Social Enterprise Investment Fund Summary Presentation

Big Issue Invest (“BII”) is a leading provider of short and medium term loans to social enterprises. It has a strong brand name based on its parent company The Big issue, described by McKinseys as the most well known and trusted social enterprise brand in the UK. A robust track record - as of March 31 st 2009, BII has lent over £5 million to 24 social enterprises with no defaults. The Big Issue Invest mission: BII is launching a ‘social enterprise investment fund’ in 2009, targeting scaleable social enterprises. There is a clear need for a method to provide social enterprises with medium and long term funding that moves beyond grants, loans and venture philanthropy. The fund will provide growth capital to social enterprises with the potential for scale and sustainability. We will aim to deliver both a social and financial return to our investors Overview Big Issue Invest is passionate about funding ground-breaking, innovative, business solutions and helping to scale-up profitable social enterprises that create social opportunity and environmental sustainability. 2

Big Issue Invest (“BII”) is a leading provider of short and medium term loans to social enterprises. It has a strong brand name based on its parent company The Big issue, described by McKinseys as the most well known and trusted social enterprise brand in the UK.

A robust track record - as of March 31 st 2009, BII has lent over £5 million to 24 social enterprises with no defaults.

The Big Issue Invest mission:

BII is launching a ‘social enterprise investment fund’ in 2009, targeting scaleable social enterprises.

There is a clear need for a method to provide social enterprises with medium and long term funding that moves beyond grants, loans and venture philanthropy.

The fund will provide growth capital to social enterprises with the potential for scale and sustainability.

We will aim to deliver both a social and financial return to our investors

A social enterprise is a business with primarily social objectives whose profits are principally reinvested in the business or a social / environmental cause, rather than being driven by the need to maximise profits for shareholders and owners. Social enterprises: Create business solutions to social problems Encourage ethical markets Improve public services Improve levels of enterprise Have the potential to build a socially just and more environmentally sustainable economy There are over 55,000 social enterprises in the UK generating turnover in excess of £27bn per annum, and contributing more than £8bn to GDP each year. 1 Examples include: The Big Issue - one of the largest social enterprises in the UK, with 175,000 copies of the Big Issue distributed weekly and a reader population estimated at 0.75m. It contributes £15m to the economy, of which £8m is distributed to homeless or vulnerably housed vendors. Café Direct – which aims to get small coffee producers a better price for their crops and greater opportunities for their communities. It is a publicly listed company where grower partners, employees and founders all own shares in the company alongside investors. Jamie Oliver’s Fifteen – a charitable foundation, existing to inspire disadvantaged young people to believe that they can create for themselves great careers in the restaurant industry. Profits are reinvested in the business. Housing Associations - independent, not-for-profit bodies who own and let homes throughout the country. As Registered Social Landlords they are the main providers of social housing. There are over 1,800 RSLs in England, currently managing around 1.7 million homes and housing at least twice that many people. Currently, few social enterprises operate at scale. Lack of finance is one of the major constraints. Cabinet Office, Office of the Third Sector , Social Enterprise Action Plan 2006 – Scaling New Heights, November 2006 3 Social enterprises – what are they?

A social enterprise is a business with primarily social objectives whose profits are principally reinvested in the business or a social / environmental cause, rather than being driven by the need to maximise profits for shareholders and owners.

Social enterprises:

Create business solutions to social problems

Encourage ethical markets

Improve public services

Improve levels of enterprise

Have the potential to build a socially just and more environmentally sustainable economy

There are over 55,000 social enterprises in the UK generating turnover in excess of £27bn per annum, and contributing more than £8bn to GDP each year. 1 Examples include:

The Big Issue - one of the largest social enterprises in the UK, with 175,000 copies of the Big Issue distributed weekly and a reader population estimated at 0.75m. It contributes £15m to the economy, of which £8m is distributed to homeless or vulnerably housed vendors.

Café Direct – which aims to get small coffee producers a better price for their crops and greater opportunities for their communities. It is a publicly listed company where grower partners, employees and founders all own shares in the company alongside investors.

Jamie Oliver’s Fifteen – a charitable foundation, existing to inspire disadvantaged young people to believe that they can create for themselves great careers in the restaurant industry. Profits are reinvested in the business.

Housing Associations - independent, not-for-profit bodies who own and let homes throughout the country. As Registered Social Landlords they are the main providers of social housing. There are over 1,800 RSLs in England, currently managing around 1.7 million homes and housing at least twice that many people.

Currently, few social enterprises operate at scale. Lack of finance is one of the major constraints.

