SCHRODER BSC SOCIAL IMPACT TRUST PLC

Prospectus • Nov 23, 2020

National Storage Mechanism | Additional information

RNS Number : 0903G

Schroder BSC Social Impact Trust

23 November 2020

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN OR TO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN WHICH THE PUBLICATION, DISTRIBUTION OR RELEASE OF THIS ANNOUNCEMENT WOULD BE UNLAWFUL. PLEASE SEE THE SECTION ENTITLED "DISCLAIMER" TOWARDS THE END OF THIS ANNOUNCEMENT.

This announcement is an advertisement and does not constitute a prospectus and investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in the prospectus expected to be published shortly by Schroder BSC Social Impact Trust plc (the "Prospectus") and not in reliance on this announcement. Once published, a copy of the Prospectus will, subject to certain access restrictions, be available for inspection on the Company's website: http://www.schroders.com/sbsi and at the registered office of the Company. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase, investments of any description, or a recommendation regarding the issue or the provision of investment advice by any party.

23 November 2020

LEI: 549300PG5MF2NY4ZRM86

Schroder BSC Social Impact Trust plc

Intention to Float

Schroder BSC Social Impact Trust plc (the "Company") is pleased to announce its intention to launch an initial public offering and to admit its shares on the premium segment of the Official List of the Financial Conduct Authority and to trading on the main market of the London Stock Exchange. 

The Company is targeting an issue of up to 100 million ordinary shares ("Ordinary Shares") at 100 pence per Ordinary Share (the "Issue Price") seeking to raise up to £100 million by means of a placing, offer for subscription, intermediaries offer and issue of consideration shares (the "Initial Issue"). In addition, pursuant to the prospectus expected to be published shortly (the "Prospectus"), a placing programme will allow the Company to issue a further 100 million shares, being Ordinary Shares and/or C shares, in the 12 months from the date of publication of the Prospectus and following initial admission ("Initial Admission") (the "Placing Programme").

The Company's investment objective is to be the first London listed investment company to deliver measurable positive social impact as well as long term capital growth and income, through investing in a diversified portfolio of private market impact funds, co-investments alongside impact investors and direct investments in order to gain exposure to private market Social Impact Investments.

The Company has appointed Schroder Unit Trusts Limited ("Schroders") as its AIFM. Schroders is a global leader in sustainability and a leading provider of investment trusts to the UK market. The Company and Schroders have appointed Big Society Capital Limited ("Big Society Capital" or "BSC" or the "Portfolio Manager") as delegated Portfolio Manager with responsibility for the investment of the Company's assets.

Big Society Capital is one of the UK's leading social impact investors, with a track-record in delivering sustainable financial returns and positive impact on people's lives in the UK. The partnership of Schroders and BSC, leveraging their respective experience, should provide the Company and its shareholders with expert impact investment knowledge, and the use of the investment trust structure will allow the product to provide a diversified and liquid exposure to private market impact investments in the UK.

The Company aims to open access to specialist private impact markets, with a liquid publicly listed vehicle - for institutional investors, wealth managers, advisors and private investors in the UK. The Company's board of directors (the "Board") believes that the Company has the ability to work towards the democratisation of access to private market impact assets that will allow for measurable outcomes for society in the UK. 

Defining Social Impact Investment and the Company's Investment Case

·    "Social impact" is the improvement of the life outcomes of beneficiaries in a specific target group or groups. After years of investing in social impact, early pioneers such as Big Society Capital have identified models which are at a point where they require significant capital to scale. Big Society Capital is one of the UK's leading social impact investors, with a track-record in delivering sustainable financial returns and positive impact on people's lives in the UK.

·    Big Society Capital adopts the Impact Management Project1 framework as the emerging global standard for managing and articulating social impact. The Company's investments are expected to be "high impact" within the meaning of that framework, on the basis that they are expected to sit within "Category C" of "Contribute to Solutions". Such investments are generally seen as higher impact than investments in "Category A" that "Avoid Harm" or "Category B" that "Benefit Stakeholders".

·    Since 2012, Big Society Capital has sought to improve the lives of people in the UK by connecting social impact investment to social enterprises and charities. The UK social impact investment market has grown significantly since 2011, the year before Big Society Capital was established, with a compound annual growth rate of 25 per cent. Based on underlying market demand and current growth rates, Big Society Capital estimates that the investable high impact segment of the UK market will be approximately £10 to £15 billion by 2025.

·    The Company has been established to capitalise on these opportunities and to increase flows of capital to high impact business models.

·    An investment in the Company is intended to provide investors with exposure to a diversified portfolio of private market social impact investments delivering positive social impact in the UK as well as long term capital growth and income. This will be achieved primarily through investments in:

•             private market impact funds and separate accounts managed by third party asset managers ("Impact Funds");

•             co-investments made alongside Impact Funds or other impact investors (which may include the Portfolio Manager) ("Co-Investments"); and

•             direct investments in Social Impact Investments ("Direct Investments").

·    The Company intends to demonstrate measurable positive outcomes through transparent reporting, aligned with the United Nations' action plan, adopted in 2015, comprising 17 goals aimed to eradicate poverty and hunger, fight inequality, tackle climate change and achieve sustainable development globally by 2030 (the "UN Sustainable Development Goals").

·    The Company will invest across a range of asset classes with a focus on the three primary areas identified in the Company's investment policy:

•             High Impact Housing - Including property funds that either acquire or develop high quality affordable housing, from more specialist housing for vulnerable groups (for example, transition accommodation for people who have experienced homelessness or survivors of domestic violence) to housing for low income renters currently living in poor quality or insecure accommodation.

