Eis december lr (2) by Alex Sullivan

www.eismagazine.com DECEMBER 2015 ISSUE 05

DELIVERING THE GOODS Supplying you with the best investment opportunities

SEIS

EIS

VCT

SITR

IHT

BPR

Octopus is celebrating the eighth birthday of the Octopus Inheritance Tax Service with a special offer: the first 888 new customers who apply for this product through their financial adviser will pay no annual management charge for the lifetime of their investment. For full terms and conditions, please visit: octopusinvestments.com/inheritance The Octopus Inheritance Tax service aims to achieve capital preservation and relief from inheritance tax in just two years, by using a government-established tax relief designed to support investment in UK companies. We’re currently helping thousands of people who want to pass on their wealth free of inheritance tax. To find out how the Octopus Inheritance Tax Service could help your clients please get in touch by calling 0800 316 2067.

For professional advisers only. Not to be relied upon by retail investors. Offer began 28 September 2015. The value of your client’s investment could fall or rise. They may not get back the full amount invested. Past performance is not a reliable indicator of future results. Tax treatment depends on your client’s personal circumstances and may change in the future. Tax reliefs depend on the portfolio companies maintaining their qualifying status. The shares of smaller companies could fall and rise in value more than shares listed on the London Stock Exchange. They may also be harder to sell. Investors should read the product brochure and terms and conditions before deciding to invest, these are available at octopusinvestments.com. We may record telephone calls to help improve our customer service. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 3942880. CAM02721.

CONTENTS 4. Welcome EIS Magazine is published by

IFA Magazine Publications Limited, The Old Wheelwrights, Ham, Berkley, Gloucestershire GL13 9QH Full subscription details and eligibility criteria are available at www.eismagazine.com ©2015. All rights reserved.

Telephone: +44 (0)117 9089 686 Editor: Michael Wilson editor@ifamagazine.com

Publishing director: Alex Sullivan alex.sullivan@ifamagazine.com

Design: Fanatic Design www.fanaticdesign.co.uk EIS Magazine is for professional advisors only. Full subscription details and eligibility criteria are available at www.eismagazine.com EIS 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 wihtout prior permission. All material has been carefully checked for accuracy, but no responsibility can be accepted for inaccuracies, independent research and where necesary legal advice should be sought before acting on any information contained in this publication.

Bad Santa? As the December rally fails to show up, Michael Wilson still finds something in his stocking

6. News

Round up of the latest industry news

8. A Changing Regulatory Environment

Jack Rose, Business Development Director at LGBR

10. Bigger, Stronger, More Resolute Paul Latham, Managing Director of Octopus Investments

14. How We Got to Here

Anna Slemmings, Sales and Marketing Manager at MMC Ventures

16. An Important Transition

Daniel Rodwell, Managing Director of Seed EIS Platform

19. Getting Back to Risk

Ian Battersby, Business Development Director at Seneca Partners

22. Many Ways to BPR

Hugh Rogers, Business Development Director at Puma Investments

25. Parlez-Vous?

Bill Nixon, Managing Partner at Maven Capital Partners

27. AIM in an ISA?

Chris Hutchinson, Director of Unicorn Asset Management

29. A Spirited Year in View

Andrew Aldridge, Head of Marketing at Deepbridge Capital

31. Open Offers

Our monthly listing of what’s currently available for subscription

To stay up to date with the latest EIS news visit www.eismagazine.com December 2015 · www.eismagazine.com

Bad Santa If this festive season leaves your clients feeling like the little boys (or girls) that Santa Claus forgot, they’re in good company. With barely two weeks to go before the big day, the absence of the traditional Santa Claus rally has been notable – not to say baffling, at a time when we’re all being told that things are getting better and better. By mid-December the Footsie was down more than 14% against its April 2015 peak – representing a stillghastly 7% drop over the year to date – and, although the Eurofirst 300 had managed a modest 3.5% price rise, that wouldn’t have comforted you very much against the 10% slippage in the sterling/euro exchange rate over the same period. Whatever George Osborne might say, we Europeans are all in the same boat, and we’ve all taken on 7% more water this year. We could argue about the exact reasons why Bad Santa has been wearing Saint Nick’s scarlet costume this year. It might be the downturn in China, which has up-ended the commodity markets and walloped all the pension funds. It might be that OPEC is at war with itself, driving down the price of Brent crude below $40 and (yes, you guessed it) walloping all the pension funds. It might even be the decision by many banks to curtail their seasonal bonus

EIS Magazine · December 2015

programs, which have always driven the frantic end-of-year buying splurge. Until now. Through A Glass, Brilliantly

Whatever your preferred poison, there’s a chance that you’ll find somebody offering you a gloomy seasonal glass. But there’s one sector that hasn’t been doing at all badly this year. The FTSE Smallcap Index put on a trend-busting 5% growth during the same period. The FTSE AIM All-Share made 4.7%, but the FTSE AIM soared by 13%. Now doesn’t that make your heart sing? It jolly well ought to. If there’s one thing that conventional wisdom teaches us about stock market trending, it’s that small companies tend to be in the ascendant during the early period of a wider economic upswing. And that they can act as bellwethers for a wider revival which is all too absent from view everywhere else you look. Let’s consider the reasons why small and vibrant companies have outpointed the market this year. Imagine what you’d have found the Footsie doing if you’d stripped out all the banks, the mining companies, the deadbeat supermarkets and the oil giants from the index. That’s right, you’d have a bull market taking shape. All this, and low interest rates too. It’s the smaller companies that are showing the true trend. But have your

clients noticed that yet? Fill Your Boots

The chances are that they haven’t. So maybe this would be a good time to remind them, very quietly, that the Chancellor’s commitment to the EIS/ SIS/VCT/BPR sector is still absolutely benign – even if he has put a bit of a damper on VCTs and on those EIS funds which were hoping to benefit from renewable energy. (He’s been ordered by Brussels to lay off the incentives for an industry that’s already well-favoured.) Most of all, though, remind them that the clock is ticking for anyone who looks like bumping his head against next April’s lowered pensions threshold. And that the availability of suitable VCTs is expected to get tighter in the spring, due to changes in the rules. (See Paul Latham’s piece for Octopus on Page 10.) And that this year’s changes have renewed the government’s focus on putting the enterprise back into EIS. We are witnessing a shift away from capital-preservation techniques and toward inventive, higher-risk ventures which more closely resemble the reasons why we developed the EIS principle in the first place. Happy New Year!

Mike Wilson, Editor in Chief

A DIVERSITY OF GROWTH EIS / SEIS FUNDS – BROUGHT TO YOU BY INNVOTEC AND ITS STRATEGIC PARTNERS Anglo Scientific EIS This is Innvotec’s “flagship” Fund. This eighth annual EIS Fund from the Innvotec / Anglo Scientific collaboration is, by demand, now an “evergreen” fund that offers private investors all year round investment into fast emerging companies created and led by the well regarded, specialist and dedicated team of technology entrepreneurs, that is Anglo Scientific.

angloscientific

Anglo Scientific has built a portfolio, all EIS qualifying, of hugely promising companies, focused on delivering world class products based on the very best science, all of which should make a difference to peoples lives; investors have the opportunity to invest in a pre-identified portfolio of five or six of these companies, details of which are to be found in the Information Memorandum. C R E A TING SOLU TIONS

Performance across the earlier funds is impressive and is likely to remain so as the target companies are on a strong upward growth curve in both performance and value.

Startup Funding Club SEIS 2016 The third annual generalist SEIS Fund from the Innvotec / Startup Funding Club collaboration, the first two having been deployed across well-diversified portfolios, with forty companies having been invested in. Startup Funding Club is one of the most successful “boutiques” working with companies seeking seed and early-stage finance, especially those companies that own proprietary intellectual property (IP) capable of being exploited globally and whose founders possess the stamina and know-how to meet the challenges that lie ahead. The Startup Funding Club’s network ensures that opportunities are sourced from many of the UK’s best regarded “incubators and accelerators”. Whilst the portfolio will have a technology-bias, it will also include product based companies and those in the food sector. Integral to the success of the Fund is a mentoring programme in support of the entrepreneurs and a co-investment policy that sees the Fund investing alongside business angels.

