The EIS, which has an initial capacity of £20m, will invest in a second-hand dry bulk ship that will be chartered to transport a wide range of cargos including grain, coal and fertilizer across global trade routes.
The annual investment limit for an EIS company is £5m, so the funds will be split across four of Time Investments’ EIS-approved companies.
With seaborne trade expected to double by 2030 and industry experts predicting an increase in charter rates over the next three to five years, now is an opportune Time to invest in dry bulk shipping, as those owners with bank-leveraged vessels are currently selling assets at discounted prices, according to the investment firm.
It added that the number of ship owners going out of business has increased the levels of both second-hand vessel sales and ships sold for scrap.
The company said it aimed to mitigate risk by not borrowing money to purchase a vessel and by implementing a hedging strategy for foreign currency.
Independent oversight is provided by an advisory committee of three industry heavyweights, including Guy Platten, chief executive of the UK Chamber of Shipping and Alan Marsh, founder and former chief executive of a London Stock Exchange-listed ship broker.
The minimum investment is £10,000.
Provider view
Nigel Ashfield, managing director and partner at Time Investments, said: “Last year saw a record inflow of £1.4bn in to EIS schemes, but much of this went into renewable energy. With these assets no longer qualifying for EIS, investors and their advisers are looking for new ways to invest in a non-contentious asset-backed EIS, and dry bulk shipping is one of those.
“I have studied this market carefully over the past 14 years and believe now is a good Time for investors to consider it. With the experience we have pulled together for this investment, we believe we have a very convincing proposition.”
Adviser view
Scott Gallacher, chartered financial planner at Leicester-based IFA Rowley Turton, said: “I’m sceptical of EISes. Our experience has taught us that they do not generally perform well. We have inherited clients with vast amounts of their portfolios dedicated to EIS investments but have not seen much, if any, return on their investment.
“The credibility of these types of investment is generally determined by the manager behind them. Here Time Investments is a respected company.
“I think EIS investments may be suitable to clients with a high attitude to risk and a capacity for loss.”
Charges
A 3 per cent arrangement fee and a service fee of 1.75 per cent per annum.
Verdict
EISes are certainly not the cheapest investment vehicles. Here the 3 per cent arrangement fee and annual service charge appears significantly high compared with the more traditional investments in bonds and equities. The fee does not even factor in the adviser charge.
This is not to say that the product is a complete write-off. Time Investments is well respected in the industry, and its team of experts is sure to have done extensive research into the sector it is looking to invest in.
This investment is likely to suit risk-tolerant, high net-value clients with a substantial capacity for loss, who aim to mitigate their tax requirements.
