Big Society Capital launches

The £600m social investment fund contains £400m from dormant bank accounts while the remaining capital comes from HSBC, Barclays, Lloyds and RBS.

The so-called ‘Merlin' banks, those who meet government requirements on lending to small businesses, pay and bonuses, have injected capital as part of the Merlin deal agreed with the government.

Big Society Capital is headed up by Nick O'Donohoe, former head of research at JP Morgan, and chaired by Apax founder Sir Ronald Cohen.

The fund will invest via intermediaries in social enterprises and social impact bonds which seek to address a social problem. Some of the returns to investors will be funded by the government, which will return a cut of any savings the Treasury made as a result of the work of a social enterprise portfolio company.

The government hopes that the launch of the fund will help fuel the growth of social impact investment, which has so far been slow.

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