•             Debt for Social Enterprises - Including charity bonds, co-investments in portfolios of secured loans and mezzanine debt funds with some equity that invest in established social enterprises.

•             Social Outcomes Contracts - Contracts between a public sector or government body and a delivery organisation whereby an external investor provides upfront capital to the delivery organisation and is repaid by the income stream from the public sector body based upon social outcomes delivered rather than on a fee for service basis. 

Seed Portfolio

The Company has agreed, conditional on Initial Admission, to acquire from Big Society Capital seven assets (comprising interests in five Impact Funds and two Co-Investment debt portfolios) which, as at the date of the Prospectus, have an aggregate valuation of approximately £40 million on an invested basis, plus outstanding commitments such that the aggregate valuation on a total commitment basis is approximately £60 million (the "Initial Portfolio") (the "Acquisition") . Big Society Capital, who will be receiving, as consideration, shares of the Company (the "Consideration Shares") and cash such that BSC will become a significant Shareholder on Initial Admission. As a result of receiving the Consideration Shares, on Initial Admission Big Society Capital is expected to hold 25 per cent. of the voting share capital of the Company.  Big Society Capital will retain an interest in most of the Social Impact Investments comprising the Initial Portfolio, further details of which are set out in the Prospectus.

Based on the size of the Initial Portfolio and the opportunities for investment that the Portfolio Manager has identified, it is anticipated that the net proceeds of the Initial Issue will be substantially committed within 12 months of Initial Admission and substantially invested within 18 months of Initial Admission. The Board, the AIFM and the Portfolio Manager anticipate continuing to find attractive opportunities for the Company to invest in, consistent with its objectives, and as such, hope to grow the Company through further issues of Shares and are targeting a portfolio size of £300-500 million within five years of Initial Admission. It is hoped this growth would provide further benefits of scale and diversification for shareholders in addition to delivering greater social impact.

Cornerstone Investors

As stated above, Big Society Capital will receive Consideration Shares in exchange for the Initial Portfolio and, as a result, is expected to hold 25 per cent. of the voting share capital of the Company's on Initial Admission. In addition to this, Schroder & Co. Ltd has informed the Company of its intention to subscribe for Ordinary Shares in the Initial Placing on behalf of their clients representing £17.5 million or 17.5 per cent. of the Company's issued share capital on Initial Admission. The final subscription amount will be subject to final demand of the clients of Schroder & Co. Ltd and the final number of Ordinary Shares to be issued by the Company pursuant to the Initial Issue. Accordingly, upon Initial Admission Schroder & Co. Ltd is expected to hold approximately 17.5 per cent. of the voting share capital of the Company.

Target returns and distribution policy

The Company aims to provide a Net Asset Value total return of CPI plus 2 per cent. per annum (once the portfolio is fully invested and averaged over a rolling three- to five-year period, net of fees). The Company will pay out its income as required by applicable law but does not have any distribution targets. The Company intends to pay distributions on an annual basis.

Whilst the Company's income is expected to vary over time depending on portfolio construction, to the extent an annual dividend is declared by the Board, it is anticipated to represent in the region of a 1-2 per cent. yield on net asset value, once the portfolio is fully invested.

Investors should note that the target return set out above is a target only and not a profit forecast and there can be no assurance that it will be met or that any capital growth or distributions, or any growth in distributions, will be achieved.

In addition, although the Company's target returns are set by reference to the CPI, an investment in the Company should not be considered to be a hedge against the risks of inflation on a portfolio. The Company expects to invest in some Social Impact Investments with inflation linkage, some with inflation correlation and some with no link to inflation. It is not anticipated that these assets will directly track CPI or any other measure of inflation.

Commenting on the launch, Susannah Nicklin, Chair of the Company, said:

"I am delighted that we are able to bring this social impact trust to the market at a time when the UK is facing some significant headwinds, particularly on social issues. This trust brings together the powerhouse of Schroders, a leading global asset manager, working alongside Big Society Capital, one of the UK's leading impact investors.

"Schroder BSC Social Impact Trust will bring together a diverse team of investment professionals with experience in portfolio management, sustainability, impact investing, government policy and social enterprises. Our intention with this trust is to provide investors and the investment sector with a best-in-class impact trust."

Andy Howard, Global Head of Sustainability at Schroders, said:

"The connection between social impact and investment is deepening and expanding across financial markets.  At Schroders, we have been focused on the implications of that shift across our entire business, and on meeting the changing demands of our clients.

"It is clear that our clients are looking for new ways to connect their investment goals and sustainability concerns to produce measurable social impact as well as a financial return.  Our solution offers individuals and institutions exposure to a different type of impact product - a high impact diversified portfolio of specialist investments that help improve the lives of people in the UK. These investments are anticipated to be long term, low volatility and have low correlation to equity market movements.

"We are very excited to combine Schroder's expertise, infrastructure and investment experience with Big Society Capital's recognised leading position in the UK impact investment industry."

Jeremy Rogers, Chief Investment Officer at Big Society Capital, said:

"The current coronavirus pandemic is exacerbating many social challenges from homelessness to domestic abuse. Social impact investing can directly help the charities and social enterprises tackling these problems, for example, by enabling them to provide accommodation and support for those experiencing homelessness and survivors of domestic abuse. 

