Hambro Perks

The Hambro Perks Growth EIS Fund

24 Apr 2019 / Tax enhanced research

The Hambro Perks Growth EIS Fund is a discretionary portfolio service, which will co-invest with Hambro Perks Ltd to build a portfolio of EIS investments in unquoted companies in the target areas. The target return is twice the capital invested, with the aim of holding positions for three to five years. Returns will be focused on capital gains, and investors are unlikely to receive any dividends. The Fund is evergreen, with no set closings.

Slightly unusually, the Fund has a Manager and an Adviser that are both subsidiaries of the same parent company, Hambro Perks Ltd.

Why invest

Positives

Strategy: To co-invest alongside Hambro Perks Ltd in a portfolio of fast- growth, disruptive technology-enabled companies.

Issues

  • Patient capital: Hambro Perks aims to be a supplier of patient capital, and some investments may take significantly longer than the target.

The Management

Positives

  • Team: The management team has a broad range of experience in both finance and entrepreneurship, and has interests aligned with investors.

Issues

  • Track record: Although it shows signs of promise, Hambro Perks has a short track record and, so, there is a lack of exits to date.

Nuts & bolts

  • Duration: The Fund is evergreen. The aim is to have exits in a three- to five-year timeframe, but investors should note the patient capital comment above.
  • Diversification: The manager expects to provide 10 to 15 EIS investments, with a mix of early-stage and better-developed companies.
  • Valuation: Reviewed quarterly, with updates on company progress being sent twice a year.

Fees:

  • Fees: All fees are charged direct to investors.
  • Performance fee: Charged on a portfolio and tiered basis, with a rate of 20% for aggregate returns over £1 but below £2, and at 30% above that.

Risks

  • Target returns: The target return of doubling capital, excluding tax reliefs, over three to five years, suggests a 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 investments will do very well, but those that fail may do so completely.