Odyssey Mission SEIS UK based private investors have an opportunity to invest in the Odyssey Mission SEIS Fund, a novel portfolio of early stage businesses led by Asian Entrepreneurs. Investors have the prospect of strong capital appreciation whilst helping an “affinity group” renowned for both ability and commitment. The Fund is focused on providing start-up /early stage funding and mentoring support to the best of the next generation of Asian graduate entrepreneurs that wish to build their businesses in the entrepreneurial-friendly United Kingdom, some of whom will require a Tier 1 graduate entrepreneur visa so to do. The SEIS Fund is the first step in the Innvotec / Startup Funding Club inspired Odyssey Mission project to encourage cross fertilization of entrepreneurism between the UK and the Indian sub-continent.

OION SEIS 2016 The OION SEIS Fund is the second Innvotec managed growth fund in association with Oxford Innovation Opportunities Network (OION). The Fund offers private investors an opportunity to invest in a growth portfolio of early stage businesses identified by OION through its UK wide affiliated network of business and innovation centres and its associated business angel networks. The companies that will form the OION SEIS Fund will be from across the UK and will use the proceeds of investment to advance them on their business growth curve. The Fund benefits from the participation of Oxford Investment Opportunities Network (OION) in generating quality deal flow and as with all Innvotec managed SEIS Funds the entrepreneurs will be supported by the provision of experienced mentors.

FinTech SEIS 2016 Another fund from the Innvotec/ Startup Funding Club association, with FinTech Circle as the provider of sector expertise, and the first dedicated to investment in aspiring UK companies operating in the financial technology sector. The global financial services industry is currently experiencing a wave of innovation which is starting to shake up decades of status quo. A large number of “newcomers” are developing products and services that are disrupting traditional activities such as foreign exchange, payments, asset management, insurance and even developing new forms of currencies. Companies within the FinTech SEIS Fund will benefit from the complimentary knowledge and expertise of the parties involved.

“And other funds to follow” For full details on any of the above EIS / SEIS Funds or any other information please contact Innvotec on:

Tel: +44 (0) 20 7630 6990

Email: info@innvotec.co.uk

Web: www.innvotec.co.uk

Issued and approved by Innvotec Limited, Business Design Centre, Suite 310, 52 Upper Street, Islington, London, N1 0QH. Innvotec Limited is a registered company in England & Wales. Registration Number: 2030086 Innvotec Limited is Authorised and regulated by the Financial Conduct Authority.

VA0815

News Round up of the latest industry news The Autumn Statement - Good News, Bad News

The last time that EIS Magazine reported on the emerging regulatory situation was a few days before the Chancellor’s Autumn Budget Statement – and we were worried that Mr Osborne might decide to hack back at the tax privileges enjoyed by instruments such as EIS, VCT or BPR. We also fretted that the system of Capital Gains Tax allowances might come under pressure as the Chancellor sought to fix what looked like a £12 billion hole in the fiscal balance. It’s good to report that our fears were groundless, at least for the time being. The Chancellor was able to pull a £27 billion rabbit out of the hat – the result of a recalculation of Gross Domestic Product by the Office of Budget Responsibility, which gave him an early Christmas present and allowed him to go easy on the cutbacks. For now, anyway. Firstly, there has been no whittling down of GCT arrangements, although that will be of only limited comfort to buy-to-let landlords who’ll be paying a typical 3% levy on sales from next April. There’s also a new requirement that any tax or levies payable on a disposal must be paid within (three months?) of the deal being finalised. Secondly, the Chancellor decided to leave pensions largely untouched (for once) – meaning, however, that the £1 million lifetime allowance will still come crashing down on higher earners from next April. That in turn ought to mean that the pressure from

EIS Magazine · December 2015

investors for alternative tax-efficient solutions will certainly continue. “The Chancellor has listened to calls from the pensions industry,” said Paul Latham, Managing Director at Octopus, “and, aside from confirming the state pension and full state pension rates from April 2016, he has left pensions alone. However, now is the time for those investors who may otherwise be hit by a tax charge from their pension investments to seek alternative tax-efficient solutions, which can complement their existing retirement planning solutions. We consequently expect to see demand for Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS) increase on the back of today’s announcement.” Thirdly, the Chancellor finally squashed all remaining hope that alternative energy projects might still squeeze into VCTs or EIS. The disallowal of such schemes has been widely decried by environmental groups, but in practice its reasoning is less sinister. As several contributors to this issue have confirmed, the government has had its arm twisted by the European Union, which points out that renewable energies already enjoy many financial incentives, and that further concessions would conflict with EU policy. In a fourth gesture of support for UK smaller companies and for entrepreneurs in general, the

Government has voted for another twelve month extension of the small business rate relief scheme, which benefits around 600,000 smaller companies in the UK. The Chancellor went out of his way to stress in his statement that successful entrepreneurs play a critical role in driving economic growth. He also announced the creation of 26 new enterprise zones across the country. All of which went down well with Alex Macpherson, Head of Octopus Ventures, said that the two measures were welcome signs of support for UK enterprise. “From research, funding for innovative technologies, to early stage investment incentives such as the Seed Enterprise Investment Scheme (SEIS), British support for small businesses is some of the best in the world.” “The Octopus High Growth Small Business Report, for example, shows that fast growth enterprises make up less than 1% of UK companies, yet last year it created one in every three new jobs in the UK. Entrepreneurial businesses have a disproportionately positive impact on the British economy, both in wealth and job creation, and the more the Government can do to encourage entrepreneurs to set up their business here and stay in the UK through their business’ growth cycle, the better.”

New EIS Investing in Dry Bulk Shipping Launched TIME Investments’ launch of an Enterprise Investment Scheme (EIS) investing in dry bulk shipping marks a new departure for the fund house, and offers the prospect of allowing risktolerant investors to benefit from what is in effect a proxy for the Baltic Dry Index, a volatile but potentially highly profitable measure. TIME is not the first EIS provider to go down this route – two years ago, Enterprise Investment Partners launched a similarly-structured EIS company called London Shipping Limited (“London Shipping”). What makes it new, however, is the sense that perhaps the deep trough in international shipping trade may at last be coming to an end. Rather than buying directly into the Baltic Dry Index – which is effectively uninvestable, since it’s simply a daily average of bulk shipping prices and has no assets - the TIME scheme aims to set up four portfolio companies, each of which is to purchase a used dry bulk ship that will be chartered to transport a wide range of cargo including grain, coal and fertilizer across global trade routes. Only the initial tranche, for the first ship, is currently being raised. TIME says that advance assurance has been received from HM Revenue & Customs regarding the fund’s EIS status. The company says it is targeting a base case return of a £1.27 from each £1 invested, together with the initial 30 pence income tax relief.

EISA Welcomes News That Replacement Capital May Be Allowed Within EIS and VCT Regulations

The Enterprise Investment Scheme Association (EISA) has welcomed the Chancellor’s statement in the Autumn Statement to the effect that replacement capital may be allowed within EIS and VCT regulations. EISA has long been lobbying for the change. “I am pleased the Government has listened to the representations of the industry,” said EISA Director General

“With seaborne trade expected to double by 2030, and with industry experts predicting an increase in charter rates over the next three to five years, TIME Investments…believes that now is an attractive time to invest in dry bulk shipping, as those owners with bank-leveraged vessels are currently selling assets at discounted prices,” the prospectus declares. Moreover, the ready availability of ships at bargain prices is a further incentive, the company says. Depressed charter rates and constant running expenses for Supramax vessels have combined to place many ship owners in a tight situation, and several have filed for bankruptcy protection - including major Japanese shipper Daiichi Chuo in September 2015. That in turn has increased the numbers of second-hand vessels for sale, and there are also fewer new build orders being placed. So where’s the good news? Mainly that the present situation is set to produce a shipping supply shortage when charter rates eventually begin to recover. The global shipping situation

Sarah Wadham. “Replacement capital was not allowed under the original UK scheme regulations but is allowed under the overarching Global Block Exemption Regulations that govern tax advantaged venture capital schemes in the EU. It’s an anomaly that needed sorting, and it looks like it will be, although it’s likely to be next year when the details are finalised.” This will put us on a level playing field with the rest of the EU, and it is beneficial for the economy, strengthening the finance available to successful businesses.”

