The Big Society Bank officially launched yesterday with a new name, CEO and board and announced its first investment of £1m into the Private Equity Foundation.
Minister for the Cabinet Office Francis Maude announced the news yesterday, where he also confirmed that the “Merlin banks” HSBC, the Royal Bank of Scotland, Lloyds Banking Group and Barclays had agreed on the terms of their £200m investment into the new organisation.
Big Society Capital
Big Society Capital will be the new name for the Big Society Bank. Sir Ronald Cohen, founder of private equity firm Apax, will be its interim chair, while Nick O’Donohoe, former global head of research at JP Morgan, will be its chief executive.
Both Sir Ronald and O’Donohoe drew up the proposal for the organisation, which was approved by government earlier this year.
Speaking at the launch, Sir Ronald Cohen said it was the start of a revolution similar to the venture capital movement in the 1980s.
“Today’s launch of Big Society Capital Group marks the culmination of ten years of thought and effort by many individuals and organisations," he said. "It is the first of a new kind of organisation devoted to providing finance in the interest of society. "
The Big Society Capital’s structure will include three entities: Big Society Capital Limited (BSC), the operating company of the group; the Big Society Trust (BST), responsible for ensuring the group stays true to its mission, and the Big Society Foundation, a charity able to receive philanthropic donations to support the investment readiness of social organisations.
The Merlin banks have agreed to provide equity investment of £200m into BSC over four years. The banks have one representative on the board of BSC, and 20 per cent voting rights.
The Merlin banks have also agreed to provide BSC with an interest-free loan to assist with its establishment.
BSC, which will be independent from government, will also receive equity capital from dormant bank accounts, estimated to be £400m.
State aid exemption
However, government is still awaiting FSA authorisation and EU state aid approval to set up Big Society Capital.
Maude said he would be going out to Brussels to deal with the matter. “We’ve made a formal application,” he said. “But it is a grindingly slow task and process. I am pressing commissioners and I shall be going out to Brussels.
“It’d be surprising if they say no.”
BSC’s new CEO, Nick O’Donohoe, said he didn’t forsee any issues with the FSA.
While the BSC is waiting for EU and FSA authorisation, the Big Lottery Fund has established a committee, chaired by BSC board member John Kingston, which will start to make investment from dormant bank accounts.
Payment-by-results fund
It announced its first investment yesterday of £1m in a social investment fund run by the Private Equity Foundation to help disadvantaged young people into employment, education and training.
The investment will be split with £500,000 as equity in the fund, which will have a payment-by-results model, and the other £500,000 to underwrite efforts to attract investors into the fund.
The board of Big Society Capital includes:
• Sir Ronald Cohen, Chair (the Portland Trust and Bridges Ventures)
• Nick O’ Donohoe, CEO (formerly JP Morgan)
• Dawn Austwick (Esmee Fairbairn Foundation)
• David Carrington (Independent consultant)
• John Kingston (Association of Charitable Foundations)
• Geoff Mulgan (National Endowment for Science Technology and the Arts)
• Dai Powell (HCT Group)
• Lady Susan Rice (Lloyds Banking Group)
• Danielle Walker Palmour (Friends Provident Foundation)
The Board of the Big Society Trust, responsible for ensuring the group stays true to its mission, includes:
• Sir Richard Lambert (University of Warwick)
• Ian Davis (formerly McKinsey & Co)
• Baroness Pitkeathley (House of Lords)
• David Robinson (Community Links)
• Sir Stephen Bubb (CEO of Acevo) [in rotation every three years with NCVO]
• Peter Holbrook (CEO of Social Enterprise Coalition)
• Gareth Davies (Cabinet Office)
• Sir Ronald Cohen (Chair of BSC)
Caroline Mason, former chief operating officer of Charity Bank, also joins the BSC senior management team as the organisation's chief operating officer.
