Smith & Williamson has introduced Childcare Corporation 8, an enterprise investment scheme that aims to raise money for the building and operation of around three more purpose-built children’s nurseries in the UK.
This EIS takes up the objectives of the previous seven Childcare Corporation schemes by providing private day-care facilities for children aged between three months and five years.
The directors of the EIS have built up a track record through the previous Childcare Corporations EISs and an eighth was established because the directors still see a demand for childcare and for asset-backed investments, particularly from older EIS investors.
The directors believe their success is securing sites for the previous EISs will help them negotiate reasonable prices, although they admit that nurseries are increasingly expensive to buy.
The directors believe this offering will attract interest from older investors who have an eye on inheritance tax planning. EISs are exempt from IHT, which distinguishes them from VCTs which are not exempt from IHT. In particular, it is thought that people who are retiring and selling their businesses may find Childcare Corporation attractive because they can defer their IHT liability indefinitely.
However, as an unquoted company that is developing new businesses, the risks for investors could be high. The success of the EIS will depend on a range of factors such as the availability of development sites at the right price, being able to carry out building work on time so extra costs are not incurred, the continuing demand for childcare provision and successful marketing of the nursery places when the project is complete.
The track record of this EIS may put it in pole position with investors who are looking for this type of investment, but some IFAs remain unconvinced that money can be made out of childcare.