For its financial year ending 30 June 2022, Schroder BSC Social Impact (SBSI) reported a NAV return of 1.6%, with a 7.8% NAV return since inception (5.1% annualised) on 22 December 2020. The three largest drivers behind SBSI’s NAV performance were its Charity Bond portfolio, an uplift in valuation of its holding in Community Investment Fund, and valuation gains and rental income from its investment in the Real Lettings Property Fund.
Given SBSI’s objective of achieving positive social outcomes via its investments, the trust has committed £85m, financing 160 organisations and reaching 160,000 people, of whom at least 90% are from disadvantaged and vulnerable backgrounds. The trust’s investments helped fund over 10,000 affordable homes through the high impact housing asset class and generated over £55m of near-term value as savings for government and households.
The board has announced an annual dividend of 1.30p per share, which it believes is consistent with the target outlined at SBSI’s IPO.
Despite its positive NAV returns SBSI has seen its discount widen as of 20 October, with the trust trading on an 8.44% discount. We note that over its financial year SBSI traded on an average 1.1% premium, and finished its financial year on a 0.5% premium. A proposal for authority to purchase up to 14.99% of the issued share capital will be put forward at the 2022 AGM.
SBSI’s managers have requested two changes be made to SBSI’s investment policy, which will be put to a vote at the upcoming AGM. The first is to increase the limit on equity interests in the Debt for Social Enterprises asset class from 10% to 30%, and renaming it Debt and Equity for Social Enterprises. The second is a request to increase the maximum allocation to liquid investments (which are used to meet anticipated fund drawdowns) from 20% to 30%.
[While we are encouraged by SBSI’s positive NAV growth and the phenomenal impact it has had on the wider UK society, it is disappointing that the current discount SBSI trades on has effectively wiped out the positive NAV growth since its inception.]