"Now more than ever, investors want their investments to deliver significant local impact. This new trust gives investors the opportunity to access high impact investment solutions with diversified returns away from public markets."

Expected Timetable

	2020
Initial Issue
Publication of the Prospectus and commencement of the Initial Placing, Offer for Subscription and the Intermediaries Offer	23 November
Latest time and date for receipt of completed applications from the Intermediaries in respect of the Intermediaries Offer	11.00 a.m. on 15 December
Latest time and date for applications under the Offer for Subscription	1.00 p.m. on 15 December
Latest time and dates for commitments under the Initial Placing	2.00 p.m. on 16 December
Publication of results of the Initial Issue (through a Regulatory Information Service)	17 December
Completion of the Acquisition, Admission and dealings in Ordinary Shares commence	8.00 a.m. on 22 December
CREST accounts credited with uncertificated Ordinary Shares	22 December
Where applicable, definitive share certificates despatched by post in the week commencing*	28 December (or as soon as possible thereafter)
* Underlying applicants who apply to Intermediaries for Ordinary Shares under the Intermediaries Offer will not receive share certificates.
Subsequent Placings under the Placing Programme
Subsequent Placings under the Placing Programme	between 22 December 2020 and 22 November 2021
Announcement of the results of each Subsequent Placing	as soon as practicable following the closing of a Subsequent Placing
Admission and crediting of CREST accounts in respect of each Subsequent Placing	as soon as practicable following the allotment of Shares pursuant to a Subsequent Placing
Definitive share certificates in respect of the Shares issued pursuant to each Subsequent Placing despatched by post	approximately one week following the Admission of any Shares pursuant to a Subsequent Placing
Any changes to the expected timetable set out above will be notified by the Company through a Regulatory Information Service.

Dealing Codes

The dealing codes for the Ordinary Shares will be as follows:      

ISIN: GB00BF781319

SEDOL: BF78131

TIDM: SBSI

For further information please contact:

Schroders
John Spedding Estelle Bibby (Press)	0207 658 3206 0207 658 3431
Big Society Capital
Georgette Harrison, Senior Communications Director James Westhead, Head of Engagement	gharrison@bigsocietycapital.com jwesthead@bigsocietycapital.com
Winterflood Securities Limited	020 3100 0000
Darren Willis Neil Langford Chris Mills
Buchanan (Financial PR)	020 7466 5000
Charles Ryland Henry Wilson George Beale

Notes:

[1] The Impact Management Project (the "IMP") provides a forum for building global consensus on how to measure, manage and report impacts on sustainability.  The IMP convenes a community of over 2,000 practitioners and facilitates a structured network of standard-setting organisations.

Further information on the Company

Investment objective

The Company's investment objective is to deliver measurable positive social impact as well as long term capital growth and income, through investing in a diversified portfolio of private market impact funds, co-investments alongside impact investors and direct investments in order to gain exposure to private market Social Impact Investments.

The Company aims to provide a Net Asset Value total return of CPI plus 2 per cent. per annum (once the portfolio is fully invested and averaged over a rolling three- to five-year period, net of fees) with low correlation to traditional quoted markets while helping to address significant social issues in the UK.

Investment policy

The Company will invest in a diversified portfolio of private market Impact Funds and Co-Investments alongside such funds or other impact investors (including the Portfolio Manager), which in turn support charities and social enterprises, with a focus on the United Kingdom. The Company may also make Direct Investments.

The Company will make Social Impact Investments that seek to deliver a positive social outcome together with a financial return, including but not limited to Investments in:

·    High Impact Housing - Including property funds that either acquire or develop high quality affordable housing, from more specialist housing for vulnerable groups (for example, transition accommodation for people who were formerly homeless or fleeing domestic violence) to housing for low income renters currently living in poor quality or insecure accommodation.

·    Debt for Social Enterprises - Including charity bonds, co-investments in portfolios of secured loans and mezzanine debt funds with some equity that invest in established social enterprises.

·    Social Outcomes Contracts - Contracts between a public sector or government body and a delivery organisation whereby an external investor provides upfront capital to the delivery organisation and is repaid by the income stream from the public sector body based upon social outcomes delivered rather than on a fee for service basis.

The market for Social Impact Investments in the United Kingdom is a rapidly evolving market and the Company retains the flexibility to invest in Social Impact Investments other than those in the three categories set out above.

The Company will typically obtain exposure to Social Impact Investments through investing in Impact Funds and Co-Investments. The Company will usually make investments on a commitment basis, expected to be called over a period of time. The Company will generally hold minority interests in Impact Funds, but may hold majority interests where appropriate including, for example, where the Company may be a cornerstone investor alongside the Portfolio Manager. Co-Investments would be made alongside third party impact investors, including the Portfolio Manager. It is expected that the Company will invest in Impact Funds and Co-Investments alongside the Portfolio Manager, benefitting from the broad range of opportunities sourced by the Portfolio Manager. Direct Investments are not expected to comprise a material proportion of the Company's portfolio.

Impact Funds that invest in Debt for Social Enterprises assets may include some interests in both debt and equity interests. However, the Company will not normally have more than 10 per cent. of Net Assets, calculated at the time of commitment, exposed to equity interests via mixed debt and equity Impact Funds.

The portfolio composition at any one time will reflect the opportunities available to the Portfolio Manager, based on the performance, social impact and maturity of the Impact Funds, Co-Investments and Direct Investments.

