Ecology secures over £7m of investment to support growth strategy

Ecology Building Society is celebrating the success of its latest issue of Core Capital Deferred Shares (CCDS), which have now raised a total of £7.1m.

This second issue of CCDS to professional investors has now closed, after the green lender sought additional capital to support its ambitious growth plans.

The mutual is nearing completion of a key stage in the ongoing modernisation of its IT systems, part of substantial investment in products and services to grow its membership and future impact.

This includes the launch of a new Ecology App and core banking platform, which will improve service for Members and mortgage brokers, as it seeks to double its mortgage lending.

The IT upgrades also lay the foundations for future innovation, including the ability to launch fixed rate products and reach new customer groups, to enable Ecology to take advantage of significant market opportunities, now and in the future.

“I’ve enjoyed meeting investors and have been pleased by their positive response to our vision for Ecology as the Society continues to grow and evolve,” said Gareth Griffiths, Ecology Building Society’s Chief Executive Officer.

“Their investment will enable us to significantly increase our impact-led mortgage lending, to projects including community-led housing and green renovations. For every £1m raised through CCDS, we can lend £22m.

“The successful issue coincides with the imminent completion of our exciting digital transformation. This is the latest in a series of major milestones for the business and the service improvements it brings will be among the most visible changes to benefit our Members and mortgage brokers.

“This latest CCDS tranche has more than doubled investment in Ecology and I’m grateful to our professional advisors for making this possible.”

The latest issue of CCDS was placed by Allia C&C Ltd, which also managed the listing of Ecology’s first CCDS issue on The International Stock Exchange (TISE) earlier this year, the first UK building society to do so. The second issue has now also been listed on TISE.

Ecology’s first CCDS issue, released in 2020, raised £3 million and supported strong growth in the Society’s balance sheet during the past five years[1].

“Allia C&C is delighted to have acted as adviser and lead manager to place Ecology Building Society’s recent CCDS issue,” said Ben Hall, Director of Allia C&C.

“The offer raised additional Common Equity Tier 1 capital paying an indicated distribution of 11% per annum. The issue was placed with a wide range of investors including West Yorkshire Pension Fund, family offices and other professional investors for whom Ecology’s green mission and ethical standards were an added appeal.

“Building societies are a highly regulated part of our financial markets serving a wide section of our community. However, because many of them are small, they have to pay higher rates for their debt in the capital markets. Given this, we were delighted to raise this equity issue for Ecology at lower rates than we have seen other smaller banks and building societies pay for junior capital.”

Mark Russell, Head of Fixed Income at West Yorkshire Pension Fund, said: “We are delighted to confirm our further investment in Ecology Building Society.

“This represents our ongoing commitment to this local company. We are also delighted to help the Society grow and continue in its mission towards new homes, energy efficiency and communities.

“It was a pleasure meeting the senior team at Ecology’s head office and we would like to thank all involved in a very successful and well-run reopening of this investment opportunity.”

Allia C&C’s legal counsel was Addleshaw Goddard and Mills & Reeve advised Ecology.

[1] Since the CCDS issue by Ecology in 2020, the mutual has grown total assets year on year and increased its balance sheet by more than £110m (49%).