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CONTENTS CHAPTER • 1 Editor’s Welcome
Michael Wilson, Editor In Chief
News
A round up of industry news
CHAPTER • 2 The New Kids on the Block
An investment showcase bringing you the newest offerings from the sector
The Exiteers
Bringing you news of successful exits in the sector
Film Club
Training the lens on investments with movie star qualities
Born out of a Founder’s Frustration
Neil Martin talks to Daniel Gandesha, CEO of Property Partners, about their online property platform
The Northern Powerhouse
Ian Battersby, Business Development Director at Seneca Partners examines the opportunities for investing outside the South East
Boxing Clever
Barry McGuigan steps into the Financial Ring with a new company that aims to train the next generation of boxing superstars
VCTs: Nothing ventured, Nothing gained
Annabel Brodie-Smith, Communications Director at the AIC looks at the reasons for a spike in demand for VCTs
Friends for Life – or until the exit
Neil Martin talks to Dr Ilian Iliev, Managing Director of EcoMachines Ventures
CHAPTER • 3 GBI Round Table
Hot topics from our round table event in London
CHAPTER • 4 Open Offers
Our monthly listing of what’s currently available for subscription
GBI Magazine is published by IFA Magazine Publications Ltd, Arcade Chambers, 8 Kings Road, Bristol BS8 4AB
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Telephone: +44 (0) 1179 089686 Editor-in-Chief: Michael Wilson editor@ifamagazine.com City Editor: Neil Martin neil.martin@ifamagazine.com
Commissioning Editor: Michelle McGagh Publishing director: Alex Sullivan alex.sullivan@ifamagazine.com Design: The Wow Factory www.thewowfactory.co.uk
Full subscription details and eligibility criteria are available at www.gbinvestments.co.uk ©2017. All rights reserved. Full subscription details and eligibility criteria are available at www.gbinvestments.co.uk
GBI Magazine is for professional advisers only. GBI Magazine is a trademark of IFA Magazine Publications Limited. No part of this publication may be reproduced or stored in any printed or electronic retrieval system without prior permission. All material has been carefully checked for accuracy, but no responsibility can be accepted for inaccuracies, independent research and where necessary legal advice should be sought before acting on any information contained in this publication.
What do we mean by ‘government backed’? In the interests of clarity, any reference made by GB Investments to the point that EIS, VCTs and similar investments are government backed relates to the government’s general approval of these schemes, indicated by their having granted them highly tax advantaged status. The use of this term does not imply that government would in any way act in the capacity as a guarantor or backer of last resort in connection with such schemes.
PATIENCE, CAPITAL Remember the good old days when August could be relied on as a good time for a quick holiday break? When so little was happening in the world that you could safely leave your mobile back in the hotel and enjoy a relaxing news detox on the beach? Not this year, we’re afraid. It’s not been just that the flailing Trump presidency has been sending a sudden chill over the investment industry on both sides of the Atlantic (although it has, and still does); and it’s not even been that the Brexit talks during the holiday season have brought on one of those Michael Caine Zulu moments. (“I don’t like it sir, it’s too quiet.”) It might, of course, be that we’re starting to doubt the viability of Shiller p/es that seem determined to break the 30 threshold (and which, by some measures, have already done so). Yikes. Or are we waiting to see how Chancellor Philip Hammond plays a promising hand in the prime ministerial replacement stakes? Perish the thought that such a thing should become a reality, of course, but gosh, this autumn’s party conference season is not going to be an easy time for Theresa May. And could that, in any way, have been why the Treasury chose the slack period of August to launch its proposal for a brand new investment fund for innovative businesses? I refer, of course, to the multi-billion fund that the government intends to set up after Brexit, so as to replace the existing small-company backing from the European Investment Fund that will presumably disappear once we cut loose from Brussels. And which forms the subject of the consultation paper ‘Financing Growth in Innovative Firms’. Which you’ll doubtless have heard about (won’t you?), and which closes for comments on 22nd September. Get your skates on…
What does the paper say? Firstly, that Mr Hammond has identified a $4 billion gap in the way that innovative British firms are funded, compared with their American equivalents. And secondly, it would seem, that the crux of this need arises not when they’re very small, but when they outgrow the seed bed. “Fewer than 1 in 10 firms that receive seed funding in the UK go on to get fourth round investment,” the paper says, “compared to nearly a quarter in the US.” And “while the UK leads Europe in the creation of Unicorns, it significantly lags behind the US which accounts for 54% of these £1 billion plus companies; and China which accounts for 23%. Just 4% are based in the UK.” I don’t know about you, but that looks like a tangle of figures to me. The Chancellor is on slightly firmer ground with the observation that: “Top US firms are also younger than UK firms… suggesting the US is more effectively growing new businesses into large scale firms. 10 of the
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UK’s largest 100 listed firms were created after 1975, compared to 19 in the US but only 2 in Europe.” But what’s he actually saying? I wish I could be sure.
How, when, where? The Treasury does, however, say that the new national investment fund that will fix all this might perhaps be set up from the word go as a public-private partnership, or it might alternatively be placed fully on the government’s balance sheet, to be sold off once it’s fully up and running. The EISA has generally given the plan a welcome, although it notes in its blog that the proposal doesn’t envisage any new tax incentives for backing innovation. That might, of course, be connected with the Treasury’s slightly mysterious assertion that the majority of EIS schemes are being used “for lower-risk, capital preservation-focused investment goals.” (A proposition which the blog prefers to take with a pinch of salt. Surely risk and innovation are what it’s about?) Or then again, it might simply be that the Treasury isn’t minded to splash any new cash at the moment? I could say more, but it’s an emerging situation and the details aren’t clear. Read the proposal for yourself and make sure that you know what it says. You’ll find it at https://tinyurl.com/y9aw8qwa, and the EISA’s response is at https://tinyurl.com/y8hjlr8b. Take it from here! Michael Wilson, Editor in Chief
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News
Shaving company closes £3.5m investment round Shaving company Cornerstone, which provides quality British skin care products and German engineered razors to 140,000 customers around the UK via an online subscription service, has just secured a further £3.5m investment. It has just closed a £3.5m investment round, taking its total raised since launch in 2014 to £8m. The round was led by UK growth investor Calculus Capital and adds to Cornerstone’s list of angel investors which already includes Quidco CEO Andy Oldham, ex-Jack Wills Chairman Will Hobhouse, Charles Tyrwhitt Chairman Nick Wheeler and ex-President of Levi Jeans Joe Middleton. The company also announced that e-commerce veteran William Reeve (previously on the boards of Graze, Lovefilm, Zoopla & Paddy Power) is joining the Cornerstone as an adviser. Cornerstone was born out of entrepreneur Oliver Bridge’s personal frustrations with the
Calculus delivers more money for Origin Broadband Calculus Capital, an EIS and VCT specialist, has made a secondround investment of £2m in Origin Broadband. The new money is, says the firm, to support the “rocketing growth”
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remainder of 2017, moving into new toiletries categories such as shampoo and dental care. Bridge described the expansion as “…all-out assault on the men’s aisle at Boots – we don’t think men should have to shop for, or even think about shopping for toiletries – we’re here to fix that.”
discomfort and expensive nature of wet shaving. He launched the company in June 2014 with £10,000 of his own savings and a £5,000 start-up loan. The male grooming industry is worth $6.7 billion in Europe and globally is predicted to expand at a CAGR of 8.4% up until 2024. Cornerstone intends to broaden its range of products across the
of the award-winning provider of internet and phone services. Calculus Capital made its first investment in the business in December 2016. Since then, Origin Broadband has surpassed its projected numbers of new residential customers by more than 300%. And to help meet the increased level of demand for its products and services, the company has increased its headcount by over 100% since December. This latest round of funding will provide working capital to support the level of customer
GB Investment Magazine · September 2017
Roshan Puri, of Calculus Capital, commented: “As a consumer brand that offers customers quality, value and convenience, Cornerstone is disrupting the men’s shaving and toiletries market in the UK. We have been extremely impressed with the company’s almost obsessive focus on ‘the customer’ and industry leading capabilities in customer acquisition and management. A high quality management team is a key part of our investment criteria. Oliver and the senior team at Cornerstone have shown their ability to deliver significant business growth and build a wellrun organisation, capable of using third party investment to deliver strong returns.”
acquisition, including hiring more staff, investment in client service provision and for growing the business customer base. Head of New Investments at Calculus Capital Richard Moore said: “We are pleased to be supporting Origin in this latest round of fundraising. The company has achieved significant growth since our last investment, particularly in the residential market. This second round of funding will enable to Origin to support its enlarged customer base and focus on growing the SME (leased line) side of the business.”
With over 200 years of combined experience of sector-focused investing in growth businesses, Deepbridge works with clients to design innovative products, inducing direct investment in technology and life sciences innovation as well as asset-backed renewable energy projects. Deepbridge partners with experienced management teams to help the underlying investee companies realise their potential with the target of building successful leading-edge businesses. Everything Deepbridge does is underpinned by commercial experience in the sectors in which they operate and a culture of professional excellence and integrity.
Deepbridge Technology Growth EIS*
Deepbridge Life Sciences EIS*
Deepbridge Inheritance Tax Service*
Invests in technology companies with the potential for significant capital growth. Offering a diversified approach across energy and resource innovation, medical technology and specialist IT solutions sectors.
Invests in a portfolio of healthcare innovations, targeting significant capital growth, operating in the bioscience, pharmaceutical and medical technology industries.
The Deepbridge Inheritance Tax Service is a discretionary investment management service that invests in asset-backed renewable energy opportunities, targeting a 6% yield p.a. after the second year.
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Early-stage investment in emerging technology companies based at the renowned science and innovation campus at Sci-Tech Daresbury.
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01244 746000 www.deepbridgecapital.com Deepbridge House, Honeycomb East, Chester Business Park, Chester, CH4 9QN Deepbridge Advisers Limited is an appointed representative of Sapia Partners LLP (‘Sapia’), a firm authorised and regulated by the Financial Conduct Authority (the FCA), with FCA registration number 550103. Deepbridge Advisers Limited registered office is at 5th floor, 55 King Street, Manchester M2 4LQ.
* Risk warning – Generally the underlying investments of these propositions are likely to be both illiquid and high risk, not suitable for all investors and investors should not consider investing unless they can afford the full loss of their investment. As EIS / SEIS investments are often illiquid there is likely to be limited information as to their value. This document is a financial promotion for the purposes of section 21 of the Financial Services and Markets Act 2000 and has been approved by Sapia Partners LLP. Interested Investors should seek independent advice before considering investing. This document does not constitute financial, tax or investment advice. Applications are only accepted on the basis of suitability and qualification criteria. Please refer to the full disclaimer and risk section in the respective Information Memorandum for further details.
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“Deepbridge is in the vanguard of EIS Managers, the personnel are seasoned and, in some cases, eminent, bringing cross-sector expertise in technology and private equity.” ALLENBRIDGE LTD: TAX SHELTER REPORT ISSUE 250
THE NEW KIDS ON THE BLOCK An investment showcase bringing you the newest offering from the sector Investment: GrowthInvest Portfolio Service Aim: A discretionary management service investing in a range of SEIS and EIS investments
Tell us about the fund The GrowthInvest Portfolio Service is a discretionary investment management service which seeks to leverage the experience and expertise of the GrowthInvest investment team to select a diversified portfolio of the most promising SEIS/EIS qualifying companies that appear on the GrowthInvest Platform, and have passed through the due diligence process. GrowthInvest is a unique independent platform, which provides access to tax efficient investments to a growing network of UK financial advisers, wealth managers and investors. The platform aims to bring the advantages of early stage investing to a wider audience of investors and advisers, who are able to benefit from the potentially higher returns these companies can offer and tax efficiency via government approved schemes, such as SEIS and EIS. GrowthInvest works closely with entrepreneurs, assisting with investment readiness, structuring of investment rounds and HMRC compliance. We aim to build strong relationships with the platform businesses, supporting them throughout their journey in order to generate the best possible outcome for the GrowthInvest investors. The platform technology provides the investors on our platform with full transparency on the underlying investments alongside efficient regular reporting at company level. The fund has been designed to consist of three sub-funds, enabling investors to select SEIS qualifying companies, EIS qualifying companies or a blend of the two. Investors will be able to choose how much of your subscription to allocate to each of these three sub-funds. It is recognised that SMEs play an important role in driving growth and creating jobs within the UK economy. This will be increasingly important for the UK as it moves away from the European Union in the wake of the June 2016 referendum. However, access to finance for the UK’s SMEs remains an issue, with traditional sources of finance, such as banks, continuing to be reluctant to provide startup companies with the level of capital they need in order to grow their businesses. This represents an opportunity for the fund to invest as GrowthInvest receives a huge pipeline of applications to its platform from businesses that require funding. GrowthInvest will identify potential investee companies in their early stages that have a proven business
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model, but require support and capital to grow their business to a point where traditional funding sources become available. GrowthInvest, by providing ongoing support and guidance to investee companies, will increase the possibility of investee companies success and therefore the potential to generate higher investor returns. GrowthInvest will also seek to assist in achieving the likelihood of an exit for investors through their close contact with the investment community. Irrespective of the investment policy chosen by investors, the fund’s overall investment strategy is to finance and support promising early stage companies through their growth phases and onto a successful investor exit.
How much is being raised? The GrowthInvest Portfolio Service is evergreen.
What types of investments are being sought? Investment selection is generalist in approach and will be diversified in terms of investee company risk profile, business maturity, business sector, and operating model. In conducting the due diligence process, GrowthInvest will identify investee companies with the following characteristics. • The potential to generate high returns, yet which also represent manageable risks. • The investment entry price is attractive and a clear exit route can be identified.
• Significant value can be added by GrowthInvest and its network of mentors and advisers.
Travelfund
• A defensible market position or a disruptive business model.
A fintech consumer lending business aims to be the travel industry’s first point of sale payments platform that allows consumers to instantly spread the cost of their trip over a flexible duration (before and after departure). The business is seeking to raise growth equity in order to extend its sales and operational team to support its fast growing customer base and Q1 ramp up programme.
• Revenue generating or demonstrating a clear route to revenue generation.
