Cyrus Investment Management has announced the launch of fundraising for Cyrus Precision Engineering EIS fund two.
The fund is designed to identify undercapitalised and undervalued precision engineering businesses in the UK that are suitable candidates for growth investment.
Growth investment is the introduction of new capital management, products and markets that improve the value of these companies enabling them in turn, to be sold as a single, aggregated business at a premium to a third party trade buyer after a minimum of three years.
The firm’s first fund, Cyrus Precision Engineering EIS one has already made three successful investments in the funds core markets: aerospace, defence and security.
Cyrus Investment Management has identified 1,500 UK Precision Engineering companies as potential targets for investment, the majority of which are small and medium enterprises with an enterprise value in the range of one to five million pounds.
The UK’s smaller companies have underperformed their larger counterparts as a result of historical undercapitalisation and an ongoing inability to access capital.
Peter Schwabach, managing partner of Cyrus Investment Management, said: “In Cyrus two we want to build on the success of Cyrus one where we have been able to make investments in best in class companies.
“The UK has an active mergers and acquisitions market for larger precision engineering companies with an average value of £4bn per year (2013 to 2015). Investors will also benefit from the attractive tax reliefs afforded by the fund’s EIS structure.”
Robert Lewis. director at Heritage Financial Solutions, said: “EIS can be a really useful tax vehicle for the right client, however they come with extra risks. This is especially true where the funds are invested within a specialist sector, just like this one.
“Within our business we encounter very few clients who would be suited to such an investment, most mainstream avenues are utilised first. However we never discount the option until we’ve had an in-depth discussion with the client.
“That said I think both EIS and VCT schemes are becoming increasingly popular, which should help further understanding of the products to the wider public.”
ruth.gillbe@ft.com