is cyclical, with a typical two year lag between demand upturn and supply rebalancing, due to the time delay involved in chartering a new ship. But TIME is at pains to acknowledge the volatility of the Baltic Dry Index, the industry’s main benchmark. The BDI peaked in 2008 at 11,793 points, but by November 2015 it hit an all-time low of 498 points. (A rough working average for the last 12 months would be 1,000 points – editor.) TIME says it “will not use debt to acquire ships, enabling it to act more nimbly and operate more economically than other shipping businesses.” And that “this should ensure that investors are well placed to benefit from any market recovery.” “Independent oversight is provided by an advisory committee of three industry heavyweights, including the CEO of the UK Chamber of Shipping and the founder and former CEO of a London Stock Exchange listed ship broker. “The minimum investment size is £10,000 and applications must be made via an authorised intermediary.” Calculus Capital CEO John Glencross, who took part in the discussions with the Treasury on behalf of EISA, also welcomed the news. “Successful businesses grow, and as they do their needs change. Shareholder equity arrangements that were suitable in the early days may no longer be appropriate and may even be holding firms back. There is often a need to sort out a company’s shareholder structure to allow a larger funding to take place. It will enhance access to finance for these businesses and give them greater flexibility.” December 2015 · www.eismagazine.com

A Changing Regulatory Environment Jack Rose, Business Development Director at LGBR Capital, says it’s all going to be down to deal flow

In the last 12 months we have seen significant changes to both EIS and VCTs that will have profound consequences for the tax investment landscape going forward. What has become clear, from both government rhetoric and legislation, is the intention that both EIS and VCTs should be used for their original purpose - of delivering much needed capital to UK small businesses. Principally, the intention is to support their growth and development while also delivering value for the UK taxpayer. Supporting growth drives employment, which increases returns from corporation and income tax in due course. These changes are set against a backdrop of an ever increasing demand for EIS and VCT products. HMRC have continued to flex their muscles by

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closing a number of ‘schemes’ - causing a dramatic reduction in their number over the last ten years, from a few thousand to a few dozen at the last count. It is clear that the combination of anti-avoidance measures and pension cap limits have led advisers to regard VCTs and EIS as one of the few remaining legitimate financial planning tools with which to minimise their clients’ tax bills. Last year saw the biggest round of VCT funding since 2006, with approximately £400 million being raised, alongside something in the region of £1.5 billion for EIS. It is clear, therefore, that demand exists and is only likely to increase. But with all the changes, what is the impact for providers, products, advisers and fund raising?

Tighter Scrutiny is Coming Turning to the EIS market, it is increasingly clear that the era of capital preservation EIS strategies is coming to an end. Many of the asset classes formerly within this bracket are now excluded such as solar and renewables - and this summer saw the government target other asset classes, such as STOR (short term operating reserves) ) that are no longer deemed to be within the ‘spirit’ of EIS legislation. We anticipate that this will be a continuing trend - with the focus on supporting genuine growth capital, EIS investment strategies will face increased scrutiny.

Deal Flow As a result of these changes, there will be increased competition for deal flow. It will be important to identify providers who have a clear sight of the underlying businesses, are not capacity constrained, and have a track record of ensuring that capital is deployed prudently – rather than it being rushed out the door at tax year end, to meet carry back rules in some cases. The changes will also provide an opportunity for new providers, with expertise in growth capital, to enter the EIS marketplace. With regard to VCTs, the changes announced in the summer Finance Bill will narrow the investment universe for providers –

increasing competition for deal flow and pushing them to look at earlier stage businesses. This will affect the risk profile of VCTs and it will be important to ascertain from providers what implications the changes will have on their investment strategies. A Consolidation Among VCT Providers Unlike the EIS market, where I think we are likely to see new providers emerging on the back of these changes, VCT providers seem less favourably placed. It is already quite challenging to launch a new VCT because of the rules around how dividends are paid, but the changes announced during the summer have increased those challenges. Rather than new VCT

launches, it is possible we will see consolidation. The big issues for 2016 will be around deal flow and capacity from providers. With all the changes to both EIS and VCTs, there could potentially be a supply and demand imbalance, especially for the providers and strategies with a good track record and proposition. It will be key to identify managers with secure deal flow and a clear idea on capacity – to ensure that a client’s investments are deployed into good opportunities at sensible valuations. The danger of increased competition for deal-flow will be inflated prices, which impacts on returns and risk for investors.

December 2015 · www.eismagazine.com

Bigger, Stronger, More Resolute Paul Latham, Managing Director of Octopus Investments, says that the rule changes and restraints of the last nine months have stiffened the industry’s resolve

Demand for both VCTs and EIS appears stronger than ever. According to the Association of Investment Companies (AIC), the 2014/15 tax year raised the fourth highest level of funds ever, with £429 million invested in new VCT shares. For EIS, a record £1.53 billion was raised during the 2013/14 tax year, and I expect that the statistics for the most recent tax year will be equally positive. What’s Been Driving Demand? Pension reforms have played their part. The government has reduced both the annual and lifetime pension allowances and, as a result, many investors have turned towards VCTs and EIS to complement their plans for retirement. Moreover, this year’s changes allowing individuals to draw down more capital from their pensions has effectively given them the freedom to potentially invest that capital elsewhere. This increased flexibility, and the simultaneous removal of the old compulsion to purchase an annuity, mean that investors, provided they are

EIS Magazine · December 2015

willing to accept the higher risk profile attached to investing in VCTs and EIS, can take advantage of the many tax incentives both products offer and – in the case of VCTs – potentially earn a supplemental income during retirement. Yet just when demand is set to soar, there are changes to the legislation for VCTs and EIS which could impair supply, thereby draining the pool of companies eligible for investment. Changes as confirmed this year include: • Reducing the maximum amount of VCT funding a company can receive over its lifetime to £12 million, or £20 million for ‘knowledgeintensive’ companies. • Cutting the timeframe in which VCT companies are eligible for funding, so that firms have to have made their first commercial sale in the past seven years, or ten years for knowledge-intensive businesses. • With the European Union keen to ensure that ‘state aided’ money – such as investments that qualify for tax reliefs – is used to fund

new growth rather than to acquire existing shares or businesses, VCT money can no longer be used to fund management buyouts and acquisitions. • In October, the government announced further changes aimed at limiting the investment mandates of EIS and VCTs: from 30 November 2015, investments made in reserve power companies no longer qualify for the EIS or VCT tax reliefs. • In the Autumn Statement, these changes went even further, and all remaining energy generation activities will be excluded from VCTs and EIS as of 6 April 2016. Some people might look at the legislative changes and surmise that there is heavy scrutiny from the government. But successive governments, including the current one, have been very supportive of VCTs and EIS since they were introduced over 20 years ago. These new rules might be reducing the number of smaller companies eligible for VCT and EIS funding, but they are not unreasonable and do

not come as a shock. Rule changes to VCTs and EIS are the norm, not the exception, and to date have never been applied retrospectively. In short, no-one should be pushing the panic button just yet. Business as Usual?

The first point to make is that these changes do not materially affect the way in which VCTs or EIS work – indeed they will only help to ensure that high-growth and innovative businesses can continue to benefit from investment. Crucially, investments already made aren’t impacted. A specific VCT or EIS won’t look any different to the shareholder after the change. It will still be a portfolio invested in hopefully, well-performing

businesses that will continue to do what they have been doing. Over the past 20 years we have witnessed successive governments make a number of tweaks to the legislation to ensure that the tax incentives are targeted appropriately. It’s their job, after all, to ensure that EIS and VCTs continue to fulfil their policy objectives. But while the range of companies that now qualify for tax reliefs might be slightly smaller, there’s still a thriving and fertile market full of the type of fast-growing smaller companies, many of whom are desperate to access funding, that VCT managers like us look for. We believe there will continue to be a good pipeline of potential

investment opportunities. We are used to governments making changes to the rules to ensure investment is being targeted to companies and sectors most in need of finance. For us, it’s very much business as usual. Where is the Market Heading?

