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IW Capital Limited

IW Capital Limited/Sapia Partners LLP

23 May 2019 / Tax enhanced research

Why invest

Positives

  • Strategy: Exposure to a small portfolio of revenue-generating companies across a range of industries.

Issues

  • Track record: Although the company has a record of raising capital on both a brokered and managed basis, there has only been one exit to date.

The Investment Manager

Positives

  • Team:Experienced team, with a mixture of entrepreneurial and corporate finance backgrounds.

Issues

  • Company size: The team is small and this may act as a slight constraint, although it is recruiting at the time of writing.

Nuts & bolts

  • Duration: The service is evergreen, with portfolio investors participating in deals subsequent to the funds being received.
  • Diversification:¬†For portfolio investors, the manager targets five or more investments each year with a minimum of four.
  • Valuation: No interim valuations, but investors will be aware of prices of follow-on transactions.

Fee Information

  • Fees: All fees charged to investee companies.
  • Performance fee: No direct performance fee, with IW Capital taking options equal to 10% of the equity stake held by investors.

Risks

  • Target returns: The target, fully diluted, return for each investment is a 3x to 5x return on net capital over five to seven years suggests a high-risk investment strategy.
  • Companies: Although the companies are slightly later-stage than some other EIS products, the usual company risks still apply. There will be a spread of returns, as the successful companies will do very well, but those who fail may do so completely.
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