Why do you buy The Big Issue? Is it to feel good about helping those on
the margins of our society? Or is it to get something interesting to read?
The answer — and that is the uniqueness of the paper launched by John Bird in
1991 — is that it is both. You help a homeless person to enjoy the dignity
of paid employment rather than the humiliating alternatives, and you buy a
magazine that, because of its charitable nature, can frequently attract
first-class interview subjects.
Nigel Kershaw hopes that the same twin attractions will apply to the £10
million fund being launched by Big Issue Invest (BII), the subsidiary of the
magazine that invests in social enterprises. BII is effectively an ethical
investment bank, having helped 23 enterprises in less than four years.
The Social Enterprise Investment Fund will be targeted at foundations,
charitable investors and individuals of high net worth, but it will aim to
gave them a genuine, if modest, rate of return.
Mr Kershaw, chief executive of BII and chairman of The Big Issue Company, says
that earlier ethical funds were intended to maximise returns while screening
out investment in unethical industries, such as tobacco or alcohol, or were
purely charitable in their intentions. “We're neither fish nor fowl. We're
trying to create a new asset class. If you buy The Big Issue, you can
feel good about what you buy while you get value from it.”
The same should be true of his new fund, which aims to have raised £3 million
by the second quarter of this year. It hopes to offer a return of 3 per cent
to 5 per cent net annually and investors will be locked in for ten years.
The first dividends should be payable on the fourth anniversary of its
launch.
Investments are expected to range from £100,000 to £500,000, although the
charitable Esmée Fairbairn Foundation has committed £750,000 to kick-start
the fund. The fund has attracted City institutions such as Nabarro, the law
firm, PricewaterhouseCoopers, the accountancy, and HSBC, all of which are
helping on a pro bono basis.
At Big Issue Invest, Ron Sheldon, a managing director of Advent International,
the private equity company, is chairing the investment committee. The
overall chairman is Robin Monro-Davies, a former chief executive of Fitch
Ratings who sits on the boards of HSBC and Axa.
Mr Kershaw, 58, is an improbable investment banker, even an ethical one. He is
a former lithograph printer and father of the chapel (shop steward) at the Mirror
newspaper in the days of Robert Maxwell. He first met John Bird, who had
slept rough and served time in prison and had created The Big Issue
along with Gordon Roddick, in 1992.
The magazine was looking to set up its own printing press and by then Mr
Kershaw was advising on printing projects around the world. The venture came
to nothing, but the two stayed in touch.
He joined in 1995 as operations manager. The magazine now sells 146,000 copies
in the UK, according to the latest figures. “Last year Big Issue vendors
earned — rather than begged or stole — £8 million.”
Within a couple of years of joining, he and Mr Bird were seeking to replicate
the principles behind the magazine at some sort of investment vehicle. They
set out to raise £20 million for some sort of venture capital fund in 2002
but gave up when they amassed only £12 million. “I think it was before its
time,” Mr Kershaw says now. The Big Issue already had links
with HBOS, which was looking at ways to give the homeless access to banking
facilities. “They started to talk to us about creating a community
development finance institution.” The bank put in £120,000 in seed capital
to BII and the first two investments were made in December 2005. One, a
green energy business, came to nothing, but BII got its money back. The
other was Belu, which produces carbon-neutral bottled water in bottles that
can go on to a compost heap.
The best-known recipient of finance is the Fifteen Foundation, created by
Jamie Oliver, the television chef, to train disadvantaged young people for
careers in the hospitality industry. Others include Turning Point, the
social care organisation that helps people with, for example, drug or
alcohol addictions.
Mr Kershaw says that he has a pipeline of 68 possible ventures that might be
helped by the fund, of which perhaps eight to twelve might eventually prove
suitable. Most are in manufacturing or technology.
“If BI Invest is an embryonic social investment bank, then this is an
embryonic asset class,” he says. Because the magazine is both, “we
understand how to run a social enterprise and how to run a business”. Of
those 23 investments by BII, not one has required a writedown. “One of the
reasons is because we understand the people we've invested in.”
He pauses. “Not yet. Robin [Monro-Davies, the chairman] said to me: ‘You will
never be a banker until I see your face when the first investment goes.'”
Street-smart
— Founded in 1991 by John Bird and Gordon Roddick, one of the founders of the
Body Shop, The Big Issue is a social enterprise that offers homeless
people the chance to earn a living by selling the magazine on the streets
— Mr Roddick was inspired by a newspaper called Street News,
which was sold on the streets of New York. Upon returning from the United
States, he enlisted the help of Mr Bird, who had worked in the print trade
and who had also slept rough. They believed that the key to solving the
problem of homelessness lay in helping people to help themselves, and sought
to offer a legitimate alternative to begging
— The magazine, produced by professional journalists, is sold to more than
2,500 vendors at 70p a copy. They sell it on at £1.50, keeping the
difference as their earnings
— A study by management consultants described The Big Issue as
the most trusted and well-known social enterprise brand in the UK
— Because of its charitable status, the magazine is able to attract prominent
and newsworthy subjects, who give it access to interviews before commercial
publications
— Versions of the magazine are published in Australia, Japan, South Africa,
Kenya, Ethiopia, Malawi and Namibia. Another is scheduled to be launched
soon in India. The Big Issue is a founding member of The
International Network of Streetpapers, which represents more than 80 similar
social businesses in 37 countries
— “Big Issue Invest is an extension of The Big Issue,” John
Bird says. “It takes on the simple need to help social businesses with
long-term financial investment, in order to dismantle poverty”
