Bridges Fund Management has unveiled details of its Inclusive Growth Fund, aimed at investing in purpose-driven businesses that deliver measurable benefits to vulnerable groups. The fund has been seeded with assets from Bridges Evergreen.
London-based Bridges Fund Management has launched a fund to invest in social impact-driven companies in the UK, which has been seeded with assets transitioned from its Bridges Evergreen fund.
The new vehicle, the Bridges Inclusive Growth Fund, aims to “address gaps in the market” by supporting businesses with strong growth potential that can also deliver measurable social outcomes for vulnerable groups, according to Emma Thorne, a partner at Bridges and manager of the fund, in an exclusive interview with Impact Investor.
“The Inclusive Growth Fund represents a doubling down of our commitment to UK social impact,” Thorne said. “It’s designed to back cash-generative businesses that are purpose-driven and capable of delivering measurable benefits to underserved communities.”
As many impact funds increasingly pivot towards climate and decarbonisation themes, Bridges said the move emphasises their commitment to address the financing gap faced by social impact-driven businesses.
Since its founding in 2002, Bridges has raised over £1.8bn (€2.2bn) across three private market strategies – private equity, property, and outcomes partnerships, with private equity investments accounting for £650m.
“More than half of our private equity pipeline is focused on the decarbonisation and climate theme,” Thorne noted. “We felt it was important at this point to introduce a dedicated capital allocation to social themes. This is all about creating a product that can attract more capital into the space over the next few years.”
Local authority pension funds, a significant investor group, have shown support for the strategy, reflecting their growing interest in place-based investments with community-focused outcomes.
From evergreen to closed-end fund
The fund is launching with a £65m allocation transitioned from Bridges Evergreen, which launched in 2016 as an open-ended structure to provide long-term support to impact-focused businesses.
Following a number of investments and exits, a decision was made to transition Evergreen’s remaining assets to a closed-end structure, resulting in the launch of the Inclusive Growth Fund, Thorne explained.
The move, Thorne said, reflects investor feedback regarding their need for liquidity and defined time horizons, and an unmet demand for a vehicle that is specifically focused on UK social impact. Investors in the Evergreen Fund have supported the transition to the new structure, she added.
Themes and metrics
The fund focuses on three core outcome areas – physical health, mental health, and economic and social inclusion. It will target a wide range of business and sectors, from companies providing solutions in preventative health, to therapy to improve mental health outcomes, or those focused on education and skills development.
“We have a pretty broad origination platform in our private equity team, so we’re looking across the UK for potential investments,” Thorne said. “A number of LPs in the fund are local authority pension funds that increasingly want to invest locally and focus on outcomes at a time when the private sector’s role in outsourcing is under a lot of scrutiny.”
Measuring social impact remains a sector-wide challenge, particularly for medium- and long-term outcomes. To address this, Bridges will draw on expertise from its Outcomes Partnerships team, which is recognised across the impact investing sector for its contribution to the development of social outcomes models and impact metrics.
Thorne explained that their aim is not just to track the scale and depth of the impact but also who specifically benefits from it, to make sure they are reaching the “most vulnerable groups”.
The fund is launching with two seed investments carried over from the Evergreen fund. One is New Reflexions, which provides residential care and therapy for children in care. The other is The Ethical Housing Company, a portfolio of private affordable rental housing, with many units let to individuals at risk of homelessness.
The team behind the fund hopes to add new investments in the near future, with further fundraising expected over the next two to three years.
