Benevolent Society markets second social benefit bond

Philip Bayley
Two social benefit bond offers have been made as a result of an initiative supported by the New South Wales treasury.

The first came from Social Ventures Australia - an A$7 million offer reported two weeks ago.

The latest issue comes from The Benevolent Society, which is seeking to raise $10 million.

Working in conjunction with Commonwealth Bank of Australia and Westpac Institutional Bank, TBS began distributing presentations to their institutional investor clients and philanthropic supporters last week.

TBS is seeking to raise $10 million for five years, and two classes of SBBs will be issued. The P class SBBs are aimed at both sophisticated and institutional investors, and are principal-protected. The E class SBBs are aimed at philanthropic investors and will have 100 per cent of their principal at risk.

The allocation of P class and E class SBBs is $7.5 million and $2.5 million, respectively. Investors can participate in both classes of SBBs, if they wish.

The potential compensation for investors in the TBS P class SBBs is up to 10 per cent per annum, and up to 30 per cent per annum for investors in the E class SBBs. However, the performance-based return earned will only be calculated, and paid, at the end of year five.

The proceeds from the TBS SBBs will be used to keep children in New South Wales out of foster care. The success of the intervention program will be measured against a control group of equally at-risk children whose families will not receive intensive intervention from TBS.

If the assessed performance improvement resulting from TBS' intensive intervention as compared with the control group is less than five per cent over the five year period, the P class SBB-holders will receive no return on their investment. The E class SBB-holders will not only get no return, they will lose their principal as well.

An increasing scale of returns applies for performance improvements greater than five per cent.

The TSB SBB offer officially opens on July 1 and will close July 15.