The market for VCTs and EIS is now mature and the type of investment opportunities available today are vastly different to when these schemes were first introduced. If you need a reminder of just how much has changed over two decades, the internet was still considered primarily a government rather than commercial project when EIS was introduced in 1994.

December 2015 · www.eismagazine.com

It is inevitable that some investment managers will feel the pain of the legislative changes more than others. Some VCT managers will need to change their investment mandates and shift their focus in light of the recent legislative changes. However, today there is a range of VCTs available to investors, for example those that focus on early stage investments to those that back companies listed on the Alternative Investment Market that qualify for VCTs. I would suggest early-stage companies where current and future legislation is least likely to have

an impact are particularly attractive to investors The Octopus High Growth Small Business Report 2015 identified some 22,000 UK smaller companies with an annual turnover between £1 million and £20 million – these are firms that make up less than 1% of UK companies yet created one in every three jobs in the UK last year. Yet almost one in every four companies surveyed in the report said they found it difficult to access the funding that they needed to grow. Clearly, there’s still a huge opportunity for VCTs and EIS to help support these

underfunded companies. Both VCTs and EIS are wellestablished government-approved initiatives and both are recognised as being a vital source of funding for many UK smaller companies – companies that make a significant contribution to our economy and generate thousands of jobs. Investor demand for such products shows no signs of abating and I have no doubt that the industry will find ways to channel its efforts into finding an appropriate supply of new investments.

“smaller companies with an annual turnover between £1 million and £20 million – these are firms that make up less than 1% of UK companies yet created one in every three jobs in the UK last year.”

EIS Magazine · December 2015

How We Got to Here Anna Slemmings, Sales and Marketing Manager at MMC Ventures, says 2015 has been an eventful year The chancellor’s Summer Budget proposed a number of changes to the sector, many of which went beyond the draft legislation originally published in March. This was largely to ensure the correct application of EU State Aid guidelines to EIS and VCT, which seek to promote development capital for early-stage businesses and intellectual property innovation. In order to comply with EU regulation, the government had little choice but to enact the changes. So now, with state aid approval and Royal Assent hopefully imminent, what is the outlook for EIS and VCTs in 2016? In order to consider the future of the industry, it is worth reflecting on how we got here. A Bit of History

The government first introduced EIS in 1994 to encourage private investors to provide capital for growing UK unquoted companies. Then, as now, it was difficult for entrepreneurs in unprofitable businesses to secure lending from institutions, in spite of the role these businesses play in driving economic growth. Fast forward more than 20 years, however, and the picture changes. HMRC has reported that, since its launch, almost 23,000 companies have received investment through EIS and more than £12 billion worth of funds have been raised. However, to date, a significant proportion of EIS and VCT investment has flowed into funds investing in asset-backed businesses, capital preservation schemes and companies that benefited from other public

subsidies and tax breaks - most of which were arguably not acting in the spirit of the legislation. It is likely that this type of investing drove, in part, the many changes that have been made to the EIS and VCT sectors over successive years. Whilst the tax reliefs for investors still remain as generous as ever, the investments that qualify are being consistently refined. And in our view this is a positive shift towards the scheme’s original purpose: encouraging investment into smaller high-growth UK companies. As such, we believe that the major investment theme for 2016 will be toward more ‘growth’ orientated funds and opportunities, and away from what were deemed ‘lower risk’ propositions. Still Confusing for Investors

What is clear too, however, is that the frequency, scope and sometimes ill-defined nature of the changes to VCT and EIS legislation over the past few years have resulted in significant confusion in the industry, and will probably result in further modifications. The additional layer of EU complexity may cause difficulties for the sector in the coming months while adjustments are being made in order to comply. By way of example, there have been reports of delays with EIS3 processing - both the advanced assurance for companies, and the generation of the tax

certificates that allow investors to claim their relief. Should these delays become more pervasive, we anticipate this being a significant issue for the industry throughout 2016. On the other hand, it should be noted that HMRC have announced their intention to make access to EIS and VCT easier for companies and investors alike through a process of digitisation, a move that would surely be welcomed by the broader industry. Don’t Cook the Golden Egg

Ultimately, while we support the government’s efforts to channel funding to the companies that need it most, there is some risk that the complexity creeping into the process will ‘kill the goose that laid the golden egg’. With EIS and VCT missing from the chancellor’s Autumn Statement, it is possible that the government has decided to stop tinkering and allow these schemes to fulfil their original purpose – encouraging investors to support early-stage businesses that would struggle to find funding through traditional means.

December 2015 · www.eismagazine.com

An Important Transition Daniel Rodwell, Managing Director of Seed EIS Platform, says advisers have plenty to catch up on

Ea In rly ve St stm ag en e ts

2016 promises to be an interesting year within the EIS and VCT market. There are a number of key themes which could serve to change the landscape and the approach of those using the schemes. The EIS market is experiencing significant growth at present, with recent government statistics confirming investment via EIS in excess of £1.5 billion during the 2013/14 tax year. This represents an increase of 48% on the preceding year, meaning in effect that the market has doubled in size since 2010/11. Why? Well, in an environment of restricted pension contributions, advisers are increasingly viewing EIS investments as a realistic alternative in tax planning for suitable clients.

EIS Magazine · December 2015

Acceptance of the Seed EIS scheme is also gaining traction, despite the limits of the scheme in terms of investable capital. In its first year (2012/13) there was £86 million invested through the scheme, but in 2013/14 this figure soared by 93% to reach £166 million. Official Focus on Growth

It gets better. The use of the SEIS sector can only benefit from the fact that it can now be used alongside EIS in one transaction. This welcome improvement of the rules enables businesses to raise more capital at the outset, enabling them to concentrate on strategy execution. Alongside this there are obvious benefits to using both schemes at once for client tax planning. With the Finance (No.2) Act 2015 recently receiving Royal Assent, it is

clear that the government wishes to focus the schemes toward investments that deliver higher growth and generate employment. EIS or VCT money must be invested not only for the purposes of a qualifying trade, but must now also promote business growth and development. With new restrictions on the age of a qualifying business and the prohibition of use for the purposes of a management buyout or trade acquisition. Goodbye Capital Preservation Vehicles

Another example of this stance has been in the withdrawal of qualifying status for ‘renewable energy’ offerings. This ‘capital preservation’ type offering has historically represented a significant portion of the market -

and it now remains to be seen whether advisers that have been active in this segment will be willing to accept the perceived increase in risk associated with growth based EIS products. Hello Risk

Focusing tax efficient investment towards smaller enterprises will involve an increased acceptance of risk. In assuming this risk, it is of paramount importance that there is an appropriate level of due diligence conducted. Whether investments are made into EIS funds, portfolio services or directly into qualifying companies, there should be due diligence and analysis at both manager level and investee company level. Advisers

can work with expert third parties as a starting point, then use their own expertise and client knowledge to make informed decisions. Investment in early-stage companies has been growing significantly in recent times, and the stance of the Treasury will only be a catalyst to this. The dramatic growth of equity crowdfunding platforms which offer early stage SEIS and EIS investments has proven that there is significant appetite for these products in the retail market. These direct-toconsumer offerings, by definition, fail to include advisers in the process. Raising questions around client suitability within a high risk asset class.

And in 2016? In 2016 we expect to see advisers being increasingly included in this process, ensuring that clients are adequately educated around the products and the inherent risks. This may require a process of education for some advisors, who have historically been reticent to advise on this segment. Hurdles still to be overcome include risk profiling, a general lack of understanding of the products themselves, and concerns around professional indemnity cover. Nonetheless, the inclusion of more advisers will bring a welcome layer of professionalism to a market that is becoming more effectively regulated as it matures.

