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.
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 been only one successful 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 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
- 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; 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.
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