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.