Schroders Social Impact Fund Misses IPO Goal in Weak Market

A Schroders Plc fund focused on social impact projects raised 75 million pounds ($100 million) in its initial public offering, a quarter less than targeted, as fund listings struggle to attract demand in the U.K.’s laggard stock market.

Schroder BSC Social Impact Trust Plc targets specific social results and allocates capital to effect change, while also seeking a financial return. The fund rose 1.5% to 101.50 pence at 8:04 a.m. in London in its trading debut.

While traditional environmental, social and governance investment strategies focus on avoiding sectors and stocks seen as harmful, impact investments seek to address issues including homelessness, supporting people with learning disabilities and providing housing for survivors of domestic abuse.

The listing is a response to the pandemic exacerbating issues like domestic abuse and homelessness, Jeremy Rogers, chief investment officer at Big Society Capital, Schroders’ partner on the fund, said in an interview. Private equity behemoths like Apollo Global Management Inc. and large asset managers such as BlackRock Inc. helped boost impact investing to a $715 billion market.

Still, the fund fell short of its initial 100 million-pound target. Another Schroders fund, Schroder British Opportunities Trust Plc, last month managed to raise only a third of its goal, despite what it called a “once-in-a-generation opportunity” to invest in U.K. companies.

The FTSE 100 Index is down about 15% this year, one of the worst performances among major European markets.

“Although ESG is the flavor of the moment, a shrinking U.K. economy and difficult talks to exit the European Union have made it difficult for British funds to raise money,” said Oliver Brown, a fund manager at RC Brown.

Brown invested in another fund IPO in London, Ecofin U.S. Renewables Infrastructure Trust, which said Friday it raised $125 million, about half of its initial target. “This is just the start and the fact that these funds are raising any money at all is a positive because they can come back to market at a later stage and raise more,” he said. Ecofin U.S. Renewables was unchanged in early trading Tuesday.

Schroder BSC aims to scale the fund to 500 million pounds over five years and is looking to provide a net asset value total return of inflation plus 2% annually.

©2020 Bloomberg L.P.

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