Octopus Investments has opened a new tranche of its tax efficient investment structure which will focus on energy investments.
The group said the latest tranche of its enterprise investment scheme (EIS) would focus primarily on investment into the anaerobic digestion sector, which it called an “underdeveloped but growing area of the market”.
The move to attract more money into its EIS comes after the group last month waived the fees on one of the tranches after its underlying media holdings dropped in value.
The company said at the time it would not reintroduce the 2 per cent plus VAT fees until it could return its investors’ money in full. It added some of the media-related businesses in tranche 2 of its EIS had seen their valuations fall, meaning the value of the holdings were down to 73p for every pound initially invested.
In terms of the new tranche, Matt Setchell, head of the renewable energy team at Octopus, said: “As we have seen with solar, the energy market opportunity in the UK is significant.
“It is a growing industry, and, as evidenced by the Finance Bill 2014, the Government is actively encouraging investment into the more nascent sectors to help them develop and become more established in order to meet renewable energy targets.
“We have identified anaerobic digestion as a sector that is ripe for growth, with attractive characteristics for our funds, as demonstrated by significant deployment outside of the UK.”
In addition to investment into anaerobic digestion, Octopus EIS will also seek to invest in reserve power businesses. Reserve power provides electricity to the National Grid during periods of increased demand, which can be dictated by seasonality or by events and weather variation occurring each day.
Octopus said investment into EIS had almost doubled in the year to March 31 2012 to £1bn, up from £545m in 2010-11.
Enterprise investment schemes were introduced by the government in 1994 to encourage investment into smaller companies in the UK. Investments into an EIS can provide investors with tax reliefs providing the investment in the underlying companies are held for at least three years.
These include 30 per cent upfront income tax relief, capital gains tax deferral, up to 45 per cent loss relief and tax-free growth. Investments are also free from inheritance tax after two years.
Octopus said it is the UK’s largest provider of EIS investments.
