On Tuesday night, Enterprise Investment Partners put on a wine tasting and product showcase at No. 11 Pimlico Road, the award winning bar and restaurant in Chelsea. The evening was well attended by a mix of investors, drawn from many different industries and backgrounds, curious to hear EIP Directors Martin Sherwood and Christian Elmes view on the future of EIS and SEIS investment now that Solar projects, which, as Christian pointed out, has attracted £1bn of investment flows over the past 3 years, no longer qualify for the tax efficient wrapper.
Christian spoke briefly about his expectation that the market will start to fragment as a result, hence the focus of the evening on asset backed trades, especially attractive to investors looking to manage downside risk. Property with long leaseholds or other easily saleable assets, such as wine, shipping, or storage are likely to move centre stage, and in that spirit it was time to hear the first a series of brief presentations.
Imbiba EIS 5 – Walton and Williams – Simon Wheeler & John Connell
Walton and William are an EIS Company looking to raise £5m to acquire a successful events and catering company operating 11 Prime Central London Venues. The investment represents 3 opportunities in 1 business, namely marketing, catering and events. The Company in question turns over approximately £35m per annum, however Imbiba feel that a new management team can drive turnover to the £50m mark, and increase profit yield to around 10%. A successful and established lifestyle business with room to grow and enhance its reputation represents an exciting play with very little downside risk.
London Storage – James McCulloch
James McCulloch presented London Storage’s plans to increase storage capacity in affluent central London areas including Mayfair, Kensington and Chelsea. London Storage recognise storage as an immature market and have identified an urgent need for wealthy, but time poor home owners to store their belongings nearby, giving them peace of mind. The team believe that acquiring property for the purposes of storage is a lucrative play, estimating that a sq. ft. of space can achieve rental values of £50-100 whilst costing less than £10 to administer. Once stored, possessions are often left in situ for years, and the stickiness of the market makes for predictable revenue streams.
Shipping: Martin Sherwood, EIP
Martin believes that the market for Feeder container ships represents an extremely attractive proposition in the current market. The numbers of this type of vessel have declined in recent years which is likely to push up charter rates and values in the short to medium term. The vessel to be acquired is The City of Hanoi, which is a 17 year old vessel currently transporting freight between Florida and Freetown, Jamaica. Acquisition will be free of debt and subject to an independent valuation meaning a fair value can be obtained, and a mid case return to investors of £1.32 is expected. Downside is capped with at least 70% recoverable by recycling in the worst case scenario, and tax relief of 30% returns 100% in the pound. EIP believe that a disposal into the active second hand market after 3 years and with the current USD exchange rate this opportunity is a safe haven over the 3 year EIS period with good upside potential.
Bestport Venture EIS fund – Ole Bettum and James Stoddart
Highly experienced Fund managers with over 18 years of investment experience, £44m invested into 47 companies of which 37 have been realised, with an IRR of 23%, Bestport are looking to raise up to £10m via a new Generalist Fund. Although generalist investors, Bestport have particular knowledge of the healthcare, business support and IT industries. Their high calibre network of contacts and intermediaries provides a quality pipeline of deals and investment opportunities, with a target exit period of 3-5 years. All assets within the fund are 100% EIS eligible. No upfront fees so investors get tax relief on 100% of their investment.
Start Up Funding Club – Stephen Page
Stephen Page’s Startup Funding Club 2015 SEIS fund is a pure SEIS investment into a diversified portfolio of at least 12 qualified and vetted early stage companies. Stephen, an industry veteran who has also been CEO of a global technology Company for more than 18 years, and Innvotec, the fund manager, are vastly experienced investors and use a network of mentors and coaches to give their portfolio companies the best chance of success. Of the 2014 vintage, 6 of 15 companies are now seeking Series A funding, a highly impressive return. In the past, Innvotec funds have achieved an average uplift of 37% not including tax reliefs. Innvotec have been established since 1987.
The Wine EIS Company
Martin and Christian invested time and energy into studying a range of Wine investment schemes, before deciding to go with Anpero Capital Ltd as they “were by far the best offering with the best credentials in the space”. Wine can provide diversification to any portfolio of investments combined with the attractive tax advantages of EIS. The Wine Enterprise Investment Scheme began trading in 2012 and manages over £3.5m of assets. The Company are looking to raise a further £3m. Anpero has 12 years’ experience of the market, with over £35m AUM. The manager is targeting growth of 7% p.a. representing an exit after 3 years of £1.21 for each £1 invested before tax advantages. Minimum investment of £10k required.
Pelorus Network: Matt Lenzie & Jeri Dutz
Pelorus network is a hospitality and leisure investor club offering exclusive deals and unique events for its members. The sector is large, innovative and fast growing. Pelorus has a large advisory team sourcing quality deals and providing industry insight. The Network has plans in place to provide New York style entertainment venues in Central London. Watch this space!
Wine tasting and networking
As the presenting drew to a close, a Q&A session was held, with Christian taking questions from the audience. Conscious that a wine tasting was imminent, perhaps, and with contact details and opportunities to register one’s interest already provided, the audience were by now keen to take the blind taste test, so it was over to Chris Smith of the Wine EIS to help us understand the difference between a fine, and a not so fine (but perfectly presentable), vintage.
The secret is in the smell, colour, and taste, of course, but how does one tell if what is being drunk has been aged in more expensive oak barrels, for example. The answer lies in the overtones of vanilla. Unlike most of the gathering, I could not pick the superior label without Chris’ help, but, consoling myself with delicate canapés and a further glass of red (or two), I can declare myself extremely satisfied with the evening!
Product showcases are rarely held in such an impressive, yet unpretentious venue, nor by such approachable and friendly presenters. The vast majority of attendees will have found what they were looking for at EIP’s enjoyable and informative event.