Hambro Perks Growth EIS Fund
Introductory tranche: apply by 20 May
New for Wealth Club investors: the fund introductory tranche aims to invest in 12 companies, targeting 40% deployment by the end of summer 2022 – not guaranteed.
Hambro Perks has confirmed it has a large pipeline of companies in which to invest, seven of which are detailed in the Pipeline Overview document. The application deadline is 20 May.
The Hambro Perks Growth EIS Fund offers investors access to institutional private equity expertise with the benefit of EIS tax relief.
It aims to give investors a diversified portfolio of 12 early-stage, disruptive, businesses in the fintech, digital healthcare, enterprise software, and consumer technology sectors.
A well-resourced management team is able to draw on experience from spells at Odey Asset Management, Draper Esprit and McKinsey & Company among others.
Launched in 2018, to date the fund has invested £6.7 million across 50 investments into 31 companies.
The wider Hambro Perks business is a specialist private market investment boutique founded in 2014. It has approximately £500 million under management, predominately through a range of institutional funds (March 2022 ). The manager expects to co-invest in every EIS deal.
- Target return of 2-3x across the lifetime of the fund (not guaranteed, excluding tax relief)
- Aims to be fully invested in 12 to 18 months, with the majority of returns expected in four to seven years
- Minimum investment of £25,000, you can apply online
- The deadline for the introductory tranche is 20 May 2022
Read important documents and then apply
Hambro Perks is a specialist private market investment house founded in 2014. It manages approximately £500 million of investments (March 2022). The vast majority sits within its institutional funds, which attract investors such as large pension funds and insurance companies, private bank Hoare & Co and investment giant Schroders. Hambro Perks also launched the first UK Special Purpose Acquisition Company (SPAC) under new listing rules, raising £143.5 million in December 2021.
The fund manager of the EIS fund is Hambro Perks Asset Management Ltd, incorporated and regulated in Guernsey. The investment committee consists of three experienced investment professionals. Nick Sharp, Head of the EIS fund, was previously a fund manager at Odey Asset Management after previously working at BofA Securities, Inc. (previously Bank of America Merrill Lynch). Tom Bradley, Partner at Hambro Perks, was previously the CEO of Oxford Capital and a Partner at Draper Esprit and DN Capital. Dominic Perks, CEO of Hambro Perks, is a serial entrepreneur and former McKinsey & Company consultant.
They are assisted by a further seven investment professionals and four support staff and can draw on the wider resources of the Hambro Perks business.
Hambro Perks Limited, the manager’s parent company in which all staff have a stake, will invest a minimum of 2% in the fund each year.
As well as providing strategic advice and access to its wider network, Hambro Perks can provide operational support to companies should they need it. That could include making desks available at its offices or performing back-office functions such as legal, accounting and finance work.
The EIS fund may also co-invest alongside the Hambro Perks Leaders Fund, which follows a similar strategy, targeting disruptive technology companies in Europe, raising seed or Series A capital. The Leaders Fund is seeking to raise £100 million by the autumn of 2022 – and is already at two thirds capacity.
Watch our latest video interview with Nick Sharp, Head of the EIS fund:
The Hambro Perks Growth EIS Fund looks to invest in “a diversified portfolio of fast-growing, early-stage, technology-enabled businesses that have the potential to reshape existing industries and create new markets”. In particular, the manager looks to support companies in four broad categories:
- Digital Healthcare
- Enterprise Software
- Consumer Technologies.
These are areas where the managers think the UK has a strategic advantage, and the market opportunity and potential for disruption are significant. The fund will target early-stage businesses – generally with a valuation of below £30 million.
The manager screens around 3,000 potential deals every year, the majority of which will be in the UK. Of those, around 100 make it to a second meeting, with companies screened for management ability, but also their potential to deliver substantial returns.
The managers believe each investment should have the potential to return an investor's subscription in full – although not all investments will achieve this and you should expect some failures. As a result, the fund targets an overall return before tax relief of 2-3x –not guaranteed.
The intention is to give each investor a portfolio of around 12 companies, split equally between follow-on and new investments. The allocation to each company will depend on its maturity and return potential, with higher-risk investments receiving smaller allocations. The goal is for six to receive a c.5% allocation and six a c.10%-15% allocation.
Since launch in 2018 the EIS fund has made 50 investments into 31 companies. The total investment cost was £6.7 million and the current valuation is £11.1 million. Most of these investments are in the Software & Services and Health Care Equipment & Services sectors, accounting for 45.4% and 30.5% of investments respectively.
Below are previous portfolio company examples. They are outlined to give a flavour of the types of companies expected but are unlikely to be part of a new investor's portfolio.
Founded in 2016, PrimaryBid aims to give retail investors access to initial public offerings (IPOs) and other fundraising rounds that were previously only available to institutions.
As of 2021, PrimaryBid signed up 500,000 investors and completed over 100 deals, with over $1 billion of orders placed through its platform. More recently, the company has started to expand into Europe, launching a partnership in France with global stock exchange group Euronext in June 2021.