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December 2015 路 www.eismagazine.com

Getting Back To Risk Ian Battersby, Business Development Director at Seneca Partners, says things have changes now that capital-defensive strategies are being discouraged

2015 has been a year of significant change for tax-advantaged VCTs. The government, while complying with state aid rules, is seeking to ensure that tax reliefs are made available to support eligible companies in an effective and well targeted way and that they continue to provide value for money for UK taxpayers. July’s consultation paper from HMRC was full-on about the government’s concern over the potential for schemes to be used as tax mitigation products with the aim of capital preservation, or perhaps as a means of reducing tax on capital gains. And that, it thought, was missing the point about a tax break that was really supposed to be driving enterprise instead. This was the context for this

year’s disqualification of renewables, and of other subsidised investments where the risk had been substantially removed prior to investment, as a tax-efficient investment avenue. And the change in mood has significantly changed the landscape for providers and advisers alike. The Figures

According to recently published government statistics, 2013/14 saw £1.529 billion invested into the EIS market (an increase of around 50% on the previous year), of which over £400 million had been invested into capital preservation type products. Some 26,275 investors had claimed tax relief through EIS, of which 69% had been for amounts of between

£25,000 and £500,000, and 19% for amounts between £500,000 and £1 million. The steadily tightening cap on pension contributions is going to make it more and more likely that EIS will continue to enhance its position as a mainstream tax-efficient product. The trend may be further compounded by the recent changes in the VCT arena - where final details are yet to be concluded at the time of writing, and where revised strategies are due to be announced. But the disqualification of renewables from EIS eligibility suggests that it would be logical to expect that the further £400 million invested this year will be seeking a home in capital growthbased offerings instead. December 2015 · www.eismagazine.com

What Does This Mean for EIS Providers and Advisers? At provider level, the competition for good quality investment deals is likely to intensify - and those providers who have hitherto specialised in energyrelated and capital preservation investments will need to either change tack (and presumably buff up their skillsets too), or to retire from the market altogether. For advisers, there will undoubtedly need to be some client re-education and analysis of risk capacity. Crucially,

EIS Magazine · December 2015

they will need to increase their research and due diligence on the product providers they choose to work with. Managers with clear specialism in growth capital investing and with strong deal flow will be key considerations for advisers and investors seeking the wise deployment of their capital. A Different Game, A Different Tempo Growth capital investing is a markedly specialist skillset and advisers need to be alert to the

prospect of providers with surplus capital at their disposal, chasing deals and over paying, which will have obvious consequences for their clients’ returns further down the line. This problem tends to be more acute in the later stages of the tax year. So offerings where there is little or no investment risk really ought to carry a health warning for investors going forward. These are more than likely to carry increased ‘tax risk’ in the future, as HMRC’s searchlight will surely bring them into sharp focus.

What It Says on the Tin Frankly, the removal of tax reliefs from investments which have little or no risk attached is logical and fair in the wider context of the tax paying public. It will be interesting to see how the market settles around these changes. The notion that EIS becomes viewed as a non-correlated, small private equity component within clients’ wider

portfolios, but with added tax benefits, may be more aspirational than realistic in the near term. However, the fact remains that HMRC’s direction of travel is driving towards an ‘investment led’ rather than a ‘purely tax led’ approach and it is difficult to argue a case against that. Perhaps, then, there may be a trend towards all year round investing rather than a dash for the line in February and

March where there may be the added temptation to sacrifice deal value on the altar of a time deadline. Tax advantaged venture capital schemes are there to meet the government’s aim of providing valuable support to small and growing businesses seeking finance to develop, to grow and to create employment. That’s what it says on the tin.

December 2015 · www.eismagazine.com

Delivering calculated excellence for your clients We offer a range of tax-efficient investments with a proven track record of delivering for our investors and the businesses we support. Our VCT, IHT, EIS and AIM investments suit a variety of tax planning needs which our expert team are happy to support you and your clients with across every step of the process. Call our Business Development Team on 0207 408 4100 or visit pumainvestments.co.uk to find out more.

This advertisement is an exempt financial promotion issued by Puma Investments. It is for the use of professional advisers only and should not to be relied upon by retail clients. Puma Investments is a trading name of Puma Investment Management Limited which is authorised and regulated by the Financial Conduct Authority. Our offerings place your clientsâ&#x20AC;&#x2122; capital at risk and investors may not get back the full amount invested. The tax treatment of our offerings depends on individual circumstances and may be subject to change. Past performance is not a reliable indicator of future results. 20

EIS Magazine Âˇ December 2015

Many Roads to Business Property Relief Hugh Rogers, Business Development Director at Puma Investments, explores the different ways to reflect Business Property Relief (BPR) Business Property Belief can be considered a simpler and more efficient way to mitigate inheritance tax (IHT) compared to traditional trusts and gifts, but there are a variety of different routes available for accessing BPRqualifying investments. Most advisers are reasonably aware that investors can claim 100% inheritance tax relief for holding shares in Business Property Relief qualifying companies, as long as they have held them for more than two years at the point of death. However, when it comes down to the details, many are less sure of their ground. So let us take a closer look at the options available to the investor. What’s In, What’s Out We are all aware that BPR qualifying companies include most companies listed on AIM, and EIS investments, but fewer understand that other unquoted companies may also qualify. However, investors should also be aware that not all companies will automatically qualify for BPR. A firm must be wholly or mainly a trading business – meaning that the rules automatically exclude those dealing in securities; in stocks or shares; in land or building; or in the making or holding of investments. As IHT becomes an increasing concern for many investors, demand for investing in unquoted BPR-

qualifying companies has grown. Investment management companies can offer investors a variety of BPR solutions. Puma Heritage, for example, has a particular focus on senior secured lending, which can help to preserve capital by taking security over assets when advancing loans. BPR investments will always carry an inherent element of liquidity risk but AIM-listed BPR qualifying companies can offer investors a higher potential for liquidity than unquoted companies. Investors can access this type of company through a direct investment, although it is important to note that there is no way for investors to view a definitive list of BPR-qualifying companies on AIM. Investors will also be required to regularly check an AIM company’s BPR status, as this can change over time. The AIM Route

Another way for investors to gain IHT relief through AIM-listed companies is with a managed portfolio of AIM stocks, which offers more diversification and gives the peace of mind that the BPR qualifying status is being regularly monitored on your behalf. The AIM market has been around for 20 years and is more established and mature than many may perceive it to be. It comprises a wide variety of well-established companies with substantial assets and sound business

models. Fund manager for Puma’s own AIM portfolio, Justin Waine, takes a deliberately defensive approach to investing in AIM shares by targeting only BPR-qualifying companies with market capitalisations of over £50 million. EIS Holdings

EIS companies also qualify for BPR after two years, but they must be held for a minimum of three years to maintain the range of other initial tax benefits. The 30% income tax relief offered by EIS companies could prove particularly attractive for any clients facing a potentially large income tax bill should they opt to take a large withdrawal from their pension pot. Although typically considered suitable for more sophisticated investors, accessing EIS companies through a portfolio service can help to mitigate some of this risk. The Puma EIS portfolio service has a strict selection criteria to target asset backed businesses, once again with the aim of generating stable returns whilst aiming to preserve capital for investors. Finding the Right Vehicle

As we’ve seen, each of these options for accessing BPR offers its own unique benefits and risks. As with any investment, investors must think carefully about their own financial needs and should always consult with an independent financial adviser before committing to a BPR solution.

