Social impact fund Valloop, which was created to help employees and management buy the companies they work for, has delivered compound annual growth of 16.1 per cent over a five-year period between September 2015 and September 2020.
Valloop’s model has dramatically lowered the cost of entry for investing in private markets funds with a minimum investment of GBP100,000 – against an industry average of GBP2.6 million. This has opened up access to institutional investment for high net worth individuals and family offices that might previously have been excluded.
With the societal impact of investment under the microscope, Valloop’s social purpose buy-out model to support SMEs in adopting employee ownership, is proving that doing good does not have to be at the expense of delivering investor returns.
An evergreen fund, Valloop emerged from stealth in December last year, having spent five years testing the model. Designed to provide investors with the opportunity to be part of one of the most underrated asset classes in the world, it uniquely blends six different private market products – working capital, senior debt, asset finance, commercial mortgages, private equity and insurance – in one place.
Acting much like a ‘mini-Berkshire Hathaway’ – the long-term investment fund – Valloop has been set up to ensure investors receive long hold returns indefinitely via a fixed annual yield, capital appreciation and ongoing dividends. Valloop’s creative debt and equity funding structures offer investors a blended risk profile that sits between traditional private equity and private debt, without sacrificing the equity-like returns offered by traditional private equity.
Through its intelligent buy-out (IBO) framework, Valloop is the only private institution that democratises ownership with the consent of all parties – investors, owners and employees. When employees have a stake in the company, the business remains rooted in the community, safeguarding jobs and maintaining relationships.
Stephen Greenwood, Co-founder and CEO, says: “We’re delighted with the performance of the fund to-date, which while not a guarantee of future performance, demonstrates that our unique model has enormous potential. This is how you can generate high level returns without having to exit the business. We haven’t sold a business – that would destroy the sustainable return. Furthermore, all other employee shareholders have had the same growth. In actual fact their return is higher because they didn’t have to pay for it. Everyone is experiencing the same value. In private equity you would have to exit the business to achieve these returns.”
Baroness Bowles of Berkhamsted, OBE, Member of Valloop Advisory Council, says: “Everything is pointing to the value of this model – be it investor interest in ESG, opportunity in employment, increased relevance of community and localism resulting from Covid-19 or the levelling up agenda. The fantastic thing is being able to serve these needs and at the same time investors doing as well or better.”