ADVERTORIAL: EIS & SEIS Investing with Blackfinch

This article is part of
Tax Efficient Investing - March 2015

Richard Cook, Founding Partner of Blackfinch & CEO.

With anaerobic digestion and hydropower generation projects not being eligible for EIS tax reliefs from 5th April 2015, investors will now be looking for new ways to invest through EIS with a focus on real and reliable revenue streams. It is more important than ever that investee companies strike the correct balance between providing investors with the chance to create real returns from strong opportunities, as well as managing some of the risk through strength of counterparty and business model.

As well as IHT Portfolios, which focus on delivering Business Relief through capital preservation focused trades, Blackfinch also offer portfolio services for investors seeking Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) qualifying opportunities. Our strong management team and asset advisers are experienced and also carry the expertise necessary to source, develop and manage these investments.

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Blackfinch EIS Portfolios provide these characteristics for investors, to help fill the gap left by renewable energy generation within EIS. Our EIS portfolios are a discretionary service, meaning that we select the investee companies on behalf of the investor, according to our investment mandate. First and foremost, we will only invest into companies which have been granted Advance Assurance from HMRC, providing comfort to the investor that they qualify for the valuable EIS tax reliefs. The nature of the investee company activities also provide strategic focus on capital preservation through their predictable income streams underpinned by intellectual property or high levels of contracted revenue.

The underlying investee companies in our EIS portfolios are concentrated in the media sector, allowing investors to access real growth opportunities on their investments. The entertainment and media sectors are an established and important part of the UK economy, accounting for approximately 4% of GDP. Blackfinch focus on two distinct areas within this sector, music publishing and television distribution.

Our music publishing companies are responsible for creating, protecting and monetising rights in musical compositions on behalf of musicians, songwriters and composers. Music publishing royalties are the revenues due to the creator of that underlying intellectual property and are generated from a number of sources, including performance, synchronization and mechanical royalties. The intellectual property and strength of revenues contribute to the capital preservation characteristics, while the strength of counterparties we work with means that there is real potential for growth.

Our television distribution companies sell the broadcast rights for the television programmes on behalf of producers. The companies acquire the distribution rights for those television programmes by advancing money to the television producer which is recovered in the first position, along with sales commission and expenses, from the sales of the programme to international broadcasters who license those rights. Usually, the majority of revenues will come from one reputable primary broadcaster, such as the BBC, and are for a known amount which is contracted in advance. These contracted revenues offer an element of capital protection to investors and the remainder of revenues are from sales to credit-worthy international broadcasters.