The investment was obtained through an issue of Core Capital Deferred Shares (CCDS), a type of capital raising instrument used by mutuals.
Nationwide has issued over £1 billion of CCDS to raise new funds to date and Cambridge Building Society has placed £15 million privately with its local county council pension fund using the instrument.
Ecology will become the third and smallest building society to use this form of funding, which it is using to promote ecological building practices and sustainable communities as well as green lending.
Paul Ellis, chief executive of Ecology, said: “This investment marks the beginning of an exciting new era in the Society’s history, underpinning our growth prospects and strengthening our commitment to sustainability and ecological lending.
“This demonstrates confidence in Ecology’s values-based and purpose-driven model.
“The effects of the climate and ecological crisis continue to be felt both here in the UK and across the globe, and it has never been more relevant and important for Ecology to continue to provide a progressive force for positive environmental change.
“The additional capital will accelerate our lending, ensuring we’re well placed to support the green recovery.”
As well as being a green mortgage provider for energy efficient self-build and renovations, Ecology is well known for its development of sustainable finance.
Ecology’s C-Change mortgage discounts incentivise energy efficiency through mortgage pricing, based on the property’s energy rating when the project is completed.
The investment will help further build the Society’s capacity to support the sustainable recovery and complement initiatives such as the imminent launch of the government’s Green Homes Grants scheme, which will help homeowners cover the cost of making energy efficiency home improvements.
How the CCDS works
The structure of this type of investment preserves Ecology’s status as a member-owned, mutual organisation as each shareholder only has one vote regardless of how many shares they hold.
Charity and mission-driven businesses funding specialist Allia C&C acted as manager for the Ecology Building Society offer of CCDS.
Allia placed the CCDS through its network of ethical and mainstream institutional and professional investors. The offer closed early after eight days having been 1.25 times oversubscribed.
Adrian Bell, chief executive of Allia C&C, said: “There is a growing demand for investments making a positive social and environmental impact. Through Allia C&C’s support to access this demand, Ecology will now be able to significantly increase its lending to sustainable and community projects.”
A spokesperson for the investment team at West Yorkshire Pension Fund said: “West Yorkshire Pension Fund is pleased to support the new Ecology CCDS issue as a cornerstone investor. The Fund is committed to sustainable investing, and this new investment is an addition to our growing portfolio of stocks and bonds which are actively engaged in green technology and environmentally sound businesses.”
Gildas Surry, portfolio manager at Axiom Alternative Investments, said: “Axiom Alternative Investments is delighted to take part in Ecology’s capital raising via the Axiom European Financial Debt investment trust.
“Axiom’s participation will further strengthen the building society’s capital ratios, while supporting the resilience of its unique business model and the growth prospects of its differentiated ethical product offerings.”