Krzana
• Ambitious and dynamic management teams with good track records and a history of working together. • Entrepreneurs who are prepared to commit their own capital to their transactions.
• Capital efficient business models. • A clear funding path can be identified by GrowthInvest, such as syndicating with other potential co-investment partners.
What is the minimum investment? The minimum investment is £10,000 and in multiples of £1,000 thereafter. There is no maximum for an individual investor. However, tax reliefs are only available on a maximum investment of £100,000 per individual in respect of SEIS Reliefs and £1,000,000 in respect of EIS reliefs.
What is the targeted return? A targeted portfolio return to investors of £2.00 for every £1.00 invested over a five-year period. For financial illustration purposes only, without taking into account any SEIS and/or EIS reliefs, this would give the fund a projected internal rate of return (IRR) of c.14.8% over five years.
Provide details of the top three fund holdings The following are examples of three companies that are shortlisted for the next GrowthInvest Portfolio Service deployment:
Krzana is a cloud based real-time monitoring platform that surfaces actionable breaking information and is able to intelligently search over 60,000 sources (including Twitter, Reddit, the Financial Times, Zero Hedge, RSS feeds, blogs etc), combining advanced algorithmic processing with human insights. The company is gaining great traction within the financial markets being used by multiple hedge funds and regularly reporting price sensitive breaking news significantly faster than service providers such as Reuters or Bloomberg. An example of this would be the reporting of a refinery fire significantly ahead of other news vendors enabling the client to capitalise on a 7% move in the diesel crack spread.
Prestige Car Buyer PCB is focused on the high-end luxury brand and super-car sectors through their website which aims to provide a fast, efficient and trusted online car selling service. Private clients sell their car to PCB who in turn sell the car onto the trade, typically within a 48-hour period, providing a fast return on capital outlay. The company has been trading for 12 months and was profitable from month two, the average return over that 48 hour period is currently 3.5%. Funds are to be used to invest in technology in order to scale but also to support the purchase and sale of stock.
GB Investment Magazine · September 2017
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THE EXITEERS Bringing you news of successful exits in the sector Fund: YFM Equity Partners Exit: GO Outdoors
Details of the fund YFM Equity Partners originally invested in 1998, through British Smaller Companies VCT plc, one of its advised VCTs, alongside the founders Paul Caplan and John Graham. At the time, there was just one store in Sheffield generating £2 million in sales, but we could see potential for rapid expansion. • Fund: British Smaller Companies VCT plc • YFM Private Equity Limited advises British Smaller Companies VCT plc • Date of investment May 1998 • Original deal size £1.3 million • In November 2016 GO Outdoors was sold to JD Sports Fashion plc for £130 million • Investment held for 18 years.
What does the company do? GO Outdoors, a retailer of outdoor clothing and equipment, was founded in 1998 by Paul Caplan and John Graham following a management buyout of the first store backed by YFM Equity Partners. At the time, this was a single store business with a turnover of circa £2 million, making a small profit. Since then, YFM worked with the management team to develop and professionalise the business as the company transformed the outdoor retail market by opening the UK’s largest outdoor stores.
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Today GO has 58 stores and is the market leader with over £250 million of turnover. GO Outdoors has been a market changer. In the same way that Pets at Home moved the pet supplies market to large scale out of town sheds, GO changed the market for outdoor clothing and equipment. Their 20-50,000 sq ft stores allow them to offer customers everything for the outdoors under one roof and the best value for money in the market. GO Outdoors has stores across the UK as well as a fast growing e-commerce website. GO sell tents and camping equipment, climbing gear, outdoor clothing and boots, fishing gear, bikes, running kit, ski wear – everything for the outdoors. They sell all the major brands including Berghaus, Rab, Mammut, Vango, Outwell, Merrell and Scarpa as well as their own brands such as Hi-Gear tents. GO Outdoors re-invented the outdoors market by recruiting enthusiastic and knowledgeable staff and successfully introducing the first paid-for customer loyalty card in the sector.
What did the company invest the money in? YFM Funds supported the management buyout of the first GO Outdoors store.
How much was raised? The original deal size was £1.3 million. Although there was a small further equity investment, most of the subsequent growth was funded by cash generated by the business and bank debt facilities.
How was the exit achieved? In 2011 3i acquired a minority stake in the business from YFM Equity Partners and the founders (creating a realisation for one-third of YFMs stake). In November 2016 GO Outdoors was sold to JD Sports Fashion for £130 million providing an exit for the remaining two thirds of YFM’s stake. The business made an excellent fit with JD who already owned the Millets and Blacks brands and who had clear plans to grow in the sector.
• We helped professionalise the Board to manage its transformational growth by introducing new decision making processes and introducing additional directors to the team. • We supported the national retail roll out strategy – helping them to grow by opening new stores and acquisitions.
How much was returned to investors?
• We were integral in helping the company to introduce one of the first successful paid for discount cards – crucial in helping to monitor footfall and target marketing. There are now over 1 million active card holders.
Overall, YFM Equity Partners achieved 37x its original investment, with a £23 million total return.
YFM’s long-term partnership with the business helped create a market leading retail business:
What other benefits has the company provided? YFM invested in GO Outdoors because of the potential for successful growth, improved profitability and turnover of the original Sheffield store, and the plans to develop this model in other stores. We were backing a serial entrepreneur and high energy chief executive. GO Outdoors chose YFM because they wanted a partner who would assist them in developing the business.
• Grown from one store in Sheffield to a nationwide chain of 58 stores. • £2 million turnover to over £200 million. • 10 employees in 1998 to more than 2,000 employees.
How will you continue to support the company? Our fund sold its shares alongside the management team and the founders in late 2016 to JD Sports.
• We supported the company by restructuring our investment during a difficult trading period at the beginning of our involvement.
GB Investment Magazine · September 2017
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FILM CLUB Turning the lens on investments with movie star qualities
Manager: Templeheart Films Fund: A number of films in production
Tell us about the fund? Our movies are placed inside SEIS and EIS qualifying companies that individuals can invest in and gain the tax benefits that SEIS and EIS offers.
What films are in production? We currently have one movie in post production. Heretiks by Paul Hyett, starring Clare Higgins, Hannah Arterton, Rosie Day and Michael Ironside. The movie is produced by Marcia Do Vales and Michael Riley. We collaborated with Riley on Hyett’s first movie, the critically acclaimed and award winning The Seasoning House, which sold to over 40 territories. Heretiks is a period chiller set in the 1700s that follows a persecuted young girl as she struggles to cope living with an order of nuns that are her new custodians. We also have several movies close to pre production. The Foreseen is directed by Ben Franklin and Anthony Melton and is being produced by Marcia Do Vales and Mark Sandell. The film will be shot in New Orleans, Louisiana, taking advantage of more favourable tax credits. Quail Hollow, directed by Javier Del Prado, is a movie also set in Louisiana, about twin sisters separated at a young age. Our producing partners in the US include the fabulous Peter Wilson. We recently opened up an entirely new division, collaborating with filmmakers on a new slate of fun, family friendly movies. This venture has a particular aim of providing movies with the kind of family values we can all relate to. Movies that Disney became so renowned for, that the whole family, of all ages, can watch together. Finally, we are also working on two TV shows simultaneously. One is a reality style show based around a studio, while the other is an anthology series that combines modern age shows like Black Mirror with classics such as The Twilight Zone.
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What film characteristics should investors look out for? As much as film characteristics, such as the genre and cast, can play a key role in the success of a film, investors should really pay attention to the filmmakers and the experience they have in bringing movies to completion and worldwide sales. Well-made genre movies (horrors, supernatural) usually find plenty of homes internationally, but the biggest consideration should be the size of the budget. Genre movies are not known for big star names, so the focus should be on making sure the budget makes sense. These tend to have the largest amount of break out hits in terms of pure return on investment for investors. Low budget and huge returns capture headlines too. However, don’t think they happen all the time. Always consider the experience of the team behind the project, regardless of what type of movie it is. A good track record counts for a great deal.
What is the minimum investment? The minimum is £2,500. There is no maximum. However, there is a maximum allowance to consider under SEIS and EIS. Only £100,000 per tax year is allowed to qualify for the tax benefits under SEIS and £1 million for EIS.
How much has been raised? Each company has varying amounts left available to investors.
What return can investors expect? Assuming an investor has paid UK income tax, under SEIS, he can look forward to 50% back from HMRC before the film is even sold or released, in most cases. Films also qualify for Film Tax Credits. In the UK, this is 20% of the budget spend. Investors should, therefore, be expecting 70% security on a movie structured correctly.
If no income is made on sales of the movie, then investors can claim loss relief up to 45% of the loss incurred. In this case, investors in qualifying companies can see that they are at a maximum risk of 30% less 45% loss relief, which is 16.5%. Risking no more than 16.5% is very good, in any industry. At Templeheart, we only green light the movies considered to be the most commercially viable with worldwide appeal. Once we deconstruct the project and assess all the potential risks, only then do we start to forecast the potential return on investment. If it doesn’t reach at least double the production spend, it won’t go into production. 100% budget-to-income profit case; £10,000 invested (where £5,000 was returned via SEIS and £20,000 returned as income from sales and other exploitation of the film). This would mean a cash outlay of only £5,000 became £20,000 and therefore worth four times to the investor. Tax free.
What are the risks? The biggest risk is the SEIS and EIS qualification. You want to know that this is all in safe and in extremely experienced hands. Not only the company activities and people in control, but also the accountants being employed. After this, movies suffer a risk of not even being completed. If a film is never finished it can never be sold. In our history of over 30 movies, we have always completed and sold all our movies worldwide as well as in the UK. We project manage each of our movies from start to finish. From script to sales.
Why is the UK film industry important? It’s well documented how much the British film industry is worth to the UK economy. Back in 2011 The Economic Impact of the UK Film Industry, commissioned by the BFI and Pinewood Shepperton, demonstrated that despite the on-going recession in the UK at that time, the film industry was thriving. With a significant upward trajectory over the last 20
years, the overall picture for the UK film industry is of continued long-term growth. There is significant and continued investment in infrastructure and the number of jobs is rising, all of which are made possible by robust support from government. UK film contributes over £4.6 billion to UK GDP and more than £1.3 billion to the Exchequer according to an independent report published by Oxford Economics in 2014. One of the reasons GDP growth has stayed robust since the EU referendum is the UK’s creative sector. The combined UK film, TV and music industry boomed in the second half of last year, growing almost 11% compared with the previous six months, according to government figures. In December alone, the film sector accounted for half of all growth in the key services sector – which accounts for 80% of the British economy – because of boxoffice takings from UK-made ‘Rogue One: A Star Wars Story’ and JK Rowling’s ‘Fantastic Beasts and Where to Find Them’. The TV production industry is enjoying a golden age of investment, with deep- pocketed new arrivals such as Netflix pouring money into bigbudget shows including £100 million into royal series ‘The Crown’. This success is underpinned by a digital savvy UK whose embrace of new TV and film services saw streaming and downloads of films and TV shows pass sales of DVDs and Blu-ray discs for the first time last year. 2016 saw £1.6 billion being spent in the UK on feature films. This is a significant 13% increase on 2015, according to the British Film Institute, and the highest since records began in 1994. Independent filmmakers are also experiencing this growth. The share of UK box office going to indie UK films has increased significantly over the past decade. From less than 4% market share of UK and Ireland box office to a peak of 16% by 2014.
GB Investment Magazine · September 2017
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CREATIVE INVESTING: HOW FILM AND MEDIA ARE TAKING CENTRE STAGE UK film and entertainment is a booming market and EIS can provide access to the gilded world of performing arts, says Oxford Capital Media Team Investment Manager Jen McCloy
The red carpet undoubtedly has an allure. The ‘glitz and glamour’ of Hollywood invokes imagery of champagne flowing, glasses clinking, hands shaking and deals being done. Productions and projects appear to be a-plenty and the entertainment industry as a whole is consistently evolving – with new stars being born and new technologies being created, it would seem, every day. But behind the façade of linen and velvet – is the media and entertainment market (read: film, TV, music, performing arts, gaming and digital markets) really profitable? Is there a solid case to be made for putting your money behind these essentially artistic endeavours? Putting all thespian aspirations and creative dreams aside, to examine this we need to first understand the wider market opportunity.
Sector Focus: The film industry
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Another important and beneficial aspect of film and screen production for the UK is tourism. Film tourism – visiting a place that features in a film or television programme – is becoming increasingly popular, with approximately £840 million of tourism spending by overseas visitors to the UK attributed to filminduced tourism. This combination of culture and commerce is what lies behind the government’s support of the sector, providing approximately £400 million in funding in 2016 – more than the National Lottery and grant-in-aid put together.
Of all of the creative industries, British film is a particular source of pride for the UK on the global stage. Many independent films that are identifiably British, such as The King’s Speech, Paddington and The Imitation Game, performed well at awards time, and there is an increasing number of Hollywood stars from the UK. The industry has produced a rich heritage of creative teams and individuals who are hugely influential in global media, entertainment and the arts.
In the UK, film was the first creative industry to be supported by government incentives in recognition of its importance. Film is often regarded as a driver of the other creative industries, in that it is high profile and often makes use of the highest design and creative skills. Fiscal incentives, or ‘creative industry tax reliefs’, and are now available for high-value television, animation, games and selected theatre productions.
In a more tangible sense, UK film makes a huge contribution to the UK economy, providing employment for between 60-70,000 people. In 2016, 276 British films were made, generating a production spend in the UK of £960 million.
The current tranche of our Media EIS invests in film sales agents. Investee companies will acquire the right to act as sales agents for a number of independent films, earning revenues from the sale of distribution rights. Using this model, the companies are entitled to be paid from some of the first revenues generated
GB Investment Magazine · September 2017
by each film. As such, the companies are not exposed to the risks of box office failure – and they can make a positive and often very strong return even from films which only recover part of their production budget.
