Eis magazine march(lr)

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www.eismagazine.com MARCH / APRIL 2015 ISSUE 02

The IFA Gu i d e t o Ta x Eff i ci e n t I n ve s t i n g

OSBORNE’S

CHANCE WHAT THE BUDGET MEANS FOR ALTERNATIVES

SEIS

THE NEXT BIG THING

EIS

BPR

AND IHT EFFICIENCY

SEIS

VCT

SITR

IHT

ALTERNATIVE

ENERGY AFTER APRIL

BPR

4.

Welcome

It seems there’s some kind of an election coming. Michael Wilson muses on the prospects for consumers, & for advisers too.

5.

News in Brief

6.

Adviser Checklist for April

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.

Our monthly round-up of news stories. Keep sending us your news, please.

Ingenious Media presents a last-minute guide to end-of-year tax efficiency.

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

7. The SEIS Revolution Michelle McGagh writes about the biggest trend of the moment. Dragons’ Den watchers, begin here.

10. Technology Perspectives

A look at two current projects from the McKinnons stable

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.

Upcoming Events

12. Venture Capital Trusts Annabel Brodie-Smith from the Association of Investment Companies explains why VCTs are all the rage at the moment. And why they can offer a flexibility that even EIS can’t always match.

16. IHT Strategies

Dermot Campbell, MD at Kuber Ventures, explains how EIS investments can work within clients’ inheritance tax planning strategies

Tax Efficient Investing for HNW Clients An Adviser Seminar on EIS/VCT and BPR Investments from IFA Magazine and EIS Magazine Tuesday 28th April 2015 Bruntwood Tower, Manchester Thursday 30th April 2015 The Capital Club, London Registration is free Full details at http://tinyurl.com/k3gtmsx These extended morning seminars will explore the possibilities for HNW investors of all types, and will explore EIS/SEIS, VCT, BPR and SITR investments with an impressive panel of expert speakers. CPD accredited. Lunch included.

20. Business Property Relief Tony Müud, Tax & Trusts specialist at St. James’s Place, explores an option that’s often overlooked.

24. The Future of Alternative Energy Investment Michael Wilson talks to Claire Ainsworth, head of Triple Point, about the forthcoming changes to EIS fund eligibility.

26. Open Offers

Our monthly listing of what’s currently available for subscription.

www.eismagazine.com · March/April 2015

3

Welcome Michael Wilson, Editor As the air finally cleared in the House of Commons after the Chancellor’s Spring Budget speech on 18th March, you could almost sense the relief among the assembled deputies.

George Osborne had got to the end of his hour-long speech with a pretty neutral balance on the savings and investment side. An extension of the ISA contributions entitlement here, a cash incentive to first time home buyers there, and the usual strong of threats against tax-dodgers, both personal and corporate. As pre-election budgets go, it could have been worse.

But there was more going on beneath the surface than seemed to meet the eye. For one thing, Mr Osborne had probably done the alternative investment market a power of good – ironically, by making life harder for high net worth pension savers. By lowering the lifetime pension contribution cap from £1.25 million to just £1 million, with effect from 2016, the Chancellor was effectively increasing the pressure on HNW clients to seek out more and better ways of sheltering their cash from HMRC. The demand is already hefty. Just think about the number of venture capital trusts that have been able to close their offers ahead of schedule this year, because of the heavy demand from wealthier investors. Consider the fact that EIS investment is now running at record levels. Think about the huge expansion of activity in crowdfunding, some of it extending to clients who wouldn’t normally have considered themselves high rollers in the past but who are starting to think about seed funding. (And who, in some cases, would possibly be better advised to stay away. But that’s another story.)

Changes to the EIS/VCT Regime There was more change buried in the many reams of printed detail. On the one hand, the Chancellor took the opportunity to spell out the future for what are being called Social Venture Capital

4

Trusts, a new type of vehicle which is still very much on the drawing board. On the other, he took action to align the whole alternative investment market with the European rules on state support to investment vehicles (see the following pages) – with particular reference to EIS & VCTs. And in the process he raised some serious questions which will occupy the experts for some time to come. Suffice it to say that, though, that on the whole the new VCT and EIS rules are benevolent in their intention. Further proof of the Chancellor’s good intent can be seen in the way that he abolished the stupid rule that prevented SEIS companies from applying for EIS or VCT funding until they had spent at least 70% of the funds they had raised under SEIS.

Renewable Energy Mr Osborne also took the chance to cast some welcome light on the powers of Socially Investment Tax Relief (SITR) vehicles, now that EIS schemes are being disbarred after April from investing in renewable energy projects. (The point here being that such schemes are already getting quite a lot of other financial incentives, so fair’s fair.) But SITRs can still invest in community energy projects, some of which might look really quite similar to renewables All in all, then, we’d be well off target if we thought the alternative investment sector had been untouched by the Budget. The changes are small, significant and generally timely. It seems unlikely that any of them will deflect the rampant demand from investors for these new investment products. EIS

News In Brief A Round up of the Latest Industry News Budget Changes to VCT and EIS Investments The regulatory changes announced by the Chancellor to EIS, VCT and SEIS schemes on 18th March have been largely designed to ensure that they comply henceforth with the current European rules on state assistance for high growth companies. So far, so good.

Most investors will never notice the impact of the new rules, because on the whole they tend to apply only to fairly extreme situations. That said, some of them may turn out to present certain difficulties which are likely to take some time to resolve.

In effect, the Chancellor let it be known that EIS or VCT investment will henceforth be limited to companies

that were less than 12 years old when they received their first EIS or VCT investment - except where the investment would lead to ‘a substantial change in the company’s activity’.

What, exactly, did ‘a substantial change in the company’s activity’ mean?

How substantial was ‘substantial’?

And, not least – would the new rules be applied retrospectively to investments that had already been made?

It’s an important point, because many VCTs and EIS schemes invest in companies much older than 12 years.

Would they be disqualified? And if they were simply reversed into new vehicles, would that make them new for the purposes of the rules? It still remains to be clarified.

Renewable Energy

Meanwhile the government has clarified the situation around the new social investment tax relief (SITR) schemes – and also the newly-mooted Social VCT schemes when they arrive.

It is, of course, widely appreciated that EIS, SEIS and VCTs will be unable to invest in any renewable energy projects after 6th April. But the Chancellor has confirmed the expectation that SITR schemes will be able to invest in community energy generation projects.

It will probably be clear that there is in fact some overlap and interplay

Marketing SITR funds

Meanwhile the rules on the marketing of SITR funds are being relaxed. With effect on 13 April 2015, the present ban on directly advertising SITR funds to the public is to be abolished, with the proviso that the pattern should follow the promotion pattern of EIS funds.

The Association of Investment Companies (AIC) responded positively to the Chancellor’s announcement.

Ian Sayers, Chief Executive, said on 18th February that he welcomed “the Government’s commitment to secure the future of VCTs by ensuring that they gain European state aid clearance.”

And that the AIC would “consider these proposed rules with our members and their managers and work constructively with the Government to secure the best possible outcome for the sector.”

Social Venture Capital Trusts between sectors here: many if not most community energy schemes will be built around renewable energy. Whereas the majority of EIS renewable energy projects at present tend to revolve around larger and more technology-oriented projects.

The government says it intends to allow a transitional period of 6 months following state aid clearance for the expansion of SITR before eligibility for EIS, SEIS and VCT is withdrawn. During that period, community schemes will be able to access EIS and VCT as before.

SEIS Changes

Other changes are less difficult to interpret. SEIS companies are being freed from the rule that says they must have spent at least 70% of the funds raised under SEIS before they can be considered for EIS or VCT funding. This measure ought to make it easier for companies to grow and progress smoothly.

The Chancellor also laid out the government’s plans for so-called Social Venture Capital Trusts (Social VCTs), intended to increase participation in social investment among retail investors who want to invest smaller amounts than are generally needed for direct investment.

Broadly, the new Social VCTs will be based closely on the existing VCT patterns, so as to maintain consistency across the tax system and to benefit from the existing familiarity among advisers. Social VCTs will have the same excluded activities as SITR. The government is to set the rate of income tax relief for investment in a Social VCT at 30%, subject to State aid clearance. Investors will pay no tax on dividends received from a Social VCT or capital gains tax on disposals of shares in Social VCTs. Officials will talk further to the sector about how the Social VCT will be delivered before proceeding to legislation in a future Finance Bill.

www.eismagazine.com · March/April 2015

5

A Year End Checklist for Advisers Edward Grant, an Investment Director in the Client Relationship Team at Ingenious Media, offers some timely thoughts There are many tax year end checklists at this time of year, but few of them consider the full spectrum of solutions available.

With major pension changes coming into effect from 6 April 2015 and the possibility of investors having their personal allowance in the 2014/15 tax year reduced to nil, based on an adjusted net income of £120,000, income tax and retirement planning should both remain key focuses.

As the tax year end fast approaches, it is not too late for investors to make the most of allowances, exemptions and reliefs available, so now is the time to consider the following strategies: • Using pension contributions to reduce adjusted net income and reduce the higher or additional rate tax liability or, where adjusted net income is between £50,000 and £60,000, the impact of the Higher Income Child Benefit Tax Charge Utilising the New ISA £15,000 contribution limit for 2014/15, which maintains a tax free return for future years

• Where an estate is liable to inheritance tax (IHT), the £3,000 annual exemption is available for gifts of up to £3,000 for the current tax year. Any remaining annual exemption can be carried over from each tax year to the next, but the maximum exemption is £6,000. This is a ‘use it or lose it’ exemption and therefore, combined, a married couple could have a maximum of £12,000 annual exemption if they have not yet used the previous year’s allowance • Taking advantage of the capital gains tax (CGT) annual exemption of £11,000

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EIS Magazine · March/April 2015

• Clients who have capital gains in excess of their annual exemption arising in the 2014/15 tax year can defer the CGT liability by investing their gain into an Enterprise Investment Scheme (EIS) qualifying investment within 3 years of or 1 year prior to the gain arising o In addition, if an investor has a UK income tax liability, then they could claim income tax relief of 30% against their 2014/15 tax liability, up to £1 million, by investing into EIS qualifying companies • EIS income tax relief can be claimed in the tax year in which the investment is made, or carried back to the preceding tax year. As such, if an EIS investment is made in 2014/15 tax year, the 30% income tax credit can be offset against your 2014/15 tax liability and/or your 2013/14 tax liability

• For individuals that already know an income tax liability will arise in the 2015/16 tax year, an investment can be made into Ingenious Pathé Plus Film EIS, as shares in these EIS qualifying companies will be allotted after the end of the 2014/15 tax year end Since being launched in 1994, the EIS has grown considerably as a retail solution. With a relatively accessible entry point of a £10,000 minimum investment, the EIS now raises in excess of £1 billion a year.

Seed Investing Michelle McGagh discusses the advantages, the tax breaks and the potential pitfalls of a fast-growing investment sector Investors receive an attractive initial income tax relief of 50% have a permanent establishment in the British Isles

MUST BE BASED IN THE UK

LESS THAN £200,000 ASSETS

SEIS TO QUALIFY FOR SEIS, COMPANIES MUST

The seed enterprise investment scheme (SEIS) has remained a relatively niche investment since its launch three years ago, but it offers generous tax breaks for clients with the right risk tolerance.

Originally announced in the Chancellor’s 2011 Autumn Statement, they were finally launched in 2012 as a way to help small and early stage startup businesses and ultimately to boost the UK economy during the long exit from the financial crisis.

Three years down the line, the SEIS sector is making strong headway – and, as we’ll see, the 2015 Budget statement brought an important change in the way that SEIS companies can graduate to EIS or VCT status.

The Tax Breaks Based on the long-established enterprise investment scheme (EIS), SEIS offers even greater tax benefits for investors willing to take a risk on start-up companies. It’s no exaggeration to say that, in creating

FEWER THAN

25

EMPLOYEES

BE NO MORE THAN TWO YEARS OLD

SEIS, the UK government has created the most generous investment scheme in the world – offering both income and capital gains reliefs, as well as downside protection for shielding investors in the event of failure.

The original introduction of SEIS formed part of a wider shake-up of tax incentivised investment plans such as EIS and venture capital trusts (VCT).

HM Revenue & Customs (HMRC) said at the time that SEIS was ‘intended to recognise the particular difficulties which very early stage companies face in attracting investment by offering tax relief at a higher rate than that offered

by EIS’.

