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Stellar and Accretion tech EIS route

Stellar Asset Management has teamed up with specialist technology manager Accretion Capital to create an enterprise investment scheme fund that will provide expansion capital to unquoted UK technology companies.

Accretion Capital is a specialist in technology investment and was set up in 2007, but Stellar has known its chief executive Steve Bellamy and chief investment officer Mike Bourne for years.  Bellamy has 15 years business experience and 16 years investment experience.

Bourne was founder and chief investment officer of Reabourne Investment Management and has more than 20 years’ experience of fund management in the technology sector He managed the Finsbury technology trust between 1995 and 2007, and was also technology adviser on the First Close Technology fund, an EIS launched in 2000.

Stellar believes harnessing Bourne’s skills in an EIS fund structure will be attractive to investors, particularly high earners who will be affected by an increase in higher rate income tax to 50 per cent from April. The abolition of higher-rate pensions tax relief for people earning over £150,000 a year could also be a factor as they may be looking for an alternative tax efficient investment. An EIS will provide them with 20 per cent income tax relief, up to 40 per cent capital gains tax deferral and exemption from inheritance tax after two years.

According to Stellar, established, later stage technology companies are finding it difficult to raise capital to expand. With few experienced providers of capital actively investing in the sector, valuations are depressed, which could provide a good entry point into the sector for investors.

Accretion Capital’s investment strategy will focus on firms with established revenue stream and proven technology, including companies trading ion Aim. Accretion will invest on a three to five year view and will work with the companies in which they invest to agree on an exit strategy before any investment are made.

Some investors are looking at the technology sector again, possibly for the first time since the dotcom bubble burst, because it contains some good companies that are generating strong profits. However investing in the unquoted end of this specialist sector will not suit everyone who wants to add technology to their portfolio.

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