Investment restrictions

The Company will manage its assets with the objective of spreading risk through the following investment restrictions that limit the Company's exposure to not more than:

·    60 per cent. of Net Assets in High Impact Housing;

·    60 per cent. of Net Assets in Debt for Social Enterprises;

·    40 per cent. of Net Assets in Social Outcomes Contracts;

·    30 per cent. of Net Assets in Social Impact Investments other than High Impact Housing, Debt for Social Enterprises and Social Outcomes Contracts;

·    10 per cent. of Net Assets to a single Investment, held directly or indirectly on a look-through basis;

·    20 per cent. of Net Assets to any one Impact Fund;

·    25 per cent. of Net Assets to Impact Funds managed or advised by the same investment management and advisory group; and

·    15 per cent. of Net Assets to non-UK Investments.

Each of the above restrictions will be calculated at the time of commitment and where the Company's exposure will be the aggregate of the value of the Company's Investments plus its outstanding commitments. Where the Company makes an Investment otherwise than on a commitment basis, the time of commitment will be the time of investment.

The Company will not be required to dispose of any investment or to rebalance the portfolio as a result of a change in the respective valuations of its assets. However, the Portfolio Manager will regularly monitor the portfolio and may make adjustments from time to time consistent with the objective of spreading risk. Where the calculation of an investment restriction requires an analysis of underlying Investments held by an Impact Fund in which the Company is invested, such calculation will be based on the information reasonably available to the Portfolio Manager at the relevant time.

As a result of managing its assets and spreading investment risk in accordance with the above restrictions, the Company expects to have diversified exposure across its various counterparties and co-investors.

In addition, while not forming part of the Company's Investment Policy, in order to comply with the Listing Rules, the Company will invest:

(1) no more than 10 per cent., in aggregate, of the Company's gross assets ("Gross Assets") in other listed closed-ended investment funds; provided that

(2) the restriction in paragraph (1) above does not apply to investments in closed-ended investment funds which themselves have published investment policies to invest no more than 15 per cent. of their total assets in other listed closed-ended investment funds.

Notwithstanding paragraph (2) above, the Company will not invest more than 15 per cent., in aggregate, of Gross Assets in other listed closed-ended investment funds.

Cash and liquidity management

The Company may hold cash on deposit and may invest in cash equivalent investments, which may include short-term investments in money market type funds and tradeable debt securities. In order to efficiently allocate the Company's funds whilst it may otherwise hold significant levels of cash, the Company may also make short and medium term liquid investments, including in social bond funds, closed-ended listed funds and other liquid ESG investments, that the Portfolio Manager considers are consistent with the Company's liquidity requirements, investment policy, investment guidelines and risk profile while also meeting high ESG criteria ("Liquid ESG Investments"). The Company may invest up to 20 per cent. of Net Assets in Liquid ESG Investments, measured at the time of investment.

The Company will seek to ensure the Liquid ESG Investments target the Portfolio Manager's responsible investment policy, which is underpinned by nine core responsible business principles, including:

·    'Do No Harm' - To minimise negative impacts on target beneficiaries and communities, the environment, employees, and all stakeholders.

·    'Protect the Environment' - To promote and practice the efficient use of natural resources and protect the environment wherever possible.

·    'Inclusive Practices' - To promote equality, diversity and inclusion practices through good corporate governance and decision making, employment, organisational culture and values, and operational delivery.

When identifying key ESG risks, the Portfolio Manager aims to be proportionately compliant with its responsible investment policy, based on an assessment of the materiality of the ESG risks and best practice within the target industry.

The policy is integrated into the Portfolio Manager's investment approach. For example, material ESG risks that are identified will be reported to the SBSI Investment Committee when a recommendation paper is presented for decision.

There may be times when it is appropriate for the Company to have a significant cash or cash equivalent position instead of being fully or near fully invested, including for the purpose of seeking to satisfy expected capital calls on commitments to Impact Funds and to manage the working capital requirements of the Company.

There is no restriction on the amount of cash or cash equivalent investments that the Company may hold. Cash and certain cash equivalents will be held with approved counterparties and in line with prudent cash management guidelines agreed between the Board, AIFM and Portfolio Manager.

Capital calls

The Company will invest in Impact Funds that will predominantly be funds structured as limited partnerships or similar vehicles, to which the Company is expected to make a commitment. A commitment is an agreement by the Company to invest a certain pre-agreed amount of capital in an Impact Fund (or similar Investment) as at some future point, such timing generally being at the discretion of the manager of the Impact Fund. Therefore, commitments by the Company may be drawn down, or called, from time to time and the Company will typically be required to have sufficient liquidity to meet such requests for capital (up to the maximum amount of such commitment) at that time. Co-Investments and Direct Investments may also be structured on a commitment basis. The Company will usually be contractually obliged to make such capital call payments and a failure to do so would usually result in the Company being treated as a defaulting investor by the relevant Impact Fund or, where applicable, under Co-Investment or Direct Investment documentation.

The Portfolio Manager will monitor and manage cash flows and expected capital calls on the Company's commitments. Such capital calls will usually be subject to standard notice periods and the Portfolio Manager expects to receive periodic forecasts of capital requirements from the managers of Impact Funds and relevant Co-Investments in the Company's portfolio. The Company will seek to satisfy capital calls on commitments through a combination of reserves of cash, the realisation of cash management investments and Liquid ESG Investments, anticipated future cash flows to the Company, the use of borrowings and, potentially, the further issue of Shares.

