EIS was one of the main targets of the 2017 Autumn budget. The resultant changes, and the responses to the government’s Patient Capital Review have solidified government support for the scheme, whilst making sure that EIS is focused on investment in legitimate risk capital.
Intelligent Partnership have published the second industry report focused on the AIM market. Part of their award winning Alternative Investment Report (AiR) series, the 88 page, CPD accredited report takes an in-depth look at AIM from advisers and financial planners’ point of view, with a particular focus on tax efficient investments.
Business Relief (BR) has become an increasingly important IHT mitigant as financial planning for later life has become more and more complex. Recent HMRC research has revealed It’s application is “in keeping with policy objectives” and the Government, “is committed to protecting the important role that this tax relief plays in supporting family-owned businesses, and growth investment in the AIM and other growth markets”. While this is a sector in which adviser understanding and confidence can deliver substantial added value to clients, there are some tricky nuances and important developments to take into account, as well as the everyday nuts and bolts. Our guide is the first in a series that aims to give readers the technical knowledge and practical know-how to navigate the challenges of undertaking BR investment.
Mike Currie begins by saying that “backing British business has never been more important” in the context of discussing Foresight Group’s generalist VCT, which maintains a technology bias. In his opinion, the quality of opportunities and providers in UK venture capital has never been better. On its new Williams Technology EIS he talks about collaborating with a world class operation and major brand like Williams, and leveraging the UK’s strength in mechanical engineering.
Will Fraser-Allen from Albion Capital discusses its Top Up Offers and their dual positioning as a long-term savings product and investment into growth businesses, true to the spirit of venture capital. He talks about the diversity of their broad portfolio and the gradual move towards tech and businesses services, as opposed to any pivot. He argues Albion’s experience is invaluable in backing the right companies, particularly given 2017/18’s forecast record VCT fundraise.
Laurence Callcut from Downing talks about increased choice in the VCT market and expands on its offering from a cutting-edge healthcare VCT to its Downing ONE VCT, still containing investments dating from 1997. He goes on to discuss EIS, and the ‘direction of travel’ towards tech and innovation, as well as the structures he’d like to see to increase follow-on funding.
Kealan Doyle explains Symvan’s California-style approach to venture capital, saying that Europe is behind the curve but things are changing. In a conversation grounded in the venture capital industry’s shift during the last five years from an asset-backed to growth focus, he talks about Symvan Capital’s life-cycle approach from seed to later-stage funding rounds, why it focuses on B2B tech, its progressive fee structure and the “inventive streak” in the UK.
Gordon Pugh discusses Blackfinch Investments’ Asset Focused EIS and Media EIS Portfolios, including how construction still offers a route to asset-backing and the interesting new area of offshore supply vessels. He talks about the diligence of Blackfinch’s approach to receiving Advanced Assurance from HMRC, sometimes receiving this as quickly as a fortnight, and why ‘capital preservation’ is a misnomer: all investments seek to balance a risk return profile.
Louise Farley expands on Deepbridge Capital’s position as a ‘business builder’, underscored by its management team’s background, and how that translates into its investment strategy. Also touched on are demystifying ‘life sciences’ for advisers and their clients, and increased interest in investee businesses as the public focus shifts from tax reliefs to growth and innovation. She talks about increasing diversity in the industry – from business angels to company founders – and a collaborative effort to back British business.
James Faulkner uses Oxford Capital’s high-tech and high-growth focus as a jumping-off point for how increasing asset values have driven demand for EIS. On deal flow, he doesn’t believe there’s a lack of quality deals in the market, but sourcing the best of the best is still key. In a changing landscape, adviser education is important, and consequently so is manager clarity on strategy, investment process and when tax reliefs will kick in.
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