Cabinet Office, Office of the Third Sector , Social Enterprise Action Plan 2006 – Scaling New Heights, November 2006

Social enterprises – how they are currently funded? Grants Patient Capital Equity / quasi equity capital Loans Pure charities (no trading revenue) Donations Some trading / contract income but not 100% self sustainable Potentially sustainable, profitable business with profits distributed for social purpose or retained in the business Profit distributing, but socially driven business. Profit maximising business, with a social conscience Charity Social Enterprise Social Business Business Private donations, corporate donations and sponsorship Central /regional government grants, foundation grants Stock exchange listing VCT, EIS, Private Equity Long-term risk capital investment with below market return expectations Community Development Finance Institutions, Triodos Bank, Charity Bank, Big Issue Invest GAP IN FUNDING FOR SOCIAL ENTERPRISES / SOCIAL BUSINESSES The Big Issue Social Enterprise Investment Fund seeks to fill this gap A limited number of funds have been raised which target social businesses which can generate a high IRR through a traditional private equity approach to funding 4 Banks

Turning Point is one of the UK’s largest social enterprises and leading social care organisations. They work with 100,000 people each year, providing social care and support, working across a variety of areas such as substance misuse, mental health, learning disability, employment and young people's support. ‘ Connected Care ’ is Turning Point’s blueprint for significant change in how health, housing and social care services are provided. It involves local communities in the design and commissioning of public services and provides more integrated health and social care services to low-income families. Big Issue Invest provided a loan to Turning Point which was used to launch Turning Point’s ‘Centre of Excellence’, providing Connected Care audits alongside communities and commissioners and developing Connected Care services of the highest quality. Lord Victor Adebowale (CEO of Turning Point) is a prime example of the sort of entrepreneurial spirit that Big Issue Invest seeks to support. Turning Point represents a potential future investment for the Social Enterprise Investment Fund. “ Big Issue Invest is the venture capital funder for the Social Enterprise movement. ….Turning Point and our Connected Care centre for excellence look forward to a long and rewarding partnership with Big Issue Invest” Lord, Victor Adebowale CEO Turning Point Belu is the first carbon neutral, bottled water company in the UK. It uses compostable bottles made from corn oil. It donates its dividends to fund clean water projects in the UK and around the globe including a ‘rubbish muncher’ on the Thames to remove 45 tonnes of plastic bags and bottles a year. Belu is currently supplying major supermarkets and many top class restaurants. Reed Paget, Founder and CEO, was named the Schwab Foundation’s Social Entrepreneur of the Year 2008. "Big Issue Invest gave us assistance right across the board in sales, marketing and financial management. They were our lifesavers." Reed Paget, CEO, Belu 9 Big Issue Invest - some of the companies BII has funded so far

Turning Point is one of the UK’s largest social enterprises and leading social care organisations. They work with 100,000 people each year, providing social care and support, working across a variety of areas such as substance misuse, mental health, learning disability, employment and young people's support.

‘ Connected Care ’ is Turning Point’s blueprint for significant change in how health, housing and social care services are provided. It involves local communities in the design and commissioning of public services and provides more integrated health and social care services to low-income families.

Big Issue Invest provided a loan to Turning Point which was used to launch Turning Point’s ‘Centre of Excellence’, providing Connected Care audits alongside communities and commissioners and developing Connected Care services of the highest quality.

Lord Victor Adebowale (CEO of Turning Point) is a prime example of the sort of entrepreneurial spirit that Big Issue Invest seeks to support. Turning Point represents a potential future investment for the Social Enterprise Investment Fund.

Belu is the first carbon neutral, bottled water company in the UK. It uses compostable bottles made from corn oil. It donates its dividends to fund clean water projects in the UK and around the globe including a ‘rubbish muncher’ on the Thames to remove 45 tonnes of plastic bags and bottles a year.

Belu is currently supplying major supermarkets and many top class restaurants.

Reed Paget, Founder and CEO, was named the Schwab Foundation’s Social Entrepreneur of the Year 2008.

