Bridges Fund Management: Navigating Changes in the Political Economy

Abstract

This case focuses on Bridges Fund Management (Bridges), an early leader in the impact investing space, with offices located in both the U.K. and the U.S. Bridges has been in operation for fifteen years and has raised, through early 2017, over $1 billion in capital across its 12 funds. While the firm was originally founded by two members the U.K.’s Social Investment Task Force (SITF), Sir Ronald Cohen (now Advisory Board Chair) and Michele Giddens (now one of Bridges most senior partners), Bridges now has seventeen partners located either in its U.K. or U.S. offices. Bridges’s third co-founder, Philip Newborough, serves as the firm’s overall Managing Partner.Bridges addresses social issues by investing in companies that provide both a financial return and social impact. For example, Bridges improves unemployment through investments in the Babington Group, which provides job training to youth; improves healthcare and well-being by investments in Alina and Home Care, which serve aging populations; and improves access to housing through its property funds with investments in the Old Vinyl Factory in the U.K. and the Spoke housing complex in the U.S.The case asks: How might the changing political environment in both the U.S. and U.K. impact Bridges in its ability to raise future funds and in the level of support (financial or otherwise) available to its investments, also known as portfolio companies?

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

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Resources

Exhibit 1: Biographies of Bridges Partners Mentioned in the Case

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Philip Newborough has been the Managing Partner of Bridges since 2002. He is currently involved in much of the portfolio and has negotiated the successful exits of Simply Switch, The Office Group, The Hoxton and The Gym Group, among others. Prior to Bridges, Philip managed two venture capital-backed businesses and a substantial pan-European business. He previously worked at Aiwa as Director and General Manager and was then appointed Managing Director of MWB Business Exchange Ltd, a serviced office provider. Philip has a BA Honors in Economics from York University and is a qualified chartered accountant.

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Steve Morrison is a Partner & Chief Operating Officer at Bridges Ventures, having joined in 2013. Prior to his current role, Steve had a successful 25 years in banking where he spent 14 years in Leveraged Finance with Bank of Scotland, culminating in leading this business as Head of Structured Finance. Other Key Executive roles included Strategy & Planning for Private Equity/Investing, Credit Risk and more recently as Head of Credit Risk for Lloyds Banking Group’s Business Support Unit where he supported corporate restructures in the U.K., Europe and the Middle East. He has a wide range of experience across industries and supports the various funds within Bridges.

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Michele Giddens is a Co-founder and Partner of Bridges and focuses on strategy, investor relations, public relations, and social impact assessment. Michele has over 15 years of international development and social finance experience. She was an Investment Officer with International Finance Corporation, the private sector financing arm of the World Bank Group in Eastern Europe in the early 1990s, then spent eight years with ShoreBank Corporation, which was one of the leading community development banks in the USA. There she ran small business lending programs in Russia, Central and Eastern Europe, advised on microfinance in Bangladesh, the Middle East and Mongolia and did research in the US community development finance sector. Michele has a BA Honors in politics, philosophy & economics from Oxford University and an MBA from Georgetown University, Washington, DC. She was an adviser to the Social Investment Task Force and Chair of the Community Development Finance Association (CDFA) 2003-2005.

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Brian Trelstad is a partner at Bridges Fund Management, based in New York. Brian has over 10 years of impact investing experience, having served until 2012 as the Chief Investment Officer of Acumen Fund, where he oversaw $55 million of investments into companies that were delivering health, water, energy, and agriculture services to economic base of the pyramid in South Asia and Sub-Saharan Africa. As CIO, he was a member of Acumen’s management team and helped build out the network of country operations that worked closely with the entrepreneurs. Brian has an undergraduate degree from Harvard University, an MBA from Stanford’s Graduate School of Business, and an MA in City & Regional Planning from the University of California at Berkeley.