Income Tax Investors receive an attractive initial income tax relief of 50% on

investments, regardless of the income tax rate they pay, up to the £100,000 maximum that can be invested each tax year – but the shares in the company have to be held for at least three years to qualify for the relief.

This £100,000 can be spread over a number of companies but cannot be invested in just one company. A company can raise no more than £150,000 a year from SEIS, and investors cannot control the company receiving their money and cannot hold more than a 30% stake in any company in which they invest. An investor can, however, be a director of the company they want to invest in but not an employee.

There are a number of factors that companies have to satisfy in order to qualify for SEIS. Companies must be

www.eis.magazine.com · March/April 2015

7

Seed Investing

In the first year around 1,100 companies benefited from over £80 million invested through SEIS based in the UK and have a permanent establishment in the British Isles. They must also have fewer than 25 employees, be no more than two years old, and have assets of less than £200,000.

The company also has to be part of an approved sector, where the government wants to kick-start entrepreneurship - which does not include the financial and investment sector or property sector.

Capital Gains Tax It is not just relief on income that SEIS offers, but exemptions on capital gains tax (CGT) too.

If shares are held for three years or more, there is no CGT to pay, and no inheritance tax (IHT) liability.

There is also an additional relief that can be claimed called ‘capital gains reinvestment relief’.

If an investor has paid CGT on other investments, up to 50% of the tax paid can be claimed back if the money is reinvested in a qualifying SEIS in the same tax year. Reinvestment relief was originally intended to be a temporary measure, available in the tax year 2012/13, but it was made a permanent feature of SEIS by chancellor George Osborne in his 2014 Budget.

Loss Relief If the company invested in goes bankrupt - which start-ups are more likely to do – any losses can be offset against either income or capital.

Investors can claim loss relief on the amount they invested equal to half of their total investment multiplied by either their income tax or CGT rate.

How Loss Relief Works The benefits of can be illustrated by an investor paying 45% additional rate income tax and 28% CGT, investing £10,000.

In the first scenario, the company is successful and the investment doubles in value to £20,000. The investor receives 50%, or £5,000 in income tax relief. As the investor has held the shares for three years or more there is also no CGT to pay on the £10,000 growth, meaning the tax-free return on the £10,000 investment is £15,000.

In the second scenario, if the shares in the company are still £10,000 at the end of three years, the investor has still realised a £5,000 reduction in their income tax bill.

In the third case, the company fails and the shares become worthless. The investor has already received £5,000 of their £10,000 investment back in income tax relief. They then receive loss relief equal to 45% of their at risk capital, totalling £2,250, meaning their actual loss is just £2,750.

Carry Back There is the option to carry back SEIS tax relief to the previous year by electing all of some of the shares purchased in the current tax year to be treated as though acquired in the 8

EIS Magazine · March/April 2015

previous year up to a maximum of £100,000.

Initial Take-up Figures illustrating the take-up of SEIS are limited, due to the infancy of the investment scheme. The only figures available from HMRC, published in December 2014, provide a snapshot of the number of companies that have benefitted from SEIS and the types of investors placing money through the scheme.

In the first year around 1,100 companies benefited from over £80 million invested through SEIS. The ‘hitech sector’ received the most money, according to HMRC, taking a 32% share of the £80 million. The ‘business service’ sector took second place with 22% invested and the ‘distribution, restaurants and catering’ sector came in third with 14% of the total sum invested in this area.

A total of 5,000 investors claimed income tax relief on self assessment forums under ‘SEIS’ in 2012/13 and the majority, 63%, claiming relief invested less than £20,000 into companies.

Risk While SEIS may be the preserve of higher-net-worth investors, it would seem they are tentative about investing too much through the scheme as investments of £20,000 or less made up 70% of the total raised through the schemes.

Those investing £50,000 or less contributed 86% of the £80 million raised by SEIS in 2012/13.

Sarah Wadham, Director General of the Enterprise Investment Scheme Association (EISA), which is the trade body for both EIS and SEIS promoters, said at the outset that the risky nature of SEIS investment meant that the schemes would remain ‘small and niche’. However, recent changes to the rules has made it more attractive for investors to invest in early-stage companies through SEIS. Previously, companies that were using SEIS were not allowed to apply for EIS status, through which a larger sum of money can be raised, until they had finished using at least 70% of the cash raised through SEIS.

Seed Investing

Crowdfunding platforms use SEIS to pool investors’ money while offering tax breaks for investing in fledgling businesses

Now, companies will be allowed to apply for EIS status and therefore raise more money, more quickly, before finishing their SEIS cash, says Wadham. (See also our News report on Page 5 for more details of how the 70% requirement has now been abolished.)

‘Before, you had to finish your SEIS money before you could raise EIS money, but now people are doing funding for both together, so the first [investors] get SEIS tax breaks and then continue to get EIS [tax breaks] the more [money is invested],’ she says.

‘You can grow your investment as the company grows. There are better tax breaks early on when it is more risky and [the tax breaks are] less good when it gets bigger, even though through EIS they are still generous.’

Wadham says that the changes to the rules have been welcomed, as the small sums raised by SEIS – a maximum of £150,000 – were typically to create ‘demo products’ which then allow companies to progress to EIS and raise more money.

‘Companies use a hybrid [of SEIS and EIS],’ she says. ‘They do SEIS first and then more on to EIS because SEIS is just too small.’

SEIS is not just small, it is also very risky, and Wadham says it is only suited to sophisticated, high-net-worth investors. In her experience, Wadham says, she has found that advisers are generally better off putting clients into EIS than SEIS. But SEIS is something they should definitely know about, she says.

Crowdfunding Issues The increased popularity of crowdfunding is one avenue through which clients may learn about SEIS. Crowdfunding platforms use SEIS to pool investors’ money while offering tax breaks for investing in fledgling businesses.

There are currently 35 crowdfunding platforms in the UK, and the equity element of the crowdfunding market is worth over £50 million – that’s distinct from the peer-to-peer lending part of

the crowdfunding market, of course.

However, Wadham believes that crowdfunding is too specialist an area for advisers to get too involved in, and that it should be left to angel investors.

This concern has also been flagged by the Financial Conduct Authority, which has tightened its rules around who is allowed to invest via crowdfunding.

Rather sternly, the regulator reminds us that most investments in start-up businesses result in a 100% loss of investment, and that between 50% and 70% of new businesses fail in the early years.

‘Advisers are wary enough about recommending EIS so they will be even more wary about recommending [SEIS through] crowdfunding,’ she says. ‘SEIS will remain small and niche…because it is so risky and advisers need to protect their backs when it comes to [client] suitability.’ EIS

www.eismagazine.com · March/April 2015

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The Multi-Manager EIS Platform Kuber Ventures offers investors access to some of the most innovative EIS investment opportunities, managed by leading Fund Managers and all within a single platform.

Through a single applicatoin from, investors have access to a range of 19 individual funds across 8 different strategies. The platform provides consolidated online valuations, and a document repository which stores all relevant documents including EIS3 certificates Investors can choose from a range of EIS funds, creating a single portfolio which is diversified across a number of Fund Managers and underlying portfolio companies, offering targeted spread of between 15-40 companies in a typical portfolio.

For more information about Kuber Ventures and its range of EIS Portfolio Funds

www.kuberventures.com Kuber Ventures Ltd [FRN 574987] is an Appointed Representative of Sturgeon Ventures LLP which are Authorised and Regulated by the Financial Services Authority.

+44 (0)20 7952 6685 info@ kuberventures.com

ADVERT-A5_Layout 1 09/03/2015 09:59 Page 1

Finely crafted investments

Amati VCTs Top Up Offers 2014/2015 and 2015/2016 Amati also manages the TB Amati UK Smaller Companies Fund and offers an AIM IHT Portfolio Service A hard copy of the Amati VCTs Top Up Offers Document is available from fund platforms, financial advisers or can be downloaded from www.amatiglobal.com, by emailing vct-enquiries@amatiglobal.com or by calling 0131 503 9115.

“ Amati has one of the most experienced UK smaller company investment teams, a clear investment process, and a disciplined approach to risk management” Dr Brian Moretta Analyst, Hardman & Co

Risk Warning Amati Global Investors Limited recommends that potential investors seek independent financial advice prior to investing in a Venture Capital Trust (“VCT”). Investment in a VCT carries a higher risk than many other forms of investment. For more information relating to risks, please see the Risk Factors section in the Amati VCTs Top Up Offers Document 2014/2015 and 2015/2016 relating to the companies and offers for subscriptions. In particular, potential investors should be aware that their capital is at risk and that they might get back less than their original investment; the value of tax reliefs depends on the individual circumstances of each investor and may be subject to change in future; investors must hold their shares for at least five years to qualify for income tax relief; the availability of tax reliefs depends on the companies invested in maintaining their qualifying status; and, there can be no certainty that either VCT will achieve its intended level of investment in qualifying investments.

THIS ADVERT IS A FINANCIAL PROMOTION WHICH HAS BEEN APPROVED BY AMATI GLOBAL INVESTORS LTD. INVESTORS SHOULD NOT SUBSCRIBE FOR SHARES IN AMATI VCT PLC AND AMATI VCT 2 PLC REFERRED TO IN THIS ADVERT EXCEPT ON THE BASIS OF INFORMATION IN THE AMATI VCTS TOP UP OFFERS 2014/2015 AND 2015/2016 DOCUMENT WHICH ALSO CONTAINS INFORMATION ON FEES AND CHARGES APPLICABLE. Amati Global Investors Ltd is authorised and regulated by the FCA with registered number 198024.

Mackinnon’s - New X-Wind Offering and Peto Progress As the opportunities for EIS investing in alternative energy fade into the sunset, Mackinnon are shortly to close their X-Wind offering

Mackinnon’s £2 million offering for its X-Wind project, which has been open since January, will sadly be closing the fund’s doors on 31st March ahead of the new regulations on EIS eligibility for renewable energy.

Established in 1997 by Iain Mackinnon, the company specialises in Corporate Finance Advisory, Wealth Management and merchant banking with particular expertise in the renewable energy and health sectors.

X-Wind X-Wind, says Mackinnon, has developed a groundbreaking Vertical Axis Wind Turbine aimed at the medium scale renewable energy sector. The team has drawn on its extensive experience gained developing the world’s largest wind turbines at Vestas. Since its launch in 2012 X-Wind’s core patented technology has won five high-profile technology awards.

X-Wind’s visible sales pipeline, according to Mackinnon’s, exceeds £40 million, and the company is also securing commercial commitments for its 80kW turbines from customers in need to secure energy pricing and supply.

X-Wind has secured a partnership with the UK’s largest electricity user. To date X-Wind has raised £1.7 million in grants and £0.3M of equity. X-Wind currently requires £2.0M of equity funding to complete the production of their first full-scale 80kW turbine.

Barts Health Open Offering Mackinnons is also operating with portfolio company Peto Limited, a marketplace for the Public Sector, in respect of an offering in respect of Barts Health. Peto was appointed in September 2014 to support the Trust in the delivery of savings from the off-contract spend of around £38 million per year. Three months into service delivery, the company was able to report that the Peto team were achieving 12% realised savings against a target of 4% on prior spend.

This is a strong result, says Mackinnon’s, and reinforced by huge opportunity to increase the scope of the throughput which has been lower than forecast to date.

“We are thrilled with the results we are achieving at Barts,” says Peto Chief Executive Julian Trent, “ and we look forward to collaborating with the team to achieve even greater savings in the future.”

Active in over 200 NHS trusts, Peto connects public sector buyers and private sector sellers via an easy-to-use online marketplace, and where necessary, with additional resources to reduce spend via its insourcing procurement service. EIS

www.eis.magazine.com · March/April 2015

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Venture Capital Trusts Annabel Brodie-Smith, Communications Director, Association of Investment Companies

Venture Capital Trusts (VCTs) have been celebrating an important birthday: it’s now twenty years since VCTs were launched.

The sector has matured with strong performance and assets close to their record level, at £3.2bn of assets. VCTs have had a strong year, with the average VCT up 6% and the average Generalist VCT up 8%. The good news is that VCT managers in our latest survey reported a positive year, with managers overwhelmingly finding a good flow of investment opportunities and some companies even enhancing their investment teams accordingly. So what are VCTs and how would you go about selecting a VCT for your clients?

