My apologies, if necessary, for posting so much news on Enterprise Investment Partners, the boutique EIS and SEIS investment advisors! Obviously they are a client of mine, but I’m not required to write endless blog posts about them, I am doing so because they appear to be the hardest working team in London at present. If you feel you are working harder, don’t hesitate to contact me with your news and we can have a “who-is-doing-the-most-work-for-their-clients-off!
2 weeks ago, the team, which is headed up by Martin Sherwood, product specialist and founder member of the EIS Association, Christian Elmes, accountant and tax specialist, and Matt Lenzie, partner, held a product showcase in Chelsea 2 weeks ago, featuring investment opportunities for both Enterprise Investment Scheme (EIS), and Seed Enterprise Investment Scheme (SEIS) investors, including Stephen Page’s pure SEIS fund, 2 very promising opportunities in fine wine and shipping, and a new EIS fund, amongst others
They could be forgiven for resting on their laurels, popping on their Christmas jumpers and helping themselves to a cheeky mince pie and a sherry, but they have done quite the opposite. On Tuesday a mailshot went out from EIP HQ announcing the launch of The Imbiba Leisure EIS fund, a diversified portfolio of investments in the leisure and hospitality sectors in Central London.
The team are partnering with the award winning Imbiba team, consisting of Simon Wheeler and John Connell, who have raised and invested over £28 million in 13 EIS companies over the past 15 years, marrying impressive longevity with a dynamic and yet considered approach to investing. In their time together they have made 9 exits, generating £38m of cash, and their last exit, the trade sale of Drake and Morgan in 2013 saw them return 5.7x to investors before EIS tax relief on an investment of £3m, receiving an award from the EIS association for best EIS exit. Quite an achievement.
The structure of the new fund is unique, reflecting Imbiba’s desire to adopt a bold management style in an industry they know extremely well, taking the best aspects of their recent successes and jettisoning the strategies they found to be disadvantageous. There will be 5 investee companies, with up to £5m investable in each. The performance rate hurdle for the management team is an industry high £1.50 per £1.00 spent. It is also very encouraging to know that both EIP and Imbiba are personally invested in each of the investee categories. It is always preferable to work with a confident bunch.
About the fund
The fund will invest in up to 5 companies with the aim being to secure long term leaseholds and freeholds, creating diversification and acquiring underlying assets to mitigate risk but investing exclusively in bars / restaurants and events based businesses. Each of the underlying companies will have its own management team and an independent trading strategy. Minimum and maximum subscription will be £3m, and £25m. Exit timeframe, 3-5 years.
2 opportunities have already been identified; Walton and Williams represents an opportunity to buy into an existing hospitality business operating from 14 sites across Central London and generating revenues of £35m. Wright and Bell is a new venture launching next summer with the intention of providing all day bar and restaurant venues also in Central London.
So what is so attractive about the central London property market, or indeed the leisure and entertainments industry? Well, if you can’t get excited about entertainment at the heart of one of the greatest cities in the world, perhaps this opportunity is not for you after all!
Last month was the UK’s leisure market experienced a 20th consecutive month of growth with like for like sales increases of 3.4%. Obviously, when it comes to leasing Central London properties, they are both in short supply, and high demand, and the chance to secure a long leases does not come around all that often.
The UK population, and probably most of the tourists making the trip over here, have higher than average incomes, and eating out is becoming a more and more popular pastime. There is rarely a bad one, but this is a good time to invest in London. The consensus is that the Capital continues to grow from strength to strength, and there are many compelling reasons for this. Investment from overseas, heritage, tradition and status to name a few. There just aren’t as many historic and attractive buildings anywhere else to attract tourists’, and locals’, cash.
And of course, there are the tax benefits. The fund is aimed at high net worth investors with large capital gains tax liabilities, because an EIS scheme will reduce their tax bill by 30%. There is an initial income tax relief of 30%, and capital gains made if shares are held longer than 3 years will not be taxed. It may also be possible to mitigate Inheritance tax liabilities.
We hope that gives you something to ponder over the turkey sandwiches this year. Please contact EIP for further information either by phone, 0207 487 8282, or by visiting the website.