Why choose Lacomp British Enterprise EIS Funds?

Twenty years of discretionary portfolio management experience

Lacomp has over twenty years experience in discretionary portfolio management.  This is backed up by a first class administration service, a vital part of any fund management business.

Spread of risk

Unlike traditional, single company EIS investments, Lacomp EIS Funds invest in a minimum of four different companies, giving investors a spread of risk from the 'portfolio' of investments.

The term “fund” is something of a misnomer since an EIS Fund is a collection of individual discretionary management portfolios.  Investors' shareholdings in the underlying assets of the fund (i.e. the individual qualifying EIS companies) are in exact proportion to the amount of monies they have invested and to the overall size of the fund.

Underlying investment - the most important consideration

Although the EIS tax breaks are considerable, the most important aspect of any investment is the potential for capital growth.  Whereas the vast majority of VCTs predominantly invest in AIM listed companies, the Lacomp EIS Funds always seek to invest pre-IPO, i.e. prior to the uplift in valuation usually associated with a listing.  Nevertheless, it is worth noting that this does not exclude the potential for our investment selections to be asset backed.

It has often been argued that any sizeable, well-spread portfolio should always contain an element of unquoted, pre-IPO equities.  Obviously, such an exposure should be proportionate to the size of the total portfolio in order to retain the chosen overall risk profile.  This is one of the reasons we set the level for the minimum investment at £3,000, thus making this investment opportunity available to almost everyone.

Examples of the quality and spread of some of the investments selected for our previous Funds are detailed in the Lacomp British Enterprise EIS Funds Investee Companies leaflet.

Our Expertise

Lacomp has carefully assembled a team of acknowledged experts (details of the Investment Advisory Panel members are on this site and on page 5 of the full Lacomp British Enterprise EIS Funds brochure that can be obtained from us or downloaded here).  The Panel members represent a vast amount of relevant experience in the field of small company finance and investment.  This enables them to identify exciting, early stage unquoted companies that we believe have potential for exceptional capital growth.  By pursuing this deliberate policy we aim to maximise the potential uplift and capital gains for investors.  Our Panel members see many hundreds of business plans and attend a large number of company presentations over the course of every year so sustained high quality deal flow is assured.

In the case of our EIS Funds, this translates into four key processes: deal flow, selection, monitoring and exit strategy.  The selection process entails, amongst other actions, meeting the management and key members of staff of a potential investee company, combined with site visits and market research to highlight business potential and competition.  This is followed by rigorous commercial, financial and legal due diligence.

Equally important is ongoing monitoring after an investment has been made.  Members of the Investment Advisory Panel attend each and every board meeting of the chosen companies.  In addition, the Panel members meet on a monthly basis to discuss and review the progress of each company.

The Panel members are also ideally placed to assist with the planning and execution of the exit strategy.  The Fund will hold shares in investee companies for a minimum of three years in order to satisfy EIS qualification rules and will then seek to sell the shares in years four and five.

Capital growth potential

A leaflet describing some of the existing investee companies from previous Lacomp EIS Funds can be downloaded here.  The central theme within each of these companies is the exceptional potential for capital gains.

Efficient tax planning

Lacomp EIS Funds are “Approved” by the Inland Revenue.  An Approved Fund must invest monies raised within six months of the Fund's closing date.  Conversely, an Unapproved Fund can take as long as three years to complete its investments.  Whilst the 20% EIS tax relief can be claimed in the tax year during which the Fund closes, CGT deferral relief is granted at the date the Fund Manager invests in an EIS qualifying company.  Therefore, when investing in an Unapproved Fund, this important tax benefit is very difficult to plan for and could easily prove unworkable in practice.

The many tax breaks associated with EIS investments are clearly described on pages 10 to 12 of the Lacomp British Enterprise EIS Funds brochure and in the EIS Taxation section of this website.  Income tax relief apart, an EIS investment is demonstrably more tax efficient (CGT deferral, Loss Relief and IHT effective) than a VCT investment.

How investors benefit

Many investors look for exceptional capital growth potential in some of their investments.  This is why we opted for a low investment entry level of £3,000, making this exciting opportunity available to almost everyone.

Other investors are faced with CGT liabilities, be this through selling a business, a property or other assets, and some investors may not have seven years left to mitigate potential IHT liabilities and could find a solution in an EIS investment under the Business Property Relief rules.

For investors who wish to invest more than £1m in EIS qualifying companies, we are able to construct individual, bespoke EIS portfolios matching the investors' chosen risk profile.

The risk warnings are clearly spelt out in our brochure (pages 15 and 16), but we strongly urge investors to consult their professional adviser.

Reporting

Lacomp keeps investors fully informed about the progress of all investments by sending updates about each company's development on a six-monthly basis but, because of the early-stage nature of the underlying investments, does not attempt to increase valuations of investee companies until two years have elapsed.

It must be borne in mind that putting a value on companies in the early stages of their development is essentially a subjective process.  A company is only worth what a willing buyer is prepared to pay which, in turn, presupposes that there is a willing seller!

Lacomp deliberately pursues a conservative valuation policy, only uplifting the valuation where this can be substantiated by events that are either in the public domain or known to us due to our close ties with the investee companies (including the attendance of all board meetings in our monitoring role).  However, the valuations will reflect any dilution arising from new fund raising rounds, which may well be for the ultimate benefit of the investee company and, therefore, its investors.

Please do not hesitate to call us to discuss the Lacomp British Enterprise Funds in more detail.  We will also be pleased to put you in direct touch with members of our Investment Advisory Panel.