VCTs in many ways are like other investment companies.

They are companies listed on the stock exchange, investing in a diversified portfolio of investments managed by a professional investor. However, they must invest 70% of their portfolio in up and coming businesses or in AIM shares.

These investments must be in companies which are below £15m in size at the time of the investment. To compensate

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EIS Magazine · March/April 2015

your clients for the extra risks of investing in smaller companies there are tax benefits. Your clients will pay no income tax on any dividends you receive, and no capital gains tax on any profits you make when you sell your shares.

These reliefs are available at all times, irrespective of how much you invest, how you buy the shares or how long you hold them. However, if you buy shares on the launch of a VCT or when it raises new money, then you receive 30% tax relief to reduce your income tax bill, providing you hold the shares for a minimum of five years and subject to certain conditions.

This is known as ‘initial’ or upfront income tax relief.

When looking at VCTs there are three main sectors as defined by the AIC - the Generalist sector, the AIM Quoted sector and the Sector Specialists. As the name of the Generalist sector suggests, these VCTs invests in a range of investments in different sectors. The VCT AIM Quoted sector includes companies whose policy is to invest in a range of qualifying companies listed or about to be listed on AIM or on any other exchange where the securities are treated

as unquoted. This sector offers advisers a route into these listed companies which are not eligible through EIS. Then there are the Sector Specialists which include Healthcare & Biotechnology, Environmental, Infrastructure, Media, Leisure & Events and Technology. There is a host of data for researching VCTs in these sectors on the AIC website www. theaic.co.uk, including performance and NAV data, yield and ongoing charges.

Of course, VCTs do not just have investment benefits for their investors. VCT investment can have a tangible impact on the businesses they invest in. Some very well-known and successful consumer brand companies are supported

by VCTs, such as Secret Escapes and Zoopla, backed by Titan VCT at Octopus Investments. However, it’s striking how diverse the companies VCTs invest in are. They range from a fertility clinic, CREATE Fertility, where a £5m investment from Livingbridge has facilitated the opening of a flagship clinic in central London, to the good old fashioned British pub. Brewhouse & Kitchen, backed by Puma VCTs,

£3.2

BILLION ASSETS

have successfully expanded their number of pubs and microbreweries.

Some VCTs are helping save lives through their investment in healthcare technology Some VCTs are helping save lives through their investment in healthcare technology. For example, Albion Ventures invests in Dysis, a company that developed a gold standard technology to detect cervical cancer. This technology has been used to scan 30,000 patients and has improved cervical cancer detection rates. Elsewhere, in the media sector, Edge VCTs are backing Mirriad, a video advertising solution for the ‘skip generation’, those

6%

8%

AVERAGE VCT GROWTH 2014

GENERALIST VCT GROWTH 2014

www.eis.magazine.com · March/April 2015

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Venture Capital Trusts

of us who watch TV shows or videos online and skip the advertisements. Mirriad places the advertised products into the TV shows’ content subtly and seamlessly, so for the viewers, there are no interruptions to the programme but the advertised products reach the target audience and create a new revenue stream.

The uncertainty that the approaching election brings is an issue for the industry, but VCTs do not seem unduly concerned

With the economy currently thriving, it’s not surprising that there is currently a lot of confidence within the industry. Confidence in deals is flagged by Mark Wignall, Managing Partner at Mobeus Equity Partners, who said: “The Mobeus VCTs have been investing in excess of £30 million for each of the past two years. Current deals in progress suggest that the 2015 figure will be higher.”

Bill Nixon, Managing Partner of Maven Capital Partners, manager of the Maven VCTs, is also positive: “We’ve just successfully closed another top-up fundraising, having raised around £40m in the past 15 months from investors keen to access the strong tax-free returns from VCTs, and have invested in 17 profitable UK companies across a range of sectors in the past 2 years.”

The uncertainty that the approaching election brings is an issue for the industry, but VCTs do not seem unduly concerned. Dr Paul Jourdan, CEO of Amati Global Investors, comments: “May’s general election injects uncertainty into the investment outlook for 2015. However, the kinds of small companies we look to hold in the Amati VCTs are mostly focussed on specific growth niches, which can prove resilient in the absence of a major setback.”

David Hall, Managing Director, YFM Private Equity, is of the view that SME confidence has not been affected by the forthcoming election. He states: “Strong demand for investment finance has continued in 2015 from the previous year. SME confidence has remained high reflecting overall UK performance; we have seen no tailing off pre-election.”

So, twenty years on since VCTs were launched, the oldest existing VCTs in the sector are Baronsmead VCT and Northern Venture Trust and they are still thriving today. Interestingly, some £1,000 at launch invested in these companies would have grown to £3,549 and £4,031 respectively in share price total return terms.

Their investors certainly have something to celebrate. If you’re interested in finding out more about VCTs, we have produced a new guide to help your clients understand more about VCTs. There’s also a series of videos that bring the impact of VCT investment to life, and the AIC’s extensive data on VCT members available at www.theaic.co.uk. EIS

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EIS Magazine · March 2015

Venture Forth Dermot Campbell, MD at Kuber Ventures, explains how EIS investments can work within clients’ inheritance tax planning strategies One of the most generous tax incentives out there is unquestionably the Enterprise Investment Scheme or EIS

What does investing in Enterprise Investment Schemes (EIS) really involve and can IFAs truly be independent if, as a government endorsed tax-planning solution EIS is not considered due to a lack of knowledge and misconception?

Dermot Campbell, MD of independent Multi-Manager EIS Platform Kuber Ventures, talks about the key to using EIS in estate planning and dispels some of the myths associated with this route of tax-efficient investing.

The Government has thrown everything it can think of to encourage money to be invested in small to medium sized businesses. One of the most generous tax incentives out there is unquestionably the Enterprise Investment Schemes or EIS. For clients who want to maximise the amount they pass on to their successors, but still want to retain control, it doesn’t get much better, however, be warned, you need to get the financial planning right.

What is the Key Benefit to EIS in an Estate Planning Context?

There are 2 relevant reliefs that apply to Estate Planning: Business Relief, which was formally called Business Property Relief & Replacement Property Relief.

You get 100% Business Relief (BR) against an estate for qualifying property which includes a business or interest in a business or shares in an unlisted company. There are a few exceptions such as companies which deal in shares or land but all EIS investments should qualify for BR. Business Relief is only relevant if you die and to qualify you must have owned qualifying property for at least 2 years before your death. Where you have a portfolio of investments which qualify for BR and part of the portfolio is in cash, the cash element will not qualify for BR If you sell a BR qualifying asset and the proceeds are reinvested in an alternative qualifying asset, within 3 years of 16

EIS Magazine · March/April 2015

disposing of the original asset, then this new property may be treated as Replacement Property. Your estate will be able to treat the ownership period of the first property towards the 2 year qualifying period for Business Relief.

Care needs to be taken here, because the HMRC guidelines state that you need to re-invest the entire proceeds in Replacement Property, suggesting that if you sell an asset for say £10,000, spend £2,000 on a Holiday and invest the remaining £8,000, then the new property may not qualify as Replacement Property. It is worth contacting HMRC for guidance if you are considering investing client’s funds in Replacement Property.

Types of Client for Whom EIS is Suitable The starting point here is that the client should generally be High Net Worth within the FCA definition. The FCA defines HNW as someone with at least £250,000 of assets excluding principle residence, pensions and a few other things, or an income over £100k.

There are circumstance when recommendations have been made to clients below the HNW threshold which are appropriate, however, if you work on the principle that for a less wealthy client, it is sensible to keep EIS to below 10% of their investments, then a client with slightly below the threshold would only be able to invest £25,000.

Clients also need to be a tax payer; i.e. they should pay income tax or have incurred a capital gain within the last 3 years. EIS investments benefit from tax free gains providing the investor claims at least £1 of income tax relief on each EIS investment and it is probably fair to say that if they are not paying income tax, then you shouldn’t recommend an EIS, although as always, there are exceptions to this.

The perfect EIS investor from a tax perspective pays income tax at higher rates and is likely to continue to do so into the future; they have incurred a capital gain in the recent past; and

they have an estate which is likely to be subject to Inheritance Tax. For these clients, if they die having owned shares in an EIS for at least 2 years, then the tax relief alone will be worth nearly 75p in the £1 assuming the assets returns its value and the tax relief is held in cash at death. These investors will be able to gain maximum advantage from loss relief should the investment return less than 70p in the £1.

The key here is building a well diversified portfolio and looking for 3 in 30 investment to outperform. Loss relief will cap losses of the disappointing investments at 38.5p while the gains on the successful investments will be tax free.

Very close behind perfect EIS investors are clients who are higher rate tax payers with no CGT liability: EIS is extremely attractive for these investors too.

These investors are often well suited to private equity style EIS because the loss relief will protect the downside for them.

The table illustrates the power of loss relief for a 40% tax payer.

Investors who are likely to be basic rate tax payers in the future still enjoy very generous tax reliefs using EIS. Loss relief will be of less value for these clients so focusing more on the asset or income focused investments. With these investments, the likelihood of needing to use loss relief is lower.

There are a number of EIS funds available which invest in companies which own physical assets (e.g. pubs), or have contractual rights to secure income streams. Whereas these investment are unlikely to deliver the same returns as private equity style EIS funds, the risk of a return below 70p per £1 invested is less likely. (30% tax relief + 70% investment recoupment = 100% recoupment). It is still important to diversify across strategies to reduce risk so a portfolio approach is essential.

Suitability Considerations I recently conducted some analysis into Financial Ombudsman decisions relating to EIS. The Financial Ombudsman Service website publishes decisions going back to 1 January 2012.

There are a whopping 6,260 complaints over the period 01.01.2012 – 06.03.1 made on the general filter option of ‘Investments and Pensions’. 2,104 of these complaints were upheld by the Ombudsman. Encouragingly, only 18 of these cases related to EIS of which 12 were upheld. Of those that were upheld, several can be viewed as not particularly specific to EIS as they related to poor service, however, there were some important lessons to be learnt. There are some helpful comments within the reports: 10 investments - £100 each Total investment £1,00

“Responsibility for the investment choices within the EIS lay with the EIS provider rather than [the adviser]. Since [the Adviser] was not responsible for those investment choices, I did not consider whether they were properly made – because I would not uphold the complaint against [the Adviser] even if they were not.”

“Mrs V could afford to invest the sum she invested into the EIS. That money was a relatively small proportion of her overall wealth, and she could afford to accept higher risks with it if she wanted to. She was aware from the outset that the EIS was higher risk than her other investments.”

“An investor’s age is relevant to the amount of risk they are able and willing to take, but it is rarely the only factor.

Some elderly investors are happy to take extremely high risks.

Some young investors are unwilling to take any risks at all. In Mrs V’s case, I did not agree that her age meant the EIS was automatically unsuitable.”

There were a number of issues that the reports did highlight: in several cases, EIS was simply recommended because it had IHT benefits, however the clients left the investment to their spouse which was an IHT exempt transfer and EIS relief was irrelevant. The key takeaway here is that you need to do more than just recommend a product – you need to actually make some proper planning recommendations which fully address the clients problems.

In another of the cases the client’s spouse had recently died and an EIS was recommended as a means of reducing IHT. The adviser forgot to take into account the deceased spouses nil rate band in calculating the potential IHT liability…

Liquidity is also a fairly obvious planning consideration. In one of the upheld cases by the FOS, the adviser recommended an EIS to a youngish client who was saving up for a house in a few years time, but left the client with no liquidity…

Summing up EIS is a fantastic financial planning tool which offers exceptionally generous tax benefits. When advising clients on inheritance tax planning, it is not something you can ignore. That said, equally, EIS is considered to be a high risk investment by the FOS and as such there are certain things that you need to remember to account for.

A last thought: when you look at types of risk within an EIS, it is the stock specific risk that is most relevant and systemic risk is less of an issue. EIS

Initial investment

Net profit (loss)

Total return post tax

1 investment fails

£100

(42)

£58

2 lose 30% of initial investment

£200

0

£200

4 break even

£400

£120

£520

2 return 1.3 x investment

£200

£120

£320

1 returns 5x money Total return

£100

£430

£530

£1000

£631.50

£1,628

www.eismagazine.com · March/April 2015

17

BPR & Tax Planning Tony Müud, Tax & Trusts specialist at St. James’s Place, explores an option that’s often overlooked

Business property relief (BPR) solutions have, and continue, to evolve with investment options designed to cater for a variety of client requirements; including varying levels of risk and return.