10 In 2002, Jamie Oliver combined two ambitions: to open a top class restaurant and to give disadvantaged youngsters the chance to gain professional training that would set them up for an independent, inspired and productive life. Five years on, Fifteen is still achieving both, improving and expanding all the time. Fifteen Foundation exists to inspire disadvantaged young people – homeless, unemployed, overcoming drug or alcohol problems - to believe that they can create for themselves great careers in the restaurant industry. Big Issue Invest financed the start-up of a new restaurant by the winner of Jamie Oliver’s graduate chefs’ competition. Fifteen Foundation is driving forward the dream of building Fifteen into a global social enterprise brand inspiring young people all over the world. To date it has opened restaurants in London, Cornwall, Amsterdam and Melbourne, all staffed by its graduates. Big Issue Invest hopes to provide future capital from the Social Enterprise Investment Fund to assist them in achieving this dream. "We love working with Big Invest. Uniquely, they understand and are passionate about social business. They have great ideas for structuring deals. And they have money. What's not to like?" Liam Black, Former Director, Fifteen Hackney Community Transport (HCT) is an award winning and rapidly growing provider of public transport and related training services in the UK. Originally founded in 1982 to provide local options for people who find it difficult or are unable to use existing public transport services, HCT has developed into one of the UK's largest and most successful social enterprises. The HCT vision is social justice and equality for all. The company aims to contribute towards this goal by re-investing their generated surpluses within the business, increasing employability of local people, promoting community transport concepts and applying the social enterprise business model. Big Issue Invest made a loan to support the expansion of 15 school bus routes in Yorkshire, carrying over 700 students to school each day and the creation of a ‘dial a ride’ scheme for elderly and disabled people. Big Issue Invest - some of the companies BII has funded so far

In 2002, Jamie Oliver combined two ambitions: to open a top class restaurant and to give disadvantaged youngsters the chance to gain professional training that would set them up for an independent, inspired and productive life. Five years on, Fifteen is still achieving both, improving and expanding all the time.

Fifteen Foundation exists to inspire disadvantaged young people – homeless, unemployed, overcoming drug or alcohol problems - to believe that they can create for themselves great careers in the restaurant industry.

Big Issue Invest financed the start-up of a new restaurant by the winner of Jamie Oliver’s graduate chefs’ competition.

Fifteen Foundation is driving forward the dream of building Fifteen into a global social enterprise brand inspiring young people all over the world. To date it has opened restaurants in London, Cornwall, Amsterdam and Melbourne, all staffed by its graduates. Big Issue Invest hopes to provide future capital from the Social Enterprise Investment Fund to assist them in achieving this dream.

Hackney Community Transport (HCT) is an award winning and rapidly growing provider of public transport and related training services in the UK. Originally founded in 1982 to provide local options for people who find it difficult or are unable to use existing public transport services, HCT has developed into one of the UK's largest and most successful social enterprises.

The HCT vision is social justice and equality for all. The company aims to contribute towards this goal by re-investing their generated surpluses within the business, increasing employability of local people, promoting community transport concepts and applying the social enterprise business model.

Big Issue Invest made a loan to support the expansion of 15 school bus routes in Yorkshire, carrying over 700 students to school each day and the creation of a ‘dial a ride’ scheme for elderly and disabled people.

SCA Healthcare provides NHS dentistry care in South Hampshire where a large number of dentists have gone private and there were no dental services available in low-income communities. SCA have a staff team of over 600 people, treating 35,000 patients. Big Issue Invest financed two SCA Healthcare Dental Surgeries serving disadvantaged inner-city communities on the south coast. Big Issue Invest - some of the companies BII has funded so far Pines Calyx is an award winning – ‘Sustainable Building of the Year 2007’ – environmentally sustainable conference centre near Dover. The centre is carbon neutral and is built from recycled materials using groundbreaking architectural and engineering techniques. Big Issue Invest provided loan finance to build the conference centre. Thorpete provides gas and installation services, mainly for Housing Associations. It trains and employs long term unemployed young people in the East Midlands. Thorpete serves more than 11,000 homes across the East Midlands. Big Issue Invest financed the upgrade of Thorpete’s customer service IT system. 11 Digartref Ynys Mon provides supported accommodation to young people who may have been affected by housing issues. The organisation supports those aged between 16 and 25 years to develop skills essential for independent living. They are then supported to move-on into their own tenancies with continued support given through a resettlement programme. Big Issue Invest financed the extension and refurbishment of a building providing accommodation. Stevenage Citizens Advice Bureau Specialist Telephone Advice Centre (SSTAC) provides UK-wide specialist legal advice by telephone for people who qualify for legal aid. In December 2006, SSTAC won a major contract with the Legal Services Commission (LSC) in competition with private sector providers. Big Issue Invest provided a working capital loan to help cover the higher staff costs required to scale-up and deliver the LSC contract. The loan will enable the delivery of 30,000 hours of counseling on welfare benefits, housing, employment & debt. Digartref Ynys Mon Stevenage

SCA Healthcare provides NHS dentistry care in South Hampshire where a large number of dentists have gone private and there were no dental services available in low-income communities.

