This is the second in a series of articles written about the theme of UK Enterprise Investment Schemes and how the market for these structures is developing.
In the first part of a feature examining the views of practitioners within the UK’s Enterprise Investment Scheme landscape, this publication probed firms about returns, investment exits, and strategy. In this item, WealthBriefing spoke to Calculus Capital, a Mayfair, London-headquartered firm operating in this space.
Madeleine Ingram, head of investor relations at Calculus, sets out thoughts about how her firm’s investments are progressing. In mid-August, the firm announced that it had put £2.1 million ($3.28 million) into the synthetic biology company Synpromics. This firm creates synthetic promoters which are used to help cure diseases sure as haemophilia and hereditary blindness.
Ingram talks also about Venture Capital Trusts, a listed form of structure holding small businesses and start-ups carrying certain tax advantages, pitched more towards the retail end of the spectrum. She explains her firm’s approach and gives some case studies about specific outcomes.
Unlike VCTs where the investor has to sell his or her shares in the VCT to exit – usually at a discount back to the VCT – most EIS funds are self-liquidating, as when the various investments are realised, the proceeds are distributed to the investors. Clearly, the exit process is key and of interest to investors.
Calculus, which has two former heads of M&A amongst its senior ranks, has used many different approaches to exit – trade sales, sales to larger private equity firms as part of the investment ‘food chain’ and the initial public offerings process.
Consideration of the exit starts during the initial investment assessment period when the likely buyers are first identified. Our investment agreements are written with the exit in mind, and the formal exit process commences well prior to the end of the 3 year holding period. The exit is regularly discussed with management throughout our holding period and all key players are aligned with regards to exit time frames and expectations.