IW Capital’s EIS Portfolio Service will provide an Investment Management Facility (similar to a managed portfolio service), investing in unquoted companies with no sector focus. The target fully-diluted return for each investee company is 3x-5x net money invested over five to seven years. Returns will be focused on capital gains, and investors are unlikely to receive any dividends. The Service is effectively evergreen.
- Strategy: Exposure to a small portfolio of revenue-generating companies across a range of industries.
- Track record: Although the company has a record of raising capital on both a brokered and managed basis, there has been only one successful exit to date.
The Investment Manager
- Team: Experienced team, with a mixture of entrepreneurial and corporate finance backgrounds.
- Company size: The team is small, and this may act as a slight constraint, although it has expanded and 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: The manager targets five or more investments for each investor, with a minimum of four.
- Valuation: Provided on an annual basis, with most valuations expected to be based on the price of the last significant transaction.
- 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.
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- Target returns: The target, fully-diluted, return for each investment is a 3x to 5x return on net capital over five to seven years; this 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.