SCA have a staff team of over 600 people, treating 35,000 patients.

Big Issue Invest financed two SCA Healthcare Dental Surgeries serving disadvantaged inner-city communities on the south coast.

Pines Calyx is an award winning – ‘Sustainable Building of the Year 2007’ – environmentally sustainable conference centre near Dover.

The centre is carbon neutral and is built from recycled materials using groundbreaking architectural and engineering techniques.

Big Issue Invest provided loan finance to build the conference centre.

Thorpete provides gas and installation services, mainly for Housing Associations.

It trains and employs long term unemployed young people in the East Midlands.

Thorpete serves more than 11,000 homes across the East Midlands.

Big Issue Invest financed the upgrade of Thorpete’s customer service IT system.

Digartref Ynys Mon provides supported accommodation to young people who may have been affected by housing issues.

The organisation supports those aged between 16 and 25 years to develop skills essential for independent living. They are then supported to move-on into their own tenancies with continued support given through a resettlement programme.

Big Issue Invest financed the extension and refurbishment of a building providing accommodation.

Stevenage Citizens Advice Bureau Specialist Telephone Advice Centre (SSTAC) provides UK-wide specialist legal advice by telephone for people who qualify for legal aid. In December 2006, SSTAC won a major contract with the Legal Services Commission (LSC) in competition with private sector providers.

Big Issue Invest provided a working capital loan to help cover the higher staff costs required to scale-up and deliver the LSC contract. The loan will enable the delivery of 30,000 hours of counseling on welfare benefits, housing, employment & debt.

PHD is a social enterprise incorporated in 2007 that has grown out of a partnership started 10 years ago between two inner city GP practices in Birmingham. PHD is located in Smethwick in the West Midlands. Smethwick is a multi ethnic region that faces many challenges. Once a thriving industrial centre, famed for engineering, it is now an area that faces high unemployment and poor health. PHD is a progressive and innovative provider of extended primary care services (diabetes, counseling, elderly care, osteopathy, pain relief, chiropody, dietetics, physiotherapy, community nursing etc ) specialising in meeting the needs of inner city, multiracial people in Smethwick. It has a 9 year track record of both developing and delivering high quality services to ethnic minority and marginalised groups profitably. It currently provides a wide variety of services to a population of just over 22,000 people. Big Issue Invest has already provided loan finance to PHD and would like to provide more capital in the future to assist them in further scaling their model. This complements Big Issue Invest’s mission to serve excluded and marginalised populations and adds to its sector thrust in partnering with organisations which are working to transform healthcare delivery . Possible investment opportunities for the New Fund 15 Pathfinder Healthcare Development

PHD is a social enterprise incorporated in 2007 that has grown out of a partnership started 10 years ago between two inner city GP practices in Birmingham.

PHD is located in Smethwick in the West Midlands. Smethwick is a multi ethnic region that faces many challenges. Once a thriving industrial centre, famed for engineering, it is now an area that faces high unemployment and poor health.

PHD is a progressive and innovative provider of extended primary care services (diabetes, counseling, elderly care, osteopathy, pain relief, chiropody, dietetics, physiotherapy, community nursing etc ) specialising in meeting the needs of inner city, multiracial people in Smethwick.

It has a 9 year track record of both developing and delivering high quality services to ethnic minority and marginalised groups profitably.

It currently provides a wide variety of services to a population of just over 22,000 people.

Big Issue Invest has already provided loan finance to PHD and would like to provide more capital in the future to assist them in further scaling their model. This complements Big Issue Invest’s mission to serve excluded and marginalised populations and adds to its sector thrust in partnering with organisations which are working to transform healthcare delivery .

CASA is an umbrella organisation which sets up sustainable, employee owned Social Enterprises to deliver health care at home. CASA social enterprises are modelled on the already successful Sunderland Home Care Associates which now has 220 staff and is carrying out c. 4,000 hours of care services per week. To date further CASA units have been set up in North Tyneside, Manchester and Newcastle. Each CASA unit is a social enterprise which is majority owned and controlled by its employees. CASA employees participate in the decision making process and share in the prosperity of the company by being given shares in the social enterprise. Each CASA unit operates under the systems, policies and procedures that have been developed by the umbrella organisation. The businesses all re-invest their surpluses to work towards continued growth and improved quality of services. CASA targets new units in areas suffering from high unemployment. Their employee ownership model ensures a pride in and a commitment to both the service and the people receiving care. In a sector where wage rates are notoriously low, and conditions are difficult, CASA has succeeded in forging a model of ownership and management that rewards the loyalty and professionalism of its whole staff team. In total CASA is providing in excess of 7,000 hours of home care services per week throughout Sunderland, Tyneside, Manchester and Newcastle. CASA has identified a number of opportunities to acquire small, privately owned home care businesses, where the current owners are supportive of their contracts being operated in the future by a smaller, more caring homecare provider. This represents an opportunity for CASA to scale up quickly through acquisition rather than organic growth. Possible investment opportunities for the New Fund 16 Care and Share Associates The CASA mission: ‘to democratise home-care in the UK – to greatly enhance the ‘social enterprise take’ of the UK’s Health and Social Care market through robust competition with the private sector, and close collaboration with the public sector. This will be achieved through the replication of successful social enterprise models working within the health and social care sector.’'