When it comes to tax planning however, there are a number of benefits common to the vast majority of the solutions on offer.

These include: • Speed of IHT relief • Access and control • BPR falling outside of the nil rate band • Transfers between spouses do not reset the two year qualification period • Replacement rules preserve BPR qualifying status, provided proceed of qualifying investments are replaced within three years.

Inheritance tax (IHT) can be a complex issue with personal, political, economic and indeed emotional implications, making it an area that many clients struggle to get to grips with.

IHT can have significant implications for clients and their families, and the variation in personal circumstances, needs and motivations can make planning a demanding area. BPR arrangements have a significant part to play and the following are examples of just how valuable such solutions can be.

Elderly Clients or Those in Poor Health Many estate planning solutions either require a client to survive a period of seven years, or, rely on them being able to arrange life assurance.

For the elderly, or clients in poor health, the fact that planning involving BPR is affective within two years and does not require underwriting, can be of significant value.

This aspect can be further enhanced where the advisor is dealing with a couple who may both be elderly and/ or infirm. On the assumption their wills pass any BPR assets to each other on first death, and then just one of the couple survive a period of two years, the exemption will be available on the entire investment irrespective of who dies first.

Finally, if a client has sold assets qualifying for BPR within the last three years - perhaps a business or qualifying AIM shares - a sum equal to the proceeds could be invested, and in this way, requalify immediately without the usual two year qualifying period.

Attorneys and Deputies When an individual loses mental capacity their financial affairs will be dealt with either by an Attorney or

18

EIS Magazine · March/April 2015

a Court Appointed Deputy. In these circumstances significant limitations are imposed in relation to lifetime gifts (for Attorneys, Section 12 of the Mental Capacity Act 2005).

Similar limitations are normally placed upon Deputies and while it is possible under a Continuing Power of Attorney in Scotland, for them to be given the power to make gifts, it is still unusual. As the individual who has lost capacity cannot therefore make gifts either out right or into trust; directly or via his Attorney/Deputy, the Mrs A is 87, has a significant estate but suffers from Vascular Dementia.

She is incapable of looking after her own affairs. She qualifies for NHS continuing care, and consequently does not have to contribute to the cost of her care fees. Her son and daughter, who are her sole beneficiaries, hold a Lasting Power of Attorney. They are concerned about the IHT liability on their mother’s estate and would like to undertake some planning. They are aware that as their mother has lost capacity, their IHT options are restricted as their powers as Attorneys do not extend to making substantial gifts.

Keen to avoid an application to the Court of Protection (a costly and time consuming exercise) which may permit them to engage in a strategy of gifting, they elect to invest in a BPR product. After two years this provides 100% IHT relief and importantly the assets remain registered in Mrs A’s name i.e. there has been no gift.

Inheritance Tax (IHT) can be a complex issue with personal, political, economic and indeed emotional implications

ability to make an investment that will become exempt from IHT after two years, can often be the only solution.

Combining BPR and Trusts It is a fairly common scenario; both husband and wife are on their second marriages, both with children from their first marriage and with separate finances. While they may have agreed that their own money will be passed to their own children upon their death, one partner may have a much higher income so want to ensure that their spouse receives sufficient financial support, in the event of his or her own death.

The simple solution to this situation is to leave the income from the richer partners’ capital to their spouse in their will. Then, on second partners’ death, the capital is to be distributed to the first partners’ children from the first marriage. This is an ‘immediate post death interest trust’ or ‘interest in possession trust’. However, the value of the trust will be deemed as an asset of the second partners’ estate, and, as such, liable to IHT. If the interest in possession trust were to invest in a BPR product, then after two years, assuming the second partner survives his or her spouse by this period, and the arrangement is held until the time of his or her death, then the trust assets, to the extent that they are invested in BPR solutions, will be exempt from IHT. This strategy would also enable the full amount of the

second partner’s own nil rate band to be applied against his or her own estate when they die, thus protecting it for the full benefit of his or her own children.

Miss B is 62 and owns a successful trading business.

Unfortunately, having worked hard to build up her business, is diagnosed with a debilitating illness and would like to sell and retire so that she can enjoy the rest of her life. The nature of the business means that it already qualifies for BPR. However once the shares are sold, the proceeds will potentially be liable for IHT, if, as seems likely, Miss B’s death occurs in the short term. She is concerned about the effect the IHT charge will have on the bequest she would like to leave her nieces and nephews.

However, if Miss B sells her shares and invests the proceeds into a BPR qualifying arrangement, the funds will continue to receive BPR relief without interruption, provided the investment is made within three years of the sale of her business. In this way, even if her death occurs shortly thereafter, the purchase of the BPR shares, this part of her wealth will remain exempt from IHT. If her death does not happen in the short term, she still retains full access and control over her investment should she need it in the future.

www.eismagazine.com · March/April 2015

19

BPR and Tax Planning

Given the attractions of BPR investment solutions, it is not surprise that they are a subject on HMRC’s radar Business Owners For many business owners their business offers the perfect shelter from IHT. However, when the business is ultimately sold the protection from IHT will be lost. This need not, however, be the case.

BPR - A Gateway to Discretionary Trusts In 2006 the government made some fundamental changes to the taxation of trusts. This effectively left discretionary trusts as the last remaining type of flexible IHT efficient trust. However, gifts to discretionary trusts in excess of the nil rate band are subject to a 20% up-front chargeable lifetime transfer tax. In practice, due to the grossing up rules, this charge is actually 25% on the settlor in most occasions.

This can be avoided if the investment to be placed into trust is held in a BPR qualifying asset for two years prior to being moved into the trust, as this eliminates any chargeable lifetime transfer. Furthermore, where monies going into the discretionary trust are

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EIS Magazine · March/April 2015

within three years prior eligibility for BPR, it is possible to make a BPR investment and immediately transfer the funds into the discretionary trust; again avoiding any chargeable lifetime transfer. It is important to note, however, given the current political climate in respect of tax avoidance, that this latter solution should not be pre-ordained.

Finally, a Word of Warning Given the attractions of BPR investment solutions, it is no surprise that they are a topic on HMRC’s radar.

The Finance Act 2013 introduced anti-avoidance provisions specifically to deal with one type of planning using BPR which it considered at least against the spirit of what parliament intended.

The measure introduced by the Finance Act concerns the basic rule that IHT is charged on the net value of an estate after deduction of liabilities. If, prior to the 6 April 2013, an individual died with an outstanding debt that was used to purchase a BPR investment, their estate affectively got double benefit for IHT purposes.

Under the new provisions, where a liability is attributed to financing the acquisition of property which qualifies for BPR, the liability will reduce the value of the investors’ estate only if it is paid out of the estate in money or monies worth. This is to ensure that loans financing the purchase of exempt or relievable property are deducted

from the value of the assets qualifying for relief, such that there is no double tax benefit.

BPR solutions are now firmly established, reasonably well understood and offer a plethora of potential solutions in the estate planning market. One misconception remains however, that they also represent an alternative strategy to the more common IHT mitigation tools. The reality is that BPR should be seen as a Mr C borrows £400,000 and purchases an investment qualifying for BPR. He dies four years later and his BPR investment is now valued at £500,000. Is subject to BPR at 100% and therefore exempt from IHT. He also has property worth £500,000 and investments of £450,000. Prior to the changes the loan could have been offset against his property or investments.

However, since the change the loan will now be offset against the relievable assets i.e. the BPR Investment such that the house and investments remain within the taxable estate.

complimentary solution, that can be combined with many other techniques; almost always with interesting and enhancing results. EIS

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Tuesday 28th April 2015 10.30am - 1.30pm

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Both of these seminars will explore the possibilities for HNW investors of all types, and will explore EIS/SEIS, VCT, BPR and SITR investments with an impressive panel of expert speakers. Lunch Included.

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Clear Round INS Rosehill Enterprises PLC Staying one jump ahead is important for any investor, but INS Rosehill Enterprises PLC is literally giving people a chance to take a leap forward with their portfolios.

Established in 2013, Rosehill is an unquoted public company and plans to generate attractive investment returns by backing successful show jumping horses. The company focuses on the identification of horses, then their purchase, development and eventual sale. The management team behind the company has a proven track record in this area and have already shown the profitable nature of the concept.

Rosehill is planning to raise around £4m which will fund the training and development of horses which can cost from £350,000 to £1 million per horse. It is anticipated that anywhere between three and eight horses will be owned at any one stage. All horses which are owned by the company are insured for loss of use, mortality and theft.

As for returns, Rosehill is targeting a minimum of 167p for every 100p invested over a four year period. This excludes any tax breaks that may have been received.

The company has received advance assurances from HMRC that the Company’s trade will qualify under the Enterprise Investment Scheme.

International Credentials Rosehill is run by founder and managing director Caroline Wilks and has two top international show jumping horse talent spotters in the shape of Duncan Inglis and Henk Nooren. The pair, who have an international reputation, have over 15 years’ experience in training the world’s leading horses within the sport. The company believes that there are a limited number of experts who can operate at this level of the sport, who have the necessary combination of skills, expertise and network of contacts to identify the horses.

The company’s management already has an impressive track record, bringing on and selling horses at a high rate of return.

Wilks says that: “Over the past five years, show jumping has become a major league sport which attracts and generates huge amounts of money. The demand for horsepower at the very top of the sport is driving up the prices of horses that have the potential to be world champions. Show jumping horses ready to compete at World Championships, or the Olympics, have commanded prices of between £1m and £5m.”

“Also, the industry continues to experience significant growth, with increasing interest, involvement and inflow of money from new entrants around the globe, including the Middle East, South America, Eastern Europe and the Far East.”

Wilks points to the fact that there are significantly more buyers now than there were 15 years ago and what’s more, they have more to spend than ever before.

Parties are willing to spend over £1m on show jumping horses.

Helping the elite nature of the sport are quality sponsors such as Longines Global Champions Tour, the Gucci Masters in Paris and the Rolex Grand Slam Series, attracting wealthy clients and nations.

Last word goes to Wilks: “I am committed to maintaining an investor relations programme, forwarding regular updates with video links, photographs and trading updates in addition to the Annual Report and Accounts. The Company intends to provide Investors with the opportunity to exit from June 2018. I strongly believe the Company is an attractive, asset backed, alternative investment.” EIS

www.eis.magazine.com · March 2015

23

Life After Renewables EIS Magazine talks to Claire Ainsworth, Managing Partner of specialist investment manager Triple Point

As most of us are aware, 5th April marks the final closure of the opportunity to invest in renewable energy companies through EIS, SEIS or VCT funds. And there’s nothing quite so calculated to concentrate the mind as a door that’s about to shut for ever.

It all leaves Triple Point, a manager with particular strengths in renewable energy and social causes, in something of a fix as far as its EIS and VCT schemes are concerned. In particular, the 5th April deadline marks the end of the road for Triple Point’s Hydro VCT, one of the last opportunities to invest into Feed-in Tariff based renewable energy assets through a VCT. The fund, it says, aims to deliver a tax-free IRR of 10% over a 16 year timespan, taking advantage of what it calls long term, predictable, and RPI linked revenue streams which can be distributed as tax free dividends.

Triple Point was originally founded in 2004, it says, to bring together “complementary skills and experience in three core disciplines: structured finance, tax and investment.”

It stresses that it doesn’t give VCT and EIS advice – rather, it relies almost completely on advisers for its distribution channels. And during those ten years, it claims, it has sourced, arranged and managed more than £250m of VCT and EIS investments.

Capital preservation is “the overarching priority” for the group & renewables are not particularly correlated to market performance

HNW Clientele Yes indeed, but how is all that going to change now that the doors to eco power investment are closing? We spoke to Managing Partner Claire Ainsworth, who is also Chief Investment Officer and Chairman of the Investment Committee at Triple Point.

The key attraction of these renewables funds, Ainsworth says, is not so much that they reflect a deeply principled stand (although they do that as well), but that they aim to target capital preservation – “the overarching priority” for the group, she says - and they are not particularly correlated to market performance. That’s something that a largely HNW clientele particularly prizes, she says.