December 2015 · www.eismagazine.com

Parlez-Vous? Bill Nixon, Managing Partner at Maven Capital Partners, says that European legislation is behind a recent spate of changes Investors may be aware that the world of VCTs and EIS has been subject to change recently, following the enactment into law of the 2015 Finance Bill. Less well known, perhaps, is that the provisions of the Bill are intended to ensure that the UK is compliant with EU law - particularly in relation to state aid rules as they impact on smaller, growth companies receiving finance from a fund manager whose product falls into the state aid category. In practical terms, this means that VCT and EIS managers will be more restricted in their investment activities - most notably, in that they are no longer being allowed to invest in companies more than seven years from their first commercial sale, or to fund acquisition finance, which is most commonly a management buy-out. A Challenge for Managers

There will also be a ‘no acquisition’ rule, and managers will be required henceforth to ensure that investee companies use the VCT or EIS funds for qualifying purposes only - with legal contracts in place to ensure that this provision is adhered to. In our view, this presents solus AIM managers with a very difficult operating model, as investments

EIS Magazine · December 2015

in AIM companies can now only be made at IPO, and not in the secondary market, and it is unclear whether an AIM manager has the ability to prevent a listed company from using any funds raised from state aid sources to finance acquisitions. This is a very real and serious issue, as the penalties for breach are significant for investors. One Door Closes, Another Opens

These changes are generally unwelcome, but by no means do they signal the end for the VCT and EIS industry. Certain exclusions to the new rules apply around turnover relative to the amount invested, or whether a company has received state aid funding in the past. And for those managers who also look after non-state aid monies, there is the possibility to co-invest those funds with VCT and EIS capital and retain greater flexibility. Helpfully, the UK government has also stated that it will investigate and in due course propose separate legislation to allow for ‘replacement capital’, which may further increase the range of companies and transaction types that VCT and EIS managers may invest in. These changes are likely to impact the product offers coming to market during the current fund raising season,

as managers adjust to the new rules and refine their investor offering. Good quality generalist. VCT offers are likely to be in short supply - and indeed, they may be fully subscribed well before the end of the tax year as investors look to secure a tax efficient investment in an existing VCT via a top-up offer, where there is a strong history of growth in net asset value and dividend yield. VCT managers who understand how to invest successfully in the growth of SMEs, and who have good coverage of the UK market, will continue to identify and work with strong, ambitious businesses that offer the potential for healthy investor returns. And the Future?

The VCT and EIS market is a vital part of UK business and finance. It acts as a funding bridge for many high growth companies, and helps the UK remain at the forefront of innovation across many varied business sectors. There is a cost to the taxpayer in supporting these investment products, but the value add to the SME sector in the UK dwarfs that cost. It adds up to one of the few ways that an investor can broaden his or her portfolio, while gaining diversified exposure to some of the companies of tomorrow, in a tax efficient fashion.

December 2015 路 www.eismagazine.com

AIM in an ISA? Chris Hutchinson, Director of Unicorn Asset Management, looks at a little-known investment that’s got everything going for it Much has been written of late about Britain’s baby-boomers hitting retirement age - and not surprisingly, really. Over six million of the UK’s 22.7 million ISA investors - or 25% - are now over the age of 65. This means that, in addition to thinking about how their pensions will keep providing them with an income into older age, an ever-increasing number of investors are looking at estate planning solutions within an ISA framework. With this in mind, 2016 could well be the year when Alternative Investment Market (AIM) companies held within ISAs become more prominent – thanks to their ability to solve a growing problem of inheritance tax (IHT) planning for those investors over the age of 65. Rapid Exemption

Most of us are already aware of the potentially attractive growth prospects

that AIM companies can offer, but many people are surprised at just how quickly they qualify for IHT exemption. Whereas more traditional forms of IHT planning - such as gifts or trusts can take up to seven years to be fully exempt from IHT, those AIM stocks which qualify for business property relief (BPR) only need be held for two years before the IHT immunity kicks in. Double your Advantage

You won’t be surprised, then, to hear that the AIM/BPR route has been popular for years, and that there are a considerable number of AIM IHT portfolios for investors to choose from. But the real game changer came just two years ago, when a rule change meant that AIM shares could be held for the first time in an ISA wrapper - allowing them to receive the additional benefit of having tax free status on the capital growth and the income they generate. And all this on top of

the IHT exemption benefit. Let’s look at a case study to understand the impact of the rule change: An investor who has accumulated £500,000 in an ISA portfolio, might not just want to mitigate their IHT liability, they also might want an income. On this basis, a yield of 3% would give back £15,000 tax-free. However if the investor had used their tax free IHT allowance elsewhere, and had no spouse to leave it to, their estate could lose up to 40% (£200,000) of its value. We see this tax change as an opportunity to provide something genuinely different. Advisers would be wise to look closely at AIM IHT as a way of providing ISA investors with effective and efficient mitigation of their IHT liabilities, without the time lag or complexities of some of the more traditional solutions.

“Over six million of the UK’s 22.7 million ISA investors - or 25% - are now over the age of 65.” 24

EIS Magazine · December 2015

A Spirited Year in View Andrew Aldridge, Head of Marketing at Deepbridge Capital, expects a significant expansion during 2016 The outlook for EIS in 2016 is extremely positive. The Chancellor has indicated that he is largely finished his ‘tweaking’ of eligibility. Instead, he is now focusing on ensuring that HMRC has the tools and resources to be able to better identify and act against tax avoidance and abuses to the system. This should allow individual companies and portfolio managers the confidence to be able to focus on providing investment opportunities, which are within the original spirit of EIS. With renewable energy – and, latterly, reserve energy - no longer qualifying for EIS, I expect to see new and innovative products come to market. The tightened criteria around company age and size will also see providers re-assess their offerings with a general acceptance that, in

order to benefit from tax reliefs, the government will want to see some degree of risk being taken by the investor. After all, the substantial tax reliefs are indeed compensation for the illiquidity and high-risk nature of investing in small, unlisted companies. We have already seen the considerable growth of crowdfunding in the UK, and I expect this to continue to grow in 2016. This has stimulated awareness of EIS and has encouraged some investors to ask their financial advisers about other EIS or SEIS opportunities. I expect that trend to continue in 2016. The SITR Landscape

I also expect to see social investment tax relief (SITR) opportunities increasing in number and volume during 2016. Although there are still question marks around such propositions, and the exit

opportunities thereof, changes in the eligibility rules are allowing more organisations to consider SITR. As UK investor confidence grows, so will the desire for sociallyorientated investments. The reducing pension lifetime allowance (LTA) has also heightened the interest of financial advisers in finding other tax-efficient opportunities for the expected 10% of savers who are likely to be adversely affected by reductions in LTA. EIS forms a credible part of such planning. Technology

I expect technology and life sciences to continue to be appealing investment sectors during 2016. Investing in technology has always been popular, since ‘technology’ is generally perceived as advancement, and people will always want to be ahead of the crowd.

December 2015 · www.eismagazine.com

And Life Sciences? Life sciences are another area that remains particularly interesting for many investors – due, not least, to the potential rewards on offer for those ‘superstar’ concepts which go all the way from university spinout through to nine or ten figure exits. The latter are, of course, the minority of cases – and, with an attrition rate of approximately 38%, investors would be best advised to consider a ‘portfolio’ approach to this market – particularly since it is unlikely that the majority of investors will truly understand the underlying therapeutics, pharmaceuticals or technology.

EIS Magazine · December 2015

In contrast to my earlier suggestion about technology, however, I would suggest looking to invest at the earliest realistic opportunity when it comes to life sciences. Companies in this field will often go through more, and larger, funding rounds than technology companies before eventually realising an exit. This inevitably means that an earlier investor will find his shareholding diluted – but, having started with a larger slice of the pie, he will still end up with a better exit that someone who came in later, at a higher share price and with only a marginal stake. The government is supportive of EIS, but wants it to be used within the spirit in which it was originally intended. 2016 promises to be another positive year for

the sector, with new entrants, increasing transparency and the right spirit. Whether we’re talking about the Romans looking to invest in aqueducts, or the Victorians looking to invest in Brunel and his ilk, or the 1990s dot.com bubble, history proves that there has never been a shortage of individuals looking to obtain a piece of ‘the next big thing.’ These days, my general suggestion to anyone looking at investing in technology is to try to invest at the commercialisation stage. Investing early can bring great rewards, but it can also be extremely risky. By investing at the second funding stage, however, you should be able to identify whether a company is postrevenue and beyond proof of concept thus mitigating some risk.

Open Offers Our monthly listing of what’s currently available for subscription Investment Key:

SEIS

EIS Open

01/08/2013

N/A

Amount to be Raised: Uncapped

EIS

VCT

SITR

IHT

BPR

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 high-growth 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:

T. 01244 746000 www.deepbridgecapital.com

EIS Open

January 2014

Quarterly

Amount to be Raised: Unlimited

T. 020 7408 4070 E. info@pumainvestments.co.uk www.pumainvestments.co.uk

• Energy & resource innovation; • Medical technology • IT-based technology

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.