The EIS market The opportunities for investment in the UK creative industries are significant. The challenge is to ensure these opportunities are accessed in ways that do not attract unwanted attention from HM Revenue and Customs. The EIS provides investors with a generous range of tax reliefs (covering income tax, capital gains tax and inheritance tax) and has had a long association with the creative industries, raising more that £212.6 million in 2016/17 alone. In recent years the reputation of the creative sector has been tarnished by the negative publicity surrounding film partnerships, leading some investors to reconsider their options. However, by investing in the creative sector through an EIS, it is possible to do so with the confidence that HMRC will typically have pre-approved the investment (‘advanced assurance’) therefore mitigating the risk of any future challenge. In the true spirit of the scheme, the EIS offers investors a non-contentious way of accessing the creative sector – providing a well-structured, government-supported backstage pass to all of that glitz and glamour.
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GOLDFINCH ENTERTAINMENT EIS • EIS FUND • SEIS • SEIS FUND
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SPONSORED FEATURE
ONLINE PROPERTY PLATFORM BORN OUT FOUNDER’S FRUSTRATION
How many businesses are born from a founder’s frustration to not be able to do something, but just can’t find the right way? Property Partner was just one such business. It’s an online marketplace that makes it easy to invest in residential property. Investors can buy shares in a range of individual properties, allowing them to build a diversified portfolio quickly and easily. They earn proportional rental income each month and can release capital gains if the property prices rise. What’s more, investors can also benefit from increased liquidity through an active resale market, on which they can trade their holdings. The key idea is to make it as painless a process as possible. Therefore, the letting and management of the properties is carried out on behalf of investors, as is most of the paperwork. Created in 2014, it’s the brainchild of current CEO Daniel Gandesha. He already owned investment property and had managed it himself for years, so was immersed in the process, when repeatedly he saw opportunities that he could not act upon. Since its launch it has raised just shy of £25m from backers such as Octopus Investments and Index Ventures. Gandesha explained: “Time and time again I wanted to invest in residential property in a particular area. I would see nice coffee shops starting to pop up, steady increases in the number of estate agents setting up shop, regeneration plans being approved…So what stopped me acting on my instincts and investing in these areas? Well the reality is that buying a residential investment property is more like starting a business than making a simple investment!” He pointed out that the hurdles for investors wanting to invest in residential property are significant. These include for example a large up-front cash requirement, a mortgage that leaves you exposed to funding significant re-payments if the property is empty between tenants, having to dip into your savings account if something goes wrong, and a number of onerous administrative and legal obligations.
Property Partner was created so that interested investors could choose from properties from all over the UK (and eventually Europe and even further afield). The platform allows an investor the opportunity to invest in a specific property, take a view on where and when to invest, and with as much, or as little as they want. They also have the ability to offer their investment for sale whenever you want, via their own internal stock market, with the added protection of firm opportunities to exit at fair value, and this applies equally to small and large investors alike. To date, some 10,000 investors have used the platform to invest in 400 properties, purchasing £71m of property. And some £15m has been traded on their stock market. It is also reaching out to professional advisors, although Gandesha admits it is early days in their engagement. This has included letting IFAs view the opportunities as discretionary investments, something which needed FCA permission. Matters are complicated because each property investment is via a UK limited company, so Property Partner wanted to avoid IFAs having to get due diligence on each one. Gandesha explained: “We’ve got extra permissions from the FCA so that the IFA can look at us more like a Brewin Dolphin, and say right, you want some property exposure, you just need an independent diligence report on Property Partner itself, which can be commissioned from a third party, we can then work with you, understand your requirements and help you deploy your capital across a range of investments. “Assuming IFAs want to utilise the discretionary investment route and allow their clients to invest through our platform, we’re optimistic that in the months ahead that it will be a live channel that will be meaningful for us.” So, the business might have been born out of a sense of frustration, but one which led to a growing platform that is helping to redefine the buy-to-let market.
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THE NORTHERN POWERHOUSE: MYTH OR LEGEND? Seneca Partners Business Development Director Ian Battersby examines the opportunities for investing outside of the South East
This is probably the most frequent question put to me when addressing advisers based in London and the South of England: is the Northern Powerhouse really happening or is it all political posturing to a large extent? To give it some context, it is worth mapping out a few facts: the North is home to 15 million people and over 1 million private sector businesses within a geographical catchment area from Liverpool to Hull and Sheffield to Newcastle - which if it was an independent country would rank within the top half dozen economies in Europe. With seven international airports, twelve major ports and 20 universities, the region is responsible for 25% of the UK’s total manufacturing output and almost one third of the UK’s total renewable electricity. Additionally, in the three months to August 2016, the North achieved a record employment rate of 72.6% and so it is fair to say the region is alive and kicking. Of course this is not all new. The North was the birthplace of the Industrial Revolution and has a very rich tradition of innovation and entrepreneurship and has long been at the leading edge of discovery in technology and materials. The aforementioned universities, together with the much vaunted Bio-Hub at Manchester Science Park, continue to attract interest on a global scale. Foreign investors are responding too and 2015/16 saw inward investment rise by almost 25%, much faster than the national average.
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So there is much to be proud of and lots to shout about. Government initiatives and political statements seem to point towards exploiting the opportunity with £13 billion of funding being allocated for transport infrastructure improvements and a further £3.4 billion allocated to the North through growth deals. But if that is the base we have constructed, can we genuinely deliver on our potential?
Genuine change It sometimes appears that as a region, we have to fight to be heard when that might not necessarily be the case elsewhere and that does provoke an element of cynicism. However, the overriding ambition for Northern Powerhouse was set out back in 2014 which at headline level ‘exists to increase the impact and contribution of the North of England to the UK economy’. A rebalancing exercise it might be said, with a view that the economy of the North could be some £100 billion larger within three decades. But there needs to be conviction from Westminster that there is a genuine desire to make this happen. Becoming submerged in a quagmire of political rhetoric is not an option and with the UK facing a General Election closely followed by negotiating its Brexit deal, this is the lingering spectre for those who have ‘heard it all before’. Being blunt though, the UK needs this to happen, not just Northerners.
Another often cited factor is the need to address the skills gap. Far fewer people are educated to degree level in the North compared to their peers in the South and this clearly needs to change if the opportunity to continue to grow and develop our technology, biotech and life sciences talent is to be optimised. It is estimated that the region loses 30,000 graduates a year when the reality needs to be net migration of graduates into the region particularly in science and technology.
Productivity push Without doubt, one of the largest and most critical issues is how to improve the level of productivity, which is well below London for example, and a staggering 40% lower than some of our comparable European counterparts. Transport infrastructure would be the top answer for most people seeking to identify key causes. The traffic snarl-ups in London are notorious, but speaking from experience, it is far easier to run six appointments on a given day in London than would ever be possible using the motorway network of the North and the current standard of more local rail links and travelling times is borderline ‘farcical’. Manchester and Sheffield are 40 miles apart and yet they are reputedly the worst connected cities of their size anywhere in Europe. Arguments continue with some validity as to whether funds must be invested to improve transport links within cities rather than between them in order to facilitate access to jobs across their wider city regions. Getting to a City is one thing, the ability to move around easily within it is something entirely different. It isn’t far-fetched to say that the current two hour rail journey to London is far more preferable than trying to travel 30 miles into Leeds, Manchester or Liverpool. TfN has its work cut out and many would prefer to see the HS2 budget being diverted to more local transport needs, at least for now.
The third, and possibly most contentious strategy for some, is the devolution of power and finance to cities and regions where local skills and transport challenges are, in theory, better understood. The success of this undoubtedly hinges on a cohesive approach across the region rather than the development of fiefdoms and the Northern Powerhouse leaders will surely have this uppermost in their thoughts. Dealing with the challenges of the health budget at a regional level and financially strapped local authorities make the task no easier.
Brexit effect The underlying fear on the ground, and not necessarily confined to Northern Powerhouse, is the upcoming Brexit effect and whether the UK’s bigger picture starts to overwhelm the support and funding for what is developing in the region. The argument that the country needs this to progress more than ever in a post-Brexit world shouldn’t be lost on anybody and the weight of support from the UK and international corporates which are committing themselves to the region suggests momentum will be maintained. The North is raising its voice and is upping its game substantially. This is a region rich in resources and resilience, with a will to succeed and with genuinely, world class businesses at its heart. It needs and deserves to be embraced. Over to you Westminster - but never underestimate a Northerner.
GB Investment Magazine · September 2017
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BOXING CLEVER: BARRY McGUIGAN STEPS INTO THE FINANCIAL RING The ‘Clones Cyclone’ is behind a new company that aims to train the next generation of boxing superstars
Former WBA featherweight world champion and ‘hall of fame’ boxing legend Barry McGuigan is reluctant to give away the secret to spotting new talent but he is willing to share the benefits of their success with committed investors. ‘You can just see it,’ says McGuigan, when asked the secret to picking out raw talent. ‘85% of the best pros are the best amateurs.’ And McGuigan, or the ‘Clones Cyclone’, should know. In 1983 he became European Featherweight Champion and British Featherweight Champion, and in 1985 became the WBA World Featherweight Champion, the Founder and Chief Executive of Cyclone Promotions. It is at the Cyclone Promotions HQ that GB Investments meets him to talk about his move into the investment arena. It’s probably the first, and
only time, an interview about a new company will be conducted in a boxing gym to a backdrop of grunts and punches being thrown. Indeed, the Boxing Advantage Company (BAC), which is being run as a Seed Advantage EIS fund, is the first of its kind. The fund will act as an incubator for new boxing talent, which are selected by McGuigan as being potential stars. The boxers are then brought into the McGuigan camp where they are trained, mentored and promoted to become ‘superstars’ of tomorrow. McGuigan is planning to sign five boxers to the fund initially and has his first signing in sight - kickboxerturned-boxer Chantelle Cameron. Although she failed to qualify for the next Olympics, McGuigan believes she is destined for great things.
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The boxers are paid a sign-on fee, a regular monthly income, and have the cost of their training, nutrition, doctors, physiotherapy and fight costs covered by the company. In return, the boxers sign over the fees they receive from sponsorship and advertising for the first three of their career to the company. This revenue makes up the returns to investors. McGuigan’s company will develop the media presence of the boxers, their brand and fan base, with short and long-term sponsors already identified, as well as TV link-ups with Channel 5, ITV, Sky Sports, Showtime Sports and CBS in the bag. Boxing is a sport which attracts serious money. In 2015, the Floyd Mayweather versus Manny Pacquiao fight generated more than $400 million in pay-perview revenue alone. On top of this are opportunities for sponsors to pay for advertising on shorts, gowns, training gear, as well as brand endorsement and product placement opportunities offered by social media sitting alongside more traditional corporate events and personal appearances.
Giving Back Barry McGuigan and Cyclone Promotions like to give back to the community and are involved in Laureus Sport for Good and is the founder of the BMBA. The organisation aims to use sport to end violence, discrimination and disadvantage, and supports more than 100 sports-based community programmes in 35 countries. It works with disadvantaged children to help change their lives. McGuigan says he has been involved in bringing boxing to ‘troubled kids’ in London’s East End. Through the charity, McGuigan is hoping to spread his boxing ethos wider. He is famously known for being a friendly and upfront boxer, and family man who eschewed trash-talking at the height of his fame. ‘We have a social conscience and a standard of beliefs that are acceptable,’ he says. ‘Be nice to people, try your best, and never insult your opponent.’
BAC, which is managed by Amersham Investment Management, is aiming to raise £5 million. Investors are being asked for a minimum investment of £5,000 and the fund will target a return of £1.20 for every £1 invested, to be delivered after a three year period. Investors may also benefit from other opportunities, such as meeting the boxers, watching them train and having behind-the-scenes access to them.
A Family Affair Cyclone Promotions, which is based at The McGuigan Gym in South-West London, is a family organisation. Shane McGuigan is maybe the best known of Barry’s sons. Although he is just 28 he has made his mark on the boxing world and has been awarded Trainer of the Year 2016 by the British Boxing Board of Control, Saturday Night Boxing, The Boxing Writers Association of America, and Ring 8 Boxing Awards. It was under Shane’s stewardship that Carl Frampton won his IBF super bantamweight title, making Shane the youngest trainer in history to train a world champion. Shane also trained George Groves in his successful fourth attempt to win a world title, help him become WBA super-middleweight world champion. McGuigan described his son as a ‘remarkable’ trainer who takes a ‘multi-faceted approach’ to training the boxers, taking on the strength and conditioning training as well as the nutrition and tactical aspects of coaching. ‘Only certain guys can get it right,’ says McGuigan, and Shane has certainly proved his credentials. Although Shane won’t be training all the boxers signed to the fund due to time constraints, the McGuigan team will use trusted trainers across the country to help train the boxers. There will also be opportunities for the signed-up boxers to come to the McGuigan gym for bootcamps and additional training. It isn’t just about the training however, and the rest of McGuigan’s family is working behind the scenes to benefit their boxing fraternity. Blain and Jake, McGuigan’s other sons, are hired as consultants and are the promoters in charge of building the social media aspect of the boxers’ careers, something that is increasingly important - and financially lucrative - in this digital world. ‘[My family] grew up with a PhD in boxing...they grew up with knowledge of the game...and they are all passionate about it,’ says McGuigan. ‘They are a very important part of the circle.’
Next Generation Family is the basis of Cyclone Promotions and the boxers who are brought into the camp are treated as family, one that aims to help one another, and the money raised via BAC will help McGuigan to help more boxers realise their potential.
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The McGuigan Stable The boxers in the McGuigan stable already hold a string of titles. Carl ‘The Jackal’ Frampton Frampton, 28, who was awarded an MBE in 2015, has lost just one of his 24 fights - 14 of which were knockouts. The Northern Ireland native is a former twoweight world champion, holding the unified WBA (super) and IBF super bantamweight titles between 2014 and 2016, and the WBA (super) featherweight title from 2016 to 2017. Josh ‘The Tartan Tornado’ Taylor Scottish Taylor, 26, turned professional in 2015, competing in the super lightweight category, after an amateur career that included winning gold at the 2014 Commonwealth Games. Rupert Phillips, Director of Operations at Cyclone Promotions, says it takes around three years to train a boxer to win a title and the fund will help them achieve those goals.
Since then the former junior taekwando champion has won all of his nine fights, with eight ending in a knockout.
‘Most boxers have a second job...and are struggling,’ he says. ‘They often don’t get the time and funding they need unless they are heading to the Olympics. This [EIS] can fund them and give them the support they need and we hope we can make them champions.’