In addition, the Company's investment restrictions are measured at the time of a commitment being made in respect of a Social Impact Investment. It may be that a commitment is called at a time when the Company's exposure to that Social Impact Investment may be materially different to the exposure when initially measured at the time of commitment, which may lead to an increased concentration risk in respect of the Portfolio and/or an increased risk of having insufficient cash or liquid assets to meet the capital call.

Valuation

The Net Asset Value of the Company and the Net Asset Value per Share will be calculated in Sterling by the AIFM, and approved by the Board, on a semi-annual basis as at 30 June (audited) and 31 December (unaudited) in each year. The first calculation will be as at 30 June 2021.

The NAV (and NAV per Share) will be determined on a fair value basis in accordance with FRS 102.

Investments in funds and the debt of individual charities and social enterprises that are not publicly traded, or are listed but do not have meaningful liquidity, are expected to comprise a material proportion of the Company's portfolio and will generally be valued in accordance with FRS 102, IPEV 2018 Valuation Guidelines or such other valuation standards or guidelines as the Portfolio Manager, the AIFM and the Board consider appropriate.

Investments in the Company's portfolio will be held at fair value. Judgements as to the estimations of fair value will be considered on an ongoing basis and formally every six months by the relevant committees within the Portfolio Manager, the AIFM and the Board, including considering the impact of events in the relevant market.

Continuation Resolution

If in the two-year period ending on 31 December 2023, and in any two-year period following such date, the Ordinary Shares have traded, on average, at a discount in excess of 10 per cent. to Net Asset Value per Share, the Directors will propose an ordinary resolution at the Company's next annual general meeting that the Company continues its business as presently constituted (the "Continuation Resolution").

If the Continuation Resolution is not passed, the Directors will put forward proposals for the reconstruction or reorganisation of the Company, bearing in mind the liquidity of the Company's Investments, as soon as reasonably practicable following the date on which the Continuation Resolution is not passed. These proposals may or may not involve winding up the Company and, accordingly, failure to pass the Continuation Resolution will not necessarily result in the winding up of the Company.

The discount prevailing on each business day will be determined by reference to the closing market price of Ordinary Shares on that day and the last published Net Asset Value per Share (adjusted for dividends).

The Board

The Company has an experienced Board comprising senior professionals from the impact investment, investment trust and asset management sectors. All of the Directors are non-executive and are independent of the AIFM, the Portfolio Manager and the other service providers.

The Directors are as follows:

Susannah Nicklin, Chair

Susannah Nicklin, CFA, is an investment and financial services professional with 25 years of experience in executive roles at Goldman Sachs and Alliance Bernstein in the US, Australia and the UK. She has also previously been involved in the social impact private equity sector with Bridges Ventures, the Global Impact Investing Network and Impact Ventures UK. Susannah is a non-executive director and senior independent director of Pantheon International plc and non-executive director of The North American Income Trust plc, Baronsmead Venture Trust plc, Amati AIM VCT plc and Ecofin Global Utilities and Infrastructure Trust plc. She retired from the Board of City of London Investment Group plc in October 2020.

Mike Balfour, Audit Chair

Mike Balfour is a non-executive director of Standard Life Investment Property Income Trust plc (audit chair) and, Fidelity China Special Situations plc (audit chair). He also chairs the investment committee of TPT Retirement Solutions (previously The Pensions Trust) and sits on the trust's management board. He has over 30 years' experience in financial services. He was chief executive of Thomas Miller Investment Ltd until 2016 and prior senior appointments have included chief executive at Glasgow Investment Managers and chief investment officer at Edinburgh Fund Managers Limited. He is a member of the Institute of Chartered Accountants of Scotland.

James B. Broderick

James Broderick is a director of the Impact Investing Institute, with primary responsibility for leading the engagement with UK pension funds. He also worked in 2016-2019 with the Institute's predecessor bodies, the Implementation Taskforce on Growing a Culture of Social Impact Investing, and the Advisory Group, both sponsored by the Cabinet Office. He is currently a trustee of Philanthropy Impact, which works with advisors, philanthropists and charities to promote philanthropy and social impact investing. He is also a commissioner in the Commission on Social Investment, chaired by Lord Victor Adebowale CBE.

James was head of UBS Wealth Management in the UK & Jersey for five years before retiring in 2018, in which position he also served as chair of UBS Optimus Foundation (UK). Before that, he worked for 19 years at JPMorgan Asset Management, latterly as head of its EMEA business. In that position, he was CEO and/or director of the firm's principal asset management and insurance subsidiaries in the UK, and a director of the principal affiliated mutual fund investment and management companies in continental Europe.

Alice Chapple

Alice Chapple is an economist and a specialist in impact investment and impact assessment. She established Impact Value in October 2012. Before establishing Impact Value, Alice worked as director of sustainable financial markets at Forum for the Future.

Prior to Forum for the Future, she worked at UK development finance institution CDC as financial analyst, fund manager and social and environmental advisor. In the late 1990s, she established a programme for evaluation of development impact and in the 2000s she designed processes for fund managers to assess the ESG aspects of their investments.

Alice's current roles include chair of Investor Watch (which seeks to align capital markets with a sustainable future through Carbon Tracker and Planet Tracker), independent chair of the CDC Plus (Technical Assistance) Committee, Trustee of the Shell Foundation, and member of the Advisory Boards of Sainsbury's Foundation, Frontier Finance Solutions and Connected Asset Management. Alice is also working with the University of Cambridge Institute of Sustainability Leadership to develop and tutor their course on sustainable finance.

