Blackfinch has unveiled a new EIS portfolio focusing on construction businesses.
Review
Blackfinch Investments Limited has launched a new Enterprise Investment Scheme (EIS) portfolio.
The Asset Focused EIS is a discretionary managed portfolio service, initially featuring two underlying asset companies specialising in residential and commercial property developments. Blackfinch may look to introduce additional sectors in the future.
The aim is to take advantage of the growth opportunities provided by younger businesses and combine this with a simple portfolio service and EIS tax reliefs.
The portfolio has an investment committee in place, responsible for approving each individual investment, and to oversee the ongoing performance of the underlying companies.
Blackfinch has said it will only invest into companies that have been granted advanced assurance from HM Revenue & Customs, in order to provide added assurance that the tax advantages will be honoured.
The minimum investment required is £25,000 with an annual management fee of 2 per cent.
To qualify for the EIS tax reliefs, investments must be held for a minimum of three years, with an exit opportunity available between three and four years. At this point, Blackfinch will contact investors to see how they wish to proceed.
Comment
There is an interesting buzz around at the moment regarding the support of newer and smaller businesses. A number of new schemes and sectors are emerging in order to capitalise on companies that need to borrow in the wake of banks tightening lending practices.
EIS are certainly not new, having been first introduced in 1994, but their attraction may be on the rise. The government squeezing of pension tax relief is acting as a big catalyst, as EIS offer a potential alternative to pensions in terms of upfront tax relief, albeit with a higher degree of risk.
The timing of this launch suggests Blackfinch has identified this as a business opportunity. The property industry was hit in the immediate aftermath of the Brexit vote so question marks will remain over this sector, particularly with so much uncertainty ahead.
However, the UK’s housing shortage means demand is unlikely to collapse, in the residential sector at least. Although investors can access funds within this portfolio in three to four years, smaller businesses carry a higher chance of failure and therefore a longer timeframe would mitigate some of the risk.
But for investors already comfortable with the nature of EIS, and also optimistic about the medium-term prospects for property, this will tick all of the boxes.
craig.rickman@ft.com
