Impact Investing in Social Property: A Case Study of Cheyne Capital

Jarvis, Serena Lehua (2021). Impact Investing in Social Property: A Case Study of Cheyne Capital. PhD thesis The Open University.



This thesis offers a solution to one of the most enduring housing challenges: how to come up with the capital, which is affordable for housing, built for social purposes? To achieve this, it presents the first in-depth academic study on impact investing in social property or impact real estate, specifically focusing on the case of Cheyne Capital, the London-based alternative investment manager, and its role in developing housing for disadvantaged groups. Looking at one of the earliest examples of impact investing – an emergent market that has not been institutionalised as of yet – this research examines the mechanisms developed to create Big Society Capital (BSC), the world’s first social investment wholesale bank, and introduce Social Investment Finance Intermediaries (SIFIs), like Cheyne Capital, to help build the modern social finance market to fund social and environmental initiatives. It further examines the challenges that Cheyne Capital faced as a new social landlord, particularly those relating to inefficiencies in building procurement, its need to develop a viable real estate scheme and its pledge to demonstrate a measurable social impact, alongside a financial return, for each investment. Here this real-world case analysis reveals that it is possible to achieve a sweet spot model where the business model and the impact model are the same. The outcome is that Cheyne Capital has invested around £900 million to help tackle the shortage of affordable housing solutions and deliver key worker housing, supported living, elderly extra-care housing, and housing for the homeless for local councils, housing associations, and charities. This thesis also introduces design principles and a proto-typical housing module for housing without a site, which can be replicated and scaled and includes an exploratory framework for social impact measurement for housing. These findings offer insight into the opportunities, risks and challenges of using this new model to deliver quality and affordable urban housing at a large scale and its policy implications.

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