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Hardman & Co spearheads initiative to support new (S)EIS funds

Playfund (Fund)

General Investment Partners Limited / Sapphire Capital Partners LLP

09 Feb 2017 / Tax enhanced research

The Fund’s investment strategy is to invest in a portfolio of (S)EIS qualifying companies that will each develop a video game for mobile platforms.

Why Invest

Positives

Strategy: Exposure to a portfolio of video game development companies with support from a publisher.

Issues

Communities: The strategy includes creating gaming communities. While sensible and not fundamental to success, these are still to be built up.

The Investment Mentor

Positives

Team: The senior individuals involved have a strong track record in the video game industry and an extensive network of contacts.

Issues

Track record: Although backed by experienced people, the Mentor and publisher are relatively new companies.

Nuts & Bolts

  • Offer period: The closing will be 31st March 2017.
  • Diversification: The aim is to invest in 8-12 companies, with a minimum of five.
  • Valuation: As unquoted companies there will be little or no change in the valuation, though revenue will be transparent and investors will receive regular updates on progress.

Specific Issues

  • Fees: All charged directly to the investee companies.
  • Performance fee: Subject to a threshold of £1.30 for each £1 invested. Above this the Fund receives 20% of the investor share of the return on a portfolio basis.

Risks

  • Target returns: The target return of £2.50 for each £1 invested suggests a higher risk strategy within the EIS area.
  • Companies: Although each investment will be a minority stake in each investee company, the potential risk is managed by the fund having effective board control and rights over any decisions on cash within the investee companies.

This report is available on request.

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