AIFM, Company Secretary and Administrator

The Company has appointed Schroder Unit Trusts Limited as the AIFM of the Company, pursuant to the AIFM Agreement. The AIFM will act as the Company's alternative investment fund manager for the purposes of the AIFM Rules.

Schroders is a leading provider of listed closed-ended funds in the UK and has been a prominent participant in the investment trust market for over 70 years, as well as being a global leader in sustainability. Schroders' existing range of investment trusts has a combined £4.1 billion in gross assets under management. The Board believes that Schroders' institutional risk management capabilities and infrastructure provide the stable and robust platform needed for the efficient management of the Company.

The AIFM will also be responsible for providing administrative, company secretarial and marketing services to the Company. These will include general fund administration services (including calculation of the NAV based on the data provided by the Portfolio Manager), bookkeeping, and accounts preparation.

The AIFM is authorised and regulated in the UK by the FCA.

The Portfolio Manager

Big Society Capital's core mission statement is to improve the lives of people in the UK and provide itself and its clients with a sustainable return. Working with expert partners, Big Society Capital seeks to understand people's needs first. Then, using its knowledge and capital, Big Society Capital collaborates and invests with fund managers who also want to create a better, sustainable future.

The Portfolio Manager was established by Sir Ronald Cohen, co-founder of Apax Partners and chairman of the Global Steering Group for Impact Investment, and Nick O'Donohoe, CEO of CDC Group and vice chairman of the Global Steering Group for Impact Investment, to grow the social impact investment market in the UK. Since its inception in 2012, the Portfolio Manager has managed £625 million in proprietary capital (£425 million derived from dormant bank accounts, pursuant to the Dormant Accounts Act 2008, and the remainder from its minority shareholders being four UK high street banks: HSBC, Lloyds, Barclays and RBS), has reviewed over 400 potential investments, has undertaken due diligence on over 200 investments and has invested in over 100 Social Impact Investments. Together with more than 100 institutional investors, Big Society Capital has committed approximately £2 billion to Social Impact Investments (as at 30 June 2020).

The Portfolio Manager operates as a social investment wholesaler investing into intermediary organisations who in turn invest into companies, charities and social enterprises.

The Portfolio Manager is one of the leading social impact-led investors with an impact management approach that is integrated throughout the investment process, leveraging its unique proprietary knowledge and learning culture with an investment process that is well established and tested across key stages.

Portfolio management team

Investors in the Company are expected to benefit from the Big Society Capital portfolio management team's years of experience and expertise across the public, private and social sectors. The Board believes that the portfolio management team are well placed to manage the Company's portfolio with the intention of delivering sustainable financial returns and positive social impact on people's lives in the UK. Four of the senior investment professionals listed below have worked together at Big Society Capital for over seven years, building the current process, portfolio and approach. Stephen Muers has joined the team more recently in 2016 bringing extensive experience from senior roles in government.

Jeremy Rogers - Chief Investment Officer

Jeremy has over 20 years of experience in the investment and social sectors, with 12 years in impact investing. In the late 1990s Jeremy set up and ran JP Morgan's European High Yield Trading group, growing it over ten years to be the market leader and becoming JP Morgan's youngest Managing Director. He then became a partner at Praxient Capital, a multi-asset investment fund, before joining BSC as Chief Investment Officer in 2013. Since then BSC has helped establish over £2 billion of social impact investment vehicles supporting over 1,200 charities and social enterprises.

Jeremy has held multiple voluntary and non-executive roles at charities and social enterprises including the Princes Trust, Ashoka, Big Issue Invest and Pilotlight. Jeremy is a member of the Lankelly Chase Foundation's Investment Committee, Access - the Foundation for Social Investment's Joint Investment Committee and is a Senior Adviser to the Rockefeller Foundation Innovative Finance program.

Anna Shiel - Head of Origination

Anna was previously a director in Merrill Lynch's Financial Institutions Group where she advised UK banks and insurers on strategy, initial public offerings, and mergers and acquisitions before joining BSC in November 2012. Since then she has been involved in a range of BSC's investments and projects, with particular experience in social banks, social property funds and community investment. Anna leads BSC's work in homes, communities and place, exploring how social impact investment can be used to tackle the UK's housing crisis and build more inclusive and resilient local economies. Anna has over 20 years of investment experience and has been a member of the board of Charity Bank since 2014.

Stephen Muers - Interim Chief Executive Officer

Stephen joined BSC in 2016 as head of strategy and market development and became interim chief executive officer in May 2020. Before BSC he had spent 18 years in UK Government, including holding senior roles in the Cabinet Office, the Prime Minister's Strategy Unit, the Department for Energy and Climate Change, the Ministry of Justice and as non-executive director of an NHS Trust.

He is currently a trustee and chair of the investment committee of the Friends Provident Foundation, in which capacity he chaired the 2020 "ESG Investing Olympics", and is a trustee of Fair Trials International. He is also a visiting policy fellow at the Institute for Policy Research, University of Bath and has published a book on public policy.

Christine Chang - Deputy Chief Investment Officer

Christine joined BSC in 2012, since then she has variously led BSC's work in health and social care, criminal justice and employment, managing team members across all stages of the investment process from origination, deal execution through to monitoring the portfolio. Christine is responsible for delivery of client investment products at BSC, which brings significant further investment into the social investment market, expanding the pool of capital available to improve people's lives. She is passionate about the delivery of social impact by charities and social enterprises, and sits on the boards of Thera Trust and Pact Futures CIC. Prior to BSC, she spent five years in mergers and acquisitions at Goldman Sachs in New York and London. She has over 16 years of investment experience.

