Review: Guinness EIS
Archived article: please remember tax and investment rules and circumstances can change over time. This article reflects our views at the time of publication.
This latest tranche of investment for Guinness EIS seeks £25 million to invest in a diverse range of non-correlated businesses, including hydroponics, electric vehicle charging and a restaurant chain.
- Latest tranche of investment from established EIS manager Guinness - closes 23 Feb for investment this tax year
- Targeting a portfolio of diverse businesses, from hydroponics to trampoline parks
- £1.25 per £1 invested target after 4-5 years (not guaranteed)
- Evergreen offering
- You can apply online.
Guinness Asset Management is a specialist fund manager with assets under management of approximately £1.1 billion and approximately £120 million invested in EIS. Six key people, including Edward Guinness and Shane Gallwey, work in the Guinness EIS team, which manages the sustainable infrastructure investments (IHT and EIS) and this generalist EIS.
With this EIS offer all pipeline businesses will have EIS advance assurance. The managers consider investments in businesses which have:
- Experienced management teams
- Good visibility on future growth
- Expanding working capital requirements
The management team has identified a range of businesses in the above areas. These include:
- Two new hydroponics businesses to produce year-round sustainable high-density and high-yield commercial food production. Salad leaves and herbs will be grown under LED lighting to supply local businesses and supermarkets.
- An Electric Vehicle Charging business whereby charging points will be built to service a growing number of electric vehicles in the UK. Construction, ownership and operation of Electric Vehicle charging points with council contracts.
- Trampoline Parks - Leisure operator with seven operating trampoline parks in high footfall locations. This is an existing Guinness investment top up to fund further parks.
These are just some of the investments Guinness is considering.
Guinness only invests in equity, avoiding businesses with high leverage as the manager wants to have claim over the cashflow of the business to help mitigate risk.
Please remember: no investment strategy, no matter how cautious, will eliminate risk. All investments can fall as well as rise in value, so you could get back less than you invest.
£1.25 per £1 invested is the target return (which is not guaranteed). This is intended to be a four to five-year investment.
As the companies chosen will all be very different, there is no predetermined exit strategy. Exits could potentially be achieved by way of trade sale, IPO, leveraged buyout or liquidation.
This could be a very diverse portfolio of investments. Therefore, it is quite difficult to assess the individual risks of potential underlying companies. One of the bigger risks is simply that this is a relatively new area of investment for Guinness. Consequently, if Guinness fails to raise sufficient capital, investors may end up with a less diversified portfolio of smaller deals.
Changes to EIS were announced in the Autumn budget, which could affect the investment strategy of this EIS in future.
The usual risks with unquoted companies apply to this EIS offer. For instance, EIS investments are illiquid and capital is at risk. Investors should only invest money they can afford to lose. The value of tax relief depends on circumstances and tax rules could change.
There is a 3% initial fee, before Wealth Club saving. There is a 2% transaction fee, and a 2% annual management fee. In addition, there are other transaction fees of up to 0.35% and an annual custodian fee of £60. Finally, there is a performance fee of 20% of any amount returned to investors above £1.
Guinness has recently successfully realised some early asset-backed renewable energy EIS investments – note past performance is not a guide to the future. Whilst these were different businesses to the ones being considered for this EIS, they share some of the same characteristics. Guinness has an experienced and well-resourced investment team that should in our view be able to manage the transition to other forms of EIS investments.
Wealth Club aims to highlight investments we believe have merit, but you should form your own view. You should decide based on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination 17-01-18