PUMA INVESTMENTS - PUMA EIS Puma EIS employs an investment strategy similar to that successfully deployed by the Puma VCTs and aims to provide investors with downside protection in a carefully managed portfolio. Building on Puma’s established track record in tax efficient investments, Puma EIS targets asset-backed businesses aiming to provide downside protection for investors through a portfolio exposure to HMRC pre-approved companies.

Successful Deployment: Puma EIS was the largest fundraise of any new EIS with a capital preservation strategy launched in 2013/14 tax year. All funds raised were successfully deployed into companies with HMRC Advanced Assurance before the end of the tax year end. Allotment Dates: The discretionary management service has no fixed closing date. Puma EIS intends to make quarterly allotments with an allotment shortly in advance of the tax year each year. Strong Track Record: Building on the market leading track record of the Puma VCTs which operate a similar asset-backed investment strategy. Realisations: It is envisaged that investments in Qualifying Companies will be realised within 3 to 5 years. Investment Size: Minimum subscription is £25,000 with no upper limit. December 2015 · www.eismagazine.com

EIS Open

Now

Evergreen

Minimum Subscription: £10,000

Rockpool’s EIS Portfolio Service Rockpool’s EIS Portfolio Service offers an alternative to traditional EIS funds. Rockpool creates direct private company investment opportunities for its network of investors which includes hundreds of successful entrepreneurs and professionals from a wide range of business sectors. Investors can choose to build a bespoke portfolio of EIS qualifying private company investments or let Rockpool build their portfolio for them.

Rockpool targets companies which are profitable or are asset-rich. Asset-rich sectors include crematorium operation, construction project delivery, managed storage services and children’s nurseries.

Rockpool’s model offers full transparency and control with meet the management sessions, regular updates, investment reviews and an on-line portal. T. 0207 015 2150 E. team@rockpool.uk.com www.rockpool.uk.com

EIS Open

Now

Evergreen

Amount to be Raised: N/A

There are two ways to access the service: ∞ Self-select - the investor selects which companies to invest in with a minimum of £10,000 per company ∞ Managed service – Rockpool selects the companies to match the investment strategy of the investor. Minimum investment of £10,000 which will be spread across a number of companies.

Par Syndicate EIS Fund The Par Syndicate EIS Fund is an evergreen EIS fund, unapproved by HMRC, investing in innovative high growth potential companies with a view to generating capital gains. The fund, managed by Par Fund Management Limited, made its first investment in December 2012. The fund’s mandate is to invest alongside (and on the same terms as) business angel syndicates, and usually, but not exclusively, co-invests with the Par Syndicate, a leading business angel syndicate that has been investing since 2009. The fund may be promoted to retail investors under COBS 4.7.

T. 0131 556 0044 E. info@parequity.com www.parequity.com

EIS Open 04/06/2015

Close 24/06/2016

Amount to be Raised: £30m Min Investment: £50,000

T. 020 7493 4940 E. madaleine@calculuscapital.com www.calculuscapital.com

EIS Magazine · December 2015

Calculus Capital EIS Fund 16

Calculus Capital, creators of the UK’s first approved AIS Fund and three time winner of EIS Fund Manager of the year, is proud to present its 16th EIS Fund.

Investors can benefit from over 16 years of invaluable investment experience and a strong track record of delivering excellent results to investors. EIS Fund 16 offers investors a portfolio of at least six qualifying companies (the historic average is eight) across a diverse mix of sectors. While the Fund targets capital appreciation, capital preservation is key, this is underpinned by our robust investment process, detailed investment agreements and investment strategy of focussing on established firms with the following characteristics: •The ability to achieve our target IRR of 20% •Experienced management teams •Successful sales of proven products or services •Revenue generating with a strong commercial proposition •Profits or a clear path to profitability •Clear route to exit

The 12-18 month investment programme commences after the relevant closing date. We value our reputation for personal service as much as our investment record, and are focused on providing an excellent client experience.

EIS Open

Now

Evergreen

Amount to be Raised: Unlimited Min Investment: £25,000

Triple Point EIS Service The Triple Point EIS Service targets investments across a range of sectors including infrastructure and construction.

The investment strategy has been shaped by our extensive and successful experience managing over £100m of EIS qualifying investments to date, where we adopt a cautious and meticulous approach to managing investors’ capital without losing the ability to capture growth opportunities.

The investment strategy is built around identifying the right opportunity, using our rigorous risk management processes. This focuses on selecting companies for funding which meet our key criteria for capital security and transparent exit strategies. We target high quality, simple investments and cash generative businesses; such as those in the current pipeline of Combined Heat and Power, which qualify for EIS tax benefits and target returns of £1.10 to £1.15 per share. In this tax year it is expected that shares will be allotted through the EIS Service into 2 or more EIS companies that, on financial close, are looking to either construct new facilities or refurbish and extend existing energy centres, incorporating combined heat and power plants (“CHPs”).

T. 020 7201 8990 E. contact@triplepoint.co.uk www.triplepoint.co.uk

EIS

SEIS

Open

January 2015

N/A

Amount to be Raised: £5m

T. 020 7873 2122 E. seis@jensonsolutions.com www.jensonfundingpartners.com

The Triple Point EIS targets opportunities that are designed to facilitate an exit for investors after three years, which we have a excellent track record in achieving. Please contact the sales team for more information.

Investments can be illiquid and the value of your investment is not guaranteed.

Jenson Funding Partners - SEIS & EIS Fund 3 We are pleased to follow-up our first two funds with a combined SEIS and EIS Fund (‘Fund 3’). Our offering allows investors to choose whether they want to invest solely via SEIS or EIS or to split their funds across SEIS and EIS investments. The Fund aims to target exciting new innovative and disruptive technologies to be nurtured alongside existing investment opportunities that require follow-on investment to fully exploit commercialization of a proven business model. At Jenson we aim to offer these businesses far more than just funding. To date, we have actively advised entrepreneurs to re-evaluate business models, reduced projected costs and introduced potential executives, partners, customers and suppliers as part of the value added service we provide. Further we believe the addition of an experienced finance director to the management team of Investee Companies, even on a part-time basis, will enhance returns. This is why each investment is allocated a Jenson finance director a key differentiation between ourselves and other SEIS and EIS providers. The combined SEIS and EIS structure is designed to provide increased diversification as a portfolio investment. The balance between capital growth, portfolio risk and time horizon is maximised, whilst enhancing the tax advantages available.

December 2015 · www.eismagazine.com

EIS

SEIS

Open

Now

Evergreen

Minimum Subscription: £20,000

Kuber Ventures Multi Manager Platform Kuber Ventures Alternative Investment Platform allows investors to create a portfolio across different Fund Managers for EIS/SEIS/BPR investments. Through a single application and depending on the scheme selected, investors can create a diversified spread of qualifying investments.

Investors may select individual funds or choose to achieve further diversification by investing in one of the Kuber strategies available. Our 8 strategy choices include:

T. 020 7478 8540 E. info@kuber.uk.com www.kuberventures.co.uk

• Business Property Relief (Minimum Subscription £40,000) • Diversified Growth • Asset Backed • Seed & Early Stage Growth • Mature Growth • Long Term Investment Focused • Media • Seed EIS Strategy

SEIS Open

01/07/2015

31/03/2016

Amount to be Raised: 1.5m

T. 01244 746000 www.deepbridgecapital.com

EIS Magazine · December 2015

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 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 investorfee free at point of investment

VCT Open

November 2015

05/04/2016

Amount to be Raised: £30m

PUMA INVESTMENTS - PUMA VCT 12 Puma VCT 12 builds on the market-leading track record of previous VCTs. Puma VCT 12 will adopt the same, proven investment strategy primarily investing in established businesses in the form of ordinary equity together with senior secured loans. Strong Track Record: Puma VCTs I to V head their peer group for total return. Puma VCT V, the latest VCT to close delivered a total return of 106.3p per share, (equivalent to a 9.4% annual return) making it the highest return to date for a limited life VCT.

T. 020 7408 4070 E. info@pumainvestments.co.uk www.pumainvestments.co.uk

Dividends: Target average annual tax-free dividend equivalent to 5p per share over the life of the fund, commencing from April 2018. Five Year Life: It is envisaged that after 5 years, the Directors will propose a special resolution for shareholders to vote on the process of winding-up the Company. Investment Size: Minimum subscription level is £5,000.

