Co-investment has helped an employee-owned care company move forward and take on new business.
Highland Home Carers was bought by its employees in 2004, thanks to support from the Baxi Partnership, which is now known as Baxendale Ownership. It grew to support 240 employee owners and achieve better scores than its private sector competitors in care quality.
But it had outgrown the investment deal that enabled it to become employee owned. The deal made it difficult for the company to take on higher volume, lower margin work; services in keeping with its social ethos. CEO Stephen Pennington went in search of a new finance deal.
Without any assets, HHC was not eligible for bank finance, but Big Issue Invest, a Community Development Finance Initiative specialising in social enterprises, partnered with Community and Co-operative Finance to lend it £300,000 in December 2012. This enabled the company to buy out its previous investor, and a lower interest rate and better terms meant it could expand and take on new contracts. It now has over 300 employee owners and is still growing.
Mr Pennington said: “The new deal means there will be more profit and therefore more money to invest in our staff. These people are our asset and in investing in your people you improve the quality of your service – which is at the very heart of caring.”
Sarah Forster, Deputy CEO at Big Issue Invest, said: “We look to invest in social enterprises that embody the ethos of Big Issue – a hand up not a handout. We liked the business model of HHC, the passion of staff and their commitment to delivering really good quality care. They’re able to help people in very remote areas and so people are receiving home caring where no one else is willing to provide it.”
Danyal Sattar, Social Investment Manager at Esmée Fairbairn Foundation, an independent funder that supports the CDFI sector, added: “We were told social enterprises need patient capital to grow, scale up and replicate. We felt investing in an intermediary would give us a specialist team of people who could support enterprises better than we could.
“It could also attract other funding, spreading the risk with a group of investors. That led us to invest £750,000 in Big Issue Invest.”