Guinness EIS Team
EIS Investment Strategy
EIS-qualifying companies are by definition higher risk, early-stage businesses. However, when we review investment opportunities for our Guinness EIS we prioritise the preservation of capital for our investors. We do this by focusing on growth companies where the value of the business is underpinned by a strong balance sheet and good visibility on future cashflows.
The Companies we target for Investment
We intend to make at least 5 investments per client portfolio in companies from a range of sectors that offer our target investment characteristics.
Examples of these are:
1. Businesses with experienced management teams
Many entrepreneurs are serial entrepreneurs. They have successfully built and sold companies and we look at their sector specific successes when they are looking for investment in new/ existing ventures
2. Businesses with good visibility on future growth
Maturing companies and businesses with clearly defined growth paths.
3. Businesses with expanding working capital requirements
Successful businesses often require additional funds to expand their working capital. We prize businesses with growing sales that require additional capital to fund stock and debtor growth.
You Should Expect to Invest for at least Four to Five Years
The EIS holding period is a minimum of three years. We target an investment horizon of four to five years between purchase of shares and exit. You will need to be prepared to have your investment tied up for this length of time before investing.
The Investment Manager will confirm that Investee Companies have received EIS advance assurance from HMRC prior to investment.
How We Will Exit
We view a successful exit as the most important part of the investment process, and we look at the options for exit even before we commit to making an investment, as well as right through the investment holding period.
In 2016 we successfully exited three investee companies through trade sales. Routes to exit include:
• sale to a trade or financial buyer
• sale to management
• Initial Public Offering on a market such as AIM
• leveraged return of capital to investors
EIS Investment Process
Our formalised internal Investment Process helps to ensure that due care is taken in the identification, selection, execution, monitoring and exit of the Fund’s Investments.