The Goodbody 2016 EIIS Fund, jointly managed by Goodbody Stockbrokers and Baker Tilly Hughes Blake, provides investors with an opportunity to invest in a diverse portfolio of high-potential SMEs.
“We are aiming to raise €10 million before December 31,” said Stephen McGivern, partner at Baker Tilly Hughes Blake.
“The EII scheme in general has experienced strong growth over the past number of years and we expect strong demand for the fund this year,” said McGivern.
“We anticipate that all allocations in the fund will be taken by December 16 so potential investors are advised to contact us soon if they would like further details.”
He said the Goodbody 2016 EIIS Fund would invest in established Irish SMEs that showed strong potential for further growth over the next three to four years.
“The fund’s average investment size ranges between €2 and €2.5 million although investments as small as €1 million will be considered in the right company,” said McGivern.
“Our investment strategy is to invest in companies with a strong management team, acceptable gearing levels, a strong track record and good cashflow characteristics.
“Most importantly, the company must be able to demonstrate an ability to provide the fund with an exit after the minimum four year holding period,” he said.
“Barberstown Castle, Intact Software and McArdle Skeath provide examples of the type of companies in which the previous Goodbody EIIS fund invested.”
By investing in the Goodbody 2016 EIIS Fund, investors will benefit from a professional team carrying out due diligence on each investee company in the fund.
“We negotiate an extensive suite of legal agreements to protect the rights of the EIIS investor,” said McGivern.
“All investments made by the fund are approved by our board of directors, which comprises six experienced investment management professionals from Goodbody Stockbrokers and Baker Tilly Hughes Blake,” he said.
“Anthuan Xavier is the chairperson for our EIIS funds. Our team has completed over 140 BES and EIIS investment and is the most experienced in the market.”
The Goodbody 2016 EIIS Fund will invest in a range of companies across a number of sectors.
“A private individual investing directly in EIIS companies will find it extremely difficult to achieve this sort of diversification,” said McGivern.
EII schemes and funds are increasingly in demand as they provide one of the very vehicles to allow 40 per cent tax relief on investments, according to Aoife Lavan, senior pensions and tax advisor at Goodbody.
“Investors receive 30 per cent relief in the first year with an additional 10 per cent after four years, subject to certain conditions being met by the qualifying companies,” said Lavan.
“There is a surge in the number of EIIS investors who have only rental income and/or pension income,” she said.
“We are also seeing PAYE employees investing in EIIS funds to shield income tax paid on share options.”
Lavan said that, from an investor perspective, there have been no significant changes this year to the rules regarding EII schemes. An investor can continue to invest up to €150,000 in EII schemes per annum.
“The one welcome change has been in the recent Finance Bill which confirmed that EIIS relief will continue to be excluded from the High Income Earner’s Restriction through 2017 and beyond,” she said.
“This means that EII schemes will continue to be an attractive proposition for high income earners.”
The maximum that can be raised in any one year is €5 million (increased from €2.5 million) and up to €15 million (increased from €10 million) over the life of the company.
“This is a welcome change that was brought in last year and companies have started to look on EIIS as an attractive source of long term funding to support the growth of their business,” said Lavan.
“A number of medium sized companies have approached us for funding over the last year and this is the market we are looking to invest in.”
