Italy’s VITA Non-Profit Content Company is now listed on the Alternative Investment Market (AIM), the London Stock Exchange’s international market for small to medium companies. This is the first time that a European joint stock company that by statute reinvests all its dividends back into the company has been listed on the stock market.
Established in 1994, VITA offers news and consultancy services to non-profits across Europe. Its products include not only the weekly magazine VITA Non-profit but also a monthly academic journal, Communitas; three websites, vita.it, vitaeurope.org and afronline.org; and VitaConsulting, a non-profit consulting and communication agency.
The reason for the move, explains company president Riccardo Bonacina, is the need to expand to address the challenges the sector faces: ‘The country we live in and the part of society that we talk about require us to express ourselves more firmly and therefore more loudly, to more people. When we met with our shareholders in 2009 to discuss our future we agreed that in order to change the world and bring about real change we had to think big.’
How will the company get round the difficulty of not paying dividends in a market where that is generally precisely what investors want? Bonacina explains: ‘We are a company, a joint stock company, and as such we are for-profit players. But our shareholders are made up of both corporate and non-profit investors. Sixteen of Italy’s most important charities own 50.25 per cent of VITA’s shares, and seven out of ten of the board of directors are civil society actors.’ In addition, VITA is allowed to undertake a ‘share buy back’ in lieu of dividends. This allows the company to make dividend-like payments (it can determine the price at which it buys back the shares) without actually distributing profits.
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‘As the commercial or trading arms of the not-for-profit sector look to traditional capital markets to raise growth finance without becoming indebted by loan finance from the banks, the VITA IPO is a genuinely innovative and ground-breaking solution. It allows financial risks to beshared with other investors. Importantly, its listing on a formal exchange means that VITA automatically becomes part of the investment universe of charity investment managers, many of whom can and do invest alarge part of endowed foundations’ assets in equities. I do hope that the arrival of VITA is drawn to the attention of the trustees of charities interested in mission related investment.’
Mark Campanale, director of London’s Social Stock Exchange