For those interested availing of tax reliefs provided through the EII scheme, but also keen to mitigate risk, investing in an established managed fund is often the ideal solution.
Now in its 21st year, Ireland’s longest-running EII fund manager, BES Management Limited, ticks the boxes for investors looking for both a long running and successful fund. The Davy EII Tax Relief Fund 2016 is the sixth EII scheme fund managed by the joint venture company owned by Davy and BDO.
“Over the last 21 years, BES Management Limited has raised and invested over €154 million in a total of 24 funds. 19 BES and five EII funds,” said Sinéad Heaney, partner at BDO.
“We have been involved this investment scheme for long time, but more importantly we have been successful and our track record offers huge amount of security investors.”
EIIS investment in the fund grew significantly last year. “Currently we are investing the 2015 fund which raised €12.3 million, almost double the value of the 2014 fund, which gives a clear indication of the increased level of interest demonstrated by investors.
“Given the huge demand to date, this year we expect to equal the amount of €12 million plus raised last year,” said Heaney.
She attributed the strong growth experienced last year and this year to two key factors, namely, the government’s widening of the scope of the scheme and the economic recovery.
The investment strategy for the Davy EII Tax Relief Fund 2016 is to invest the funds in a range of established and profitable companies with future growth potential operating across a number of industry sectors.
A sample of previous investee companies includes Maximum Media and Harp Renewables. Maximum Media is the company behind the successful Irish websites Joe.ie, Her.ie, SportsJoe.ie and Herfamily.ie. Harp Renewables specialises in the design, manufacture and installation of aerobic and anaerobic digesters.
BES Management completed the first nursing home investment under the EII scheme in July this year following the extension of the scheme to include nursing homes late last year.
“This diversification reduces an investor’s exposure to any one sector, spreads the risk of the investment and provides a balanced portfolio,” said Heaney.
“We are experiencing very strong demand from companies with significant growth opportunities, which makes them an attractive investment from an investor’s perspective.”
The fund is concentrating this year on investment in export-related businesses. “We have identified a number of companies that are focusing on exporting to the US, particularly in the software arena,” said Heaney.
She said that the meticulous due diligence process undertaken by the fund’s management team considered all risk factors including, for example, Brexit and the changes at the top of the political system Stateside.
Funds are used by the companies in receipt of investment for a wide variety of reasons. “It can be for capital investment, to invest in new or bigger premises, to finance a marketing and sales drive into new markets or R&D,” said Heaney.
Highlighting the fact that the EII scheme is one of the few remaining all income tax reliefs, Heaney said that investors in the Davy EII Tax Relief Fund 2016 could avail of income tax relief on investments up to €150,000 for the year ending December 31, 2016 or December 31, 2017.
“The minister announced further amendments to the EII Scheme in both Budget 2015 and Budget 2016. These changes have helped broaden the scope of companies that can avail of funding under the scheme making it more attractive for investors,” she said.
“These changes include increased investment limits for companies, and an increase in the scope of mid-sized companies and industries that were previously excluded and are now eligible. With the lengthening of the investment period from three to four years, the Fund can consider a range of investments that were previously deemed unsuitable.”
By investing in the Davy EII Tax Relief Fund 2016 investors can avail of an income tax deduction, offering up to 40 per cent tax relief. In addition, the Davy EII Tax Relief Fund offers investors the opportunity to invest in a diversified fund that is managed by an experienced and cohesive team.
Originally published by Sunday Business Post