CASA is an umbrella organisation which sets up sustainable, employee owned Social Enterprises to deliver health care at home.

CASA social enterprises are modelled on the already successful Sunderland Home Care Associates which now has 220 staff and is carrying out c. 4,000 hours of care services per week. To date further CASA units have been set up in North Tyneside, Manchester and Newcastle.

Each CASA unit is a social enterprise which is majority owned and controlled by its employees. CASA employees participate in the decision making process and share in the prosperity of the company by being given shares in the social enterprise. Each CASA unit operates under the systems, policies and procedures that have been developed by the umbrella organisation.

The businesses all re-invest their surpluses to work towards continued growth and improved quality of services.

CASA targets new units in areas suffering from high unemployment. Their employee ownership model ensures a pride in and a commitment to both the service and the people receiving care. In a sector where wage rates are notoriously low, and conditions are difficult, CASA has succeeded in forging a model of ownership and management that rewards the loyalty and professionalism of its whole staff team.

In total CASA is providing in excess of 7,000 hours of home care services per week throughout Sunderland, Tyneside, Manchester and Newcastle.

CASA has identified a number of opportunities to acquire small, privately owned home care businesses, where the current owners are supportive of their contracts being operated in the future by a smaller, more caring homecare provider. This represents an opportunity for CASA to scale up quickly through acquisition rather than organic growth.

BioRegional Development Group is an entrepreneurial, independent environmental organisation. It develops award winning, commercially viable products and services which meet more of our everyday needs from local renewable and waste resources, to help enable One Planet living – living within our fair share of the Earth’s resources. BioRegional is demonstrating that it is possible to significantly reduce our ecological footprint in areas such as wood products, paper, textiles, food, transport and housing to a sustainable level and maintain a high quality of life. BioRegional MiniMills Agricultural residues such as wheat straw are plentiful and can be used to make the paper we need. In fact 8% of the world’s paper is made from non-wood fibres. To date the main problem with using these residues is that there is no clean technology to treat the toxic effluent produced at this small scale. Because of the pollution that the effluent has caused, many small, straw paper mills in China and India have been closed down, holding back the use of agricultural residues to make paper there and in Europe. BioRegional MiniMills has developed a unique, small-scale, clean technology solution to both create straw pulp, treat the toxic effluent and recover energy from the effluent in the process. The ‘MiniMill’ is at a point where the technical and economic feasibility is proven and a pilot has been run. Now an industrial scale demonstration plant is being constructed at a paper mill in Manchester, UK. Bioregional needs funding to further develop this area of the business and help to establish local sustainable paper production around the UK, using local resources. This will provide an alternative to unsustainable imports of wood pulp, help create urban and rural employment in the UK and reduce the UK’s impact on the global ecological footprint. Possible investment opportunity for the New Fund 18 Eco footprinting shows that if everyone in the world consumed as much as the average UK resident we would need 3 planets to support us

BioRegional Development Group is an entrepreneurial, independent environmental organisation. It develops award winning, commercially viable products and services which meet more of our everyday needs from local renewable and waste resources, to help enable One Planet living – living within our fair share of the Earth’s resources.

BioRegional is demonstrating that it is possible to significantly reduce our ecological footprint in areas such as wood products, paper, textiles, food, transport and housing to a sustainable level and maintain a high quality of life.

BioRegional MiniMills

Agricultural residues such as wheat straw are plentiful and can be used to make the paper we need. In fact 8% of the world’s paper is made from non-wood fibres. To date the main problem with using these residues is that there is no clean technology to treat the toxic effluent produced at this small scale. Because of the pollution that the effluent has caused, many small, straw paper mills in China and India have been closed down, holding back the use of agricultural residues to make paper there and in Europe.

