Harcourt was established in 2009 and will work with fund manager Oxygen Ventures to build a portfolio of five to eight unquoted UK companies across different industries, Opportunities in the media and renewable industries are currently being considered.
The aim is to raise up to £10m from sophisticated investors who want exposure to the growth potential of the underlying companies rather than complicated tax-based structures which have been under Government scrutiny.
Harcourt partner Nick Astaire believes its investment approach is in keeping with spirit of the EIS and has set a £50,000 minimum investment for the fund because it believes this is an appropriate level for this type of fund.
Astairewas previously at Future Capital Partners, a structured finance business. Harcourt comprises five partners, of which two are directors of Oxygen Ventures. The other partners both have experience at Ingenious Media and Goldcrest Capital.
To reduce risks for investors, 45 to 65 per cent of the EIS fund will be invested in opportunities that are considered lower-risk, but where the potential upside is limited. The remainder will be invested in more speculative opportunities that have the potential for higher returns. Harcourt believes that combining the two should limit downside risk to 10 per cent, while providing potential returns above 30 per cent.
The various tax incentives that an EIS portfolio provides could be attractive to investors who are looking for a way to diversify risk within a higher-risk area of investment, but the success of the fund beyond the tax advantages will depend on the right blend of unquoted companies.