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Elizabeth Burgess is a Partner and Head of the Bridges U.S. Sustainable Growth Fund, where she leads on fund strategy, origination, investment and portfolio management. Elizabeth has approximately 30 years of experience in private equity and leveraged transactions across a wide range of industries and markets. Previous to Bridges, she was a Founding Senior Partner at Altus Capital Partners, a lower middle market buyout firm focused on investing in North American industrial companies poised for growth. Elizabeth led and supported a myriad of successful investments across two dedicated funds and directed the completion of strategic initiatives identified for these companies while serving as Chairman or Director on their Boards. Prior to Altus (and its predecessor fund Max Capital), Elizabeth sourced and structured leveraged loans in a wide array of industries within Bank of America, GE Capital and The Chase Manhattan Bank, where she began her career. Most of these transactions focused on growing and expanding lower middle market companies in the U.S. Elizabeth earned a BA from S.U.N.Y. Plattsburgh with a concentration in international business and an MBA from Columbia Business School.

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Rachel Diller is a Partner and Head of U.S. Real Estate Funds at Bridges, where she leads on fund strategy, origination, investment and portfolio management. Previously, Rachel was a Managing Director at Goldman Sachs in the firm’s Urban Investment Group (UIG), a principal investing platform that deploys capital to underserved domestic urban markets. At Goldman, Ms. Diller was responsible for the group’s national lending and investing, deploying over $750 million of capital into public-private financed projects. Prior to joining Goldman in 2009, Rachel was a Managing Director in the Commercial Real Estate Group of Centerline Capital Group, where she led the affordable housing lending businesses and was responsible for financing over $1 billion of commercial real estate in 18 states. Diller earned a BA in Urban Studies from University of Pennsylvania and an MBA from Columbia Business School.

Source: Bridges.

Exhibit 2: Bridges Funds, Advisory Function, and Charitable Trust

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Source: Bridges.

Exhibit 3: Impact Lens

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Source: Bridges.

Exhibit 4: Sustainable Development Goals

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Source: The United Nations (http://www.un.org/sustainabledevelopment/sustainable-development-goals/), public domain usage.

Exhibit 5: Health & Wellness

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Source: Bridges.

Exhibit 6: Education & Skills

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Source: Bridges.

Exhibit 7: Sustainable Living

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Source: Bridges.

Exhibit 8: Underserved Markets

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Source: Bridges.

Exhibit 9: Target Outcomes

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Source: Bridges.

Exhibit 10: Impact Results, 2016

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Source: Bridges.

Exhibit 11: The Babington Group

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Source: Bridges.

Exhibit 12: Bridges Timeline

2000: Social Investment Task Force (SITF) established by the U.K. government.

2002: Bridges Ventures founded in the U.K. Raises £40 million for Fund I, its first Sustainable Growth Fund (SGF), with investments from both government and Private sectors.

2003: Bridges wins the Investors Allstars New Venture Capital Fund of the Year award.

2004: Bridges publishes a report arguing for the provision of equity-like capital for social enterprises.

2005: Bridges successfully completes its first exit—from Harlands Hull—achieving a highly attractive return to investors and saving 50 jobs in a deprived community.

2006: Bridges launches its Impact Scorecard, measuring the social and environmental impact of its investments. Sale of Simply Switch to the Daily Mail and General Trust for a strong return on investment.

2007: Bridges launches Fund II, its second SGF. It raises £75 million from primarily private sector investors—substantially more than its £50 million target. Bridges wins a fundraising award at Unquote’s Private Equity Awards. Launch of the Gym Group.

2008: Bridges sets up its Advisory Board and launches its first public social report.

2009: Bridges launches its Social Entrepreneurs Fund and its first U.K. Property Fund.

2010: Bridges sells the Office Group in a £43.3 million deal.

2012: Bridges holds a final close on SGF III at £125 million.

2014: Launch of Bridges Social Impact Bond Fund with commitments of £25m.

2015: Bridges closes Property Alternatives III, its third U.K. property fund, on £212m.

2016: Bridges closes its first Sustainable Growth Fund in the U.S. Successful exits of the Babington Group and The Gym Group in the U.K. Launch of Bridges Evergreen Holdings, first permanent capital vehicle.

2017: Bridges Ventures renamed Bridges Fund Management to better reflect it growing multi-strategy investment platform. Elizabeth Burgess added as new Partner, Head of the U.S. Sustainable Growth Fund.

Sources: Bridges, LinkedIn, press releases.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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