Fund in Focus – Guinness Asset Management

Background

Guinness Asset Management was founded by Tim Guinness in London in 2003, along with US sister firm Guinness Atkinson Asset Management Inc. Core areas of expertise: Innovation, Energy, Leisure, AIM and Asia.

Guinness Asset Management is the leading EIS investor. Investing £100 million EIS Funds into more than 80 companies since 2011. These range from solar and other renewables to manufacturers, internet retailers and healthcare. The Investment Management Team leverages the considerable EIS and investments expertise of Tim Guinness CEO of Guinness Asset Management, Andrew Martin Smith, formerly CEO of Hambros Fund Management and Lord Flight, Chairman of the EIS Association.

Such expertise and experience has resulted in returns to investors of more than £1.20 per £1.00 invested for the first three EIS qualifying investment companies sold in 2016.

Investment Strategy

Guinness EIS targets companies which show the following investment characteristics

  1. Businesses in leisure and services sector with strong balance sheets

Eg. gyms, trampoline parks, pubs, crematoria and rehabilitation centres.

  1. Businesses with good visibility on cashflows. Maturing companies and businesses with longer term contracts to provide predictability of future earnings

Eg. waste management, recycling or data centres.

  1. Businesses requiring capital to purchase stock and equipment. Successful businesses often require additional funds to expand their working capital. As value investors, we prize businesses with high value stockor businesses with tradable assets.

Eg. Luxury goods dealers, logistics and freight.

In addition to the key characteristics the following criteria are also considered:

Size Up to £5,000,000 per investee company
Timing Funds invested within 12 months of subscription
Next close on 10 November 2017 – funds to be invested in current tax year
EIS Only invest in companies with EIS Advance Assurance from HMRC
Debt Minimal leverage.
Exit Target investment period is 4 to 5 years
Exit routes: trade sale, MBO, leveraged purchase, liquidation

The current portfolio

Gravity Fitness Limited

Gravity is a growing, profitable operator of trampoline parks in the UK. It has four existing parks and has secured heads of lease terms to fit out and operate an additional four parks at sites including Milton Keynes Xscape, and Kent’s Bluewater.
Established business – increased certainty of future cashflows
Sites highly cash generative with average revenue per site of £1.8m
Investment key points

£5m investment to fund additional sites – tangible fixed assets valued at £2.9m

Anticipated exit route – sale/ IPO
EIS3 certificate delivered Q2 2017 (existing, trading business)

Barts Pubs Ltd

An exciting pub opportunity in prime Notting Hill location, close to London Underground
Pub has suffered from underinvestment for many years, and is now shut
Guinness Asset Management invested £3 million for the purchase of a freehold pub with a view to total refurbishment of bar and opening of a restaurant on first floor and private members club on second floor
Management team have a strong track record of redeveloping and successfully managing similar locations.
Investment key points
£3 million investment alongside £2 million from Ducalian and £1.5 million mortgage to fund purchase and refurbishment
Anticipated exit route – Management Buyout
EIS3 certificate expected H1 2018 after 4 months of trading activity

CFS Care Ltd

CFS is a new company that has been formed to operate social care facilities in the Northwest of England.
Partnered with a team who have experience in running social care facilities
Relevant Local Authority will utilise services of the social care facility with a view to short term support in a converted residential property
Investment key points
£2.8m investment to fund an initial social care hub, replicating an existing model which has been successful in other parts of the UK
Anticipated exit route – Management Buyout
EIS3 certificate expected H1 2018 (after 4month initial trading period)

If you are interested in further information about Guinness EIS, please contact us on info@kuber.uk.com or +44 (0) 20 7952 6685.

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