Allen & Overy has advised Social Ventures Australia on an AUD7 million social benefit bond issuance for the funding of the UnitingCare Burnside Newpin Program which works with Australian children living in foster care to return them safely to their families.
The social benefit bonds were issued to a combination of high-net worth and institutional investors. The minimum investment in the bond was $50,000 and it has an investment return target of 10 – 12 per cent per annum depending upon the number of successful restorations of children from foster care.
The transaction marks Australia’s first ever foray into social benefit bonds which were pioneered in the United Kingdom, where investors fund the delivery of services which seek to increase social outcomes. In 2010, Allen & Overy also advised Social Finance Limited on their Social Impact Bonds, which also direct private-sector money to fund public sector projects. In this case, the investment proceeds fund prisoner rehabilitation programmes in the UK, creating a financial return to the investors that is dependent on levels of recidivism in the prisoner group.
The projected savings to government entities from social benefit bonds are significant and the market for social benefit bond issuance is expected to grow rapidly. Michael Traill, the chief executive of Social Ventures Australia, estimates that based on industry figures showing retirement savings over the next decade this would mean “AUD60 billion-plus in [social benefit bonds] as a recognised legitimate asset class”.
The Allen & Overy team acting on the social benefit bond issuance was led by Sydney-based partner Adam Stapledon, with support from Sydney-based senior associate James Abbott and associate Andrew Daidone.
Adam Stapledon said of the transaction: “We are delighted to have assisted Social Ventures Australia on this innovative transaction. We have worked closely with Social Ventures Australia since Allen & Overy’s establishment in Australia and it is rewarding to have applied global best practice commercial techniques with a view to achieving an improvement in the lives of children in foster care.”
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