Catalyst Investment Group has established a second enterprise investment scheme (EIS) fund that invests in a portfolio of between four and 15 EISs.
The fund aims for growth by investing in small and developing companies over a five-year term. With a minimum investment of £3,000, it is designed as an alternative to EIS portfolio management services, which many investors cannot access because minimum investment levels are high. For example, the Rathbones EIS portfolio service has a minimum investment of £50,000.
Catalyst specialises in providing corporate advisory services for developing companies that are seeking to raise capital and it often brings companies to flotation on the Alternative investment market (AIm) or Ofex. The company intends to use its position as a corporate advisor to identify suitable companies for the Catalyst EIS 2 fund and assess their value. It is anticipated that the fund will be fully invested in EIS companies within the first six months of the fund's five-year term.
The fund will also draw on the skills of Analyst Investment Management, which currently manages discretionary portfolios for private clients. Companies will be selected from all sectors and will be considered on their individual merits. The investment managers will choose companies only if the their full growth potential is not reflected in Catalyst's valuations, which is known as business perspective investing. Although start-ups are generally avoided those that fulfil Analyst's investment criteria may be considered.
The main advantage this fund has over investing in a single EIS is that investors can diversify the risk and will not need as much capital as they would need to individually invest in a series of EISs. However, this is still a high-risk investment and investors could lose money if the developing companies within the portfolio do not fulfil their initial promise.