Post on 19-Jul-2019
Pearce Stewart – Innovative Financial Initiatives
Innovative Finance Conference
12th November 2015, Cardiff City Stadium
Presentation will cover:- Who FIU is and our role Successes so far Pension Fund investments Charitable Bond model Critical success factors Questions
Established in 2011 to strengthen capacity for innovation.
Find new ways of funding and new sources of finance in times of austerity
making best use of Financial Transaction consequentials from UKG (over £600m)
High leverage shift away from grant funding to loans, equity, guarantees
30,000 affordable
homes’ target
28,048 completed
homes
£1.7 billion investment £1.7 billion investment
£1 billion of economic
activity each year
8,000 jobs supported each year
Social rent
Mid-market
rent
Low-cost home
ownership
Affordable Housing Supply Programme (AHSP)
First – Guarantee-based scheme for housing in the UK
First – Charitable Bond investments by a UK government
4,000 new affordable homes
through innovation
Unlocking up to half a billion pounds of housing
investment
Falkirk Local Government Pension Scheme (LGPS) fund investment in affordable housing
1 of 11 LGPS funds in Scotland £1.8 Billion fund assets
Trustees keen to support local investments that provide suitable returns
Scottish Ministers cannot direct LGPS funds investments
SG role was to enable delivery
Falkirk LGPS fund investment – timeline and key milestones
Falkirk LGPS fund investment – how it works
Falkirk LGPS fund agree plans for £30m investment - Over 300 new affordable homes to be delivered across Scotland – announced 08 June 2015
initiative will “act as a trailblazer and encourage other Scottish local authority pension fund trustees to take the plunge and invest in housing” – Alex Neil, Cabinet Secretary, Scottish Government
“Pension funds are becoming more and more interested in making 'impact' investments which affect local infrastructure, and housing is obviously part of their thinking.” – Chris Down, Chief Executive Hearthstone
SG investment of £10m rising to £37m by 2016
Charitable Bonds - Ethical financial engineering
Providing 600 affordable homes
Generating grant of £1.4m for community projects & up
to £8m for social housing £37m repaid in full by 2026
£10m SG loan invested with Allia. Allia on-lent £8.6m to Places for People to build affordable housing Interest foregone on SG investment generated £1.4m of grant for regeneration charities
£1.4m routed through the People & Communities Fund to 14 charities to tackle poverty in local communities Over 7,600 people helped –employment skills; activities for children and young people; money advice; improved community facilities
2014 – the first bond investment
Charitable Bonds - Ethical financial engineering
developing the model
Extending the bond term from 5 to 10 years, generating an increased charitable donation Using the charitable donation for the provision of social housing Procured a delivery partner – raising the profile of charitable bonds, growing the market, increasing transparency Opening up the loan finance to any RSL – providing attractive funding for affordable homes in Scotland
Charitable Bonds - Ethical financial engineering
£2m in 2014-2015 £25m in 2015-2016
Charitable Bonds – how it works
Iceberg Illusion – critical success factors
Aligning priorities across public and private sector
Understanding and reducing barriers where possible
Adaptive leadership Accepting the need to do things differently
Committed partners who are willing to collaborate