The Seneca EIS Portfolio Service is a compelling investment option which combines the significant tax benefits available under the Enterprise Investment Scheme with the potential for attractive returns. Seneca offer a discretionary investment management service where the shares are held by a nominee of our independent custodian to the investors order.
The portfolio approach allows diversity in investment, giving Investors a mixture of holdings in more mature companies, some ‘earlier stage’ businesses (such as technology and biotech companies) and those identified as having the potential to provide capital growth. The companies will either be unquoted private companies or AIM quoted. Putting together an individual portfolio for an Investor typically takes from 6 to 8 months to complete, although it can take up to 12 months, with each Investor holding shares in 4 to 6 companies for each year that they make an investment. Seneca Partners will act as Portfolio Manager and are responsible for sourcing suitable investment opportunities and advising on the structuring, valuation and execution of these investments.
To maintain growth across your portfolio, a deep understanding of the companies and their sector is also essential. Investing directly in to UK SMEs, while exciting, can prove to be challenging and time consum-ing due to the need for a full review of each company and their sector. Seneca‘s expertise lies in its highly experienced team and partner network.
Seneca target well managed businesses that can demonstrate established and proven concepts along with good balance sheet strength and are looking to take the next step in their growth phase. We will back earlier stage investments where we have a successful existing relationship with management or where there is clear visibility of liquidity through an Initial Public Offering process. When doing so, we are looking to invest in companies where we have identified a genuine opportunity for a return of £1.60 to £1.80 for every £1 invested and to exit from an investee company broadly four years after the date of investment.
Seneca reviews over 500 investment opportunities per year with only a fraction of those transacted on.
For every investment opportunity Seneca undertake a rigorous due diligence and investment process, to fully evaluate each proposal. This involves an initial, quantitative analysis of the business plan, followed by spending time with the company’s management team, whilst also analysing the competitive landscape, financial and operating model.
The exit of investments will be via an initial public offering (IPO), trade sale or possibly a management buyout (MBO). The anticipated term in line with EIS is 3-5 years. The investment case presented pre-completion of each individual investment will include likely exit routes. This may on occasion highlight specific targets for exit, for example a potential trade buyer.
Founded in 2010, Seneca Partners Limited is a specialist corporate financier providing equity/ debt funding and advisory services to small and medium sized enterprises.
The knowledge, experience and pedigree of our investment team, combined with their individual track records of successful investing in the SME sector, is complimented by an extensive deal flow network in the UK’s SME heartlands. We expect this combination to appeal strongly to EIS investors.
With offces in Manchester, Liverpool, Leeds and Haydock, Seneca Partners maintains a strong local presence in the SME heartlands and the established, trusted and high quality contact networks of the Seneca Partners team, which includes fellow professionals, funders, investors and SMEs themselves, is critical to the ability of the Seneca Partners team to source the most interesting and compelling investment opportunities.
Whilst the Portfolio Manager has the responsibility for deal origination, structuring, execution and portfolio management, the investment commitee will provide ongoing advice and will review the Seneca EIS Portolio Service’s investment policies, strategies, transactions and performance.
Ex KPMG, Peel Hunt & Co, Apax Partners & Co, Altium Capital. Board of Hedleys & Co (Stockbrokers), Founder of Liberty SIPP, Partner of Palentine PE LLP, Board of Trustees for the Lowry Arts Centre
Ex KPMG, NM Rothschild and Cenkos Fund Managers. Richard is experienced in corporate recovery, audit, leveraged finance, flotations, fundraisings, mergers, acquisitions and restructurings.
Ex MD and Head of Research for Charterhouse Securities. Voted #1 construction analyst in 2000 and 2001 in the Reuters survey for UK smaller companies. Co-founded Cenkos Fund Managers in 2007 and sits on a number of private and public company Boards.
Ex Deloitte, Jt MD RBS Corporate and Structured Finance. Set up the National Debt Advisory business. Ex-Founder Partner of NorthEdge Capital, with focus on stressed corporate opportunities. Sits on the valuation committee of a major US special situations hedge fund.
Ex Price Waterhouse and various board positions in manufacturing companies. Founded Acceleris in 2000 to raise finance for start-up and early stage companies. Excellent track record of EIS and SEIS investing. Has built up a strong network of funding sources throughout the UK.
If you decide to invest in the Service, you are not investing in a fund and therefore will not receive shares purchased as a part of these previous investment rounds. Any new or additional subscriptions paid by investors into the Service will be invested in new share issues either by companies not previously invested in by the Service or by companies previously invested in by the Service as a part of a further fundraise. If the latter applies, the purchase price of shares in the investee company will likely differ from the purchase price on previous investment rounds the Service has made into the same companies.
Past performance is not a guide to future performance. The value of investments can go down in value as well as up, so you could get back less than you invest. Investors’ money subscribed to the Service will be committed to investments which may be of a long term and illiquid nature. The companies in which the Fund invests will often not be quoted on any regulated market and, accordingly, there will not be an established or ready market for any such shares and the Fund Manager may experience difficulty in realising them (for value or at all). It is therefore important that you understand the risks and commitments.
