Februar y 2021
PAR EQU ITY
EIS – LOOKING TO THE FUTURE Par Equity argues the case as to why maturation of the EIS market offers increasingly attractive planning and investment opportunities for advisers and their clients
E
IS has been part of an adviser’s tax efficient tool kit for the last 26 years and now, more than £2 billion is invested annually into EIS qualifying companies.
EIS is powerful medicine, armed with several appealing features to mitigate some of the risk in early-stage venturing – income tax relief, CGT deferral, loss relief, CGT exemption, business relief, and business investment relief for non-doms. From a government perspective, it makes sense. For every pound of tax relief waived via EIS, the treasury recoups more back in the form of NIC, employment tax corporation tax and of course the second order effects of stimulating SME spending on the wider economy. EIS is one of the biggest drivers of the UKs tech scene, propelling innovation and improving productivity across every sector it touches. EIS Fund Managers have professionalised and developed in line with the maturation and growth of EIS. There is a new breed of manager today, compared with 10 years ago. Historically, VCs had been packed full of accountants, deal-doers, rather than having had their own experience in founding, growing and selling companies. That’s changed. Venture capital managers nowadays are wrapping experience and networks around their portfolio companies and it’s
44
having a huge impact on returns for clients. Take Par Equity, for example, our returns to investors are sitting at 3.8x money and a 27% IRR across 125 realised investment rounds into tech companies, before any EIS tax relief. DELIVERING POSITIVE CHANGE 2020 will be remembered as a year of hardship, a year of transition and also a year of opportunity. It has heralded a range of new words into common parlance - lockdown and furlough - and our kitchen tables have never seen so much of us, our laptops and never-ending debates about T-cells and government policy! Covid-19 has also hit industry hard, particularly hospitality, travel and entertainment. But we have also seen positive change too. Consider the record-breaking speed at which we’ve delivered new vaccines and what that might hold for other diseases beyond Covid-19, or how the nation ‘walked with’ Captain Sir Tom Moore to raise more than £32m for the NHS. In a similar vein, Par’s EIS investment Current Health has empowered hospitals and supported multiple vaccination trials of tens of thousands of participants around the world with its remote patient monitoring devices, whilst Mallzee (another Par portfolio company) has sold over 120,000
I FAmagazine.com