But yes, it’s undeniable that the biggest public focus of the 24

EIS Magazine · March/April 2015

last year’s activity has been in funding a pipeline of hydro VCT projects, TP Income and TP 11 - of which two were due to close this year. So what’s the impact likely to be?

Up to a point, of course, the existing VCTs and the present EIS funds will carry on regardless as a management activity.

But that doesn’t quite address the challenge of the moment.

A Service, Not a Fund So what’s going to take over the focus of new issue attention if we don’t have renewables? Well, she says, a lot of it is likely to move toward the Triple Point EIS, a discretionary management service which she says is heavily committed to small scale infrastructure investments which qualify for the EIS tax benefits.

It’s important to recognise that this is a tailored portfolio service rather than a unitary sort of fund – a direction which Ainsworth says is best able to adapt to the differing needs of a varied clientele with different priorities and time horizons. As a general principle, Ainsworth says, the Triple Point EIS aims to invest its fundholders’ money within six months of them joining the Triple Point EIS Service It would be fair to say that this year’s disqualification from alternative energy investments is likely to force a significant change of direction for the group. Fortunately, she says, Triple Point maintains a varied pipeline of other interests, including businesses related to infrastructure and social development. And that, whatever else happens, there is still a firm emphasis on businesses with a secure customer base or with high barriers to entry.

Socially Oriented Projects The construction side of the EIS Service is heavily committed, among other things, to firms which build apartments in and around UK town and city centres for the use of young adults, including many with disabilities or other needs. The projects themselves, it says, have the advantage of possessing a relatively short construction phase – meaning that they are easy to forecast. And that in turn, Ainsworth says, ought to mean that the businesses invested in will be able to advance-manage their project pipelines to ensure that there is always sufficient liquidity to meet shareholders’ exit expectations.

Any Further Chances for Energy?

Industry experts currently reckon that combined heat and power systems, a Triple Point favourite, may still turn out to

be achievable in some shape or form within the allowable EIS orbit – the details may turn out to depend on how the SITR rules take shape. Ainsworth was clear when we spoke to her in February that the company is still interested in biomass as an investment direction. But anaerobic digesters, an area where Triple Point has been particularly active, have definitely fallen under the legislative axe along with renewable energy and will no longer be achievable in a few weeks’ time.

And that really annoys the Renewable Energy Association (REA), which has let it be known that it represents the loss of a potentially vital revenue stream for small-scale projects of all kinds. Around 25 anaerobic digester projects are now likely to be shelved, it says - equating to a not-inconsiderable 20MW of potential generation, and the loss of up to £130m of investment that’s already raised for the sector.

A view that seems to chime in with Ainsworth’s own comments about the renewables sector in general. From solar to wind power, and especially among smaller projects, there’s been a funding gap, she says, and that was why Triple Point felt that this was the way to go. And where the banks don’t want to go, that’s where the opportunities were there to be taken. Perhaps the technologies were too new, or perhaps they sounded too complicated for the big lenders. All of which was a further stimulus.

And Finally…. SITR But a final note seems in order. As we’ve said, our call to Triple Point took place in February, before this month’s spring Budget statement which also clarified the position with regard to Social Investment Tax Relief, one of the few remaining ways of getting into alternative energy. With the benefit of post-Budget hindsight, we now know that there was never any real intention to let conventional tax-effective funds continue into renewable energy – rather, SITR is to be focused on ‘community energy projects’, which are going to be smaller-scale.

It was all too soon for speculation. “We, together with a lot of the industry, are looking closely at the investment rules as they develop,” was all we could squeeze out of Ms Ainsworth.

And we’re guessing that ingenuity will continue to be the order of the day.

Business Property Relief All in all, there was no sense coming from Ms Ainsworth that Triple Point was running out of ideas for new projects just because the dozen or so renewable energy VCTs has been locked down into a permanent maintenance pattern. We can certainly expect to see more activity from the group’s existing Business Property Relief arm, known as Navigator, which it describes as a non-UCIS discretionary management service arranging investment into BPR.)

www.eismagazine.com · March/April 2015

25

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26

EIS Magazine · March/April 2015

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Octopus Eureka Enterprise Investment Scheme Portfolio Service

Open

Octopus Eureka EIS is a discretionary managed portfolio that aims to provide investors with a broad range of tax benefits by investing in EIS-qualifying early stage UK companies. The diverse portfolio of companies, across a range of industries and sectors, offers the potential for higher investment returns over the long-term (more than five years) when compared with portfolios of FTSE 100 companies.

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Now

Evergreen

Amount to be Raised: Unlimited

A unique investment approach: Octopus Eureka EIS clients typically hold a portfolio of at least 15 EIS-qualifying companies. These may be either unquoted companies or companies that are already listed on the Alternative Investment Market (AIM), part of the London Stock Exchange.

Investments in unquoted companies are managed by the Ventures team at Octopus, which specialises in investing in fast-growing unlisted companies. The Ventures team includes investment professionals from a wide variety of backgrounds, including former entrepreneurs, professionals, academics and industry experts.

Investments in companies listed on AIM are managed by the Octopus Smaller Companies team. They look after AIM mandates worth more than £620 million, across a range of Octopus products.

Peto - One To Watch Peto reports 12% savingsat Barts Health Peto was appointed in September 2014 to support the Trust in the delivery of savings from the off-contract spend of around £38million per year.

T. 0800 316 2067 E.salessupport@octopusinvestments.com www.octopusinvestments.com/eis

EIS Open

TBC

Close

TBC

Amount to be Raised: £ TBC

Five months into service delivery the Peto team, are achieving 12% realised savings against a target of 4% on prior spend. This is a strong result, reinforced by huge opportunity to increase the scope of the throughput which has been lower than forecast to date. Peto has been working with Barts Health procurement team, budget holders, and the Peto marketplace, peto.co.uk.

About Peto Active in over 200 NHS trusts, Peto connects public sector buyers and private sector sellers via an easy-to-use online marketplace, and where necessary, with additional resources to reduce spend via its insourcing procurement service.

T. 01983 282925 E. td@ifmackinnon.co.uk www.peto.co.uk

www.eismagazine.com · March/April 2015

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Open Offers

EIS Open

Close

15/01/2015

31/03/2015

Amount to be Raised: £10m

Enterprise Invesment Partners - The Imbiba Fund The Fund will invest in a diverse portfolio of up to 5 businesses in the Leisure & Hospitality sector in Central London, with the award-winning Imbiba Team as asset managers. Imbiba’s outstanding track record boasts 8 EIS exits realised with an IRR of 35% (excluding EIS tax relief). Significant personal investment by both Imbiba and Enterprise (EIP) of up to £200,000 into each investee company.

The offer comprises 2 investment tranches of £10m in current tax year 2014/15 and £15m in 2015/16 with an industry leading performance hurdle rate at £1.50 per £1.00 invested.

T. 020 7487 8282 www.enterprise-ip.com

EIS Open

Close

Now

02/04/2015

Amount to be Raised: £10m

T. 020 3195 7100 E. sales@lgbrcapital.com www.lgbrcapital.com

EIS Open

Now

Close

05/04/2015

Amount to be Raised: Unlimited

Sustainable Technology Investors Approved EIS Fund 3 Sustainable Technology Investors Approved EIS Fund 3 (STIL EIS Fund 3) is offering exposure to a portfolio of sustainable energy companies within the Anaerobic Digestion (AD) and Hydro sub-sectors, targeting superior risk adjusted returns with an emphasis on downside mitigation, whilst taking advantage of EIS tax incentives.

STIL EIS Fund 3 is targeting cash returns to investors of £1.25 for a net 70p invested (79% uplift), representing a 16% IRR, equivalent to a 30% IRR to an additional rate tax payer entitled to EIS income tax relief. All subscriptions received by 2 April 2015 will be invested in the current tax year, allowing EIS Income Tax Relief to be claimed in the 2014/15 tax year or carried back to the 2013/14 tax year. This is STIL’s third EIS Fund with a similar focus, from a sector specialist management team with strong investment and development track record, particularly in AD and Hydro. STIL has a highly experienced Investment Team with a verified track record of 45% IRR from 55 sustainable energy and technology investments over 29 years and an existing platform of two EIS qualifying businesses available for co-investment and a strong pipeline of development assets.

This financial promotion has been approved by Sustainable Technology Investors Limited, which is authorised and regulated by the Financial Conduct Authority (“FCA”) with firm reference number 221604. This promotion is directed only at advisers who are authorised and regulated by the FCA. Investments in funds such as STIL EIS Fund 3 are high risk, and investors may not get back all the money they put in.

Omeira Studio Partners Ltd. HMRC-approved EIS Company backing UK talent.

Omeira Studio Partners is a UK based multi-platform content production company created to co-finance commercial projects with the major film studios, mitigating production risk with a confirmed route to market.

All our productions must be co-financed by a major or large independent studio and have distribution in place prior to investment. Prior to greenlighting productions, Omeira covers 70% of production costs with a combination of distribution and other trade deals.

T. +44 20 7193 0205 E. info@omeira.com www.omeira.com

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EIS Magazine · March/April 2015

Our film team, whose credits include Oscar winners and who have distributed over 1000 films, have identified a slate of distributor-backed projects that fulfil the company’s criteria. There are no management fees and the Directors are aligned with investors to share in profits.

Open Offers

EIS

Calculus Capital EIS Fund 2015

Open

Calculus Capital is a specialist in creating and managing private equity funds for individuals. A pioneer in the Enterprise Investment Scheme (EIS) space, Calculus launched the UK’s first approved EIS fund in 1999 and has gone on to launch 14 further funds. Calculus seeks capital appreciation from dynamic, established private UK companies across a multitude of sectors.

Close

04/06/2014

03/04/2015

Amount to be Raised: £25m

Calculus Capital’s experienced investment team, diligent investment process and ‘hands on’ approach has resulted in an impressive track record of investment success, achieving 20 exits to date with an average ROI of 3.4x – exclusive of tax reliefs.

Calculus Capital is authorised and regulated by the Financial Conduct Authority.

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

EIS

Chillingham Classics – Classic Car EIS

Open

The Chillingham Classics EIS specialises in the acquisition, restoration and sale of fine historic automobiles.

• • •

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01/04/2015

Amount to be Raised: £5m

Management team has sold over £250m of classic cars Target return: £1.40 for every £1 invested in 3 years Lower risk profile due to significant asset backing

Classic cars benefit from a set of distinctive drivers: Limited or no new supply, a growing number of market participants and an increasing interest for lifestyle and investment purposes. Collectively, these factors combine to make the market for classic cars more robust, more accessible, and more attractive as an alternative asset investment class. Minimum investment £10,000 and 3% available to intermediaries.

T. 020 3752 7211 E. info@cloistersventures.com www.cloistersventures.com

EIS

Seneca EIS Portfolio Service

Open

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.

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Evergreen

Minimum Subscription: £25,000

The EIS 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). Established in the Autumn of 2012, the EIS Service has completed 19 investments totalling £15m as well as several single company EIS funding rounds.

Seneca Partners (“Seneca”) will act as portfolio manager to the EIS Service. Seneca is an investment manager and advisory business formed in 2010 and specialising in sourcing and providing funding to small and medium sized businesses. It is part of the wider Seneca stable of companies, which had over £500m 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.

T. 020 3195 7100 E. sales@lgbrcapital.com www.lgbrcapital.com

www.eismagazine.com · March/April 2015

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Open Offers

EIS Open

15/09/2014

Close

27/03/2015*

Minimum investment: £10,000

T. 0207 550 5512 E. info@greatpointmedia.com www.greatpointmedia.com

EIS Open

Close

Now

Evergreen

Minimum Subscription: £25,000

Select Television Production EIS 2 The Select Television Production EIS 2 (“Fund”) is an alternative investment fund providing access to new UK television production companies (“Investee Companies”) that have the potential to deliver capital growth and which qualify for tax relief under the EIS. The Investee Companies will create new dramatic content for the UK and international markets, and will benefit from the significant experience of the Investment Adviser, Great Point Media - a team that possesses over 60 years combined experience in entertainment media, including the running of production and content distribution businesses as well as major television networks.