BioRegional MiniMills has developed a unique, small-scale, clean technology solution to both create straw pulp, treat the toxic effluent and recover energy from the effluent in the process.

The ‘MiniMill’ is at a point where the technical and economic feasibility is proven and a pilot has been run. Now an industrial scale demonstration plant is being constructed at a paper mill in Manchester, UK.

Bioregional needs funding to further develop this area of the business and help to establish local sustainable paper production around the UK, using local resources. This will provide an alternative to unsustainable imports of wood pulp, help create urban and rural employment in the UK and reduce the UK’s impact on the global ecological footprint.

Fund overview Investment objective: to offer medium and long term capital to UK based social enterprises which create social value, have the potential for growth and can produce a financial return to investors. Target fund amount: £10 million, with first close of £3 million Target investees: The fund will principally target expansion financings in ‘Growth Stage’ social enterprises, but will allocate up to 30% of funds in ‘Start Ups’ or ‘Early Stage’ Social impact of investee companies will be rated and monitored using the proprietary social rating system of BII’s partner Investing for Good. Fund term: 10 years, (with standard terms to extend) Minimum participation: £250,000 for investment as a Limited Partner and £25,000 for charitable contributions Target return: 10-12% gross return; 3-5%net return to investors in addition to measurable social return. Distribution of returns is targeted to begin after the fourth anniversary of first close.

Investment objective: to offer medium and long term capital to UK based social enterprises which create social value, have the potential for growth and can produce a financial return to investors.

Target fund amount: £10 million, with first close of £3 million

Target investees: The fund will principally target expansion financings in ‘Growth Stage’ social enterprises, but will allocate up to 30% of funds in ‘Start Ups’ or ‘Early Stage’

Social impact of investee companies will be rated and monitored using the proprietary social rating system of BII’s partner Investing for Good.

Fund term: 10 years, (with standard terms to extend)

Minimum participation: £250,000 for investment as a Limited Partner and £25,000 for charitable contributions

Target return: 10-12% gross return; 3-5%net return to investors in addition to measurable social return. Distribution of returns is targeted to begin after the fourth anniversary of first close.

The New FundFund - ‘Targeted Areas of Investment’ Big Issue Invest Social Investment Fund 5 key mission areas for investment Health and social care Jobs Education Training Environment Social and financial exclusion Addressing the health and social care needs of socially excluded individuals and communities Improving access to employment or education for disadvantaged individuals or communities Providing solutions to directly address environmental issues Improving the welfare or quality of life for socially or financially disadvantaged individuals or communities Disability Provision of solutions for, or services in support of, disability

Criteria for investments by the New Investment Fund The Big Issue Invest Social Enterprise Fund will invest in social enterprises and social businesses with: A clear social or environmental objective; A strong management team; An innovative business model which is either scalable or replicable; A robust business plan, focusing on developing a sustainable revenue stream, achieving scale and long term stability; Majority of Operations based in the UK; and Legal entity types which will be invested in: Charities with trading revenue Limited liability partnerships Private company limited by shares Community Interest Companies Private company limited by guarantee Industrial and provident societies Types of Investment Investments are expected not to exceed £500,000 in established enterprises and not to exceed £200,000 in early stage investments. It is expected that the New Fund will make up to 35 investments and no investment will be less than £100,000. Start Up and Early Stage exposures will be limited to 30% of committed capital An established Social Enterprise will be defined as one with annual revenues in excess of £500,000 and a proven business model which has been operating for at least two years with two years of accounts incorporating trading revenue.

The Big Issue Invest Social Enterprise Fund will invest in social enterprises and social businesses with:

A clear social or environmental objective;

A strong management team;

An innovative business model which is either scalable or replicable;

A robust business plan, focusing on developing a sustainable revenue stream, achieving scale and long term stability;

Majority of Operations based in the UK; and

Legal entity types which will be invested in:

Charities with trading revenue

Limited liability partnerships

Private company limited by shares

Community Interest Companies

Private company limited by guarantee

Industrial and provident societies

Types of Investment

Investments are expected not to exceed £500,000 in established enterprises and not to exceed £200,000 in early stage investments. It is expected that the New Fund will make up to 35 investments and no investment will be less than £100,000.

Start Up and Early Stage exposures will be limited to 30% of committed capital

An established Social Enterprise will be defined as one with annual revenues in excess of £500,000 and a

proven business model which has been operating for at least two years with two years of accounts incorporating trading revenue.