As a fellow Northern Irishman, 25-yearold Cummings has been described as the next Frampton and his fight record backs up that accolade.
McGuigan adds that ‘lots of boxers don’t make it because they haven’t had the funding and support’.
Conrad ‘Mr Dynamite’ Cummings
The middleweight boxer has fought 11 bouts, lost one, drawn one and racked up five knockouts.
‘There has been huge talent that never made it because of lack of funding and not being associated with the right people,’ he says.
Josh ‘The Punisher’ Pritchard
He believes he is the right person to help those people: ‘We are the right people for the job and have had a long time to prove it. We are really good at what we do and if we get the right talent we can make them superstars.’
He has fought five fights, winning all five - two of which were knockouts. The first of Pritchard’s fights came on the undercard of stablemate Frampton’s fight with Chris Avalos in Belfast.
Through the EIS, the boxers do not have to worry about money, they can focus on their training and investors have the opportunity to ‘make a financial gain but also to contribute to the next generation of boxing stars’, says McGuigan. ‘Give me the opportunity, let me pick the right talent and I will bring them to the top, and you will get your money back, with a bit on top, and have a fantastic time doing it,’ he says. Both the Seed Advantage Fund, and the Boxing Advantage Company are available for investment from advisers or appropriately certified direct investors through the GrowthInvest Platform. Daniel Rodwell, Managing Director comments: “We have been working with the Seed Advantage Fund for a few months now, since shortly after our launch in Autumn 2016, and welcome this exciting new element into their portfolio. As this boxing fund is associated with one of the global legends of the sport, and is a first of its kind, we expect there to be considerable interest from both our investors and advisers, and potentially reach out to a new group of EIS investors’.
Portsmouth born featherweight Pritchard is just 21 but remains undefeated.
Recent signings Chantelle Cameron Nothamption based Chantelle made her debut this year winning her first two professional bouts. Chris Billham-Smith A Bournemouth based English heavyweight boxing champion who will make his debut later this year.
Find out more Tel: 020 3011 2161 Email: s.randall@seedmentors.co.uk Web: www.theboxingadvantagecompany.com
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VCTS: NOTHING VENTURED, NOTHING GAINED Annabel Brodie-Smith, Communications Director at the Association of Investment Companies looks at the reasons for a spike in demand for VCTs It has been a milestone year for VCTs with the sector raising £542 million for the 2016/17 tax year, the second highest fundraising figure on record. To put this in context, this is the highest amount raised since the 2004/05 tax year when £779 million was raised, which was boosted by a hike in the income tax relief on VCTs. Then income tax relief was temporarily increased from 20% to 40% before returning to 30%. So why has there been so much demand for VCTs this year? Well the demand for VCTs by investors has clearly been boosted by the pensions restrictions but other tax changes have had an impact. Stuart Lewis, Head of Tax Efficient Investments at Octopus Investments explains: ‘With significant changes to pension regulations, including the reduction of the lifetime allowance, and buy-to-let investments being made more taxing through new limits on mortgage interest relief and higher rates of stamp duty, many investors are looking for complementary investment solutions to plan for their retirement. ‘Many have turned to smaller company investing as a clear way to diversify their portfolios in a tax-efficient way. As part of this trend, VCTs have now become a mainstream option for investors who are comfortable with the risks of investing in small unlisted companies.’ There has been concern over supply, with VCT offers closing swiftly, and VCT investors needing to plan in advance and not leave it until the end of the tax year.
Clear attractions The attractions of VCT’s tax-free yield in this low interest rate environment are clear. As the VCT sector has matured, so too have returns, with good long-term performance together with a strong tax-free income. It is telling that, during the financial crisis, 19 out of the top 20 performing VCTs were still able to pay a
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dividend. The Generalist VCT sector currently has an average yield of 10.1% and the VCT AIM quoted sector has an average yield of 5.3%. Looking at longer-term performance of these sectors, the average VCT Generalist has performed well, up 72% over five years and 97% over 10 years. Whereas the VCT AIM Quoted sector has strong five-year performance up 108%, but it has had a tougher time over ten years, up 62%. These performance figures do not take into account the tax benefits VCT investors receive, to offset some of the higher risk which comes with supporting small and growing UK companies at the coalface of the economy.
Changing rules These fundraising figures also demonstrate the ability of VCT managers to adapt to new investment rules. New rules came in for VCTs in the autumn of 2015 which included the end of any VCT investment in management buy-outs. There was also a lower ‘age of company’ investment condition introduced, with a VCT not able to make a qualifying investment in a company more than seven years after its first commercial sale. Although a longer time period of 10 years applies for ‘knowledge based’ companies and no time period applies where the total amount invested represents more than 50% of the annual turnover (averaged over five years) of the investee business.
However, the VCT industry is familiar with rule changes and has always succeeded in adapting swiftly to change. Russell Healey, Partner and Head of Private Equity at Foresight says: “The recent rule changes have narrowed the range of available investments in recent months, which is difficult for those smaller companies affected as there are limited other sources of growth capital”. “However, for VCTs a range of opportunities across a broad spectrum of risk is still available. Their opportunities, aligned to tax benefits, continue to make VCTs an attractive investment option for appropriate investors. We are continuing to see strong appetite from SMEs for investment, across our offices in London, Nottingham and Manchester”.
Access to finance But most importantly the popularity of VCTs is great news for UK smaller companies who are able to access the vital finance and expertise they need to grow. VCTs have an excellent track record of providing scale-up capital to smaller companies, creating growth, jobs and innovation. The growth of smaller companies is essential for the UK’s economic success and some of the businesses VCTs support go on to develop into household names. For example, Octopus Titan VCT bought Zoopla, the property research group in January 2009. Zoopla listed on the main market of the London Stock Exchange with a value of £919 million in June 2014. Octopus has successfully sold parts of its investment in Zoopla at various points and sold their final investment in Zoopla in February 2017. It’s impressive that Zoopla was the first billion dollar business to have been backed by a VCT. The AIC published its annual VCT survey in the autumn of last year, analysing 409 companies which received VCT investment. Lots of data on the positive impact of VCTs on the economy was revealed in this report. Over 20,000 new jobs have been created across the country by SMEs covered in the report, with an average of 60 jobs created per company since VCT investment. Where VCT investment has been in place for over five years the average increase in jobs was 103 per company. VCTs successfully targeted the SME finance gap, commonly estimated as between £2 million and £10 million. In 2015 alone, the VCTs surveyed in this report provided £225 million of funds to 115 SMEs. The average initial investment was £2m and the average follow-on investment was £1.5 million. It’s noteworthy that the report demonstrated that investee companies did not just benefit from financial support as two thirds of investee companies supported
by VCT money in 2015 had a VCT representative join the board to help with their strategy. The top sectors for investment in 2015 were Business Services; Digital, Creative and Information Services; Retail and Manufacturing. These sectors received £114 million, invested into 50 companies which amounted to just over half of all VCT funds provided in 2015.
Innovation abounds Investee companies supported by VCTs were also more likely to undertake innovation or R&D. Recent HM Revenue and Customs research found that three quarters of SMEs supported by VCTs (or EIS) have undertaken some form of innovation as a result of their investment. This was reflected in the survey findings as 37% of SMEs reported research and development expenditure during 2015. During 2015 VCT-backed SMEs invested £181 million in R&D. The average amount dedicated to R&D was £1.19 million per company. There is also more likely to be a significant level of exports. Within the survey, 194 companies reported exports with a value of £1.2 billion. This represented 40% of their total sales (of £3 billion) and is indicative of their appetite for growth and potential value to the UK economy. The government is the largest single investor in VCTs via the tax reliefs it provides. It is essential that the scheme delivers value to the taxpayer. It’s therefore worth noting that 221 companies within the sample disclosed that they paid £243 million in tax during 2015. The total VCT investment made into these SMEs amounted to £674 million. These companies therefore paid more tax in 2015 than they received via the initial tax relief received by retail investors in VCTs. This is a strong indicator that VCTs offer value for money to the taxpayer. This year’s landmark fundraising demonstrates there remains plenty of demand for VCTs. This is due to the pensions and property tax changes and VCTs’ longterm performance record and tax-free dividends. However, the real beneficiaries of this demand are the UK’s small companies. VCTs’ raison d’etre is to provide vital finance and support to small and growing UK companies at the coalface of the economy. Interestingly, the government has expressed interest in this area. Prime Minister Theresa May said in November: ‘I want us to turn our bright start-ups into successful scaleups by backing them for the long term.’ She has launched a Patient Capital review – led by the Treasury - that will examine the obstacles to getting long-term investment into innovative firms. VCTs provide part of the solution to concerns over ‘patient capital’ as they invest in small companies, which can be high risk, but can develop into household names in the future, helping to create jobs and economic growth. With interest in patient capital and strong fundraising this tax year, it is looking like a dynamic year for the VCT sector.
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SPONSORED FEATURE
ECOMACHINES VENTURES – FRIENDS FOR LIFE (OR, UNTIL THE EXIT) City Editor Neil Martin talks to Dr Ilian Iliev, Managing Director of EcoMachines Ventures, a firm with very definite views
The team at EcoMachines Ventures has a simple message for companies looking for investment: if they have solved all their problems and all they need is finance, then they are probably not the right partner for them.
simply not serious at first blush. We might only meet with or hold a call with 20% of these teams – like any investor, we have to be selective with how we spend our time and energy on due diligence, so vetting out businesses with red flags early is key.”
The firm looks for entrepreneurs and businesses who are building an exciting B2B hardware technology that has the potential to scale in large proven markets. And ones that need an experienced team behind them.
Dr. Iliev added: “One of the nice things about investment in industrial high-tech start-ups, for investors at least, is that there simply aren’t enough of us in the space to create a hyper-competitive atmosphere.
EcoMachines Ventures was founded by Dr. Ilian Iliev, and is backed by private investors with industrialist background.
“On the contrary, it’s actually a fairly cooperative and collaborative community, with various investment teams usually more than willing to share relevant deal flow and insights. We have had situations with VC, family offices, high-net worth angel investors and corporate VC funds all participating in the same deal.”
As Dr. Iliev told GBI Magazine: “Last year we reviewed over 200 proposals from companies within our industrial high-tech scope. There are many others that we do not pursue because they are out of scope, or
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The firm invests in promising technology companies and actively supports their growth into world class high-growth enterprises. Based in London Canary Wharf’s Level 39 cluster of tech enterprises, with a pan-European focus in investments and a global reach in terms of investment and corporate networks, it currently manages, or has syndicated, roughly £30m of investments in its portfolio of companies. The firm only invests in market segments where they see the potential for rapid growth. They are broadly focused on energy, transport, circular economy, smart city and industrial high-tech sectors. The team believes in the power of hardware innovation often in combination with software - to revolutionise these sectors, providing long-term solutions that offer real bottom-line benefits. Within this they look for businesses committed to solving real problems,
rather than those innovation’s sake.
developing
innovations
for
At the heart of the firm’s approach is to offer a high level of support to the companies in which they invest. Therefore, they never offer money alone. So whether a company is at the seed stage or a later level of investment, EMV is looking to back teams who will welcome active collaboration, hands-on help and codevelopment of the business plan. Dr. Iliev, educated as an economist, explains his approach like this: “Our aim is to look beyond current investment trends and hype, to identify both undervalued/ready to grow opportunities as well as opportunities in relatively new areas such as robotics, and AI.” And that, in a nutshell, is the guiding principle by which EcoMachines Ventures operates.
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M AGAZINE
ROUND TABLE LONDON
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GB Investment Magazine · September 2017
Round Table
Contributors Kirsty Bell - Goldfinch Kirsty Bell is both a successful film producer and a Chartered Tax Advisor who has spent much of her career at the top of global accountancy firms. This combined expertise has seen her focus on the structuring of entertainment companies and their finance raises, together with advising active partnerships and sole traders in the creative industries since 1996 – a period in which she has raised over £200m for the industry and achieved in excess of 30 Producer/ Executive Producer credits to her name. After setting up and successfully running her own consultancy business, Kirsty launched Goldfinch Entertainment in 2013 and has to date raised over £70 million for a stable of 130+ projects across the film, television, animation and video game sectors. She recently launched Bird Box Finance, a debt financing company to complement Goldfinch, and in the last 18 months has provided over £25m of debt finance to Film projects. As the final string to her bow, with actor/producer Craig Conway, she has setup BB88 and independent production company that received their seed investment from the China UK Film Fund.
David Lovell - GrowthInvest David is an experienced strategic director who has worked in the UK financial services industry for over 20 years, in a variety of distribution and consultancy roles. After graduating from Edinburgh University, he held a number of roles within financial services media space, including at FT.com, and played a key role in the development, growth and subsequent sale of Matrix Solutions, a leading Business Intelligence company specialising in the UK financial services marketplace, prior to joining EIS Platform in June 2016. His customer-centric approach is backed up by excellent sales, marketing operational and technical expertise. As well being part of several successful disruptive product launches, over the last decade he has provided consultancy and advice on distribution and fundraising strategies to a wide range of clients looking to approach the UK’s financial intermediaries and affluent and high net worth investors.
Debbie Purbrick - Mazars Debbie has over 28 years of experience in financial services and is a Chartered Financial Planner/ Paraplanner and a Certified Financial Planner Professional. Having worked for Mazars for a number of years as a Paraplanner, she was appointed as Research & Development Manager in August 2016. She now oversees the firm’s research, due diligence and product selection processes.
Raimund Berens - Iron Box Raimund is CEO of Iron Box Films and Iron Box Capital, and has been involved in the production, industry financing and sales of filmed media content since 2001. Head-hunted by Focus Films (before completing his MA) he rose to become Head of Production. During his time at Focus, Raimund served as a CoProducer/Executive Producer on numerous feature films such as Chemical Wedding starring Simon Callow and Surviving Evil starring Natalie Mendoza and Billy Zane. In January 2010, Raimund joined Iron Box Films, initially as Head of Business and Sales, launching the Company into the creative commercial sector and producing Iron Box Films’ first feature, the award-winning Betsy & Leonard. Iron Box Films has continuously grown and launched its development fund in 2013.
