In Professional Adviser’s webinar ‘EIS under the bonnet’, three of the UK’s leading experts in the sector offer guidance on how advisers should grill prospective fund managers in their EIS due diligence.

Calculus Capital chief executive John Glencross – who is joined on the panel by Par Equity LLP partner Paul Munn and The SidebySide Partnership partner John Bailye – says it is important advisers do their own investigating into Enterprise Investment Scheme (EIS) funds, as well as using third-party reviewers.
“Advisers need to do their own research,” he says. “They need to look at the background of the fund and ask: what it is they are doing, how long have they been doing it and did they suddenly reinvent themselves? Look at their investments, their track record on exits and so forth – all of which is available.”

Glencross’s point about managers reinventing themselves carries particular force in the wake of the recent shake-up in the tax-efficient sector, which has meant lower-risk, asset and contract-backed EIS and Seed EIS offerings are no longer available to investors.

Managers who relied on their expertise in such areas are now trying to convince advisers and investors they are capable of operating in the new, higher-growth and higher-risk EIS world but, the panel warns, that does not mean they necessarily have the experience and ability to do so effectively.

The changes arrived after Chancellor Philip Hammond said in his 2017 Budget he wanted to crack down on schemes being used as capital preservation vehicles instead of ways to fund high-growth, high-risk businesses.

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