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.
Why invest
Positives
- Strategy: Exposure to a small portfolio of technology companies co-investing with Business 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
- Growth rate: Several new members of staff have been recruited recently, in advance of planned growth.
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 eight equal investments for each investor, with a recent range of seven to ten.
- Valuation: Usually changes at next financing or on write-down.
Specific issues
- 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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