Portfolio valuation graph (December 2017)
Performance is based on the combination of realised and unrealised value. Based on the funds which have been fully invested for over a year, the average EIS fund value is 2.1x multiple of cost, including tax reliefs. These valuations are produced in accordance with the International Private Equity and Venture Capital Valuation Guidelines (IPEVCVG).
Mercia EIS Funds operates a fail fast policy, whereby we will not support failing companies. Where a company fails, we will write to investors confirming this as soon as possible so that they can claim their loss relief.
Traditionally, there are two main methods used to achieve realisations.
- Stock market listing (e.g. AIM) and subsequent share sale after a lock-in period (often one year).
- Trade sale (M&A) payment may not be 100% cash on sales but: i) may include shares in the acquirer as part of the consideration ii) may be subject to the company's future performance (over one to three years).
Early funds have started to receive distributions, with Mercia Growth Fund 1 returning 25% of the cash invested, and Mercia Growth Fund 2 returning 17%. These distributions have been realised by a combination of traditional stock exchange sales and sales via Mercia's Share Exchange.
It is worth noting that any EIS or SEIS investment should be treated as a long-term investment. Especially where the underlying assets are early-stage technology companies, as these can take a long time to deliver value.
The Mercia EIS Fund contains both an EIS fund and a SEIS fund, and we will continue to offer SEIS investments where we have capacity. However, it is notable, that despite the enhanced upfront SEIS tax reliefs, the average performance after tax reliefs for SEIS companies is 1.7x versus EIS at 2.1x (December 2017).
Mercia EIS Funds investors have access to a wealth of information in Mercia's Investor Centre, you can find out more using this link.
You can read more about Mercia EIS Funds from our case study section of the website which is accessible here.
Past performance is not necessarily a guide to future performance. The value of an investment may go down as well as up, in which case an investor may not get back the amount invested. Investments in small unquoted companies carry an above-average level of risk. These investments are highly illiquid and as such, there may not be a readily available market to sell such an investment.