Review: Oxford Capital Estate Planning Service
Archived article: please remember tax and investment rules and circumstances can change over time. This article reflects our views at the time of publication.
The Oxford Capital Estate Planning Service is designed to take advantage of Business Property Relief (BPR). It invests in a mix of unquoted trading companies with a focus on renewable energy and infrastructure.
- Choice of five investment strategies
- Mix of loan and direct equity investments
- Annual target return of 3% to 5% (not guaranteed)
- Well resourced and very experienced management team
- Flexible access to capital
- Minimum investment £25,000
Oxford Capital, established in 1999, is a specialist in venture capital, media and energy investments with a bias towards technology, renewable energy and infrastructure. This estate planning service is run by the 14-strong infrastructure team, headed by Oliver Hughes. Mr Hughes is a partner at Oxford Capital and has a background in banking and fixed income. He has been at Oxford Capital for five years. In total, Oxford has £250 million of operating assets in renewable energy across its EIS and IHT services.
Target return and strategy
There are five investment options available to investors, depending on their requirements. These are shown in the table below. Please note income, growth and access figures are not guaranteed.
Oxford Capital Estate Planning Service investment options
|Investment Option||Target Income||Target Growth||Target Access|
|Growth, access||-||3%||1 month|
|Growth, return||-||5%||6 months|
|Growth, balanced||-||4%||50% in 1 month, balance in 6 months|
|Income and growth||2%||2%||6 months|
Each option will invest in a combination of three unquoted holding companies. A mix of some or all can be chosen. The projects these companies finance and manage typically have stable and contracted revenue streams, financially strong customers, low operating overheads and limited technology risk.
Example investments – Newton Solar’s ground mounted solar installation in Taunton, plus an Anaerobic Digestion site in Wales, showing the gas reservoir and digestor of a typical site.
Brimstone Life Holdings Ltd specialises in asset-backed lending, primarily to energy and infrastructure projects. There is a mix of short and long-term lending, between one month and five years with a typical loan to value ratio between 50% and 60%. Because this strategy offers 30-day access to capital, approximately 30% of the entire portfolio will be in short-term loans at all times. The typical loan is for one year with a 7.5% interest rate. All the loans are currently to companies already invested in by Oxford Capital, however that may change in the future. According to Oxford Capital, all deals will be infrastructure based, but not necessarily energy generation. For example, it could lend to a company offering large-scale battery systems for storage. Loans will be used for a mix of purposes including working capital and some construction finance. A first charge over the underlying assets is typically taken.
Chalkhill Life Holdings Ltd invests in the same type of deals as Brimstone, but as a direct equity investor rather than a lender. Its flagship deal, Deeside Solar Farm Ltd, is a 3.85 MW ground-mounted solar plant at Toyota’s Cheshire facility. There is a 20 year purchasing power agreement with Toyota who take all the energy produced. This is inflation proofed. Chalkhill owns this project outright. British Gas Solar manages Deeside Solar. As well as solar there are other infrastructure and energy businesses, for example, an agricultural feedstock trading business that supplies feedstock to some of Oxford Capital’s Anaerobic Digestion plants. Oxford Capital also invests in engines that are used for reserve power.
Skipper Life Holdings Ltd is the newest of Oxford Capital's IHT trading companies. It is a combination of Chalkhill and Brimstone with a planned mix of lending to companies and direct equity investing.
The year-on-year growth in the Net Asset Value of Brimstone and Chalkhill since they started trading is shown below. Performance data for Skipper is not yet available as it only started trading in 2016.
Annual performance (% to 31 December)
Source: Oxford Capital. For Brimstone and Chalkhill the figures show year-on year growth of net asset value. For Skipper the figures show dividends paid in the calendar year, quarterly in arrears. Note these are unquoted trading companies and the valuations are Oxford Capital's own. Brimstone and Chalkhill first started trading in October 2014, Skipper in March 2016. Past performance is not a reliable indicator of future performance.
The companies in which the portfolio invests are unquoted and therefore small and illiquid. This means holdings can take time to sell, plus valuing assets in the portfolio can be more difficult. There may be a delay in receiving funds if needed urgently. Investors may lose capital and their investment may fall in value. As this service is still relatively small, currently there is a lack of diversity, however as Oxford raises more funds this should broaden out. There is currently a strong focus on energy-related investments, meaning risk is concentrated towards one sector.
There is no guarantee that the companies will qualify 100% for Business Property Relief when assessed by HMRC. Tax rules change and benefits depend on circumstances.
Full details of the risks are covered in the Investment Memorandum, which you should read carefully.
Fees and charges
An overall summary of the charges is shown below.
|Full initial charge||4%|
|Wealth Club initial saving||2%|
|Net initial charge through Wealth Club||2%|
|Annual management charge||1.5% plus VAT|
|Annual administration fee||0.5% plus VAT|
|Annual custodian fee||£50 plus VAT|
See example of the total charges over 5 years
This IHT portfolio is certainly one to consider. Oxford Capital has a large and experienced team dedicated to managing the portfolio and Oxford's reputation and expertise in renewable energy is very good. We like the fact investors can switch investment strategy (for instance from growth to income) for relatively small cost - and they should be able to access capital too, if required, although this might sometimes take a while.
The Chancellor has requested a review of a range of aspects of IHT to simplify the tax system. The review timescales, its scope and impact are unknown. Currently, investments qualifying for Business Property Relief should be free from IHT after two years. Tax rules can and do change and benefits depend on circumstances.
Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision 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.