The team also brings with them a wealth of investment management experience, having managed in excess of £300m of EIS qualifying media investment with a proven “cradle to grave” track record of delivering timely EIS3 certificates and value returned to investors. The Fund has an illustrative return of £1.08 (exclusive of tax relief) and will be allotting shares pre 5 April 2015 to ensure the availability of “carry back” to the 13/14 tax year. * (20 March for applications accompanied by cheque)

Blackfinch EIS Portfolios The Blackfinch Media EIS Portfolios allows investors to access the attractive tax benefits of EIS by investing into qualifying media companies. Our portfolio companies target capital preservation through their predictable income streams underpinned by intellectual property or high levels of contracted revenue.

The Music Publishing companies will create original music scores for films and television programmes which benefit from predictable long-term royalty streams.

The Television Distribution companies will fund the production of television programmes where the majority of revenues are known and contracted in advance.

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Target returns of £1.20 for each pound invested (Ignoring tax reliefs).

•

Predictable returns enable portfolio companies to capture, sell or refinance their revenues providing an expected exit strategy for investors.

•

T. 01684 571255 E. comms@blackfinch.co.uk www.blackfinch.com

EIS Open

01/01/2015

Close

TBC

Amount to be Raised: £2,000,000

T. 01983 282925 E. td@ifmackinnon.co.uk www.x-windpower.co.uk

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EIS Magazine · March/April 2015

•

Investments based on fixed rate and pre-contracted revenue streams in a well established industry.

Investor can benefit from the 30% income tax relief, CGT deferral & tax-free gains.

X-Wind Power X-Wind has developed a ground-breaking Vertical Axis Wind Turbine aimed at the medium scale renewable energy sector. The team has drawn on its extensive experience gained developing the world’s largest wind turbines at Vestas. Since its launch in 2012 X-Wind’s core patented technology has won five high-profile technology awards.

X-Wind visible sales pipeline exceeds £40 million. The company is also securing commercial commitments for its 80kW turbines from customers in need to secure energy pricing and supply. X-Wind has secured a partnership with the UK’s largest electricity user. To date X-Wind has raised £1.7 million in grants and £0.3M of equity. X-Wind currently requires £2.0M of equity funding to complete the production of their first full-scale 80kW turbine.

Open Offers

EIS

Deepbridge - Hydro EIS

Open

The Deepbridge Hydro EIS is a discretionary managed portfolio service; representing the last opportunity for UK taxpayers to invest in EIS-qualifying investee companies generating long term, stable and predictable returns from the operation of hydroelectricity generating projects in the UK. The core proposition of the investee companies identifies, through rigorous due diligence and engagement, attractive projects in the hydroelectricity sector of the UK renewable energy industry. The proposition involves the acquisition of established projects as well as construction and development projects; in which case proven engineering, procurement and construction contractors will be appointed with oversight by the Investment Manager.

By investing in such asset-backed opportunities that benefit from contractual revenues available under the Renewables Obligation, the EIS seeks to ensure an enduring focus upon capital preservation as well as generating stable and predictable returns for the investor. The target return for the Deepbridge Hydro EIS is 125p returned for every 100p invested, over 3-4 years. To ensure maximum tax efficiency for the investor, the Deepbridge Hydro EIS is entirely investor-fee free at point of investment.

The value of an investment may go down as well as up and investors may not get back the full amount invested. Investments in small unquoted companies carry an above-average level of risk.

Deepbridge - Technology Growth EIS

Close

01/11/2014

26/03/2015

Amount to be Raised: £15m

T. 01244 893182 www.deepbridgecapital.com

EIS Open

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.

The Fund is focused on investing in high growth companies that are seeking to commercialise and expand, specifically in three sectors: • Energy & resource innovation; including waste water treatment and conservation, advanced materials and renewable energy generation technologies; • Medical technology; such as medical and surgical instrumentation, devices and diagnostics; • IT-based technology; particularly Enterprise Application Software and Software as a Service.

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.

Close

01/08/2013

N/A

Amount to be Raised: Unlimited

T. 01244 893182 www.deepbridgecapital.com

EIS

Rockpool’s EIS Portfolio Service

Open

Rockpool’s EIS Portfolio Service offers an alternative to traditional EIS funds.

Rockpool creates direct private company investment opportunities for its Network of members which includes hundreds of successful entrepreneurs and professionals from a wide range of business sectors. Deals created for the Network are also open to a wider audience of investors through Rockpool’s EIS Portfolio Service.

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Evergreen

Minimum Subscription: £10,000

Rockpool targets companies which are profitable or have significant asset backing.

Asset backed sectors include crematorium operation, electricity generation, 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.

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 Discretionary 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.

T. 0207 015 2150 E. team@rockpool.uk.com www.rockpool.uk.com

www.eismagazine.com · March/April 2015

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Open Offers

EIS Open

Close

Now

Evergreen

Amount to be Raised: £10m

T. 0207 927 7462 E. enquiries@endven.com www.endven.co.uk

EIS Open

Close

Now

Evergreen

Minimum investment: £25,000

T. 020 7361 0212 E. fundenquiries@mmcventures.com www.mmcventures.com

EIS Open

January 2014

Close

Quarterly

Remaining Capacity £6/26m

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

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EIS Magazine · March/April 2015

Endeavour Ventures Endeavour Ventures offers a growth company direct EIS portfolio service with a bias towards technology. The core team have utilised the EIS tax structure over 15 years, and since 2006 as Endeavour introducing over £70m into qualifying companies.

Endeavour look for highly scalable businesses, experienced management, and seek early access to into US markets where exits are often sought. They believe that growth EIS has significant inherent risk and that total costs need to be contained. They seek the highest degree of investor alignment possible through equity interests in investee companies, and take an active role in developing and exiting the investment portfolio.

The best EIS investing requires patience as companies do not become successful overnight. Endeavour invests slowly and cautiously, free from any pressure to place a managed fund. The team’s experience is that growth businesses can take anything from 5-10 years - sometimes more - to reach full maturity, over which time management fees of a fund can add more than 20% to the costs of an investment, prior to management carry deductions. They make relatively few investments each year and closely follow those companies though to maturity. They do not do SEIS.

MMC Ventures - EIS Fund The MMC Ventures EIS Fund offers investors exposure to a portfolio of hard-toaccess fast growing private companies, combing real capital upside potential with generous EIS tax reliefs.

Founded in 2000, MMC is regularly rated as one of the top 5 most active venture investors in the UK, investing circa £20 million per annum in a combination of new deals and follow-on capital for existing portfolio companies. An investor in the MMC EIS Fund can expect a portfolio of 8-10 companies within 12-15 months of subscribing. The MMC EIS Fund is categorised as a generalist product but they have a clear investment focus on technology-enabled sectors where the UK is a world leader - particularly financial and business services, business software, digital media and e-commerce. MMC’s fundamental approach is to invest on the commercial merits of each transaction, viewing the EIS tax benefits as highly desirable but not the reason to invest. This approach is reinforced by their policy of co-investing their EIS Fund alongside other funds they manage that do not qualify for EIS tax relief.

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 strategy “seeking lower risk” 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.

4 EXCITING EIS / SEIS OPPORTUNITIES BROUGHT TO YOU BY INNVOTEC Anglo Scientific EIS 2015 The seventh annual EIS Fund from the Innvotec / Anglo Scientific collaboration provides further opportunity for private investors to invest behind the well regarded, specialist and dedicated team of technology entrepreneurs that is Anglo Scientific, under a discretionary management agreement with Innvotec, one of the UK’s longest established VC’s backingangloscientific opportunities in the broad technology sector.

C R E A TING SOLU TIONS

Anglo Scientific has built a portfolio, all EIS qualifying, of highly promising tech-enabled companies and Anglo Scientific 2015 EIS, like the predecessor funds, provides the opportunity to invest in five or six of these companies.

Performance across the earlier funds is impressive, an average gain on portfolio cost of 77% equating to a notional IRR across all Funds of 19%, with no fund being valued below cost.

Startup Funding Club SEIS 2015 The second annual SEIS Fund from the Innvotec / Startup Funding Club collaboration, the first having been deployed across a well-diversified, fifteen company portfolio.

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 knowhow to meet the challenge.

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.

Odyssey Mission SEIS 2015 UK based private investors have a novel opportunity to invest in the Innvotec-managed Odyssey Mission 2015 SEIS Fund, a portfolio of early stage businesses led by Asian Entrepreneurs. Investors have the prospect of strong capital appreciation whilst helping an “affinity group” and obtaining attractive personal tax reliefs in so doing.

The Fund is geared to providing start-up /early stage funding and mentoring support to the best of the next generation of Asian graduate entrepreneur 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 “Odyssey Mission” itself is a big project of which the SEIS Fund is the startpoint.

OION SEIS 2015

2015

SEIS FUND

The OION 2015 SEIS Fund is an Innvotec-managed growth fund, providing private investors with an opportunity to invest in a portfolio of early stage businesses located in Oxfordshire and its surrounds, whilst offering the prospect of strong capital appreciation and at the same time accessing attractive personal tax reliefs.

The companies that will form the OION 2015 SEIS Fund will use the proceeds of investment to advance them on their business growth curve and it is at these earliest stages of commercial exploitation that there is the potential to generate significant capital appreciation.

The Fund benefits from the participation of Oxford Investment Opportunities Network (OION) in generating quality dealflow and the provision of mentors to support the entrepreneurs.

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.

VA0115

Open Offers

EIS

SEIS

Open

Close

02/09/2014

01/04/2015

Amount to be Raised: £15m

T. 020 7416 7780 E. contact@downing.co.uk www.downing.co.uk

EIS

SEIS

Open

Close

January 2015

Evergreen

Amount to be Raised: Unlimited

T. +44 (0)845 512 1000 E. nicolajohnston@chfmedia.com www.chfenterprises.co.uk

EIS Open

26/01/2015

SEIS Close

30/04/2015

Amount: Min £3m - Max £8m

T. 0330 223 1430 E. Talong@merciafund.co.uk www.merciafund.co.uk

34

EIS Magazine · March/April 2015

Downing Growth 4 – EIS & SEIS Downing Growth 4 invests in high risk, high potential return investment opportunities, whilst also providing access to attractive EIS and/or SEIS tax reliefs (including 30%-50% income tax relief). It has a focus on early-stage UK technology companies, and its principal sectors of interest are consumer internet & mobile, enterprise software, and industries that are becoming more dependent on technology, such as healthcare, education, finance and defence. Since its launch in September 2014, it has invested in a portfolio of seven companies, with more currently being completed. Investors’ tax forms are expected within six months of investing in the fund. Investments come from a variety of sources and we have relationships with several joint venture partners. In particular, we are the preferred partner to the ‘Defence, Science & Technology Laboratory’ at Porton Down - a division of the Ministry of Defence - which provides us with access to opportunities coming out of this group. The fund is managed by Downing Ventures, a division of Downing LLP, and is led by Matt Penneycard, who has been investing in this space for over ten years, both in the UK and the US. Our team includes an individual based in the US, which is to the benefit of our portfolio companies, many of whom seek to expand in that direction.

CHF Enterprises CHF Enterprises Ltd (CHF) presents an exciting and unique opportunity for UK tax payers to invest in both SEIS and EIS qualifying media production companies, 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.

The group has multiple revenue streams from Broadcast and License and Merchandising sales with unlimited investment returns. All shows are produced in the UK and qualify for the Government’s Animation Tax Credits.

Mercia Fund Management - Mercia Growth Fund 4

(75% EIS, 25% SEIS)

Mercia Fund Management, a wholly owned subsidiary of Mercia Technologies PLC, is a leading investor in UK technology; specialising in the commercialisation of businesses with high growth potential across a range of technology driven sectors in which deep expertise is held.

Mercia Growth Fund 4 will utilise the hybrid structure of Mercia’s previous four tax efficient funds, combining EIS and SEIS, to invest in a diversified portfolio of innovative technology companies. The hybrid approach aims to offer an optimal balance between capital growth, portfolio risk and time horizon whilst maximising the tax advantages available.

Mercia has partnerships with nine universities, including Warwick, Leicester and Birmingham, and has a leading industry position which ensures a consistent, high quality pipeline of deal flow opportunities.

Mercia Growth Fund 4 will target exit realisations between three and seven years.

Mercia Technologies PLC, which listed on AIM in December 2014 raising £70m, aims to provide later stage capital to the emerging stars in the Mercia Fund Management portfolio, offering a unique venture capital model with key strategic advantages for investors.