Keith Starling - Senior Portfolio Adviser

Keith began his investment management career with roles at River & Mercantile Investment Management, Mercury Asset Management, British & Commonwealth Group and Deloitte Haskins & Sells. He was chief financial officer at Gartmore Group, and prior to that chief financial officer, Europe ex-Switzerland at Credit Suisse Asset Management, before joining BSC in 2012. Keith is the senior portfolio adviser at BSC, with over 30 years of experience in the investment management sector, whose role includes monitoring and managing the portfolio of investments and ensuring that intermediaries develop and grow in order to maximise their financial and social impact. Keith also chairs the BSC investment committee and the SBSI Investment Committee.

Philipp Essl - Senior Social Impact Director

Philipp joined Big Society Capital in 2019, where he focuses on social impact management across its investment process and portfolio. He has over 10 years of professional experience across different impact management roles and industries. Prior to Big Society Capital, Philipp worked at the multinational energy company, BG Group, where he led the group's social performance & human rights work for new country entry and early exploration projects, with a focus on South East Asia and Latin America. Philipp also lived several years in South East Asia, working with large development organisations (UN, Oxfam) and innovative start-ups on identifying and implementing opportunities for private sector-led economic growth and poverty reduction.

The Schroders BSC Social Impact Trust ("SBSI") Investment Committee

The Portfolio Manager has established an investment committee specifically for the purpose of considering Social Impact Investments proposed to be made by the Company.

This investment committee will agree new Social Impact Investments to be made by the Portfolio Manager on behalf of the Company as well as considering Liquid ESG Investments and investments relating to cash management activities. The committee will comprise members of BSC's wider investment committee and the portfolio management team, as well as representatives of the AIFM as non-voting participants.

Impact reporting

A key aim of the Company is to invest in solutions that address societal problems in the UK. The Company intends to demonstrate measurable positive outcomes through transparent reporting, aligned with the UN Sustainable Development Goals and the Impact Management Project's five dimensions of impact. The Company's aim is to demonstrate the impact on people that use the products and services created by organisations that receive investment via the Company.

The Portfolio Manager will prepare an annual impact review in respect of the Company to demonstrate the collective impact of the Company using data from across its investment portfolio. Its reporting approach will seek to align with global best practice and frameworks such as the UN Sustainable Development Goals and the Impact Management Project. Aggregated metrics within each of the asset classes will be used to demonstrate, at a high level, the impact created in respect of each asset class (e.g. the number of homes built). Alongside this, a selection of case studies will be used to demonstrate the impact being created by individual charities and social enterprises in the Company's portfolio using the Impact Management Project's five dimensions of impact (being what outcome(s), who for, how much, the contribution that is additional to what would have occurred otherwise, and the risks of impact being different than expected). The annual impact review will be published on the Company's website with the first such review being prepared for the period from Initial Admission to 30 June 2022.

The Company will aim to encourage transparency and interaction and intends to create an interactive website that will enable investors to view where geographically in the UK their money is invested and what area of social need it is tackling in their locality. This will demonstrate which outcome areas, Sustainable Development Goals and beneficiary groups are being addressed by each investment.

The Portfolio Manager will also aim to combine data with regular impact stories that will bring the figures to life and convey how the Company, and Shareholders through their investment in the Company, have impacted people's lives.

Key Risks Specific to the Company and the Securities

·    There can be no guarantee that the Company will achieve its investment objective or that investors will get back the amount of their original investment.

·    The Company has no operating history and investors have a limited basis on which to evaluate the Company's ability to achieve its investment objective.

·    The Company has no employees and is reliant on the performance of third party service providers. Failure by the AIFM, the Portfolio Manager or any other third party service provider to perform in accordance with the terms of its appointment could have a material detrimental impact on the operation of the Company.

·    The financial performance of the Company will depend upon the financial performance of the underlying portfolio. The Company's portfolio will include Social Impact Investments over which the Company and Portfolio Manager have no control. In particular, investments in Impact Funds and certain Co-Investments will be managed by third party managers. The Company's performance and returns to Shareholders will depend on the performance of those Social Impact Investments and their managers.

·    The Company's objective is to deliver measurable positive social impact as well as long term capital growth and income and these dual aims will generally be given equal weighting. Social impact is the improvement of the life outcomes of beneficiaries in a specific target group or groups. There is no universally accepted definition of 'impact', an assessment of which requires value judgements to be made. The Company's impact focus may mean that the financial returns to Shareholders are lower than those which might be achieved by other investment products.

·    The Company depends on the diligence, skill, judgement and business contacts of the Portfolio Manager's investment professionals and the information and deal flow they generate, especially given the specialist nature of social impact investing. The departure of some or all of the Portfolio Manager's investment professionals could prevent the Company from achieving its investment objective.

·    The Company will make investments where the Company's commitment is called over time. Due to the nature of such investments, in the normal course of its activities the Company expects to have outstanding commitments in respect of Social Impact Investments that may be substantial relative to the Company's assets. The Company's ability to meet these commitments, when called, is dependent upon the Company having sufficient cash or liquid assets at the time, the receipt of cash distributions in respect of Investments (the timing and amount of which can be unpredictable) and the availability of the Company's borrowing facilities, if any.

·    The Company's investments may be illiquid and a sale may require the consent of other interested parties. Such investments may therefore be difficult to realise and to value. Such realisations may involve significant time and cost and/or result in realisations at levels below the value of such investments estimated by the Company.

