Transaction: BWB has advised the HCT Group, one of the country’s most enterprising charities, as borrower under a series of new lending arrangements.
At the same time, acting behind an information barrier, another BWB team has advised the lenders to HCT. These include, Big Issue Invest, The Phone Co-op Limited and Esmée Fairbairn Foundation who each provided both fixed rate and social loans to HCT Group; City of London Corporation who provided a fixed rate loan to HCT Group; and Social and Sustainable Capital and FSE Group who each provided social loans to HCT Group.
Together with lending arrangements with HSBC and Triodos Bank, this amounted to a refinancing for HCT Group totalling £10,000,000. Some of the bespoke features of the deal include:
- the Social Loan includes an ability to reduce the interest rate if HCT meets certain social impact targets; and
- the interest rate on the Social Loan is linked to a percentage of turnover of HCT Group.
Client: HCT Group is a social enterprise transport operator providing over 20 million bus journeys each year and employing over 1,000 employees across ten depots in London, Yorkshire, the Southwest and the Channel Islands. HCT reinvests the profits from its commercial contracts into community transport services and will use its refinancing to purchase new vehicles and depots, improve infrastructure and deliver greater impact for the communities that it serves and operates in. HCT has been a client of BWB since 2008.
Louise Harman, Jess Long and Natalie Ali (acting on the other side of information barriers to the team representing HCT Group) advised the FSE Group, Social and Sustainable Capital, City of London, Big Issue Invest, The Phone Co-op Limited and Esmée Fairbairn Foundation as lenders to fixed rate and social loans for HCT Group (as described above).
Observations: This refinancing rerepresented the final part of HCT’s capital raise which began in March 2015 with HCT Group having now borrowed a total of £10,000,000. The deal has been described as “the largest of its kind in the UK impact investment sector.” The whole BWB team worked together over a period of nearly a year with HCT and the various lenders to complete this extraordinary transaction.
Luke Fletcher, head of BWB’s Social Finance Team, said, ““This is a ground-breaking syndicated loan deal involving significant collaboration between social investors and an innovative repayment structure which is linked to HCT’s social performance. It is a sign of a maturing social investment market and an indication of the ways in which social investment can be used to provide patient forms of capital on advantageous terms to successful and growing social enterprises like HCT.”
Posted on 09/12/2015 in Social FinanceBack to Knowledge