VCT Open

26/10/15

Multiple

29/04/16

Minimum Investment: £5,000

Calculus VCT plc D Share Offer is OPEN for Subscription Calculus Capital are best known in the market for their skills and experience as an investor in established, unquoted SMEs. The awards we regularly win are evidence of that. Our long standing investment team and diligent investment process have led to an exceptionally strong track record of investment success. The key points of the D Share offer are:

• Calculus VCT plc aims to pay an annual dividend of 4.5% of NAV from the first year (6.1% tax free on net cost after 30% tax relief), the company has a successful track record of delivering dividends to investors.

• By co-investing in selected established companies through both VCT and EIS, we are able to choose larger companies and bigger deals – reducing the risk profile of the investment. • Our experienced investment team and thorough investment process have produced impressive dividend performance and exit returns for investors. T. 020 7493 4940 E. madeleine@calculuscapital.com www.calculuscapital.com

• Early bird discounts: 1.0% discount for subscriptions received by December 18th 0.5% discount for subscriptions received from December 19th to January 29th 0.5% additional discount for existing Calculus VCT plc investors The full Prospectus is available on our website: www.calculuscapital.com

December 2015 · www.eismagazine.com

VCT Open

Now

Evergreen

Minimum Subscription: £3,000

Amati VCTs Top Up Offers 2015/2016 and 2016/2017 Amati Global Investors is a well-established manager of AIM-based VCTs. The Offers provide existing and new investors the opportunity to invest in one or both of Amati VCT plc and Amati VCT 2 plc: •Investment into an existing portfolio of more than 60 companies in each VCT, covering both high-growth and maturing businesses. •Tax free dividends, targeted at 5-6% of year-end NAV (although there is no guarantee the targets will be met).

•AIM based VCTs typically have a more diversified portfolio than other types of VCT, and are likely to be invested in larger, more established companies, with transparent market pricing and reasonable liquidity. • Minimum subscription £3,000 or £2,500 per VCT if applying for both Offers. T. 0131 503 9100 E. info@amatiglobal.com www.amatiglobal.com

IHT Open

Now

Evergreen

Minimum Investment: £50,000

Should you wish to receive monthly Amati fund factsheets, please request from info@amatiglobal.com

Amati AIM IHT Portfolio Service on Transact Amati Global Investors offers a discretionary managed AIM portfolio service which advisors can access for their clients on the Transact platform. The Service has recently passed its one year anniversary, having returned 30.6% vs -3.9% FTSE AIM All Share Index TR since launch (Period 29 August 2014 – 30 November 2015 Source: Amati Global Investors Ltd) The portfolio is made up of profitable companies which fit into one of four categories: owner-managed; family businesses with well-built brands; established technology companies; and special situations with attractive yields. The client portfolios are managed to a single model, hence all clients will hold the same portfolio of holdings with broadly the same weightings. The management fee is 1% plus VAT on portfolio value, paid quarterly in arrears, deducted from the clients’ account.

T. 0131 503 9100 E. info@amatiglobal.com www.amatiglobal.com

EIS Magazine · December 2015

• No Initial or exit charge • Can be held in an ISA • Shareholdings expected to qualify for 100% IHT relief after 2 years

Should you wish to receive monthly Amati fund factsheets, please request from info@amatiglobal.com

IHT Open

Now

Evergreen

Minimum Subscription: £50,000

Rockpool’s Managed Inheritance Service Rockpool’s Managed Inheritance Service is designed to deliver 100% exemption from inheritance tax after two years.

Investment through the Rockpool’s Managed Inheritance Service will be made in unquoted shares in specialist lending companies who provide loans to corporate borrowers.

Our objective is to deliver a 5% net annual return with low risk to capital and the flexibility to take income or accumulate gains. The service has a simple, low cost transparent structure. T. 0207 015 2150 E. team@rockpool.uk.com www.rockpool.uk.com

IHT Open

October 2014

Open Ended

Amount to be Raised: Unlimited

Rockpool’s Managed Inheritance Service facilitates adviser charges or introducer fees on a self-select basis.

PUMA INVESTMENTS - PUMA AIM INHERITANCE TAX SERVICE Puma AIM Inheritance Tax Service is a discretionary service that seeks to mitigate Inheritance Tax by investing in a carefully selected portfolio of AIM shares. The Puma AIM Inheritance Tax Service is also available in ISAs.

Portfolio Service: A discretionary portfolio service that seeks to deliver long term growth focusing on quality companies listed on AIM. Inheritance Tax: It is intended that investors will benefit from relief from Inheritance Tax provided investments are held for at least 2 years prior to and at the point of death. Minimum subscription of £15,000 with no maximum. T. 020 7408 4070 E. info@pumainvestments.co.uk www.pumainvestments.co.uk

Available in ISAs: Whilst ISAs are extremely tax efficient during the holder’s lifetime, upon death ISA balances may be subject to a 40% IHT liability. Investing in a portfolio of qualifying AIM stocks allows holders to mitigate Inheritance Tax while still retaining the benefits of an ISA. ISA Transfers can be accepted from existing providers as well as new investments.

December 2015 · www.eismagazine.com

IHT Open

June 2013

Monthly

Amount to be Raised: Unlimited

T. 020 7408 4070 E. info@pumainvestments.co.uk www.pumainvestments.co.uk

IHT

BPR

Open

Now

Evergreen

Amount to be Raised: Unlimited Min Investment: £50,000

PUMA INVESTMENTS - PUMA HERITAGE Puma Heritage’s core focus is on secured lending. Its primary objectives are to preserve capital and mitigate risk. Strategy: Conservative trading strategy focused on secured lending. Flexibility: Choice of income or growth shares and ability to switch between them. Directors: Three experienced Directors bringing a multi-disciplinary approach. Experienced Adviser: Puma Heritage has appointed Puma Investments as its trading adviser. Aligned Interests: The interests of Puma Investments (the trading adviser) and Shareholders are entirely aligned: Puma Investments will not receive any performance fees and its annual advisory fees are only paid in full if the minimum target annual return is paid in full. Liquidity: Twice yearly opportunity to access capital (subject to terms set out in the Prospectus). Subscription Amount: Minimum subscription of £25,000 with no maximum. Inheritance Tax: It is intended that a subscription for shares in Puma Heritage will benefit from relief from Inheritance Tax provided the shares have been held for at least 2 years prior to and at the point of death.

Triple Point Estate Planning Service The Triple Point Estate Planning Service allows clients to access both of Triple Point’s established strategies, Navigator and Generations, through one simple application.

Triple Point has a proven and consistently profitable 10 year track record in asset finance. The two underlying strategies; Navigator and Generations, focus on the provision of assets to institutions such as the NHS and Local Authorities (fewer, higher value transactions), and the provision of working capital funding to businesses (multiple, lower value transactions), respectively. Investors can chose their own allocation between these two strategies. This provides target returns to investors in the range of 1.5% to 6.0% net of fees, charges and corporation tax. To summarise the two strategies:

• Navigator Strategy: leasing and lending to a large and diverse range of UK-based small and medium sized businesses, targeting a net of Triple Point fees return of 4.0%-6.0% per annum

T. 020 7201 8990 E. contact@triplepoint.co.uk www.triplepoint.co.uk

EIS Magazine · December 2015

• Generations Strategy: leasing, lending and infrastructure funding to the public sector (i.e. Local Authorities, NHS) and to large, good quality companies, targeting a net of Triple Point fees return of 1.5%-2.5% per annum Please contact the sales team for more information.

Investments can be illiquid and the value of your investment is not guaranteed.

Compatibility: Requires IOS 6.0 or later. Compatible with iPhone, iPad, and iPod touch. This app is optimized for iPhone 5. Available on Android.

Twenty Four Seven IFA Magazine, Britain’s premier online portal and print publication for financial advisers, has launched its ver y own app designed to help you stay up to date with all the latest financial and economic news as it happens.

Main Features: Reviews Features Funds Market and Economics Trading Expert FCA Compliance Jobs

December 2015 · www.eismagazine.com