Hambro Perks originally invested in PrimaryBid in 2019, as part of a round that valued the company at £13.9 million. Other investors in the company include the London Stock Exchange and global asset management giant Fidelity. The funding round completed in October 2020, gave the group a pre-money valuation of £48.0 million, representing a 3.4x gain on Hambro Perks’ initial investment. The most recent funding round of $190m in early 2022 led by Softbank and Hedosophia, values Hambro Perks' investment at over 10x cost. Remember, past performance is not a guide to the future.
Humn applies AI big-data techniques to the insurance market. Its flagship product, Rideshur, targets corporate vehicle fleets, and prices premiums based on the driver quality. The product uses telematic and other real-time data to gauge the risk associated with individual drivers to set charges accordingly.
Rideshur has led to a 65% decrease in accidents among insured drivers, since the product incentivises good driving, and a 20% fall in premiums. The company has featured in the INSURTECH100 – a compilation of the most innovative insurtechs from around the world – for the last two years.
Hambro Perks initially invested in the business in 2019 and has since supported two further funding rounds alongside other investors including Shell Ventures. The most recent round represents an 18.4x return on the initial pre-seed investment and 4.1 x on the subsequent seed round. Past performance is not a guide to the future.
Examples of previous exits and failures
To date, Hambro Perks has not achieved any positive exits, reflective of the fact that it is still a relatively young portfolio. However, failures tend to come before successes in EIS investments, and to date the Hambro Perks EIS Fund has seen two. Labrador is a recent example.
Labrador was a utility switching business that automatically switched customers to the cheapest tariff. Hambro Perks unvested in the business in 2018, but the launch of similar products from more established players meant it ran into trouble in 2019 and administrators were called in. The company continues to trade under new ownership, but Hambro Perks recognised a 100% loss on its investment.
Of the 50 investments made so far, 18 are showing unrealised gains, ranging from 1.1x – 18.4x, two companies, Labrador and Kuula, have failed and seven are valued below cost.
The chart below shows the average performance of the total subscribed into the funds each tax year since launch, based on valuations as at 31 March 2022, expressed on a £100 invested basis. Please note, individual investor portfolios’ performance will deviate from the average.
The fund’s valuations are audited annually by PwC.
Performance per £100 invested in each tax year
Source: Hambro Perks, as at 31 March 2022. Past performance is not a guide to the future. The chart shows realised returns, if any (where share proceeds have been returned) and unrealised returns (where cash has not yet been returned and the value is based on the manager’s own assessment in line with IPEV guidelines). There is no ready market for unlisted shares. The figures shown are net of all fees and do not include any income tax relief or loss relief.
Risks – important
This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.
EIS investments are high-risk and should only form part of a balanced portfolio. As must be expected with early-stage investments, some or even all of the companies in the portfolio could fail: the fewer the companies included in the portfolio, the higher the risk of loss if things don’t go to plan. You should not invest money you cannot afford to lose.
There is no ready market for unlisted EIS shares: they are illiquid and hard to sell and value. There will need to be an “exit” for you to receive a realised return on your investment. Exits are likely to take considerably longer than the three-year minimum EIS holding period; equally, an exit within three years could impact tax relief.
To claim tax relief, you will need EIS3 certificates, normally issued once shares have been allotted. This can take several months: please check the deployment timescales carefully. Tax reliefs depend on the portfolio companies maintaining their EIS-qualifying status. Remember, tax rules can change and benefits depend on circumstances.
Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure
you fully understand the risks.
Investors should note the Fund Manager, Hambro Perks Asset Management, is not regulated by the UK’s Financial Conduct Authority but by the Guernsey Financial Services Commission. The fund is thus not covered by the UK’s Financial Services Compensation Scheme.
A summary of the main charges is shown below. All fees are payable by the investor.
The investment may have additional charges and expenses: please see the provider documents for more details.
|Full initial charge||2%|
|Wealth Club initial saving||—|
|Net initial charge through Wealth Club||2%||Annual management charge||2%|
|Performance fee||20%||Investee company charges|
|Initial charge||—||Annual charge||—|
More detail on the charges
The Hambro Perks Growth EIS Fund should benefit from access to the wider Hambro Perks business, which has a wealth of fund management experience. Hambro Perk’s institutional funds, particularly its Leaders Fund, may also provide enhanced deal flow and prove a valuable co-investment partner to the EIS Fund.
The construction of the portfolio is in our view well thought through and complements the investment strategy. The blend of earlier-stage investments with follow-on investments should help create some balance within an investor’s portfolio.
We see the Hambro Perks Growth EIS fund as a high-quality offering and an opportunity for individual investors to access expertise that is more accustomed to serving the institutional market. However, it is early days still, and that means the manager has yet to build a track record of successful exits.
Read important documents and then apply
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.
- Target return
- Funds raised / sought
- Minimum investment
- 20 May 2022 for introductory tranche