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The Par EIS Fund is a discretionary portfolio service, which will provide a portfolio of investments in unquoted technology companies. The manager highlights that it is providing genuine risk capital. The benchmark is an average annualised IRR of 15%, equivalent to doubling capital over a five-year period. Returns will be focused on capital gains, and investors are unlikely to receive any dividends. The fund is evergreen.

The report goes into details of how the investment process works, sourcing and decision-making, exit strategies, post-investment governance and monitoring, fees and more. It also includes Hardman & Co’s unique fee calculation table, allowing advisors and investors to properly investigate their effect.

Why Invest

Positives

  • Strategy: Exposure to a small portfolio of technology companies across the north of the UK co-investing with experienced Angels.

Issues

  • Diversification: While diversification has improved, and is in line with sector averages, it remains behind the best.

The Investment Manager

Positives

  • Team: Diverse range of experience in team, with clear strategy and good support from its Angel network.

Issues

  • None: We cannot think of a meaningful issue with the team.

Nuts & Bolts

  • Duration: The fund is evergreen, with no formal closings, and investors simply participate in the deal flow after investment.
  • Diversification: The manager aims to provide seven to eight equal investments for each investor, with a recent range of seven to ten.
  • Valuation: Usually changes at the next financing or on writedown.

Fees

  • Fees: A combination of direct fees and company charges. Four years of annual fees are deducted upfront.
  • Performance fee: Charged at 20% on aggregate returns over 120% of subscription.

Risks

  • Target returns: The benchmark average IRR of 15% (roughly doubling the gross investment in five years) suggests a medium- to high-risk investment strategy.
  • Companies: Supplying risk capital to early-stage technology companies at the start of commercialisation. There will be a spread of company returns as the successful ones will do very well, but those who fail may do so completely.
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