Richard Angus - Hardman & Co Richard joined the firm in September 2014, after 20 years of investment banking experience. Hardman & Co is a well established research firm which began providing reviews in the EIS sector in 2016. As regulatory challenges have become more stringent, Hardman & Co’s research capabilities are becoming increasingly in demand.
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The renaissance in film investing Film investing is putting bad press behind it as investors and advisers return to this lucrative investment opportunity
Dogged by badly publicity, film investment has had its struggles but a growing understanding and interest in EIS investment in the media space is helping to revive trust in media and entertainment businesses. ‘We’ve seen a massive change,’ says Kirsty Bell, Founder and Managing Director of Goldfinch Entertainment. ‘We initially struggled to attract people to our product in our first tax year (2013-14) because of what was being said in the Sunday papers about film partnerships, so we had to continually strive to prove why our product was different to what was being criticised in the press.” Bell’s company helps to raise film finance via SEIS and EIS and since it started in 2014 it has helped raise over £60 million for the industry. Her job is to ‘make sure the product is right from a commercial and therefore investment point of view’. ‘We started small in 2014 but in the last 18 months, we’ve seen an increase in people asking to go into media as an asset class,’ she says. ‘The amount being raised in this space is three-fold what it was in 2015. People want an alternative investment; tech companies haven’t necessarily done what investors wanted so they are looking for something
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different and we feel it’s a massive growth area.’ It hasn’t been quite so simple for the film industry in recent years, however, as HM Revenue & Customs (HMRC) took a hardline approach to film partnership schemes. In a series of high profile court battles HMRC has successfully stripped a number
of film schemes of tax reliefs, arguing that they were purely tax avoidance vehicles. Films are unique in that production companies investing in film can not only use the EIS and SEIS structure to gain tax benefits of upfront income tax relief for their investors but also benefit, although indirectly, from the UK
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Film producers’ tax credit. In the UK this means filmmakers are eligible for a 20% of spend rebate from the Government on film production costs spent in the UK. Typically, the news of varying issues with some earlier film schemes had a knock-on effect for the rest of the film industry and advisers and investors
quickly became wary of putting their money into investments backing film and media. Debbie Purbrick, Research and Development Manager at Mazars Financial Planning, said there was residual ‘nervousness’ from IFAs around film investments around ‘how the products are structured, as there’s such a wide variety’.
She says it not always easy to tell what the structure of a film investment is so ‘we take a cautious approach’. ‘I agree there’s an appetite for investment in this sector but clients sometimes need reassurance that what is being recommended is different from what’s gone before,’ says Purbrick. ‘We’re always endeavour to get right under the bonnet of each product but it’s not always easy.’ The myriad structures that have historically applied to film schemes is part of the problem for advisers, and often they do not realise a particular film investment is an EIS – a government-approved vehicle, says David Lovell, Operations Director at GrowthInvest, an independent platform providing access to tax efficient investments and a discretionary managed portfolio service. ‘There has still been some inaccurate or vague reporting in the national media but also within the financial adviser industry press around film schemes, and it refers to them as film schemes, rather than saying how they’re applied,’ he says. ‘There have been a number of articles that haven’t made the specific point that EIS are government sponsored and that therefore effectively
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one would have to tick all the compliance boxes and I’d want to know the people running it know what they’re talking about and have experience in the industry.’ Of course, the attractiveness of film, media and entertainment investments boils down to commercial realities and expectations and the film financing company has to be able to prove their due diligence process as much as the adviser. ‘The thing that drives everything is that it has to be commercial,’ says Bell. ‘Everything we’re placing highnet-worth money into, we’ll have done all the due diligence and we’ll know where it’s being distributed – we will have assessse through contacts and experience the minimum deal. When we do due diligence, we look at the base line. We look to collateralise 2.5 times what’s advanced to production companies and we take an active role in each project to make sure what is said will happen actually happens.’ the government are behind that investment.’ He adds that it ‘does not help’ that individual EIS companies previously ‘popped up’ to make a single film, in order to ‘raise money, make a bad film, then effectively disappear’. Bell says that as a direct result of this HMRC are ‘against single project’ EIS’s and issued guidance some months ago to ask those companies applying for Advance Assurance to demonstrate through their business plan that there was proof of ancillary revenue streams – AKA the growth and development test. Bell welcomes this as both sustainability and longevity in the medium and long can be demonstrated as a result.
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All The Options It is crucial for advisers to be able to discuss alternative investments with their clients. No adviser wants their client to miss out on potential returns and clients will ask difficult questions of advisers who fail to offer them all the options. However, advisers do need to ensure an EIS or SEIS ticks all the compliance boxes before committing their clients’ money to it. Advisers need to feel confident they are dealing with film financing businesses that are experts in their field, have the correct assurances and can provide peace of mind, as well as great returns, for their clients. Bell says: ‘If I were an IFA looking at business propositions, each
Bell’s company is currently looling forward to planning its first exit from its original Goldfinch Pictures offering. Lovell agrees that advisers need to look at more than just the headline returns offered by film investments. ‘Advisers and clients need to look for longevity and experience in the teams behind those investments,’ he says. For Bell, providing film investment opportunities isn’t just a oneand-done event, she wants to do a good job for investors so they keep coming back. ‘Bearing in mind my background is industry and tax, I need to make sure the investors will go on and invest further,’ she says.
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‘Exits are very important but it’s the businesses we invest in.’ Loyalty to clients and the need to ensure their money is invested wisely means that not all films receive funding from Goldfinch. She says that some film producers come to her without the necessary details and business plans, and they are quickly dismissed. ‘There are some [films] we won’t invest in and the producers get annoyed,’ she says. ‘They’ll say but the film is going to win awards but they don’t have a finance plan. It’s getting to know who you’re partnering up with. You start in the position that the people running the business you’re putting the money into need help from you to get where they need to get to.’
Berens says their sensitivity to risk means IronBox Capital takes on fewer projects. ‘When we do film analysis, we’re more on the risk-taking side, that’s why we take on fewer projects,’ he says. Beren’s goes on to explain that for IronBox Capital and for him ‘the key basis is the script. We often ask people how they see the film. If you have a British drama, then the comparative films are Bend It Like Beckham, Slumdog Millionaire, The Full Monty and Billy Elliot. They’re probably nothing like that. ‘Otherwise I look at the budget line, they obviously need to get paid, but I saw one of those projects that was a boxing drama
and the budget was £4 million and the boxer got £600 for their story.’ Investing in film has layers upon layer of due diligence. The film financing companies are working hard to use their expertise to assess the potential success of a film and ensure investors receive the appropriate tax reliefs. Advisers are adding another layer of compliance, scrutinising the opportunities for their clients and ensuring they are appropriate from a risk tolerance and tax level. With the film industry and advisers working hard to prove the benefits of film, media and entertainment investments, there has never been a more exciting time for clients to get involved as the renaissance in film investing grows.
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Art versus money: investing in film for passion and profit Investing in film indulges an investor’s artistic side but ultimately it comes down to a numbers game
The idea of the poor, struggling artist has been romanticised throughout history but when it comes to investing in film, money has to take centre stage. There is often a dilemma when money is involved in art. It can cause power struggles, and personality clashes as artist and ‘money men’ often have different views on what is important, what is valuable, and how money should be spent. Not to mention inevitable tensions when artists feel their ‘vision’ is being corrupted and investors feel the artist needs to take business plans more seriously. These struggles are something Kirsty Bell, Founder and Managing Director of Goldfinch Entertainment, has experienced and at times they have led to her walking away from projects. She believes that often the problem is that film producers
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understand the creative process behind making a film but are not as clued as they should be about the financial and business aspects. ‘The problem with producers - and we’ve tried to help a lot – is that they’re very creative but we need them to also be business-like,’ she says. Bell has recently pulled out of a film because they did not have any route to market in a tangible sense, something the producers took badly but ultimately was best for the potential investors. ‘It was a hard call to make as they were basically crying, shouting and telling us we ruined their lives,’ she says. ‘I haven’t ruined their life as the film wouldn’t have done commercially what it was supposed to and we’ve saved investors’ money. They’re the hard decisions to make.
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Bell and Berens differ slightly in their approach, with Bell saying her focus is ‘hard cash’ due to her accountancy background and stint as a producer. ‘For me, it’s about the monetarisation, art comes second,’ she says. ‘If it won’t work on paper as a money exercise, I’m not interested. You might have put in money and it looks beautiful but there are no deals at all. You’ve had the tax relief but you won’t see the money back. We at Goldfinch are about the real tangible returns. ‘I’m unemotional when it comes to the films we attach our goldfinch to, we’re making products that need to be sold, not ones that are obsolete or people don’t want.’ Passion Project or Cash Cow
‘I mentioned to one of our clients that we’d done it and they said they wish they had taken that decision with some of their films as they had ultimately not made any money.’ Of course, when it comes to art, there has to be passion but it is often the film financier’s job to measure this with business practicality. Raimund Berens, Chief Executive Officer of film financing company IronBox Capital, says you ‘have to have a passion to bring [a project] all the way through’. ‘We have layers in our evaluation system,’ he says. ‘It’s about art meeting business and it needs to [meet] in the middle. The best thing is going to the cinema and you feel you’re in a different world, those are the films we want to make.’
It is not only the film financing companies who can be hardheaded about the cash, investors often fall into two groups: those who invest in film for the potential returns and those who do so as a passion project. Debbie Purbrick, Research and Development Manager at Mazars Financial Planning, says although clients may not come to their financial adviser with a complete understanding of the mechanics of how film investment works, they generally know they want to make money. ‘Clients want a good investment and want to know that there is potential to see some kind of return at the end,’ she says. ‘They’re not usually in the position to completely understand the mechanics of each product themselves and often rely on us to recommend an investment from an established manager, which meets their individual objectives.’ ‘There are some clients who invest because of a genuine
passion for the sector but they are in the minority.’ Richard Angus, Head of Business Development at Hardman & Co, however, adds a note of caution saying that ‘it’s not easy to make money out of [film EIS] on a consistent basis’. ‘If I’m looking at it from a buyer’s point of view, the first thing I’d want to know is how risky the industry is and how easy it is to make money,’ he says. He says investors need to be asking a number of questions, including where the money is made, is it better to be in a certain part of the industry based on your risk profile, is there something to compare it against, and is there a strong base of factual information. ‘You need the right understanding, that’s where I’d start off, then you can look at this industry relative to others,’ says Angus. ‘If you’re investing in life sciences, which has a completely different business model,[…] you have to be in the position mentally to say where this fits your risk profile and what other key growth sectors offer alternative options.’ Under The Waterfall Even the most diehard film fan who invests for the love of doing so will not want to lose money and advisers must understand where their clients sit in the ‘waterfall’ of money. People may be concerned about investing because they have heard the old adage that 50% of films lose money, 25% breakeven and 25% make money and they want to make sure they are not in the 50% of people who lose money. Bell says it is not about the adage but ‘where in the recoupment process you are’.
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‘Films lose money but where are you in the waterfall?’ she asks. The first person to collect money in the ‘waterfall’ of money coming from a film is the ‘collections agency’ who take around 1%, they ‘then distribute the remaining money accordingly’, says Bell. After this the sales commission has to be paid. ‘If you have an agent selling the film or the distributor is doing it, then the commission comes off first. For every £1 that comes in, up to 25% may be taken by the sales agent,’ she says. If the sales agent has given an advance or a minimum guarantee then that will be recouped next, says Bell. Following that, EIS or SEIS investors take their cut if there is no other financing at play. ‘The commission comes off, then the minimum guarantee or the sales advance – it’s the same thing – then it could be your EIS or SEIS direct investors, they would all sit in the equity position,’ says Bell. There is one other potential layer in the waterfall; the gap investor, who sits outside of EIS or SEIS and loans the film money in order to complete. ‘The only person who can sit above them (the EIS guys) and below the sales advance is the Gap investor…If the film costs say £100 to make, [the producers] have money from tax credits or the government, there will possibly be a gap between 5-25% of that budget that they can’t raise. The Gap investor comes in like a superhero and fills the gap as a loan and charges a premium on it. ‘There’s no EIS or SEIS available for Gap so they sit in a special position where they’ll recoup 1525% on top of their investment.’ Then there are the Super Gap investors who can swoop in when
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a film has run out of money at the end of the process, although this does not happen often. ‘If you got into trouble financially making your film, if you’re in post-production and didn’t keep any money for say music, or finishing the editing of a film you’d get in a Super Gap person; they get up to 35% on top of their money,’ says Bell. ‘It’s a rare situation but it does occur.’ The waterfall should provide full transparency of who the Gap investors are as well as everyone else – they reflect the full finance plan of the budget to make a film. Once everyone has recouped, the ‘net profit participation’ is next in the waterfall, says Bell. ‘This is where everyone has had their money back plus any premiums, then remaining net profits are split,’ she says. ‘For every £1, 50p goes to each pot: the producers and those making the film, then the financers.’ ‘They recoup pro rata pari passu’. While Goldfinch does operate as a Gap investor, through other activities unrelated to EIS and SEIS, EIS investors would be equity investors. ‘If you’re talking about a production EIS, they won’t be Gap people and there might not be a Gap person if [the producers] have raised the money for the film,’ says Bell. ‘However, you don’t have all these people in the chain of recoupment, it’s just what could be. If the film cost £5 million and you raise £5 million, there’s no Gap but sales commission will be taken off.’ If a film needs to raise below the EIS limit of £5 million, IronBox Capital will try and raise the total funds, although it takes a leap of faith to do so.
