Talk to most observers of UK plc about Damon Buffini, and they tend to hark back to the period in 2007 when the then Permira boss was dragged into a very public labour dispute at one of his firm’s portfolio companies – during which the trade union tried to paint him as a poster child for all of private equity’s boom-era excesses.
But even in 2007, Buffini didn’t really fit their crude caricature of a heartless capitalist, red in tooth and claw. Two years earlier, he and Permira had set up a five-year philanthropic project called Breakthrough, in partnership with social entrepreneur Adele Blakeborough. The idea was that Permira would stump up a seven-figure sum in cash, plus a big volunteering commitment from the firm’s employees, and Blakeborough would put together a small portfolio of five social enterprises that could benefit from this support.
“It seemed to me that businesses have an opportunity to make a large impact on some real social issues by using their everyday skills in partnership with social entrepreneurs,” Buffini tells PEI. “The private equity skill-set of helping companies grow and take advantage of market opportunities is incredibly valuable in [this] sector.”
Fast forward to 2013, and it’s less of a side project for Buffini and more of a day job. No longer involved with the day-to-day running of Permira, he continues to chair The Social Business Trust, the new incarnation of Breakthrough, with Blakeborough as chief executive. The concept is the same: providing capital and advice to help social enterprises scale up and have more impact. But SBT is a much bigger beast: it has six other big sponsors alongside Permira, drawn from different areas of the corporate world, all of whom have pledged £15 million in cash and in-kind support.
The idea is to seek out reasonably large social enterprises (i.e. with a turnover of at least £1 million, of which there are apparently about 3,000 in the UK) and help them scale nationally, through a mixture of money and specialist help – so legal advice from Clifford Chance, strategy input from Bain, marketing support from British Gas, and so on. “The problem social enterprises usually have is that every penny they get is spent on delivery, and not on building the infrastructure they need to grow,” says Blakeborough.
The ultimate goal is that over the next few years, there will be 1 million extra beneficiaries of these social enterprises’ services as a result of SBT’s support. That sounds a big number; but it’s already at about 200,000 with the seven companies currently in the portfolio – which have, on average, grown 77 percent in the last two years.
Blakeborough cheerfully admits that she’d never heard of Buffini or Permira when they first contacted her about the idea. But she’s been impressed by how much value her private equity partners have added, particularly at the due diligence phase. “They really cut to the chase as to whether a social enterprise has a robust business model. I hadn’t seen that sort of process before, at least not in that level of detail.”
Equally, she admits to being slightly sceptical about how committed her prospective partners would be. Eight years on, with six other corporates on board and a flourishing portfolio, that question seems to have been answered. “It has certainly surpassed my expectations – and theirs, I think.”