Providing a ray of light with Five Lamps

30 Jul 2018

International law firm Simmons & Simmons has been working with the UK based charity, Five Lamps, for over a year on an inspiring project, which will offer genuinely affordable loans to individuals. The charity, which seeks to transform lives, raise aspirations, remove barriers and offer choice through a diverse range of social inclusion services, has raised £5m of committed social impact capital for the project. This investment has been provided by a number of organisations, namely Big Issue Invest, FSE, North East Social Investment Fund, Social Investment Scotland and Social and Sustainable Capital, as well as charitable trusts the Esmée Fairbairn Foundation, the Joseph Rowntree Foundation, Barrow Cadbury Trust and Harpur Trust.

Five Lamps is a responsible finance provider, regulated by the Financial Conduct Authority, offering fair and affordable personal loans as an alternative solution to high-cost credit. It is based in Stockton on Tees and has to date provided over £30 million of affordable personal loans primarily in the North East of England, but more recently in Scotland and, following considerable investment in systems and infrastructure, throughout England and Wales. The additional capital raised through this innovative fundraising (one of the largest ever single investments in a UK community lender) will enable Five Lamps to grow its affordable personal loans business, providing a crucial source of reasonably priced credit to help some of the most vulnerable individuals and households across the UK.

Financial exclusion remains a pressing issue in the UK, and high-cost credit is widespread. 3.1 million UK adults have one or more high-cost loans or have had one in the past year. Potentially vulnerable people are twice as likely to have used high-cost credit as other UK adults; younger single parents are three times as likely. 6.5 million UK adults have no cash savings, leaving them particularly vulnerable to financial shocks and more likely to turn to high-cost credit in times of financial need. It is for this reason that these personal loans are so essential to the individuals and households Five Lamps is seeking to support.

Simmons & Simmons provided pro bono advice to Five Lamps throughout the project, designing a bespoke syndicated loan note structure capable of meeting all of the investors various requirements and investment criteria. Social Finance provided financial advice to Five Lamps and Allen & Overy advised the investors and security trustee on a pro bono basis. The Simmons team consisted of partner, Alistair Hill, associates Robert Farrer-Brown and Sarah Loumanis and trainee solicitor Ridvan Canbilen.

Commenting on Simmons & Simmons’ involvement with the project, supervising associate Robert Farrer-Brown said:It has been a privilege to work with the Five Lamps team, Social Finance, the investors and their advisers at Allen & Overy on this important project. We wish Five Lamps all the very best as they grow their responsible personal loans business, providing a much-needed alternative form of reasonably priced credit to those who need it most.”

Graeme Oram, chief executive at Five Lamps, discussed the project and working with Simmons & Simmons:This is the largest single investment raise by a UK responsible finance provider, with the £5m of capital enabling over 100000 loans to financially excluded individuals over the investment period. Everyone at Five Lamps is hugely grateful to Alistair Hill and his colleagues at Simmons & Simmons for their expertise and professionalism in bringing the deal to fruition.

The deal itself carried a high level of complexity, with nine social investors and foundations subscribing. The successful outcome was characterised by the strong collaborative approach of our legal team. From the earliest stage they understood the significance of this investment to Five Lamps and to the wider UK community finance sector.”

Jonathan Flory, Director at Social Finance added:The pro bono support and commitment of Simmons &Simmons over an extended period has been vital to successfully launching the Five Lamps fundraising. Social Finance has greatly appreciated and enjoyed working with the Simmons & Simmons team.

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