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Berens says: ‘If it’s below £5 million, we might finance ourselves and hope, but the project needs to hit it out of the park. ‘If we have outside investors, they need access to the first dollar or pound that’s recouped.’ He adds that funding has to be looked at in the context of the type of film that is being made, as the genre can make a difference. ‘Funding a horror is different to a drama as a drama is more about execution; you need a good director and great actors whereas a horror will need a cameo but you can have unknowns with more social media-savvy actors,’ says Berens. ‘Our decision-making will shift. The fundamentals are the same but the decisions depend on the genre.’ Box Office Hit When it comes to profitable films, most investors will only read about the ‘box office takings’ that are quoted in the press. Avatar, made in 2009, holds the record for highest grossing film of all time at $2.78 billion, followed by 1997 hit Titanic at $2.18 billion. In third place is Star Wars: The Force Awakens from 2015, which grossed $2.06 billion. Although these may be the film figures everyday investors are used to seeing, Bell says they actually mean very little to film financers as this money goes through more layers before it hits the investors. ‘Say you have box office receipts of $10 million, that isn’t what comes back to the producer or investors,’ she says. ‘First you have the exhibitor (the cinema or wherever it’s shown) they can take 70% or more of the ticket price. For every ticket sold, the lowest I’ve seen taken
is 40% but that’s rare. Say $3 million comes back to the producer/investors – first the sales commission will come off that, then they’re left with $2 million. ‘They distributor would have spent marketing money called P&A funding , they’ll have had a budget to market the film that has to be repaid before anything goes back to the investors. I’d say 10% of box office takings could realistically be seen to go back to investors in a good scenario’. Investors should not look at box office takings as anything other than a ‘marketing tool’, what really matters is racking up sales in lots of different territories, with the North American market the jewel in the crown. Berens is not a fan of box office averages because they do not give a genuine feel for the performance of a film. ‘I hate box office averages as they’re not indicative of the performance,’ he says, saying that total revenue streams total about 10% after all costs are taken into consideration. The big box office numbers should not give investors a false impression; most film EIS and SEIS schemes are investing in independent films with lower budgets. ‘We’re talking about independent films so the budget are lower,’ says Bell. But it is not just about getting people into the cinema to watch it, it is also about what online platforms will pick up the film as well. ‘[With] independent films, you’re looking at Netflix and Amazon deals as well as sales in territories,’ says Bell. ‘It’s not as simple as going to a stand at a film market and showing your film.’
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Behind the scenes of film investing Advisers need to ensure they educate themselves on the complexities of film investing before offering it as an option to clients
The glamour of investing in film may be alluring to investors but advisers must be able to look beyond the glitz and understand the often complex nature of this type of investment.
money at a film outside of taxefficient EIS structures is the first mistake investors make. ‘Some investors do it without even going down the EIS route,’ says David Lovell, Operations Director at GrowthInvest, an independent platform providing access to tax efficient investments and a discretionary managed portfolio service. ‘This is the case where you have private investors who are looking at propositions and they’re not going to IFAs for the riskier parts of their portfolio, when they certainly should be.’ Kirsty Bell, Founder and Managing Director of Goldfinch Entertainment, says film is an area where ‘a little knowledge can be dangerous’ as people pick up on small bits of terminology without really knowing the meanings behind it, or crucially how it relates to them and their money.
Investing in film isn’t just about the red carpet and premieres, it’s a serious business with potentially rewarding returns if done right. However, it can also be a difficult area to understand due to the terminology, charges and structure of payments, meaning advisers need to educate themselves and their clients before committing any cash. The first point, which may seem obvious, is that advisers should only be investing client money in genuine film funds, rather than a ‘mate’s film’. Throwing
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Raimund Berens, CEO of film financing company IronBox Capital adds ‘we say to investors to never invest more than 5-10% of their disposable income and we sit them down and show them the matrix’ It all comes down to educating investors, but in order to do this, advisers themselves need to be educated on the benefits of using EIS to diversify client portfolios and when they are comfortable with that, looking at the smaller EIS offerings. EIS not only provides tax efficiency but also provide an alternative way
for clients to generate returns. But advisers should not be fooled into lumping all EIS together as there are some that are higher risk than others, and there is diversification within the EIS sector. Lovell says there have been some ‘big media EIS’ that have reached capacity as advisers pile into names they know. He believes part of this is a ‘slight fear of the unknown’ meaning there is a lack of willingness to invest with less well-known names. For him, investing in a number of EIS, not just well-known ones, boils down to ensuring diversification. ‘Diversification...needs to play an important part in an EIS portfolio,’ he says. ‘Depending on the size of the portfolio, if you’re looking at investing in the British film industry, that’s well-recognised globally and is a strength of the British economy, there’s also a need to diversify that portfolio.’ Diversification is something which Debbie Purbrick, Research and Development Manager at Mazars Financial Planning, is
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aware financial planners are keen to ensure for clients. However, she points out ‘often a planner is concerned that if their client already had an investment in the media sector, they should avoid the sector in the future. While this may be appropriate in some circumstances, we often discuss the wide range of investment offerings within the media sector and the huge differences between one product and another which help to support diversification’. The fears around investing in films, media and entertainment can be countered simply by asking questions of the schemes. Bell says she has spent ‘an inordinate amount of time trying to educate people who were brave enough to come to us and wanted to ask questions’ after 12 months of push back. ‘I think people want to invest in this asset class,’ she says. ‘The fear factor is peeled back so they can touch and feel more about this space.’ However, she admits ‘there are a lot of rogues’ as ‘anyone can set up an EIS if they have the correct advisers, it’s about whether they’ve set it up for the right reasons’. Purbrick adds that the drawn out timescales of investing in films means that ‘you could potentially be a long way down the road before you realise what’s happening’ if you were to invest in a rogue scheme.
Charging Structures Educating advisers is important – there needs to be a greater understanding of the EIS options more generally, and being able to benchmark and compare offerings. An important part of this is being able to compare charges but the ability to do so is sorely lacking. Lovell says he would like to see ‘transparency on charges’. ‘In terms of education, it’s not just film - across the industry [it’s about]...benchmarking,’ he said. ‘There’s definitely work to be done there.’ Purbrick says it can often be difficult to immediately understand all the charges that can apply to an EIS investment. ‘ Different managers present their information in different ways and it’s crucial to have a proper understanding of all the charges that could be made to a client or indeed the underlying investment companies. An open dialogue with the EIS manager, and a thorough due diligence and research process is required, as I have from time to time seen the same EIS reviewed in two places where the charges have
been shown differently’. She questioned whether there is an argument for further regulation to ensure that charges are set out in a more explicit and standardised way across the industry. Lovell says that advisers ‘shouldn’t have to be checking three different independent reviews and triple-checking every term to make sure an investment is one that’s suitable for their client’. Advisers should not believe lower charges mean a better investment, and learn to assess charges against the value delivered rather than purely as a cost. Bell says she was asked her about charges and whether they should be below market rate’ She disagreed and said that she needed to pay her sales team a certain level of commission and film sales to ensure she has the best team as ‘they won’t work for less than what they can get in other areas of the industry’. ‘Charges are very important, but it’s not necessarily the size, it’s the quality of the work done and rewards gained,’ she says.
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SPONSORED FEATURE
BLOCKBUSTER INVESTMENTS: HOW TO PICK A FILM EIS Hardman & Co Research Analyst Derek Terrington looks at how to judge whether a film scheme is going to clean up at the box office
The film world is changing rapidly. Netflix, the fast growing online film streaming service, has just reported a rise in subscriber numbers to a record 104 million. The Hollywood Studios are becoming more focused on big blockbuster series, and on the Chinese market. Investment in video content (TV and film) continues to rise. In 2016, global box office revenue reached $38.6 billion, having grown at 4% per annum since 2009 in spite of slower economic growth. PwC expects growth of 4.1% globally between 2016 to 2019, driven mainly by changing technology, notably streaming, a rise in the number of platforms and continued rise in the Chinese market.
Changes favouring UK independent film makers
Growth of the UK film industry
The flip side of the Studios’ focus on global blockbusters is increased outsourcing of smaller movies production to other film makers, maybe even becoming distribution partners.
A recent government green paper on industrial strategy recognised the global reputation of the UK’s creative industries and their contribution to the economy, accounting for 6% of GDP and growing faster than many traditional industries.
As platforms multiply, the demand for video content is rising and investment in content production is increasing. Netflix is building on its global success by moving into proprietary content. Other major players – Amazon, HBO, Sky, BBC, ITV – are doing the same.
The value of UK film production has grown at an average of 9.3% per annum over the past decade, due to work coming from the US studios; the trend was especially strong over 2014-2016, coinciding with beneficial changes in tax relief for films from 2014. The performance of UK independents was flat over 2014-2016.
The UK film Industry as a whole continues to attract investment, as shown by film tax relief, which rose from £339 million in 2015/16 to £415 million in 2016/17.
Business models Like books and music, films will always be a hits business. Whatever the budget, films remain a risky proposition; each one is a new product with uncertain revenues. There are really two business models in the industry: the studio model with production, distribution and finance all within one
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large operation, and independent film making where the organisation of production is fragmented and complex, while the producer has to organise finance too. Independents tend to have multiple sources of finance, each with its own level of risk. But low budget independents offer scope for excellent returns, especially if such a film becomes a hit. Some of the most profitable films ever made have been small budget titles that took off.
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Funding: public and private Many nations subsidise film making in some way and UK film makers can tap into a variety of public funds at regional and national level, through the BFI and from Europe – for now. Investment in the film industry is well treated by HM Revenue & Customs (HMRC). Filmmakers get a ‘film tax credit’, while tax efficient schemes for private individuals (SEIS and EIS) bring in equity risk capital alongside other sources of finance.
1 Many EIS providers offer a portfolio of films to
invest in, so reducing the risks attached to an individual film and spreading administrative costs over more products. The films will probably vary by genre.
2 Genre can be the key, e.g. horror films have lower
levels of risk on average, as does animation. Horror is relatively cheap to make, but animation is expensive, as is drama.
3 Some providers take a waterfront approach,
offering a range of media investments in, for example, film, animation, TV, video games and theatre. Investors may prefer the breadth of media experience that lies behind the selection of films.
4 Track records count and some providers have
been investing successfully in films for a long time; many EIS providers are relatively young (under five years old).
5 Judge them by the company they keep. Certain
well established providers have links with top directors and producers, as well as the major US studios and other global media players. This should allow them to offer high quality material.
6 Any film budget should be realistic and capable
of delivering the creative end product. Budget overruns will eat into returns, but it is possible for film makers to insure against this risk.
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The level of pre-sales is important in funding a film and in reducing financial risk and can provide a large part of the total amount raised.
8 But the level of pre-sales (plus tax credits) may not
A currently unresolved tax dispute between HMRC and a leading film investor should not obscure the fact that the tax rules have changed and that now there is a growing number of EIS schemes backing film production. Government concern about the use of EIS funding for low-risk businesses led to renewables being excluded from EIS in the 2014 Budget; and the rules were tightened further in the next Budget. This was to ensure that EIS schemes funded new, higher risk UK enterprises. As a result, the total number of EIS schemes and money raised fell between 2014/15 and 2015/16. However, buoyed by the success of the UK film industry more broadly and by the growing demand for good content, the number of EIS schemes funding UK independent films seems to be rising.
Judging a film based EIS Clearly, the defining risk for is how well the film is likely to perform in the market place. Investors should focus on the strength of the film in creative and commercial terms, on the attractiveness of the offering and not just the tax relief alone. EIS film offerings come in a number of shapes and sizes so there are several ways of looking at how the risks are being managed and how the offering is being made attractive to investors.
be enough to fund a film fully so some providers will fund the balance, thereby ensuring that the film is, in fact, made. This is known as gap finance; it is typically first in line for repayment. From the investor point of view, this can be part of a strategy of avoiding early stage funding in favour of later stage financing, which is potentially less risky.
9 Overseas sales can greatly enhance a film’s
commercial appeal and be decisive in reaching revenue targets; it is important to establish what the expectations are for non-UK sales.
10 At the end of the revenue cycle for an EIS backed
film there is likely to be some residual value. This will depend, firstly, on how successful the film was, but there may also be potential for a TV series or for video games. This could enhance the residual value.
11 The director and cast need to have good track records. In the case of drama especially, well known, bankable actors can enhance prospects. The experience of the director and producer of a film is key. Winning BAFTA’s and Oscars should instil confidence.
12 How attractive do the returns look? Typically, a
target of 105p -130p per 100p invested is set (after fees but before tax reliefs) with a profit sharing scheme in place if this is exceeded. The profit share can vary between 20% and 50%.
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M AGAZINE
OPEN OFFERS Highlighting some of the key offerings currently available to IFAs
EIS Open
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Close
June 2018
Amount to be Raised: £20m Minimum Investment: £50,000
Calculus Capital EIS Fund Pioneers of tax efficient investing, Calculus Capital created the UK’s first approved EIS Fund in 1999. Our 18 year track record of investing in growing UK companies assures investors of our ability to make sensible investments capable of delivering excellent returns at every stage of economic cycle. Winners of ‘Best EIS Fund Manager’ at the EIS Association Awards for the past three consecutive years, Calculus Capital are recognised as having an incredibly robust investment process and an active portfolio management style - which has led to an impressive track record of successful exits. The Calculus EIS Fund focuses on established companies with growth potential, across a diverse range of sectors. Target companies have the following characteristics: • The ability to achieve our target IRR of 20% • Experienced management teams • Successful sales of proven products or services • Profits or a clear path to profitability • Clear route to exit
T. 020 7493 4940 E. info@calculuscapital.com www.calculuscapital.com
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GB Investment Magazine · September 2017
The 18 month investment programme commences after relevant closing date. The next close is taking place October 27th 2017. We value our reputation for personal service as much as our investment record, and are focused on providing an excellent client experience. Please get in touch to find out more. 020 7493 4940.
Open Offers
EIS Open
Now
Close
Evergreen
Amount to be Raised: N/A Minimum Investment: £25,000
Seneca EIS Portfolio Service The Seneca EIS Portfolio Service is an evergreen discretionary management service that offers investors the opportunity to build a portfolio of equity investments in UK based SMEs, which are seeking an injection of capital to fund their next phase of growth. The Service gives investors a portfolio of 4-6 investments per year diversified by sector. It targets investment returns of £1.60 to £1.80 per £1 invested (excluding tax reliefs). The EIS Service totals over £45m and has completed 60 investment rounds across 35 companies. 17 companies in the portfolio service are already AIM listed providing liquidity, market pricing and exit visibility for investors.
