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EIF backs new equity fund focusing on social responsibility

  •  
    Date: 25 October 2017

The European Investment Fund and The Danish Growth Fund are cornerstone investors backing a new equity fund that will invest in SMEs with a particularly strong social profile the fund and includes.

The new fund is called Den Sociale Kapitalfond Invest (The Social Capital Fund Invest) and is the first social impact investment fund in the Nordic region. The Fund sets out to yield a financial return alongside making a positive, quantifiable difference to the lives of people in marginalised communities in Denmark. This will be achieved by promoting growth in SMEs which combine a strong potential for growth with a strong sense of social responsibility.

“Denmark has a large number of strong SMEs which are run by owners committed to social responsibility,” says Lars Jannick Johansen, Managing Partner at the new fund. “They employ people at the margins of the labour market, they contribute to development in under-resourced neighbourhoods and they develop products and services that can bring vulnerable people back into mainstream society. It’s this social and financial potential that Den Sociale Kapitalfond Invest wishes to capture.”

Mr Johansen is by no means new to this type of investment. Together with the Danish foundation TrygFonden, he set up a social impact fund, Den Sociale Kapitalfond, which since 2011 has been working with 69 different social enterprises, in collaboration with various non-profit foundations and government departments. It is this work to find "the right recipe" to combine social and economic success that forms the basis of Den Sociale Kapitalfond Invest.

Den Sociale Kapitalfond Invest already has the backing of a number of substantial investors, including the European Investment Fund and The Danish Growth Fund as cornerstone investors, in addition to Novo Nordisk Foundation, TryghedsGruppen, the Hempel Foundation and the Færch Foundation. Further investors are expected to join in the coming months.

According to the European Investment Fund, Den Sociale Kapitalfond Invest is leading the field for this type of financial innovation in the Nordic region.

“EIF is delighted to be signing our first agreement in the Nordic region under the Social Impact Accelerator with Den Sociale Kapitalfond Invest. EIF’s equity commitment will be instrumental in validating the Fund’s transition from philanthropy to impact investing and help to create the first impact investing fund in Denmark. By targeting Danish social enterprises employing marginalised job seekers, this SIA investment would back a Manager with a unique strategy, improving access to finance for Danish social enterprises needing growth capital and bridging one of the existing financing gaps in the social economy,” says Pier Luigi Gilibert, Chief Executive at EIF.

The role of Den Sociale Kapitalfond Invest will be as a minority investor to work closely with business owners. Its goal is to strengthen the special values that characterise these enterprises and to help bring them to the next level of growth – typically towards a generation change, a commercial partnership or cooperation with a major equity fund.

“We are looking forward to help the establishment of the Nordic region's first commercial social impact fund. The new fund is based on positive experiences from the Den Sociale Kapitalfond's work on investments and accelerator projects in Danish SMEs, which since 2011 have demonstrated how healthy bottom line and social profile can go hand in hand. We are looking forward to the investment team's many experiences now being brought into play in investments in companies where a strong social profile is an essential part of the business concept. In this way, investors in the fund have the prospect of achieving both a financial and a social return, which is both innovative and attractive," says Rolf Kjærgaard, Investment Director of the Growth Fund.

About Den Sociale Kapitalfond Invest:

  • Size: At present DKK 218 million
  • Investors: The European Investment Fund, The Danish Growth Fund, Novo Nordisk Foundation, TryghedsGruppen, the Færch Foundation, the Hempel Foundation, Den Sociale Kapitalfond, partners and senior advisors.
  • Focus:
    • Small and medium-sized enterprises in Denmark and South Sweden within trade, industry and services;
    • Turnover DKK 30 – 200 million;
    • High growth potential coupled with a strong social commitment to employing people from the margins of the labour market, contributing to development in under-resourced neighbourhoods or developing goods and services that can support vulnerable people.
  • Special characteristics:
    • Den Sociale Kapitalfond Invest is a minority investor (typically 10-49%) and can supplement equity investments with secured loans.
    • The Fund is an active, engaged co-owner, is respectful towards management and the existing ownership, and adopts a goal-oriented and systematic approach to developing enterprises.
    • The Fund sets financial and social targets for its investments in collaboration with enterprises. Both financial and social results are reported to investors in the Fund and are tied to the management team’s performance targets.

Press contacts:

  • European Investment Fund: David Yormesor, Press Officer, d.yormesor@eif.org, +352 24 85 81 346
  • Den Sociale Kapitalfond Invest: Lars Jannick Johansen, Managing Partner,  ljj@socialkapitalfond.dk, +45 2961 6892
  • The Danish Growth Fund: Nathali Selmeczi Leth, Senior Communication Advisor, nsl@vf.dk, +45 2860 0113

 
 

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