Open Offers

SEIS

Blackfinch SEIS Music Portfolios

Open

• • • •

Close

Now

The Blackfinch SEIS Portfolios allow you to access tax benefits and participate directly in the success of a portfolio of recording artists supported by the major record labels. Our SEIS companies will fund the recording and marketing of albums from existing music artists.

Evergreen

Minimum Subscription: £15,000

A unique opportunity to participate directly in the success of music albums backed my Major labels.

Investors benefit from all revenues from the master recording of each album in first position including album and single sales, digital downloads (itunes) and radio/TV airplay.

A simple ‘one-shot’ investment that does not require follow-on funding.

Investors can benefit from 50% income tax relief, 50% capital gains tax relief, 100% inheritance tax relief and loss relief.

For more information please contact our intermediary team on 01684 571255

T. 01684 571255 E. comms@blackfinch.co.uk www.blackfinch.com

SEIS

Tesseract Interactive SEIS Fund 5

Open

The Tesseract Interactive SEIS Fund 5 provides investors with access to companies operating in the interactive entertainment sector. It is the 5th such fund to be offered by Daedalus Partners, an experienced SEIS Fund manager with over £17.5m of SEIS funds under management.

21/11/2014

Close

03/04/2015

Amount to be Raised: £3m

The Tesseract funds have already invested in over 60 developers of applications and services for mobile devices, online games and downloadable content for the console/handheld market. It aims to achieve an attractive risk/reward profile through a balanced blend of investments in high-growth, start-up companies with potential for significant equity returns, and other investments in small enterprises exploiting established franchises, IP and creative teams.

T. 020 7866 5452 E. info@daedalus-partners.com www.daedalus-partners.com

SEIS

Select Media SEIS 5

Open

The Select Media SEIS 5 (“Fund”) will invest into shares of early stage media companies that have the potential to deliver significant capital growth via the creation of intellectual property and which qualify for tax relief under the SEIS. The Manager, Great Point Investments, will pursue a balanced strategy to ensure diversification through different business models across multiple sectors of the entertainment industry including television development, music, book publishing, film, new media and creative technology.

The Fund will benefit from the extensive experience of the Investment Adviser, Great Point Media - a team that possesses over 60 years combined experience in entertainment media, including the running of production and content distribution businesses as well as major television networks. The team also brings with them a wealth of investment management experience – this is their fifth SEIS offer to date having already raised approximately £7m of SEIS capital spread across 50 early stage media companies and delivered SEIS3 certificates within 9 months of previous offers closing.

23/02/2015

Close

29/05/2015

Minimum investment: £25,000

T. 0207 550 5512 E. info@greatpointmedia.com www.greatpointmedia.com

www.eismagazine.com · March/April 2015

35

Open Offers

SEIS Open

Now

Close

31/03/2015*

Amount to be Raised: Up to £3m

The Portillion Capital Shariah Compliant Seis Fund The Portillion Capital Shariah Compliant SEIS Fund (“the Fund”) is open to all investors but it gives an opportunity for those whom Shariah Compliance and ethical investing is of importance to invest with confidence that guidelines and procedures are in place to ensure that the Fund and all the Investee Companies are Shariah compliant and will remain so throughout the investment period.

Portillion Capital Limited are working together with Seed Mentors who have provided mentoring services to a number of SEIS funds and have the ability to introduce potential investee companies and carry out due diligence prior to investment as well as providing ongoing support for these companies.

T. 07817 997562 E. s.randall@seedmentors.co.uk www.seedmentors.co.uk

SEIS Open

Now

Close

31/03/2015*

Amount to be Raised: Up to £3m

Seed Mentors both seek out and have many companies approach them for assistance in securing start-up funds. Seed Mentors believes, with the help of IFAAS (A specialised Shariah compliance service provider based in the UK serving as the Shariah Adviser to the Fund), there will be no difficulty in finding a sufficient number of suitable Shariah Compliant, socially responsible and ethical start-up companies for investment by the Fund. * Closing dates: 31 March and monthly up to end June 2015

Seed Mentors – The Third Seed Advantage SEIS Fund Seed Mentors were one of the pioneers of Seed EIS investing.

The first two general SEIS funds from Seed Mentors have been closed and successfully invested.

So has the first Dragon Fund which was promoted in conjunction with Finance Wales, and which was designed to support start-up businesses in Wales.

That has led on to a range of specialist Seed EIS funds, which includes the second Dragon Fund, Thistle and Shamrock Funds, a Shariah Fund and a wine Fund.

And, of course, the ever popular generalist fund, the Third Seed Advantage SEIS Fund is available for investors interested in a broad spread of investments, across different industry sectors.

T. 07817 997562 E. s.randall@seedmentors.co.uk www.seedmentors.co.uk

VCT Open

Now

Close

*See Description

Minimum Subscription: £2,000

T. 020 3195 7100 E. sales@lgbrcapital.com www.lgbrcapital.com

36

EIS Magazine · January/Febuary 2015

The huge differentiator of Seed Mentors is in the name. We put key mentors around all the companies that we invest in, to ensure that they receive the best advice in terms of finance, IT, marketing and HR. It is a process that is working, and delivers us a very strong deal flow of companies to invest in from our professional connections. * Closing dates: 31 March and monthly up to end June 2015

Unicorn AIM VCT The Unicorn AIM VCT is an established VCT managed by Unicorn Asset Management since launch in 2001, targeting capital preservation, tax-free dividends & capital growth.

Unicorn Asset Management is an independently owned and managed company specialising in UK equity small cap and AIM stocks. The well-resourced investment team has over 100 years combined experience. Unicorn’s investment philosophy targets profitable, cash generative companies that have strong management teams and a leading position in specialist but growing markets.

The VCT provides investors with access to an established and diversified portfolio of 60+ AIM and smaller companies, over 60% of which have paid dividends in the last 12 months.

The VCT has a history of steady tax-free dividend distributions, with over £37m paid out in aggregate to shareholders to date. Over the past 5 financial years (to 30 September) the VCT has paid 26p in dividends to investors.

The VCT is the largest AIM-focused VCT in the market and also the highest rated AIMfocused VCT by Martin Churchill’s Tax Efficient Review.

Close: 1 April 2015 for 2014/15 tax year, 30 June 2015 for 2015/16 tax year (if not fully subscribed beforehand)

Open Offers

VCT

Downing ONE VCT – Hybrid Generalist

Open

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Diversification: top-up with immediate exposure to a mature portfolio of approximately 100 companies.

Hybrid generalist focus: 61% of the current portfolio is unquoted with an asset-backed focus; 39% are growth companies, mainly AIM-listed, and managed by Judith MacKenzie, award-winning manager of our topperforming micro-cap OEIC (out of 400 Funds invested in the UK (All Companies, Equity Income and Small Cap) in 2014, source: Trustnet / F.E.Analytics / Downing).

5.7% p.a. tax-free target income: on net of income tax relief cost.

Exit: the VCT buys back shares at a 5% discount to NAV, subject to cash resources and regulations.

T. 020 7416 7780 E. contact@downing.co.uk www.downing.co.uk

VCT Open

December 2014

Downing THREE VCT is a planned exit VCT focusing on growing UK businesses that trade from freehold premises, including children’s nurseries, health clubs and pubs.

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• •

02/04/2015

Amount to be Raised: £10m

Downing THREE VCT – Planned Exit

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Close

December 2014

With net assets of approximately £73 million across a variety of sectors, the Downing ONE VCT offers diversification to investors seeking long-term tax-free income.

Close

02/04/2015

Amount to be Raised: £25m

57% tax-free target profit: on subscription (net of income tax relief) over 6 years.

Planned exit strategy: tax reliefs are accessed over the shortest period possible, with a focus on risk management by seeking asset-backed businesses.

Exit: Downing THREE will seek to pay exit proceeds to investors at full value (no discount to NAV).

Our expertise: we have specialised in backing asset-backed businesses for over 15 years, investing more than £100 million into businesses of this type over the last three years.

T. 020 7416 7780 E. contact@downing.co.uk www.downing.co.uk

VCT

PUMA INVESTMENTS - PUMA VCT 11

Open

Puma VCT 11 builds on the market-leading track record of previous VCTs. Puma VCT 11 will adopt the same, proven investment strategy primarily investing in established businesses in the form of ordinary equity together with senior secured loans.

November 2014

Close

04/04/2015

Remaining Capacity £12/30m

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.

Dividends: Target average annual tax-free dividend of 5p per share commencing from April 2017.

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.

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

www.eismagazine.com · March/April 2015

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Open Offers

VCT Open

Close

15/10/2014

30/04/2015

Amount to be Raised: £10m

Triple Point – Hydro VCT Triple Point has been working with the specialist hydropower developer, Green Highland Renewables, and the Forestry Commission Scotland on a portfolio of run-ofriver hydroelectric power schemes since 2010 and has 7 schemes under construction and 1 fully operational. Triple Point’s Hydro VCT (a share class of Triple Point VCT 2011 plc) targets long term, inflation linked income and is an opportunity for investors to finance companies which will have the exclusive rights to construct, operate and maintain the next tranche of projects in this portfolio.

Hydro VCT aims to deliver: •

Attractive Returns: a target tax free IRR of 10% over 16 years.

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Predictability: tried and tested technology.

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

IHT Open

Close

Evergreen

Evergreen

Amount to be Raised: Unlimited

T. 020 3195 3500 E. info@stellar-am.com www.stellar-am.com

IHT Open

Evergreen

Close

Evergreen

Amount to be Raised: Unlimited

T. 020 3195 3500 E. info@stellar-am.com www.stellar-am.com

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EIS Magazine · March/April 2015

• •

Income: long-term, tax-free, and inflation linked over 15 years.

Quick Payback: the rapid return of investors’ initial capital outlay.

Diversification: returns which are uncorrelated with stock market investments.

Tax Benefits: that are available to VCT investors.

A major attraction of Hydro VCT’s investments is their ability to benefit from Feed-in Tariffs (FITs). Under the Government mandated FIT regime, producers of qualifying renewable energy are guaranteed minimum, inflation-linked, tariffs.

Stellar Asset Management – Stellar AIM IHT Portfolios Stellar AIM IHT Portfolios provides clients with a discretionary managed, diversified portfolio of AIM listed companies with the option of a unique insurance policy to protect investors from any future loss of value.

Each portfolio will be made up of AIM shares that qualify for Business Property Relief, providing 100% IHT relief after just two years while enabling clients to keep control and ownership of capital. Stellar AIM IHT Portfolios therefore creates a straightforward IHT solution while offering potential for growth and easy access & liquidity for those who wish to transfer existing stocks and shares or have cash holdings. The investment strategy exercises a well diversified, disciplined stock selection policy which focuses on long-term capital growth, and risk mitigation.

This process entails the detailed analysis and selection of companies that must exhibit a market value supported by tangible assets or yield. The average market capitalisation of companies in our portfolios is c£180 million and many are household names.

We offer a unique, but optional insurance policy across our range of IHT products to protect investors from any future loss of value. The policy provides investors and advisers with peace of mind and ensures beneficiaries always receive the original amount invested.

Stellar Asset Management – Stellar AIM IHT ISA Stellar AIM IHT ISA provides clients with a diversified portfolio of AIM listed companies in a tax free ISA wrapper with the option of a unique insurance policy to protect investors from any future loss of value.

Our AIM IHT ISA is one of the most tax-efficient investment opportunities available on the market. It is free from income tax, capital gains tax and, after just two years, inheritance tax.Each portfolio will be made up of AIM shares that qualify for Business Property Relief, providing 100% IHT relief after just two years while enabling clients to keep control of capital, without losing any of the benefits of their existing ISA. Stellar AIM IHT ISA therefore provides individuals with a straightforward IHT solution, offering potential for growth and easy access, for existing ISA transfers and new ISA investment.

The investment strategy exercises a well-diversified, disciplined stock selection policy which focuses on long-term capital growth and risk mitigation.

We offer a unique, but optional, insurance policy across our IHT products to protect investors from any future loss of value. The policy provides investors and advisers with peace of mind and ensures beneficiaries always receive the original amount invested, creating the UK’s only fully insured ISA with IHT relief.

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

Open Offers

IHT Open

October 2014

Close

Open Ended

Amount to be Raised: Unlimited

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

IHT Open

Close

June 2013

Monthly

Amount to be Raised: Unlimited

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

IHT Open

Now

Close

Evergreen

Minimum Subscription: £25,000

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.