T. 020 7071 3926 E. seneca@lgbrtax.com www.lgbrtax.com
EIS
Evergreen
SEIS
Special Opportunities
Amount to be Raised: £20m Minimum Investment: £20,000
The Portfolio Manager, Seneca Partners, is part of the wider Seneca business, which has c. £450m invested assets and over £4bn debt under advice. The knowledge, experience and pedigree of Seneca’s investment team, combined with their individual track records of successful investing in the SME sector, is complimented by an extensive deal flow network in the UK’s SME heartlands of northern England and the West Midlands.
Iron Box Capital: Particle 1 Fund Film is a fast growing industry. There is insatiable demand for film globally to provide material for all the new media that offer films. Investing in film is also approved by the government through the availability of both tax credits and EIS tax benefits. Unsurprising as it brings many millions of revenues into the UK. At Iron Box Capital we pride ourselves in our expertise and experience, and to do all that we do very well. After all, our Chairman is Colin Brown, the ex-British Film Commissioner. Through Particle 1 Fund, investors will participate in 3 or 4 films, all of which are closely vetted for genre, audience appeal and saleability. The target IRR before tax relief is 15%, and 25% if you include the tax relief available.
T. 020 7628 7857 E. info@ironboxcapital.com www.ironboxcapital.com
EIS Open
Now
SEIS Close
N/A
Amount to be Raised: £5m Minimum Investment: £15,000
T. 01865 784466 E. info@oxfordtechnology.com www.oxfordtechnology.com
And we should mention that you can have a lot of fun with film. Every investor and their adviser can get involved in our film projects in different ways. Why not talk to us to find out more? Please refer to the Investment Memorandum for full details and risk warnings.
Oxford Technology Combined SEIS and EIS Fund OT(S)EIS invests in high risk high reward technology start-ups, in general within an hour’s drive of Oxford and has been doing this since 1983. The latest fund OT(S)EIS made its first investment in 2012. By 30 June 2017, 70 investments had been made in 28 companies. The statistics are: • Gross amount invested £3.75m • Tax refunds to investors £1.52m • Net cost of investments £2.23m • Fair value £6.26m • Tax free gain (on paper only) £4.03m OT(S)EIS remains open for investment at any time. The latest quarterly report, with a page of information on each investment is downloadable from www.oxfordtechnology.com
GB Investment Magazine · September 2017
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BPR Open
Close
Evergreen
Evergreen
Amount to be Raised: Unlimited
TIME:CTC (Corporate Trading Companies) TIME:CTC is a bespoke Inheritance Tax (IHT) solution for corporate investors, which boasts an impressive 21 year track record of delivering IHT relief for investors. TIME:CTC is aimed at business owners who have built up surplus cash in their business and could potentially lose Business Property Relief (BPR). The focus of TIME:CTC is on capital preservation by investing in asset backed businesses which qualify for BPR. These businesses include secured lending, renewable energy, biomass and self-storage. Our strategy allows business owners to maintain control of their assets, avoiding the need for trusts or gifting to obtain relief.
T. 020 7391 4747 E. questions@time-investments.com www.time-investments.com
BPR Open
Close
Evergreen
Evergreen
Amount to be Raised: Unlimited
Targeting a return of 3.5% and potentially immediate reinstatement of BPR qualifying assets. To date more than 1000 of our clients have already achieved BPR on their investments, a 100% success rate.
TIME:AIM TIME:AIM uses our unique ‘smart passive’ approach in selecting companies listed on AIM for inclusion within the investment portfolios we create for investors. Designed to offer lower volatility returns than the AIM market, TIME:AIM will only target AIM listed companies that qualify for BPR. SMART because we use an innovative, defensive market screening process PASSIVE because we remove stock picker bias and ignore market sentiment A welcome secondary benefit of this approach is that we are able to offer this service at around half the annual management fee of many of the traditional AIM BPR fund managers. We believe our service creates a robust portfolio that will allow investors the opportunity for significant growth potential and mitigation of their IHT liability after only two years. • Available within an ISA and non-ISA wrapper
T. 020 7391 4747 E. questions@time-investments.com www.time-investments.com
BPR Open
Now
Close
Evergreen
Amount to be Raised: Unlimited
T. 020 7391 4747 E. questions@time-investments.com www.time-investments.com
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GB Investment Magazine · September 2017
• IHT relief in just two years • Focus on reducing volatility • Removal of stock picker bias • Lower cost than traditional AIM services
TIME:Advance TIME:Advance is a discretionary management service that allows investors to access Business Property Relief (BPR) to mitigate their Inheritance Tax (IHT) liabilities. The service offers 100% IHT relief in just two years, alongside a targeted return of 3.5% per annum. Importantly clients retain access and control, so have the option to withdraw a lump sum or set up regular withdrawals in the form of an income. The service focuses on capital preservation by investing in asset backed businesses which qualify for BPR. These businesses include secured lending, renewable energy, biomass and self-storage. The product is managed by an expert team, with a proven 21 year track record of 100% success in achieving BPR for investors.
Open Offers
EIS Open
Close
Evergreen
Evergreen
Amount to be Raised: £10m+ Minimum Investment: £25,000
Oxford Capital Growth EIS Through the Oxford Capital Growth EIS, investors can build a portfolio of shares in 12-15 companies over a period of roughly 12-18 months. Each portfolio company should be eligible for EIS reliefs, including 30% income tax relief and taxfree gains. We invest in small businesses seeking to solve big scientific, technological or commercial problems. Our current portfolio includes companies in sectors including games development, eCommerce, digital healthcare and artificial intelligence.
T. 01865 860 760 E. investment@oxcp.com www.oxcp.com
BPR Open
Evergreen
Close
Evergreen
Amount to be Raised: N/A Minimum Investment: £25,000
T. 01865 860 760 E. investment@oxcp.com www.oxcp.com
EIS Open
January 2015
EIS Close
Evergreen
Amount to be Raised: Unlimited
We work closely with our investee companies, helping to accelerate commercial development with the aim of achieving a profitable exit, usually through either a trade sale or a stock market listing. The Oxford Capital Growth EIS targets a return of 2.0x the amount invested (net of applicable fees and not including the impact of EIS tax reliefs), aiming to return the majority of proceeds 5-7 years after initial investment.
Oxford Capital Estate Planning Service The Oxford Capital Estate Planning Service can help investors mitigate Inheritance Tax by investing in companies that should qualify for Business Property Relief, subject to the requisite holding period. Clients can choose from five different investment options, depending on their preference for capital growth or dividend income. If a client’s circumstances change, they can elect to switch to an alternative investment option. Target returns range from 3% to 5% p.a., and capital can be accessed within 1-6 months through the sale of shares. Investors in the Estate Planning Service will acquire shares in unquoted holding companies. Managed by Oxford Capital’s infrastructure investment team, these companies will make equity investments in, and loans to, companies which in turn will own and operate revenue-generating assets. The investment strategy is currently focused on small-scale power generating equipment, including renewable energy assets. Over time, it is possible that other assets will be added to the portfolio.
CHF Enterprise CHF Enterprises Ltd (CHF) presents an exciting and unique opportunity for UK tax payers to invest in both SEIS and EIS qualifying shows and concepts, whilst also benefitting from risk mitigation in the form of seed and traditional EIS reliefs and Government backed Animation Tax Credits. The company has a strong and proven track record: over the past 40 years, Cosgrove Hall have produced iconic children’s programmes such as Danger Mouse, Postman Pat, Roary the Racing Car and others, and CHF has a multi BAFTA and International Emmy award winning creative team. One of its recent shows, Pip Ahoy! was funded via CHF’s own in-house EIS offering and is now on air on channel 5’s Milkshake every weekday for 5 years, to great media acclaim.
T. +44 (0)845 512 1000 E. nicolajohnston@chfmedia.com www.chfenterprises.co.uk
The shows and concepts may have multiple revenue streams from Broadcast and License and Merchandising sales with unlimited investment returns. Shows are produced in the UK and should qualify for the Government’s Animation Tax Credits.
GB Investment Magazine · September 2017
45
EIS Open
Evergreen
SEIS Close
Evergreen
Amount to be Raised: N/A Minimum Investment: £5,000
GrowthInvest - The Tax Efficient Platform for Advisers GrowthInvest is a unique, independent platform which provides access to tax efficient investments to a growing network of UK financial advisers, wealth managers and investors. Originally founded by financial advisers in 2012 as the Seed EIS Platform, we rebranded as GrowthInvest in October 2016 to better reflect the wider range of products and services available: We permit investment into a range of single company offers, as well as Managed EIS Portfolio Services and funds, giving clients a number of different investment options. • We offer a simplified asset transfer process which allows advisers to place all of their clients’ tax efficient investments onto the platform. • We provide intuitive online reporting tools, allowing advisers to monitor, analyse, and provide consolidated performance updates and quarterly reports to their clients. • All investable companies go through one of 3 defined due diligence tiers, giving added peace-of-mind to the adviser. • A single, secure online environment for all clients to review and build their tax efficient investment portfolios.
T. 020 7071 3945 E. enquiries@growthinvest.com www.growthinvest.com
EIS Open
April 2017
SEIS Close
Evergreen
Amount to be Raised:
Up to £25,000,000
Minimum Investment: £10,000
T. 020 7071 3945 E. enquiries@growthinvest.com www.growthinvest.com
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GB Investment Magazine · September 2017
We’ve placed the adviser at the heart of everything we do, making it straightforward for advisers to improve the service they offer to their clients in the tax efficient investment arena. Please visit us at growthinvest.com for more details about our current open investment opportunities.
GrowthInvest Portfolio Service A discretionary investment management service which seeks to leverage the experience and expertise of the GrowthInvest investment team to select a diversified portfolio of some of the most promising companies that have passed through GrowthInvest due diligence process. GrowthInvest is an independent platform, which provides access to tax efficient investments to a growing network of UK financial advisers, wealth managers and investors. The platform aims to bring the advantages of early stage investing to a wider audience of investors and advisers, who are able to benefit from the potentially higher returns these companies can offer and tax efficiency via government approved schemes, such as SEIS and EIS. From our experience working with advisers on the Platform, the Fund has been designed to consist of three sub-funds, each with a separate investment policy. The first will target Investee Companies which qualify for SEIS Reliefs only. The second will target Investee Companies which qualify for EIS Reliefs only and the third will be a mixed investment policy which will target Investee Companies which qualify for SEIS Reliefs and / or EIS Reliefs. You will be able to choose how much of your subscription to allocate to each of these three sub-funds. The Fund is aiming to exit investments after three to seven years.
Open Offers
EIS
SEIS
Open
Open
Now
Now
Amount to be Raised: Uncapped Minimum Investment: £5,000
Seed Advantage SEIS and EIS Funds Seed Mentors has been successfully involved in Seed EIS since it was first introduced in 2012. Since then they have successfully promoted and closed 11 funds, and invested in over 60 exciting young companies. All companies continue to trade. The fund structure is a discrete investment portfolio service operated through the Fund Manager, Amersham Investment Management Ltd. The Funds adopt as whole of market, holistic approach. Seed Mentors provide practical support and mentoring services to each company and a nominated director. The EIS fund offers the opportunity to support companies that have previously received SEIS funding, and are now looking for capital for growth and expansion.
T. 0203 011 0901 E. s.randall@seedmentors.co.uk www.seedmentors.co.uk
EIS Open
Close
Now
N/A
Amount to be Raised: £4m Minimum Investment: £10,000
T. 0203 8978 861 E. sarah@goldfinchentertainment.com www.goldfinchentertainment.com
SEIS Open
Now
Close
Multiple
Amount to be Raised: £3m Minimum Investment: £5,000
Seed Mentors have now extended the range of funds on offer with the Boxing Advantage Company. In a joint venture with the legendary Barry McGuigan, investors can invest in a portfolio of highly promising boxers through the Seed Advantage EIS Fund. The boxers will be selected and trained by Barry McGuigan and his team.
Goldfinch Entertainment EIS Fund • Approved EIS Fund with 70% Protection • Investing into qualifying Film & TV productions • Protection is taken in the form of unsold territories, Government Tax Credits or guarantees • £2m raised in 2015/16 • Built and run by a team with enviable business and industry experience • Team has deployed £60m+ since inception • Over 115 projects at various stages of development and financing • BAFTA and Oscar winning producers and directors • A List cast attached such as Orlando Bloom, Bill Nighy, Sir John Hurt, Charles Dance, David Tennant and Martin Freeman • Shortlisted TWICE CONSECUTIVELY for the ‘Game Changer’ Growth Investor Award • Managed by industry veterans Amersham Investment Management
Goldfinch Entertainment SEIS Fund • Approved SEIS Fund qualifying investment opportunities in the UK’s film, TV and other entertainment sectors. • Investing into UK Film (30%), TV (30%) and Video Games (30%) • £2.5m raised in 2015/16 • Built and run by a team with enviable business and industry experience • Team has deployed £60m+ since inception • Over 115 projects at various stages of development and financing • BAFTA and Oscar winning producers, directors and developers.
T. 0203 8978 861 E. sarah@goldfinchentertainment.com www.goldfinchentertainment.com
• A List cast attached such as Orlando Bloom, Bill Nighy, Sir John Hurt, Charles Dance, David Tennant and Martin Freeman • Shortlisted TWICE CONSECUTIVELY for the ‘Game Changer’ Growth Investor Award • Managed by industry veterans Kin Capital Partners
GB Investment Magazine · September 2017
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EIS Open
01/08/2013
Close
N/A
Amount to be Raised: Uncapped
Deepbridge - Technology Growth EIS The Deepbridge Technology Growth EIS represents an opportunity for investors to participate in a portfolio of actively-managed growth-stage technology companies, taking advantage of the potential tax benefits available under the Enterprise Investment Scheme. The Deepbridge Technology Growth EIS is a diversified portfolio of actively managed highgrowth companies seeking commercialisation funding. The Deepbridge EIS invests in companies that have a proven technology, clear intellectual property and are operating in a high growth/high value market sector. Focused on investing in high growth companies that are seeking to commercialise and expand, specifically in three sectors: • Energy and resource innovation; • Medical technology • IT-based technology
T. 01244 746000 www.deepbridgecapital.com
SEIS Open
01/07/2015
Close
N/A
Amount to be Raised: Uncapped
The target return for the Deepbridge Technology Growth EIS 22.9% p.a. over a minimum of three years; representing mid-case capital growth of 160p returned for every 100p invested. To ensure maximum tax efficiency for the investor, the Deepbridge EIS is entirely investor-fee free at point of investment.
