Resonance launches £10m evergreen fund to support disadvantaged communities

Resonance has launched a £10 million evergreen fund designed for professional investors seeking to combine social and financial returns.

The Resonance Enterprise Investment (REI) fund will invest in organisations tackling inequality, improving health and wellbeing, and supporting the transition to a low-carbon economy. Investment will be primarily in the form of debt-based products.

REI is structured via Resonance Enterprise Investment CIC, an accredited Community Development Finance Institution (CDFI), allowing eligible investors to claim 25% of their investment as tax relief through the Community Investment Tax Relief (CITR) scheme.

Originally aimed at enterprises in the South West, North West and West Midlands, the fund has already attracted investors including Unity Trust Bank, Enterprise for Development and The Ceniarth UK Foundation.

“We were delighted to participate in the launch of the REI Fund and provide catalytic capital in order to complete this blended facility,” explained Diane Isenberg, Trustee of The Ceniarth UK Foundation.

“We are focused specifically on improving livelihoods for those in disinvested areas of the country. The type of community finance employed by REI is a key lever for development in these communities.”

Keith Palmer, Founder of Enterprise for Development, added his support: “We are delighted to be part of this exciting venture.

“The fund also benefits from the Growth Guarantee Scheme, provided by British Business Bank, and a substantial Access (the foundation for social investment) grant; both designed to lower the cost of capital to recipients of investment from the fund, enhancing affordability.”

The launch of the REI Fund follows the success of Resonance’s Social Investment Tax Relief (SITR) and growth funds, which successfully made 123 investments, with £9.9million previously raised from 145 investors.

Example initiatives that could attract investment through the REI Fund include a small social enterprise brewery expanding to create employment and support for adults with learning disabilities and autism and registering a domically care team specialised in end-of-life care with the Care Quality Council (CQC).

Also, in the pipeline for the fund, is a community wood project that trains people experiencing long-term unemployment whilst also offering local people access to high quality reused wood.

Leila Sharland, Acting Head of Growing Enterprises at Resonance, said: “Social enterprises deliver real solutions to inequality, poor health and climate challenges, but they often lack the right finance.

“REI changes that by combining tax relief with risk protection. It offers investors the chance to earn solid returns while supporting communities that need investment most.”

The REI fund has a seven-year term for investors. It is open to professional investors, including family offices and corporates, with minimum commitments of £100,000.

The fund targets a 3% internal rate of return, which rises to the equivalent of around 7.1% gross with tax relief applied.

Reinald de Monchy, Chief Banking Officer at British Business Bank, went on to add: “One of our key priorities is supporting smaller businesses in underserved communities across the UK, and it’s good to see Resonance Enterprise Investment fund utilising our Growth Guarantee Scheme to help achieve that goal.

Seb Elsworth, CEO of Access, concluded: “We’re pleased to see the launch of the Resonance Enterprise Investment fund which has been part funded through our Flexible Finance programme.

“Resonance’s approach will help social enterprises access the kind of patient, flexible finance they need to grow and deliver lasting impact. By combining our grant with backing from Unity Trust Bank and the British Business Bank’s guarantee scheme, this fund will strengthen the flow of capital into communities that need it most.”