Outline fund terms The fund will be a 10 year fund subject to extensions of up to three years with Advisory Committee consent The target fund raise amount is £10m, with a first closing commitment of £3m required to launch the fund The Fund will be set up as a UK Limited Partnership and will be established in such a way as to provide a vehicle which meets a variety of investor’s requirements and objectives, and maximises the tax efficiency for investors Big Issue Social Investments Ltd will be the General Partner to the Fund An ‘arrangement fee’ of 4% will be payable by Limited Partners to cover formation costs of the Fund and placement fees (if any). Annual management fees of 2.5% of total invested funds will also be charged to the fund by Big Issue Invest Ventures Ltd to cover running costs of the General Partner. The Fund will draw down 100% of capital commitments on application. Once the investors have received a return equal to invested capital from the Fund, Big Issue Invest will share in the financial returns from the fund, taking 15% Carried Interest of financial returns (excluding any money market returns generated on funds raised but not yet invested). Any Carry received by Big Issue Invest will be reinvested either in future funds, or in the furthering of Big Issue Invest’s mission Distribution of financial returns and capital is targeted from the end of year 4 but in the interim income will be distributed to enable partners to meet tax obligations (if any). The fund is targeting a ten year gross IRR of c. 10%-12% (3%-5% net to investors)

The fund will be a 10 year fund subject to extensions of up to three years with Advisory Committee consent

The target fund raise amount is £10m, with a first closing commitment of £3m required to launch the fund

The Fund will be set up as a UK Limited Partnership and will be established in such a way as to provide a vehicle which meets a variety of investor’s requirements and objectives, and maximises the tax efficiency for investors

Big Issue Social Investments Ltd will be the General Partner to the Fund

An ‘arrangement fee’ of 4% will be payable by Limited Partners to cover formation costs of the Fund and placement fees (if any).

Annual management fees of 2.5% of total invested funds will also be charged to the fund by Big Issue Invest Ventures Ltd to cover running costs of the General Partner.

The Fund will draw down 100% of capital commitments on application.

Once the investors have received a return equal to invested capital from the Fund, Big Issue Invest will share in the financial returns from the fund, taking 15% Carried Interest of financial returns (excluding any money market returns generated on funds raised but not yet invested). Any Carry received by Big Issue Invest will be reinvested either in future funds, or in the furthering of Big Issue Invest’s mission

Distribution of financial returns and capital is targeted from the end of year 4 but in the interim income will be distributed to enable partners to meet tax obligations (if any).

The fund is targeting a ten year gross IRR of c. 10%-12% (3%-5% net to investors)

Managing and operating the fund CCLA is a Community Interest Company specialised in social and mission driven investing. It was established in 2003 with an aim of embedding social investing into mainstream financial planning by offering intermediaries and institutional asset managers; business consultancy; structuring; investment advice; and fund management. CCLA is an FSA established financial adviser/investment manager and will act as investment manager and operator of the Fund CCLA would be a discretionary manager. It would Consider the advice of the Investment Committee Seek Advisory Committee approval; Complete investments on behalf of the Fund; Monitor investments and realise investments as appropriate (as agreed between them and BII); Report to investors at regular intervals. An investment management agreement will set out in detail the parameters of CCLA’s investment discretion and how it will interact with the Fund, Advisory Committee etc.

CCLA is a Community Interest Company specialised in social and mission driven investing. It was established in 2003 with an aim of embedding social investing into mainstream financial planning by offering intermediaries and institutional asset managers; business consultancy; structuring; investment advice; and fund management. CCLA is an FSA established financial adviser/investment manager and will act as investment manager and operator of the Fund

CCLA would be a discretionary manager. It would

Consider the advice of the Investment Committee

Seek Advisory Committee approval;

Complete investments on behalf of the Fund;

Monitor investments and realise investments as appropriate (as agreed between them and BII);

Report to investors at regular intervals.

An investment management agreement will set out in detail the parameters of CCLA’s investment discretion and how it will interact with the Fund, Advisory Committee etc.