The Deepbridge Life Sciences SEIS The Deepbridge Life Sciences SEIS is an opportunity to secure potentially attractive returns by investing in a diversified portfolio of early-stage life science companies, whilst taking advantage of the considerable income tax, capital gains tax, and inheritance tax benefits available under the Seed Enterprise Investment Scheme. The Deepbridge Life Sciences SEIS seeks to fund companies with exciting new technologies that satisfy the needs of large and growing markets. The overarching focus of the Deepbridge Life Sciences SEIS offers investors companies engaged in the development of therapeutics for the following areas: • Anti-viral drug discovery and development • Antibiotic drug discovery and development • Neurodegenerative disease therapeutics • Cancer diagnostics and therapeutics • Autoimmune and other metabolic disorders therapies
T. 01244 746000 www.deepbridgecapital.com
IHT Open
Evergreen
BPR Close
Evergreen
Minimum Investment: £30,000
Fundamental T. 01923 713 890 E. enquiries@fundamentalasset.com www.fundamentalasset.com
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GB Investment Magazine · September 2017
The target return for the Deepbridge Life Sciences SEIS is >35% over a minimum of five years; representing mid-case capital growth of 250p returned for every 100p invested. To ensure maximum tax efficiency for the investor, the Deepbridge Life Sciences SEIS is entirely investor-fee free at point of investment.
Fundamental AIM IHT Portfolio Fundamental Asset Management is an independent, owner managed, investment management firm with an unrivalled knowledge of the AIM market. It has successfully provided AIM portfolio management with inheritance tax planning to private investors, trusts and institutions since 2004 delivering outstanding returns. Our investment ethos for AIM IHT Portfolios is conservative and value based. At its foundation is our in-depth, in-house research, which includes visiting and meeting senior management of hundreds of companies each year. As well as being available on its own broker platform the Fundamental AIM IHT Portfolio service can also be accessed through the AXA Elevate, Nucleus, Standard Life and Transact platforms.
Open Offers
BR Open
Close
01/07/2015
N/A
Amount to be Raised: Uncapped
Deepbridge IHT Service The Deepbridge IHT Service is designed to deliver capital preservation from a portfolio of Business Relief qualifying renewable energy companies that seek to have a high degree of asset-backing and a business model based on the Renewables Obligation, the UK Government subsidies for the generation of renewable energy. Utilising Business Relief, subscriptions may be eligible for exemption from IHT after a minimum of two years. The Deepbridge IHT Service has a target priority return of 6% per annum after the second year.
T. 01244 746000 www.deepbridgecapital.com
EIS Open
24/04/2017
Close
01/11/2017
Amount to be Raised: £1m Minimum Investment: £10,000
Investment criteria: • Attractive subsidies: The UK Government offers subsidies to the renewable energy sector, including Renewable Obligation Certificates and Feed-in-Tariffs. • No planning risk: Investments will be made in projects with all the necessary permissions in place, providing a known cost base for the investment. • Proven technology: The use of proven renewable energy technologies that allow levels of energy production to be forecast with a good level of accuracy.
International Ambulances Ltd International Ambulances Limited was formed in October 2016 by Phillip Bevan to commercialise his revolutionary new ambulance design, the “ACESO”, an all new innovative emergency ambulance that is designed from the ground up to save lives and provide demonstrably better outcomes for patients, paramedics and hospitals. Bevan Davidson International, a technology design and development company has been engaged in developing a concept prototype on behalf of the Company, using the extensive experience they have gained in vehicle concept design and development. The demands on the emergency services and ambulances have continued to grow. From a recent NAO report and Helen Hamlyn Centre for Design, there is a clear need and opportunity for an innovative ambulance that will achieve significantly better outcomes for patients.
T. 020 7071 3945 E. enquiries@growthinvest.com www.growthinvest.com
A&E departments are often overwhelmed with demand, with ambulances waiting to drop off patients. Surprisingly 48% of patients taken to A&E are not admitted to hospital. One of the key strategies of the government, NHS and ambulance services is to increase onsite and in community treatment, called the ‘See & Treat’ strategy. This can provide a better outcome/experience for patients while significantly reducing the onward cost to hospitals. A next generation Ambulance must continue to save lives whilst also becoming a successful mobile diagnosis and treatment centre. An EIS opportunity available exclusively on the GrowthInvest platform.
GB Investment Magazine · September 2017
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IHT Open
Close
October 2014
Open-ended
Amount to be Raised: Unlimited Minimum Investment: £15,000
Puma AIM Inheritance Tax Service Puma AIM Inheritance Tax Service is an award-winning discretionary portfolio service that seeks to mitigate IHT by investing in a carefully selected portfolio of Alternative Investment Market (AIM) shares. Since launch in 2014, the Service has 3 years out performance of the FTSE AIM All Share Index (+44.37% out performance since inception). Focus on defensive growth: Investments selected on a strict, research driven criteria. • Inheritance Tax: The investment is intended to benefit from IHT relief after a two year holding period. • Experienced Team: Led by Investment Director with 18 years of experience specialising in small and mid-cap companies. • Available in ISAs: Investing in a portfolio of qualifying AIM stocks, allowing investors to mitigate IHT while retaining the benefits of an ISA. • Quality companies: Seek to invest in quality companies with strong margins, good returns and a track record of cash generation. • Portfolio construction: Targeting approximately 20 companies with market capitalisation in excess of £50 million and low portfolio turnover. • Platform access: Financial advisers can access the service via the following Wrap Platforms - Ascentric, Standard Life and Transact.
T. 020 7408 4070 E. info@pumainvestments.co.uk www.pumainvestments.co.uk
This advert is aimed at financial advisers only and is not intended for retail clients. Puma Investments is a trading name of Puma Investment Management Limited which is authorised and regulated by the Financial Conduct Authority. For more information, including the risks, please visit our website.
EIS Open
January 2014
Close
Open-ended
Amount to be Raised: Unlimited Minimum Investment: £15,000
Puma EIS The Puma EIS Service employs a proven investment strategy to offer exposure to EIS qualifying investments across a range of sectors. • Investment strategy: Puma EIS seeks to support the growth of UK SMEs, and provide downside protection for investors through a portfolio exposure to HMRC pre-approved companies. It also seeks to provide EIS tax relief on 100% of funds subscribed to the Service (after deduction of Financial Adviser charges) depending on individual circumstances. • Successful deployment: Puma EIS has raised £50m+ to date, and all funds raised have been successfully deployed in EIS qualifying companies with HMRC Advance Assurance before the end of the respective tax year. • Closing dates: Puma EIS is an evergreen service but operates quarterly fund closes usually in April (just prior to the end of the tax year), July, October and January. Funds are allotted as soon as possible following these closes.
T. 020 7408 4070 E. info@pumainvestments.co.uk www.pumainvestments.co.uk
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GB Investment Magazine · September 2017
• Realisations: It is envisaged that investments in Qualifying Companies will be realised within 3 to 5 years. This advert is aimed at financial advisers only and is not intended for retail clients. Puma Investments is a trading name of Puma Investment Management Limited which is authorised and regulated by the Financial Conduct Authority. For more information, including the risks, please visit our website.
Open Offers
IHT Open
June 2013
Close
Open-ended
Amount to be Raised: Unlimited Minimum Investment: £25,000
Puma Heritage plc Business Relief Qualifying Offer: Puma Heritage plc’s core focus is on first charge secured property lending. It’s primary objectives are to preserve capital and mitigate risk whilst generating stable, asset-backed returns for shareholders. • Inheritance Tax: It is intended that a subscription for shares in Puma Heritage plc will benefit from Inheritance Tax relief, provided the shares have been held for at least 2 years at the point of death. • Investment Strategy: Conservative trading strategy focused on secured asset-backed lending. • Flexibility: Choice of income or growth shares, and ability to switch between them. • Prospectus approved: Prospectus approved by UKLA. • Experienced adviser: Puma Heritage has appointed Puma Investments as its trading adviser.
T. 020 7408 4070 E. info@pumainvestments.co.uk www.pumainvestments.co.uk
EIS Launch
12/09/17
SEIS Close
05/03/18
Amount to be Raised: £3m Minimum Investment: £10,000
• Aligned interests: Puma Investments will not receive any performance fees, and its annual advisory fees are only paid in full if a minimum annual return of 3% is achieved. This advert is aimed at financial advisers only and is not intended for retail clients. Puma Investments is a trading name of Puma Investment Management Limited which is authorised and regulated by the Financial Conduct Authority. For more information, including the risks, please visit our website.
Cape Cod Cellars Ltd Cape Cod Cellars, “Martha’s Other Vineyard” is a new company created to build Cape Cod Cellars (“CCC”), into a premier aspiration, lifestyle brand. We will deliver the Nantucket, Martha’s Vineyard and Cape Cod seafood and lifestyle cuisine to London and Europe. We will deliver this feeling to our consumers through our flagship Cape Cod Cellars Café & Wine Bar, our Apparel and Merchandise and eventually, distributing our own wine brands (Chatham Chardonnay, Nantucket Red, Schooner’s Sauvignon Blanc etc.). Our online marketplace will be commensurate with the themes of the flagship Cape Cod Cellars Café & Wine Bar and, in particular, a scalable aspect of the business. Already in production, our golden silk scarves with the Cape Cod Cellars brand to cuff links, necklaces, wind breakers, even corduroys with our logo lining the pockets, Cape Cod Cellars will be hip, smart, cool and upscale.
T. 07917 767 362 E. tim@capecodcellars.co.uk www.capecodcellars.co.uk
When a couple or a group of friends walk into our landmark CCC Café & Wine Bar, we want them to travel back to a time of their childhood or adulthood, fondly recalling great memories on Nantucket, Martha’s Vineyard or Chatham. Wide brown wood floors will be complimented with nautical oil paintings, dunes, red picket fencing, images of lighthouses, and a sailboat hanging from the ceiling. Above the circular, mahogany bar will be portholes with waves flowing behind them. It will be bright, optimistic, memorable and upscale. For Barclays banking details, email tim@capecodcellars.co.uk
GB Investment Magazine · September 2017
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Open Offers
IHT Open
June 2013
Close
Open-ended
Amount to be Raised: Unlimited Minimum Investment: £25,000
Puma Heritage plc Business Relief Qualifying Offer: Puma Heritage plc’s core focus is on first charge secured property lending. It’s primary objectives are to preserve capital and mitigate risk whilst generating stable, asset-backed returns for shareholders. • Inheritance Tax: It is intended that a subscription for shares in Puma Heritage plc will benefit from Inheritance Tax relief, provided the shares have been held for at least 2 years at the point of death. • Investment Strategy: Conservative trading strategy focused on secured asset-backed lending. • Flexibility: Choice of income or growth shares, and ability to switch between them. • Prospectus approved: Prospectus approved by UKLA. • Experienced adviser: Puma Heritage has appointed Puma Investments as its trading adviser.
T. 020 7408 4070 E. info@pumainvestments.co.uk www.pumainvestments.co.uk
EIS Launch
12/09/17
SEIS Close
05/03/18
Amount to be Raised: £3m Minimum Investment: £10,000
• Aligned interests: Puma Investments will not receive any performance fees, and its annual advisory fees are only paid in full if a minimum annual return of 3% is achieved. This advert is aimed at financial advisers only and is not intended for retail clients. Puma Investments is a trading name of Puma Investment Management Limited which is authorised and regulated by the Financial Conduct Authority. For more information, including the risks, please visit our website.
Cape Cod Cellars Ltd Cape Cod Cellars, “Martha’s Other Vineyard” is a new company created to build Cape Cod Cellars (“CCC”), into a premier aspiration, lifestyle brand. We will deliver the Nantucket, Martha’s Vineyard and Cape Cod seafood and lifestyle cuisine to London and Europe. We will deliver this feeling to our consumers through our flagship Cape Cod Cellars Café & Wine Bar, our Apparel and Merchandise and eventually, distributing our own wine brands (Chatham Chardonnay, Nantucket Red, Schooner’s Sauvignon Blanc etc.). Our online marketplace will be commensurate with the themes of the flagship Cape Cod Cellars Café & Wine Bar and, in particular, a scalable aspect of the business. Already in production, our golden silk scarves with the Cape Cod Cellars brand to cuff links, necklaces, wind breakers, even corduroys with our logo lining the pockets, Cape Cod Cellars will be hip, smart, cool and upscale.
T. 07917 767 362 E. tim@capecodcellars.co.uk www.capecodcellars.co.uk
When a couple or a group of friends walk into our landmark CCC Café & Wine Bar, we want them to travel back to a time of their childhood or adulthood, fondly recalling great memories on Nantucket, Martha’s Vineyard or Chatham. Wide brown wood floors will be complimented with nautical oil paintings, dunes, red picket fencing, images of lighthouses, and a sailboat hanging from the ceiling. Above the circular, mahogany bar will be portholes with waves flowing behind them. It will be bright, optimistic, memorable and upscale. For Barclays banking details, email tim@capecodcellars.co.uk
GB Investment Magazine · September 2017
51
Make It Your Business
The tax efficient investment market has changed significantly in recent years. There has never been a better time to get involved, as high value clients are gaining interest in this sector and it’s exactly where you can add tangible value. Complex structures and investments with higher risk profiles mean that clients would benefit from your advice. Without it, they may invest anyway and could make ill-informed decisions, whilst dis-intermediating you from the process and reducing your revenue potential. Whether you’re already advising on SEIS, EIS, BPR or VCT products, or perhaps considering them for your clients’ portfolios then contact us at GrowthInvest. We’ll show you how you can consolidate historic investments onto our platform and build a diversified portfolio from a wide range of managed fund or single company investments. Through our intuitive online platform you’ll be able to offer your clients exclusive access to real portfolio growth, secure in the knowledge that these government-backed schemes offer unique tax efficiencies. Visit us to learn about the products, the pitfalls and how best to advise on this dynamic and evolving sector. So make it your business, before someone else makes it theirs... Find out more at growthinvest.com