·    Any change in the Company's tax status or in taxation legislation or practice generally could adversely affect the value of the investments held by the Company, or the Company's ability to provide returns to Shareholders, or alter the post-tax returns to Shareholders.

·    The value of the Shares can fluctuate and may go down as well as up and an investor may not get back the amount invested. The market price of the Shares, like shares in all investment trusts, may fluctuate independently of their underlying Net Asset Value and may trade at a discount or premium at different times, depending on factors such as supply and demand for the Shares, market conditions and general investor sentiment.

·    There can be no guarantee that a liquid market in the Shares will exist. Accordingly, Shareholders may be unable to realise their Shares at the quoted market price or at all.

·    The Company may issue new equity in the future pursuant to the Placing Programme or otherwise. Where statutory pre-emption rights are disapplied, any additional equity financing will be dilutive to those Shareholders who cannot, or choose not to, participate in such financing.

Disclaimer

This is a financial promotion and is not intended to be investment advice. The content of this announcement, which has been prepared by and is the sole responsibility of the Company, has been approved by Schroder Unit Trusts Limited solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000 (as amended).

This announcement is an advertisement and does not constitute a prospectus and investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in the Prospectus expected to be published by the Company (and in any supplementary prospectus) and not in reliance on this announcement. Copies of the Prospectus may, subject to any applicable law, be obtained from the registered office of the Company and will shortly be made available for viewing at the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase investments of any description or a recommendation regarding the issue or the provision of investment advice by any party. No information set out in this announcement is intended to form the basis of any contract of sale, investment decision or any decision to purchase shares in the Company.

The information in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The material contained in this announcement is given as at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment. In particular, any proposals referred to herein are subject to revision and amendment.

Winterflood, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company and for no-one else in connection with the matters described in this announcement and will not regard any other person (whether or not a recipient of the Prospectus) as its client and will not be responsible to anyone for providing the protections afforded to its clients or providing any advice in relation to the matters contained herein.

The shares of the Company have not been, and will not be, registered under the U.S. Securities Act of 1933 (as amended) (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. Persons absent registration or an exemption from registration under the Securities Act. Moreover, the shares of the Company have not been, nor will they be, registered under the applicable securities laws of Australia, Canada, the Republic of South Africa, Japan or any member state of the EEA (other than any member state of the EEA, including the United Kingdom, where the Ordinary Shares and/or C Shares are lawfully marketed). Further, the Company is not, and will not be, registered under the US Investment Company Act of 1940, as amended. The shares of the Company will be offered and sold outside of the United States to non-U.S. Persons in reliance on the exemption from the registration requirements of the Securities Act provided by Regulation S thereunder. Subject to certain exceptions, the shares of the Company may not be offered or sold in the United States, Australia, Canada, the Republic of South Africa, Japan or any member state of the EEA (other than any member state of the EEA, including the United Kingdom, where the Ordinary Shares and/or the C Shares are lawfully marketed) or to, or for the account or benefit of, any national, resident or citizen of, the United States, Australia, Canada, the Republic of South Africa, Japan or any member state of the EEA (other than the United Kingdom or to professional investors in certain EEA member states for which marketing approval has been obtained). The Initial Issue and any subsequent placing under the Placing Programme, and the distribution of this announcement, in certain jurisdictions may be restricted by law and accordingly persons into whose possession this announcement is received are required to inform themselves about and to observe such restrictions.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.

The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested. Figures refer to past performance and past performance should not be considered a reliable indicator of future results. Returns may increase or decrease as a result of currency fluctuations.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "might", "will" or "should" or, in each case, their negative or other variations or similar expressions. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, strategy, plans, proposed acquisitions and objectives, are forward-looking statements.

Forward-looking statements are subject to risks and uncertainties and, accordingly, the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These factors include but are not limited to those described in the Prospectus. These forward-looking statements speak only as at the date of this announcement and cannot be relied upon as a guide to future performance. Subject to their respective legal and regulatory obligations (including under the Prospectus Regulation Rules), the Company, the AIFM, the Portfolio Manager and Winterflood expressly disclaim any obligations or undertaking to update or revise any forward-looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based unless required to do so by law or any appropriate regulatory authority, including FSMA, the Listing Rules, the Prospectus Regulation Rules, the Disclosure Guidance and Transparency Rules, the Prospectus Regulation and MAR.

None of the Company, the AIFM, the Portfolio Manager or Winterflood, or any of their respective affiliates, accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. The Company, the AIFM, the Portfolio Manager and Winterflood, and their respective affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("Directive 2014/65/EU"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing Directive 2014/65/EU; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Ordinary Shares and the C Shares have been subject to a product approval process, which has determined that the Ordinary Shares and/or C Shares to be issued pursuant to the Issue are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in Directive 2014/65/EU; and (ii) eligible for distribution through all distribution channels as are permitted by Directive 2014/65/EU (the "Target Market Assessment").

Notwithstanding the Target Market Assessment, distributors should note that: the price of the Ordinary Shares and/or C Shares may decline and investors could lose all or part of their investment; neither the Ordinary Shares nor the C Shares offer guaranteed income or capital protection; and an investment in the Ordinary Shares and/or C Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Issue. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Winterflood will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of Directive 2014/65/EU; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Ordinary Shares and/or C Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the Ordinary Shares and/or C Shares and determining appropriate distribution channels.

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