The Resonance Community Share Underwriting Fund (CSUF) provides a backstop facility to community share issuances that do not manage to raise the target amount of funding they seek.
Community share offers are an effective way of engaging everyday investors with local community enterprises with which they have a connection.
Projects approved for support from the Community Shares Underwriting Fund will be able to draw down up to 50% of the community share issue target from the Fund. They will be able to publicise this underwriting support upon launch of the share issue, which helps to boost confidence among potential retail investors and encourages higher uptake. The Fund’s objective is to allow communities to be more ambitious in starting new share offers, and in seeking local financial support for them to create assets of lasting community benefit.
Social impact for the Fund is assessed on four criteria: unlocking retail investors’ confidence; building momentum for community benefit; enhancing the ambition of communities; and community transformation. A further longer term measure of success for the Fund will be the capacity for local community organisations to go on to create future replicable projects.
The Fund offers up to 50% of the target equity offering in the form of a bullet loan to Resonance. This enables community projects to go ahead by making up for a shortfall in equity finance with a flexible loan product. To provide the community groups with an incentive to refinance, the loans are priced at the higher of: 7.5%, or 2% above the equity coupon.
The Community Shares market supports the sale of shares in enterprises serving a community purpose. This type of investment has been used to finance shops, pubs, community buildings, renewable energy initiatives, local food schemes, along with a host of other community based ventures. The Community Shares Underwriting Fund is aimed at supporting the growth of this market by boosting confidence amongst potential investors and to encourage a higher uptake of the share issue.
A strong and vibrant community shares market can build and bind communities and play a key role in further engaging the public in local community activities.
- Big Society Capital's investment: £1m (+ £1m over-commitment facility)
- Co-investors: Barrow Cadbury Trust, Friends Provident, Panahpur, Esmee Fairbairn Foundation and Golden Bottle Trust
- Arranger/Manager: Resonance