Westpac Institutional Bank, Commonwealth Bank and The Benevolent Society have teamed up to launch a $10 million social benefit bond (SBB) to fund the establishment of The Family Preservation Society.
The New South Wales Minister for Families and Community Services, Pru Goward, signed off on the contract for The Benevolent Society to deliver the initiative, which aims to reduce the number of family breakdowns and children placed in foster care.
Perpetual Corporate Trustees will act as the investment fund guardian and provide pro bono services in the role of trustee and security trustee.
The SBB includes $7.5 million capital guaranteed, which represents the money the New South Government would save from the initiative, while investor returns are based on agreed performance outcomes.
Global head of debt markets at Commonwealth Bank, Simon Ling, said SBBs could potentially fill significant funding gaps where government and philanthropic donations were not sufficient to have a substantial impact.
Benevolent Society general manager of business development, Steve Hawkins, said: "This type of financing encourages discipline of reporting of social outcomes, which means greater transparency for taxpayers, and also creates an asset class which does not require a choice between being a philanthropist and being an investor."
The SBB will open to investors from early July to late August, depending on subscription levels.
Westpac Institutional Bank executive director and head of structured and asset finance, Craig Parker, said early closure of the UnitingCare Burnside Newpin SBB in May, along with early market soundings, indicated strong appetite for the asset class.
NGS Super recently invested $500,000 into the Newpin SBB.