Seneca Partners do not provide personal advice based on your circumstances. If you are unsure of how suitable an investment is for you, please seek personal advice from your Financial Advisers.
There is no maximum. However the current maximum amount available for EIS Income Tax Relief is £1,000,000.
A statement and investment update report will be sent to you every six months. In addition where requested, we will notify you as each individual investment completes on your behalf. The Seneca EIS Team will always be happy to deal with any enquiries.
You may give notice to withdraw money at any time by writing to us at 12 The Parks, Haydock, WA12 0JQ or calling us on 01942 271 746. However, investments in unquoted companies are often illiquid and the timing of any sale cannot be predicted. As such, you should be prepared to retain these investments until an appropriate exit is achieved. Additionally if any investments are exited before the Three Year Period you will be exposed to potential tax consequences such as the repayment of any EIS Income Tax Relief, any CGT Deferral and CGT on any gain you make on the realisation of investments. You should consider seeking independent financial advice before an early exit.
The minimum investment is £25,000. Once you are an Investor, additional minimum contributions of £5,000 can be made at any time.
Any EIS gains on investments held for the minimum 3 Year Period are not subject to CGT for Qualifying Investors provided that a claim for EIS Income Tax Relief is made. Also, you can elect to defer capital gains you realise on other assets disposed of within the period running from 3 years before your investment to 12 months afterwards.
After you have read this document please read the Investment Management Agreement and complete the Application Form. You may invest by cheque or via bank transfer. Your Application Form (and cheque) should be sent directly to The EIS Team, Seneca Partners Ltd, 12 The Parks, Haydock, WA12 0JQ.
Welcome pack confirming completion of investment formalities.
Notification as each individual investment completes on your behalf.
Half yearly statement and investment update report as at 30th September and 31st March.
More regular information may be provided upon request.
You should not invest in this product unless you have thought carefully about whether you can afford it, and whether it is right for you.
The performance of the Seneca EIS Portfolio Service is dependent on the Portfolio Manager’s ability to identify appropriate Qualifying Companies. In addition, the investment timetable may not always be achieved, which can delay the availability of the tax advantages or, in some cases, result in the loss of the tax advantages altogether. In some circumstances, a delay could cause certain Investors to lose the opportunity to defer capital gains which occurred more than three years ago.
Prospective Investors should be aware that the value of shares in each Investee Company can fluctuate. In addition, there is no guarantee that the valuation of shares will fully reflect the underlying net asset value of the Investee Companies. Your capital and the investment return are not guaranteed and you may not receive back all or any of the money you invest. You should consider the Seneca EIS Portfolio Service to be a three to five year investment. Investments will be made in AIM stocks and unquoted companies. Investments in unquoted companies present a higher degree of liquidity risk relative to investments quoted on the London Stock Exchange. You should not invest in this product unless you have thought carefully about whether you can afford it, and whether it is right for you.
Investments in unquoted companies are less liquid than those traded on the main stock exchanges. It is not intended that any income or capital will be returned to Investors during the three year period. After holding the shares in the Investee Companies for the initial three year period, it may still be difficult to realise the shares or obtain reliable information about their value. Consequently whilst we will always attempt to redeem your investment upon receipt of a withdrawal request, this may not always be possible. You should be prepared to leave your investment intact for the medium term, and at least for the minimum three year period.
Rates of tax, tax benefits and allowances described on this site are based on current legislation and HMRC practice and depend on personal circumstances. These may change from time to time and are not guaranteed. Seneca Partners does not provide advice and potential Investors are recommended to seek specialist independent tax and financial advice before investing. The Seneca EIS Portfolio Service has been designed with UK resident taxpayers in mind. If you are not resident or ordinarily resident in the UK for tax purposes, it is not appropriate or advantageous for you to invest in the Seneca EIS Portfolio Service.
We will invest in companies which we reasonably believe to be Qualifying Companies at the time of investment, but please be aware that there is no guarantee that such companies will remain Qualifying Companies at all times thereafter, or that EIS tax reliefs will be available to Investors. There are circumstances in which an Investor could cease to qualify for the taxation advantages offered by the EIS. If a Qualifying Company ceases to carry on a Qualifying Trade during the three year period, this could prejudice its qualifying status under the EIS. In addition, if a Qualifying Company does not employ the funds made available to it within the deadlines set out in the EIS rules, it would be in breach of those rules and the tax advantages would be withdrawn. The situation will be closely monitored with a view to preserving each Qualifying Company’s EIS status, but this cannot be guaranteed.
A failure of a Qualifying Company to meet the qualifying requirements for the EIS could result in:
In certain circumstances, the Portfolio Manager may decide to dispose of a holding in an investee company that has been held for less than 3 years, where it is believed to be in line with the Investment Objective of maximising Investor returns.
If the Portfolio Manager disposes of part or all of the shares held on behalf of an Investor in an investee company that have been held for less than 3 years, the tax reliefs and tax benefits of EIS investment will be lost in relation to the shares sold. This may impact on an Investors own tax position and therefore the impact of this risk should be carefully considered by an Investor prior to investing in the Service.