Global law firm Linklaters has provided
pro bono assistance to
Charity Bank, the world's first registered general charity and authorized bank, to create a new tier of capital to underpin its growth with the support of two of the UK's leading foundations. This is a great example of lawyers making a real difference in a deal structured for the common good.
Lawfuel reports:
Esmee Fairbairn Foundation and Northern Rock Foundation have each
subscribed £500,000 of 10 year subordinated convertible loan stock. The bank is
paying 4% per annum for the funds. For the next five years this will count
towards the capital Charity Bank needs to support its growing lending business.
Documentation for this unique transaction was prepared on a pro bono basis by
leading global law firm, Linklaters.
Chief Executive of Charity Bank, Malcolm Hayday, acknowledges that if
community development finance is to move from the margin to the mainstream in
the UK, it has to be adequately capitalised. "The ability to attract capital
from socially motivated individuals, trusts and institutional investors is a
major challenge for all of us," he added.
Ron Clarke, Finance Director of Esmee Fairbairn said that "the Foundation
has been a long term supporter of Charity Bank and we are pleased to be able to
extend our support." Fiona Ellis, Director of Northern Rock Foundation
added "Charity Bank has offered the Foundation a welcome opportunity to invest
some of our reserve in direct pursuit of our mission. We are delighted to be
able to use our resources in as many ways as possible to help charitable
organisations."
While such transactions are common place in the public and private
financial markets, this is believed to be the first for a UK CDFI. There was no
template documentation to show prospective investors but leading global law
firm, Linklaters rose to the challenge. Linklaters capital markets partner, Jim
Rice, was delighted to be able to bring his firm's knowledge of the markets and
the regulatory environment to structure a deal for the common good. "We are very
pleased to have been able to support this highly innovative capital transaction
which will enable Charity Bank to extend finance to more social enterprises."
To find out more about Charity Bank visit www.charitybank.org or telephone 01732
774040.