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Structured risk finance Supporting payment by results Martin Clark Deputy CEO, Allia

Structured risk finance Supporting payment by results Martin Clark Deputy CEO, Allia. About Allia. Allia is a charitable social investment intermediary established in 1999 Raised over £18m in charitable bonds combining philanthropy and social investment

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Structured risk finance Supporting payment by results Martin Clark Deputy CEO, Allia

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  1. Structured risk financeSupporting payment by resultsMartin ClarkDeputy CEO, Allia

  2. About Allia • Allia is a charitable social investment intermediary established in 1999 • Raised over £18m in charitable bonds • combining philanthropy and social investment • lending to AA rated social housing providers • interest shared between investor and charity • Now developing new structured-risk bonds to support delivery of PBR contracts

  3. Payment by results (PBR) • MoJ is changing approach to reoffending • Committed to paying only for what works • PBR means paying for outcomes achieved, not upfront funding with input/output targets

  4. The benefits PBR allows for: • flexibility: tailoring services to the needs of offenders • innovation: delivering new approaches to reduction of re-offending

  5. The challenges • Delivery of PBR contracts requires upfront working capital • Investors bear the risk • Investment is illiquid • Investors to date largely charitable trusts and philanthropists

  6. Structured finance • Allia developing structured finance bonds to support PBR delivery • Investors get certain repayment of principal plus opportunity for gain • Bonds can be traded on secondary markets

  7. The mechanics Bond investments PBR AA-rated debt Loan repayment interest PBR +

  8. Next steps • As consortia are developed, talk to us about your financing requirements • We must ensure investors understand risk and reward – due diligence • An opportunity to develop social impact investment class and deliver public benefit • martin.clark@allia.org.uk

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