the social stock exchange

The Social Stock Exchange

building a social capital market

Mark Campanale

Canterbury Social Banking Summer School

July 2011

Thursday, May 19, 2011 2

Introduction: the SSE


  Designed to provide global social businesses with access to equity risk capital

  Core focus are for-profit social purpose businesses   Market aligns capital from mission-aligned investors who

value social outputs alongside profit   Market mechanism that provides price discovery as well as

valuation and trading of shares – and, in particular, an entry and exit route for investors’ social investments

  Allows intermediaries to create investment products that bring social investors together with social businesses

  Enshrines social mission into heart of both the exchange and enterprise

A platform that allows trading of securities in social enterprises on a Financial Services Authority regulated stock exchange



Helping to solve some of the challenges for the impact investing industry


“It is now beyond urgent that we create a new social financial services sector” Bill Drayton, Ashoka

Rockefeller Foundation funds research into a ‘Social Stock Exchange’

Creating a Social Capital Market

Translation issue – do current markets meet the needs of social enterprises? Search: Can social investors easily find social investments? Regulatory framework: Is it favourable to social investors and social enterprises? Connecting: Is better sign-posting required?


Grant Venture

philanthropy Patient capital

Bank loan

Quasi equity

Social equity offering

“There is a lot of seed capital available, angel-equivalent, for social entrepreneurs. But there is not a lot of later-stage funding available to take social entrepreneurs to scale. There a huge gap in the social capital market that’s preventing many of the best models from replicating and fulfilling their potential.” Linda Rottenberg, Endeavour Global, (Skoll Foundation/Sustainability 2007)

Addressing the Equity Finance Gap

Social enterprises are likely to require equity finance as they evolve


Lack of capital routes for expansion or exit?

The challenge for the sector


Why will a Social Stock Exchange help?


1.  Improve visibility of social businesses – reduces cost of search

2.  Provides daily mark-to-market pricing allowing portfolio management and chances for liquidity

3.  Lowers financial and management due diligence costs – regulated financial disclosures and adherence to City Codes

4.  Lowers social due diligence costs – adoption of social impact standards

5.  Facilitates “impact investing” for family offices and foundations

6.  Permits easier and targeted coverage by equity analysts interested in the sector, driving down transactions costs for all – including corporate brokers, market-makers and social impact investors

Improve visibility of deals for impact investors


Democratising impact investing

1.  Impact investing need not be the preserve of private equity or professional investors via private equity funds (which dominate the sector)

2.  Regulated public stock market allows for retail investors to participate in impact investing: both HNWI and “Joe Public” together

3.  RIE status allows pension funds to conduct impact investing 4.  Third Sector workers can invest via their occupational (and/

or private) pensions in Third Sector companies 5.  Immediate liquidity and daily mark-to-market pricing allows

mutual funds and pension accounts to be created for sale to the general public


1.  Promotes recognised standards that establish a business as being a social enterprise: BCorps, member of SEC, SE Mark, CIC status, IPS, L3Cs

2.  Promotes social impact performance and measures using standard, approved models: UKSROI, GIIRS / IRIS, NPC

3.  Promotes ‘capacity-building intermediaries’:

  social investment banks   social equity research and ratings agencies   bespoke corporate advisory   investment readiness services for the sector

4.  Stimulates Government changes to policy and practice towards the sector (taxation, procurement, etc)

Fertilizing the sector’s ecosystem


Businesses likely to gain access to a

Social Stock Exchange


A robust principles-led admissions criteria has been developed that involves:

 Social businesses demonstrate address key social impact  An issuer’s sponsorship on the exchange by a Social Nominated Advisor - NOMAD  A social audit as an addendum to the Prospectus  Vetting by an admissions panel  Ongoing disclosure obligations relating to the issuer’s social impacts  Social Key Performance Indicators (KPI’s).

SSE: Admissions Summary


The Social Stock Exchange: a capital market that supports the social business sector

Social Stock Exchange


  Deliver an FSA regulated and duly authorised investment market place

  Explicitly reflect the social mission of enterprises, whilst being comfortable to the needs of investors

  Signpost social investors to social enterprises, enabling equity capital to be raised

  Capital market that serves the sector

Summary of objectives


Contacts:

Mark Campanale [email protected] Pradeep Jethi [email protected] James Perry [email protected]

the social stock exchange

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