McDonald Glencross, a company that specialises in EIS funds, has created a fourth fund that invests in a portfolio of 10 unquoted companies.
The McDonald Glencross approved EIS fund 4 aims to provide capital growth and tax benefits to experienced investors. It will invest in a range of unquoted companies at different stages of development, including early stage companies and those that are preparing for a stockmarket flotation. These are likely to be in sectors such as food & beverages, life science, energy and leisure.
The fund will look to invest for three years and then find the best exit strategy for investors, such as a stockmarket flotation. Companies will be selected by the investment management team, which includes Susan McDonald and John Glencross, who founded the company in 1999. The first three EIS funds were established between 2000 and 2002.
McDonald has over 13 years' investment experience at companies including Robert Fleming and Banco Santander. Glencross has over 15 year's experience and previously specialised in mergers & acquisitions, flotations and restructuring as an executive director at UBS.
The team will look for companies with strong management that are already generating revenue. They are interested in real business propositions rather than one-off high fliers and have a preference for companies that are raising money for expansion rather than those at an earlier stage.
This fund offers the diversity that a single EIS investing in one business cannot provide. It is likely to appeal to sophisticated investors who want to add a private equity element to their portfolio to boost return. However, investing in unquoted companies is high risk and this fund could face competition from venture capital trusts which also diversify across unquoted companies. However, EISs allow for capital gains tax to be deferred for longer, which could be more appropriate for some investors.