Processes and responsibilities Source Deal Social Screen Advisory Committee Due Diligence Structure deal Investment Committee Investment committee report Investor reporting FSA reporting Big Issue Invest CCLA  Investors  Other ‘social’ advisors  CCLA  External investment committee members   BII

Proposed structure for the fund . By Direct Investment Investors will subscribe in units of £250,000 into a UK registered Limited Partnership (“LP”): Investors will be Limited Partners and have no responsibility in the running of the fund or have obligations beyond committed capital. At the discretion of the General Partner, Limited Partners may be invited to provide advice on transactions or be asked to participate as a Non Executive Director on the boards of investees. The LP structure provides investors with tax transparency Personal details about limited partners / investors do not have to be publicly disclosed Big Issue Social Investments Ltd, a subsidiary of BII will be the general partner in the Limited Partnership and have unlimited liability in respect of the LP’s obligations Big Issue Invest is being advised by Nabarro LLP on the fund structure, operating and investment management agreements with CCLA, FSA compliance and the content and distribution of a formal fund prospectus Donations Alternatively, investors may wish to contribute via donation in units of £25,000. Big Issue Invest has worked with Bates, Wells & Braithwaite, one of the leading charitable law firms in the UK to develop a structure which allows contributions to be made into the Fund through BII’s charity with the associated gift aid benefits (where available) being claimed by both the charity and the donor. Realisations distributed to the charity will be utilised to further BII’s objectives.

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By Direct Investment

Investors will subscribe in units of £250,000 into a UK registered Limited Partnership (“LP”):

Investors will be Limited Partners and have no responsibility in the running of the fund or have obligations beyond committed capital. At the discretion of the General Partner, Limited Partners may be invited to provide advice on transactions or be asked to participate as a Non Executive Director on the boards of investees.

The LP structure provides investors with tax transparency

Personal details about limited partners / investors do not have to be publicly disclosed

Big Issue Social Investments Ltd, a subsidiary of BII will be the general partner in the Limited Partnership and have unlimited liability in respect of the LP’s obligations

Big Issue Invest is being advised by Nabarro LLP on the fund structure, operating and investment management agreements with CCLA, FSA compliance and the content and distribution of a formal fund prospectus

Donations

Alternatively, investors may wish to contribute via donation in units of £25,000. Big Issue Invest has worked with Bates, Wells & Braithwaite, one of the leading charitable law firms in the UK to develop a structure which allows contributions to be made into the Fund through BII’s charity with the associated gift aid benefits (where available) being claimed by both the charity and the donor. Realisations distributed to the charity will be utilised to further BII’s objectives.

Structure of investments - summary Big Issue Invest has developed a number of innovative products in addition to long-term loans. These products recognise that businesses in the social enterprise sector are not always structured for equity investments. Long / medium term loans – these may be used where the social enterprise has sufficient cash flow forecast to service the loan. Both capital and interest holidays are likely to feature Participating Structures – where financial return is linked to the enterprise’s future sales revenues, thereby allowing the Fund to participate in the business’ future success. Equity Investments - for some social enterprises, long-term, “patient” equity capital is a more appropriate financing solution than further borrowing. In such cases, and if the firm’s legal and stakeholder structure allows, Big Issue Invest may make an equity investment in the company Convertible Loans - for some borrowers, such as social enterprises organised as community interest companies (CICs), Big Issue Invest may offer convertible loan structures in which all or a portion of the loan can be converted into equity after a period of time Expected portfolio mix

Big Issue Invest has developed a number of innovative products in addition to long-term loans. These products recognise that businesses in the social enterprise sector are not always structured for equity investments.

Long / medium term loans – these may be used where the social enterprise has sufficient cash flow forecast to service the loan. Both capital and interest holidays are likely to feature

Participating Structures – where financial return is linked to the enterprise’s future sales revenues, thereby allowing the Fund to participate in the business’ future success.

Equity Investments - for some social enterprises, long-term, “patient” equity capital is a more appropriate financing solution than further borrowing. In such cases, and if the firm’s legal and stakeholder structure allows, Big Issue Invest may make an equity investment in the company

Convertible Loans - for some borrowers, such as social enterprises organised as community interest companies (CICs), Big Issue Invest may offer convertible loan structures in which all or a portion of the loan can be converted into equity after a period of time

Expected portfolio mix

Big Issue Invest – key people Big Issue Invest Ltd Nigel Kershaw Sarah Forster Robin Monroe-Davies Richard Litchfield Arthur Wood Non exec board Executive team John Bird Jo Allen SEIF Investment Committee - External members Jo Allen PwC John Pulsinelli 2 CCLA reps Ron Sheldon, Chair Ed Siegel This slide needs the info in the PPM lifted into place. Roles of various parties & CVs

The content of these presentation materials (“the Presentation Materials”) has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (“FSMA”). Reliance on the Presentation Materials for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all the property or other assets invested All future communications between the recipient of the Presentation Materials and Big Issue Invest Limited ("the Company"), written or oral, concerning a possible investment in any fund associated with the Company shall be deemed to be accompanied by the warning given at the very beginning of this document and this legal notice as if they referred to the content of such future communications instead of this document. 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