Portfolio valuation graph (March 2017)
Mercia has successfully launched and fully invested eight tax-efficient funds. Performance is based on the combination of realised and unrealised value from the first four funds which have been fully invested for over a year (MGF1, MGF2, MGF3 and MDF). Of these four funds, the average EIS fund value is 2.3x multiple of cost and early funds have started to receive distributions.
Mercia Growth Fund 8 aims to triple invested capital after five to seven years*, by the creation of a well-diversified, multi-sector technology fund. Liquidity may be available earlier, by use of the Share Exchange, however the overall return may be diminished if early liquidity is taken.
*target is based on net cost, after all available tax reliefs, with a portfolio made up of EIS only qualifying companies.
Performance of EIS companies versus Seed (SEIS)
Each of Mercia’s Growth Funds contains both a SEIS fund and a EIS fund investment.
In aggregate the funds have invested in 65 companies, of which 51 have received SEIS investment. It is notable, that despite the enhanced upfront SEIS tax reliefs, the average performance (after being fully invested for 12 months) for EIS companies is substantially higher. In addition, the duration between an investment and the investor receiving a tax certificate is shorter for an EIS investment (due to qualification requirements), and, as an EIS company is often at a later stage of development, the company will often be closer (in time frame) to a potential exit.
To provide comparision of the performance of SEIS versus EIS companies, the net asset value of funds over 1 year old is 1.1x for SEIS and 1.9x for EIS, and for full comparison after tax reliefs, the SEIS is valued at 1.7x versus EIS at 2.3x (March 2017) - full performance data for all SEIS funds is available on request. A higher level of failures should be expected from any SEIS investment.
Mercia Growth Fund 8 is primarily an EIS fund, but has the option to invest 15% of an investor’s subscription to early-stage SEIS-qualifying companies. Upon request, we can enable investors to make full use of their £100,000 SEIS annual allowance, if they invest £250,000 in the Fund. Unless otherwise instructed, all investment will be made into EIS qualifying-companies (by default).