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

More documents

Recommendations

Info

Octopus Eureka EIS Portfolio Service Strategy Business Fund investing both in UK quoted and unquoted companies Size No cap (evergreen portfolio service) Fund Manager Octopus Investments (Ventures team) Minimum investment £25,000 Maximum Investment None Estimated period to full investment 12-18 months Commission 2.5% up-front plus 0.5% trail Available Tax Years 2011/12 and 2012/13 Eureka EIS Portfolio Service is a discretionary portfolio service offering from Octopus Investments, one of the largest providers of tax-efficient investments. Through various operating divisions (see Table 2), Octopus offers Venture Capital Trusts, Enterprise Investment Schemes and Inheritance Tax products in various forms, each with different risk/reward combinations. This EIS offering is managed by Octopus' Ventures team, which also manages the Titan series of VCTs (see Issue 75 for a review of Octopus Titan VCT 5). Funds raised by this EIS offering will be co-invested alongside, and on the same terms as) the Titan VCTs and private investor group, the Octopus Venture Partners, run by Octopus. The Octopus Ventures Team has been investing into EIS qualifying companies since 1999 and has built a strong track record with a realised IRR of 36.1%. This track record however is not one that investors in the Eureka product will recognise as relevant for reasons we elaborate on later. Eureka aims to offer investors the opportunity to generate returns by investing into a portfolio of early stage, fast growth UK companies which also qualify for the EIS tax reliefs. Eureka is clearly differentiated from Octopus’ other EIS offering, Octopus EIS. Octopus EIS is designed to produce predictable returns for investors by investing into companies with the emphasis on risk mitigation. Eureka invests for capital growth As at the 15 August 2011, funds raised by this offering totalled £22.4m. Eureka started life as an AIM EIS portfolio offering in early 2004 as a three year “rolling” EIS portfolio and raised £11.5m. The intention was to hold individual AIM companies for at least three years before selling and reinvesting, thus allowing the investor to claim a further 20% tax relief. The expectation in 2004 was that the manager would be very rigorous in only selecting those companies with clear visibility in revenue streams and where the manager thought there would be very TABLE 1: EIS FUNDS UNDER MANAGEMENT by OCTOPUS’ VENTURES TEAM as at 23/08/2011 Source: Octopus Investments Net assets £m Annual Management fee £m Still to be invested £m EIS portfolio funds £22.4m Not disclosed £6.1m Funds managed by the same group than can co-invest with EIS funds Titan 1 & 2 launched in 2007/08 £29.9m £0.0m Titan 3 launched in 2008/09 £19.3m £0.0m Titan 4 launched in 2009/10 £20.9m £10.1m by 31/10/12 Titan 5 launched in 2010/11 £9.9m £8.8m by 31/10/13 Funds managed by the same group than cannot co-invest with EIS funds Private investor funds £27.5m £3.0m* TOTALS £129.9m £29.1m Note: Only includes funds managed by Octopus’ Ventures team, not funds managed by other divisions of Octopus. *Source: Octopus Investments, based on Venture Partners 2010 investment 4 Tax Efficient Review Reprinted for the use of Octopus Investments Limited November 2011
Matt Cooper - Chairman Paul Latham -Managing Director Guy Myles - Managing Director Investment teams Strategy Early Stage Alex Macpherson Provides £0.5m to £2m of equity to support early stage business opportunities in market sectors where its directors and members of the Octopus Investor Group have relevant knowledge and experience. Seeking to back potential global market leaders from advanced early stage, expansion and development, MBO, MBI. Octopus Structure - products and investment teams Source: Octopus June 2011 Octopus Investments Simon Rogerson - Chief Executive Chris Hulatt - Chief Financial Officer Lothar Mentel - Chief Investment Officer Alistair Seabright - Head of Unquoted Investments Unquoted Investments Alistair Seabright Head of Unquoted Investments Octopus Ventures Alex Macpherson Growth Capital Chris Allner Provides £2m to £8m of equity to MBO and expansion capital fund raising. Seeking strong management teams and successful, high growth companies typically with historic annual earnings over £1m. Specialist Finance Mario Berti Deals where Octopus is confident that there is a high level of capital security. The companies will operate in sectors where there is a high degree of predictability, ideally with contractual revenues from financially sound customers. Quoted Capital Lothar Mentel Chief Investment Officer Octopus Smaller Companies Richard Power Provides £1m to £5m of equity to VCT qualifying companies that are issuing new shares on AIM. Manages AIM portfolios for Business Property Relief, Targeted sectors/ geography Funds People Examples of trades £112m from: Titan VCT 1 £13m Titan VCT 2 £13m Titan VCT 3 £23m Titan VCT 4 £22m Titan VCT 5 £12m Eureka EIS 1 £4m Eureka EIS 2 £25m Alan Wallace, Alliott Cole, Luke Hakes, Simon Murdoch, Jo Oliver, Anthony Collinson, Simon Andrews £104m from VCTs: Eclipse VCT 1 £24m Eclipse VCT 2 £14m Eclipse VCT 3 £17m Eclipse VCT 4 £17m CFE Fund £32m Chris Allner, Jane Vinson, Damien Lane, Alistair Brew All considered/ UK £750m from: Octopus VCT £50m Octopus IHT Service £54m Octopus Protected EIS (tranches 1 – 10) £217m Octopus ITS £300m Apollo 1 £8m Apollo 2 £8m Apollo 3 £24m Apollo 4 £11m OVCT 2 £20m OEIS £58m John Thorpe, Ross Bryan, Joe MacCarthy, Leon Clarance, Jonathan Samuels, Stuart Nicol, Matt Setchell, Hugh Costello, Ed Fellows, Joe Hartman, Melanie Hayes, Kat Johnston, Simon Pickett, Edward Keelan Media Investments Ticketing Wholesaling IT Outsourcing Bridge Financing Asset Backed Lending £291m from: Octopus First AIM £45m Octopus Second AIM £30m Inheritance TS £105m Octopus Micro cap Fund £21m Octopus Absolute UK Equity £90m Andrew Buchanan, David Crawford, Edward Griffiths, Richard Power, Paul Stevens, Kate Tidbury Tax Efficient Review Reprinted for the use of Octopus Investments Limited November 2011 5
Page 1 and 2: November 2011 Tax Efficient Review
Page 3: Product Provider Anglo Scientific T
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

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?