Tax Efficient Review of Octopus Eureka EIS Fund with ... - Clubfinance

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EIS RISK WARNINGS RISK WARNINGS AND DISCLAIMERS The information and opinions expressed and contained in Tax Efficient Review (“TER”) are proprietary to TER and are not intended to represent investment advice or recommendation to buy or sell any security. TER is not responsible for any damages or losses arising from any use of this information. GENERAL RISK WARNINGS Fluctuations in Value of-Investments Suitability Your attention is drawn to the following risk warnings which identify some of the risks associated with the investments which are mentioned in the Review: The value of investments and the income from them can go down as well as up and you may not get back the amount invested. The investments may not be suitable for all investors and you should only invest if you understand the nature of and risks inherent in such investments and, if in doubt, you should seek professional advice before effecting any such investment. Past performance Legislation Past performance is not a guide to future performance. Changes in legislation may adversely affect the value of the investments. Taxation ADDITIONAL RISK WARNINGS The levels and the bases of the reliefs from taxation may change in the future. You should seek your own professional advice on the taxation consequences of any investment. Enterprise Investment Schemes 1. EIS companies are unquoted 2. The value of EIS Shares can fluctuate and Investors may not get back their investment; 3. There is no market for EIS Shares and Shareholders may not be able to realise their shareholding unless the EIS company is sold or floated on a recognised Stock Exchange. Dividends may not be paid. 4. Potential Investors should consider that past performance of the EIS Manager is no indication of future performance and there can be no guarantees that the EIS Company will meet its objectives. 5. Investment in unquoted companies can offer good investment returns, but, by its uncertain nature involves a much higher degree of risk than investment in a quoted portfolio. 6. Whilst it is the intention of the EIS Directors that the EIS company will be managed so as to qualify as an EIS, there can be no guarantee that it will maintain such status. A failure to qualify could result in the Company losing the tax reliefs previously obtained, resulting in adverse tax consequences for Investors, including a requirement to repay the 30 per cent. income tax relief. 7. Levels and bases of, and relief from, taxation are subject to change. Such changes could be retrospective. 8. Two new conditions as to EIS qualification were introduced by the Finance Act 2007 which apply from 19 July 2007. Firstly, a qualifying company must have no more than 50 full time equivalent employees at the time of the share issue. Secondly, a company can raise no more than £2m in any 12 month period after 19 July 2007 from any or all of the Enterprise Investment Scheme, the Corporate Venturing Scheme and Venture Capital Trusts. 9. Fees charged by the EIS. Usually there is an initial cost of around 5%-10% to cover issuing the prospectus and paying a commission to introducers. This is sometimes paid out of the initial investment paid by the investor and the effect is that the EIS company receives around 90%-95%. Thereafter annual running costs of about 3%-3.5% are incurred by the EIS and met out of EIS income. On top of these, the EIS management usually have a performance incentive which pays a proportion of the return made usually after meeting some hurdle. A typical incentive might be that the management receives 20% of any uplift in net asset value over a return of original capital. Tax Efficient Review is published by Copyright © 2011 Tax Efficient Review Ltd. All Rights Reserved. The information, data and opinions (“Information”) expressed and contained herein: (1) are proprietary to Tax Efficient Review Ltd and/or its content providers and are not intended to represent investment Tax Efficient Review Ltd advice or recommendation to buy or sell any security; (2) may not normally be copied or distributed without express license to do so; 35 The Park and (3) are not warranted to be accurate, complete or timely. Tax Efficient Review Ltd reserves its rights to charge for access to these London reports. Tax Efficient Review Ltd is not responsible for any damages or losses arising from any use of the reports or the Information NW11 7ST contained therein. The copyright in this publication belongs to Martin Churchill, all rights reserved and for a fee the author has granted Tel: +44 (0)20 8458 9003 Octopus Investments Ltd an unlimited non-exclusive and royalty free licence to use the publication 2 Tax Efficient Review Reprinted for the use of Octopus Investments Limited November 2011
Product Provider Anglo Scientific Table 1: Ranking Table of EIS growth oriented products Calculus Livewire Mercia Growth MMC Octopus Capital EIS Fund 12 Capital LC2010 EIS Fund Eureka Parkwalk Stellar Growth EIS Fund Type Unapproved Fund Unapproved Fund Unapproved Fund Unapproved fund Discretionary portfolio Discretionary portfolio Unapproved Unapproved Fund Strategy Targeted sectors Capital growth Medtech, high value microelectronics Businesses with long-term positive trends, a high degree of predictability and successful, motivated management teams Diversified. Non sector specific Administrator Innvotec Ltd Calculus Funds under mgmt Year manager set up Number of investments to date Number of exits Average exit IRR Average time to exit Product Provider Strategy Software as a Service with recurring Revenue, global appeal and ability to get to revenue within 12 months. Software As A Service in any Market Livewire Capital 2010 LLP Expansion capital for high growth businesses with modest capital needs Telecoms / electronics, Medtech, cleantech, data centre management and related software City Partnership (UK) Ltd Growth capital for successful management teams Generalist investor with focus on secular growth sectors Heartwood Wealth Management £15m for all Funds £52m £1m £13m £79m 1988 2000 2007 8 for the AS EIS Funds 24 10 No exits to date Anglo Scientific With no relevant track record we have not ranked this offering 13 2010 (following a buy out from the established investment team) 13 EIS qualifying investments 28% No exits to date No exits to date 49.3% Early stage, Expansion and Development, MBO, MBI and turnaround investments. Will invest in AIM listed companies Generalist but with a focus on environmental, technology, media, telecoms, consumer lifestyle and wellbeing sectors Octopus £49.9m (£22.4m from Eureka and £27.5m from Venture Partners) Early and mid-stage funding for UK University spinout companies, investing alongside specialist groups. Technology across all sectors, highlighting Energy, Clean-Tech, Renewables, Med- Tech, IT, Software & Communications. The Share Centre Later stage funding for technology companies with proven technology and established revenue streams Technology companies across all business sectors Woodside Corporate Services Ltd £5.3m £1m 2005 2000 2009 2007 18 52 (26 through Eureka, 26 Venture Partners only) 6 19 36.4% (as of 31st March 2011) 4.7 years 2.25 3.46 Calculus 28/ 30 Tax Efficient Review EIS ratings Livewire Mercia MMC Capital Growth EIS LC2010 Fund With no relevant track record we have not ranked this offering With no relevant track record we have not ranked this offering Octopus Eureka 28 / 30 28 / 30 Track Record 35/ 40 35 / 40 34 / 40 Mgmt Team/Deal flow/Exit 16/ 20 16 / 20 17 / 20 Costs 8/ 10 7 / 10 7 / 10 TOTAL 87 / 100 86 / 100 86 / 100 8 Nil No exits to date Parkwalk With no relevant track record we have not ranked this offering No exits to date Stellar Growth EIS Fund With no relevant track record we have not ranked this offering Tax Efficient Review Reprinted for the use of Octopus Investments Limited November 2011 3
Page 1: November 2011 Tax Efficient Review
Page 5 and 6: Matt Cooper - Chairman Paul Latham
Page 7 and 8: EIS companies will be changed to al
Page 9 and 10: TABLE 4: Unquoted Eureka portfolio
Page 11 and 12: the Calculus and MMC. Octopus Inves
Page 13 and 14: Deal Flow Exits Costs Conclusion Th
Page 15 and 16: Table 8: Eureka Unquoted Portfolio

Tax Efficient Review of Octopus Eureka EIS Fund with ... - Clubfinance

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