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.

Blackfinch IHT Portfolios Blackfinch provides tax-efficient investment solutions that are transparent and compelling. Our services provide real solutions to real financial planning challenges faced by individuals today.

Blackfinch IHT portfolios are designed to mitigate Inheritance Tax (IHT) after 2 years of investment into our companies that undertake asset-backed lending in property development and renewable energy generation.

T. 01684 571255 E. comms@blackfinch.co.uk www.blackfinch.com

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EIS Magazine · March/April 2015

The Blackfinch approach: • Focused on capital preservation: Asset-backed investments in well established sectors with predictable returns.

• Targeting 4 - 7%: The investor has a greater participation in the return on investment.

• Transparency: A discretionary managed portfolio with clear valuation methodologies for the underlying assets.

For more information please contact our intermediary team on 01684 571255

Open Offers

IHT Stellar Asset Management – Stellar Succession

Open

Stellar Succession utilises Business Property Relief to provide 100% exemption from IHT after just two years while enabling clients to keep control and ownership of capital.

Each client becomes a sole shareholder of their own bespoke private limited trading company, which allocates capital to a diversified portfolio of asset backed, Business Property Relief qualifying trading activities including Forestry, Farming, Bridging Finance, Hotels and Renewable Energy.

The service has a focus on capital preservation– our trades within Stellar Succession are securitised, non-correlated to main stream asset classes, UK based and we do not use gearing.Each of our trades has a target return of 5% pa (net), returns are uncapped and clients have the flexibility to opt for growth or income.

The service is managed and fully administered by Stellar on the behalf of every client within a competitive and transparent cost structure.

We offer a unique, but optional insurance policy across our range of IHT products to protect investors from any future loss of value. The policy provides investors and advisers with peace of mind and ensures beneficiaries always receive the original amount invested.

Triple Point Navigator Service

Close

Evergreen

Evergreen

Amount to be Raised: Unlimited

T. 020 3195 3500 E. info@stellar-am.com www.stellar-am.com

IHT Open

Close

Now

Targeting Capital Growth Navigator is an investment management service that arranges investments into companies providing targeted business funding.

Evergreen

Amount to be Raised: Unlimited*

Typically this funding is used by small and medium sized enterprises to acquire assets which are critical to the continued success of their operations.

Navigator provides an ideal opportunity for investors seeking attractive riskadjusted returns and Business Property Relief by providing access to companies participating directly in helping to bridge the funding gap.

Navigator aims to deliver to investors returns of 3 - 7% per annum, after all fees and charges.

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

*Minimum investment: £50,000

IHT

Triple Point Generations Service

Open

Targeting Capital Security The Generations Service is an investment management service which provides a strategy offering investors a high degree of capital security and liquidity, while targeting returns which are comparable to asset classes such as cash deposits and bonds.

Now

Close

Evergreen

Amount to be Raised: Unlimited*

To deliver this, it targets a broad spread of leases and infrastructure financing arrangements principally with public sector organisations and good quality companies.

These arrangements provide for specific receipts on specific dates over a period of years, providing capital security, liquidity and the potential for steady returns.

They rely on a simple, transparent business model with controlled risk allowing investors to access Business Property Relief.

The Generations Service targets Cash Plus returns. *Minimum investment: £50,000

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

www.eismagazine.com · March/April 2015

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SUSTAINABLE TECHNOLOGY INVESTORS APPROVED EIS FUND 3 £10 Million UK Sustainable Energy Fund Your attention is drawn to the Important Notice at the end of this document and the risk warnings contained therein. Words and expressions defined in the Information Memorandum shall have the same meaning as in this document

Compelling investment opportunity in the sustainable energy sector STIL’s third EIS fund focused on UK sustainable energy assets A management team with a 45% IRR track record The Sustainable Technology Investors Approved EIS Fund 3 (the “Fund”) offers exposure to a portfolio of sustainable energy companies operating within the anaerobic digestion (“AD”) and run-of-river hydro (“Hydro”) sub sectors, targeting superior risk adjusted returns with an emphasis on downside mitigation, whilst taking advantage of EIS tax incentives.

The Fund Manager Sustainable Technology Investors Ltd (‘STIL’) is based in London and authorised and regulated by the Financial Conduct Authority.

STIL manages or advises on private equity investments and committed funds of over £113 million in the sustainable energy, technology and energy efficiency sectors.

STIL has a sector specialist management team with a strong investment and development track record, particularly in AD and Hydro.

STIL has a highly experienced Investment Team with a verified track record of 45% IRR from 55 sustainable energy and technology investments over 29 years.

Key Reasons to Invest  Targeted cash returns of £1.25 for a net 70p invested (79% uplift).

This would represent a 16% IRR over the 4 year period, equivalent to a 30% IRR to an additional rate tax payer entitled to EIS income tax relief.  Downside risk mitigation sought at 90% of the subscription price with low cyclicality, predictable cash flows and asset backing whilst maintaining the potential for good yields and capital gain on exit.  HMRC Approved EIS Fund – When 90% invested in first 12 months investors can claim income tax relief as if shares were subscribed for in the tax year 2014/15.  A proven Fund Manager who has already fully invested STIL EIS Fund 1 and invested more than 90% of STIL EIS Fund 2 within 8 months of fund close.  A management team with years of investment and development experience across AD and Hydro, an enviable track record and access to a strong pipeline of investment opportunities.  An exciting opportunity to access investment in the UK sustainable energy sector. Key features include revenues supported by long-term government policies and subsidies such as Feed-in Tariffs (“FITs”) and the Renewable Heat Incentive (“RHI”), whilst targeting attractive investment returns due to increasing energy demand and growing resource scarcity.

Investment Team Gordon Power – Chairman, 30 years’ private equity investment and fund management experience.

An overall track record of 29% IRR from 239 investments and a 45% IRR from 29 sustainable investments.

Jim Totty - Managing Partner, 21 years’ experience in sustainable and clean technology, with 13 years private equity investment experience.

A 30% IRR from 20 sustainable private equity investments.

Nick Pople - Managing Partner, 22 years’ sector experience across sustainable energy and technologies, with 17 years private equity investment experience.

A 36% IRR from 23 sustainable private equity investments.

Operating Partners Firglas Ltd (“Firglas”) – a specialist renewables project developer and operator. Sourced and now developing, in partnership with STIL, an AD plant and two Hydro schemes in the UK. Fredrik Adams – Founder and CEO of Firglas. Has worked with STIL since 2009 when he formed Adgen Energy Ltd, since acquired

by Tamar Energy, now one of the largest AD operators in the UK. Simon Cordery – Operating Partner who has worked closely with STIL since 2010. Significant renewable energy development experience, particularly in AD. Founder of Energy and Environment practice with Savills in 2006.

EIS Tax Reliefs  Income tax relief at 30%  Tax-free capital gains when shares sold  Capital Gains Tax deferral  Business Property Relief  Loss relief against taxable income Tax reliefs are dependent on investor’s individual circumstances and are subject to change. The availability of tax reliefs also depends on investee companies maintaining their qualifying status.

STIL EIS Fund 3 - Investment Strategy  An existing platform of two businesses available for co-investment and a strong pipeline of development assets.  Aim to provide Investors with a diversified portfolio of investments which has a lower correlation to stock market movements.  Focus on AD and Hydro – the sub-sectors where FITS and EIS relief can still be combined, the core investment focus of STIL EIS Fund 1 and Fund 2, and the areas where the Fund Manager has in-depth experience, an extensive track record and a pipeline of investment opportunities.  Downside risk mitigated by targeting asset backed companies with contracted third party revenues, proven technologies with warranties and UK government guaranteed FITs and possibly RHI revenues.

Sustainable Technology Investors Approved EIS Fund 3 Fund Terms Fund Size

£10 million

Fund Type

HMRC Approved complying EIS Fund

Investment Focus

Anaerobic digestion (AD) and run-of-river hydro (Hydro)

Closing Date

02 April 2015

Target Return

£1.25 on a net 70p invested

Exit Strategy

Liquidity targeted at 4 years

Initial Charges

2% (plus up to 3% adviser fee if applicable)

Annual Charges

2% AMC (plus 0.5% admin charge)

Performance Incentive Fee Zero until return hurdle of £1.16 (in respect of every £1 invested) is reached 4p catch up between £1.16 and £1.20

Example Investee Company STIL EIS Fund 1 and Fund 2 invested in Black Dog Biogas Ltd, a developer, owner, operator of AD plants in the UK. Its first project is a 499kW AD plant on the Isle of Wight. There is the potential to expand the plant up to 1MW in 2015 with further investment.

20% on returns between £1.20 and £1.25 30% on returns above £1.25

For further information please contact LGBR Capital: Tel: Email: Web:

020 3195 7100 sales@lgbrcapital.com www.lgbrcapital.com

Black Dog’s Isle of Wight AD Plant under construction

Important Notice This document has been issued and approved as a financial promotion for the purpose of Section 21 of the Financial Services and Markets Act 2000 (“FSMA”) by Sustainable Technology Investors Limited (“STIL”), which is authorised and regulated by the Financial Conduct Authority (“FCA”), under reference number 221604 and whose registered office is at 31A St James’s Square, London SW1Y 4JR. STIL has taken all reasonable care to ensure that this document is fair, clear and not misleading but the statements of opinion or belief contained in this document regarding future events constitute STIL’s own assessment and interpretation of information available to it at the date of issue of this document and no representation is made that such statements are correct or that the objectives of the Fund will be achieved. No reliance is to be placed on the information contained in this document. It is important that prospective investors read and understand fully the Information Memorandum relating to the Fund, dated November 2014, and the risks involved with the arrangements described in this document (which is only a summary of some of the information in the Information Memorandum). The opportunity described in this document is NOT suitable for all investors. Key risks are explained in the Information Memorandum and should be carefully considered. Investment in EIS qualifying companies are considered to be high-risk, including illiquidity, lack of dividends, loss of investment and dilution. You should be aware that shares and income from them may go down as well as up and you may not get back the amount originally invested. Past performance is not a reliable indicator of future performance and may not be repeated. An investment in smaller and unquoted companies carries a higher risk than many other forms of investment. The Fund’s investments are likely to be illiquid and difficult to realise. Prospective investors should regard an investment in the Fund as a long term investment; realisation of the original investment will be piecemeal and, in practice, may extend beyond 4 years.

Accordingly your capital is at risk and you may lose all the money you invest. Tax reliefs are dependent upon an investor’s individual circumstances and are subject to change. Prospective investors should seek their own independent advice and then rely on their own independent assessment of the Fund; nothing in this document constitutes tax, financial, legal or investment advice. STIL is unable to provide financial, investment or tax advice. This document does not constitute, and may not be used for the purposes of, an offer to or invitation to treat by any person in any jurisdiction outside the United Kingdom. This document and the information contained in it are not for publication or distribution to persons outside the United Kingdom.

Octopus: putting VCTs in your clients’ reach

What makes a great Venture Capital Trust (VCT) investment? Compelling tax advantages for investors? Definitely.

But at Octopus we think the real strength of VCTs lies in the underlying investments themselves. We’ve got a track record of spotting growth potential in smaller UK companies such as Zoopla, graze.com and Secret Escapes. Backing businesses like these is great for them and could be great for our investors too. No wonder investors trust us with more VCT money than any other provider*. We currently have a diverse range of VCTs open to new investment, so call 0800 316 2067 or visit octopusinvestments.com to find out more.

For professional advisers only and not to be relied upon by retail clients. *Source: Association of Investment Companies, October 2014. This advertisement is issued by Octopus Investments Ltd which is authorised and regulated by the Financial Conduct Authority. This advertisement is not a prospectus and investors should only subscribe for VCT shares on the basis of information in the VCT prospectus which can be obtained from octopusinvestments.com. Investors’ capital is at risk and they may not get back the full amount invested. Tax treatment depends on the individual circumstances of each investor and may be subject to change. Past performance is not a reliable indicator of future results and any forecast is not a reliable indicator of future performance. The availability of tax relief also depends on the investee companies maintaining their qualifying status. VCT shares are likely to have higher volatility and liquidity risk than other types of shares quoted on the London Stock Exchange Official List. This promotion does not offer investment or tax advice and this product is not suitable for everyone.

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