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EII Scheme information for companies seeking investment

Submitted by bdoieadmin on Mon, 2010-10-25 17:26

The Employment and Investment Incentive Scheme (“EII Scheme”) is the reformed and revamped Business Expansion Scheme (“BES”). It is a tax relief incentive scheme which provides tax relief to eligible Investors for investments in certain qualifying small and medium sized trading companies (“SMEs”)*.

How does it differ from BES?

The main differences for investee companies between the EII Scheme and the former BES are:

  1. Wider scope of companies can now avail of funding under the EII Scheme - The new scheme is available to the majority of SMEs as opposed to the BES which was restricted to manufacturing and internationally traded services companies.
  2. Significantly increased company investment limits - a qualifying company can raise up to €10 million under the EII Scheme (previously €2 million).

EII Scheme funding enables qualifying companies to raise up to €10,000,000 (subject to a maximum of €2,500,000 in any one twelve month period) in equity funding. The scheme facilitates qualifying companies to secure funding at a competitive cost of finance and with no repayment until the end of the three year investment period.

Funding Available for investment in 2012

We are pleased to announce the launch of the Davy EII Tax Relief Fund. We are actively seeking suitable SME’s for investment (including companies which previously did not qualify for the BES or had previously reached the €2m BES limit). Investments by the Fund typically range from €500,000 to €2.5 million.

Over the last 16 years we have invested over €125m in 143 companies. The new rules mean many more companies will qualify for funding than previously with BES, thus the new EII Scheme will allow our team to bring their business management experience to the benefit of an increased potential list of companies.

We encourage any companies meeting the qualifying criteria to consider the benefits that equity funding of this nature could bring to their business.

Fund Criteria

The Manager will seek to invest in companies with a capable management team and future growth potential. Certain key criteria which may be used by the Manager in assessing potential investee companies include:

  • Strong management team
  • 3-5 year track record
  • Positive net asset value, and
  • Prospect for realisation of investment after the 3 year EIIS period.

The criteria listed above are not intended to be exhaustive or an exclusive list.

Benefits to the company

In addition to the cashflow benefit, EIIS may have the following advantages for your company:

  • Fixed cost of finance for three years
  • Existing shareholders retain control of the business
  • The investment is equity not debt
  • No capital repayment until 2015, and
  • May trigger additional funding.

Previous investee companies include:

  • Schivo Precision Limited
  • The Big Red Book Company Limited
  • Helix Health Group Limited
  • Green Farm Foods Limited
  • McGill Environmental Systems (Ireland) Limited
  • A number of wind farms

For further information on any of our services or if you have any queries, contact a member of the Corporate Investment & Business Advisory team.