After a brief summer break, the Impact Investor Club resumed its regular breakfast meetings with an event on September 8th being kindly hosted in the London offices of Morgan Lewis. Focusing on the subject of the benefits for AIM companies joining the Social Stock Exchange, the panel was moderated by Iain Wright, senior partner at Morgan Lewis, whilst speakers included Tomás Carruthers, CEO of the Social Stock Exchange, Suresh Mistry, Director of Brand Engagement at fund managers Alquity, and Tony Walters, CEO of Ashley House.
Membership of the Social Stock Exchange covers many facets, but from the perspective of investors, it provides an established and legitimate reference point. They have the assurance that a wealth of due diligence over the impact that is delivered has already been conducted and the findings are presented clearly in the impact report, which is produced on an annual basis. Although managing cost is a concern for every business, Tony Walters of Ashley House was quick to point out that the listing requirements of the Social Stock Exchange were essentially complementary to those of AIM, meaning the accompanying burden was low. And whilst there was a meaningful resource requirement involved in the production of the impact report, this was seen as being hugely helpful – not just for displaying the impact credentials to those investors, but also in terms of employee engagement. Employees of Ashley House have a genuine desire to be working for a company that has impact, not just profits, at its core.
As the conversation developed, it was disclosed that through its membership of the Social Stock Exchange, Ashley House had been introduced to Funding Affordable Homes, a social impact company that is in a position to help dramatically increase the scale at which the firm can operate. With in excess of 20 schemes in the current pipeline at Ashley House – and with each one requiring funding of between £8m and £15m – this relationship has already delivered some £20m worth of investment into Ashley House and this is a number that evidently has the potential to grow rapidly into the future.
As Tony Walters noted, there was no shortage of private equity money available to help them with their expansion, but working with another Social Impact Business offered a far better fit. And this is perhaps a good example of the most telling attributes of Social Stock Exchange firms. Being awarded membership is about keeping a business aligned with the broader principles of the body, not just doing the bare minimum to keep the title. As Suresh Mistry of Alquity commented, fund managers such as themselves are keen to channel money accordingly. They want to create a safer, fairer society by engaging with companies that take this equitable view of the world.
The capital for investing in impact businesses is already out there. By having the visible credentials that social or environmental responsibility lies at the core of a company’s operations – such as through membership of the Social Stock Exchange – the route to accessing these funds can certainly be eased.
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