Mark Twain was a foxy clever guy. His quotes crop up on a regular basis, in particular with the financial sector. My favourite is
“October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.”
With interest rates so low at the moment, I would have to disagree with Mr. Twain. You can hardly call the best demand rate currently 0.6% gross ( net 0.354% after DIRT tax deduction – from Rabodirect ) appealing or attractive. Therefore other alternative investments have the opportunity to become current flavour of the day – it is also good to diversify.
One such opportunity is the Employment & Investment Incentive Scheme (EIIS). This replaced the Business Expansion Scheme (BES) in 2013 – both allowed investors obtain tax relief on certain investments. Under the current scheme, you can invest up to a maximum € 150,000 – minimum in most cases is € 20,000 or € 25,000 – for a 4 year period and, if on the higher rate of tax, receive 30% tax relief ( € 45,000 ) in the first year and 10% relief in year 4 (€ 15,000)
Most of the promoters advise on the specific investment within the EIIS, a few of them just on the reputation of their name. All these schemes have a deadline date for subscription before Christmas. Here are just 5 samples :
- Merrion Capital (Heritage House, 22-23 St Stephen’s Green, Dublin 2 – contact Niall Tinney at DDI +353 1 2404162 Mob +353 86 2533798 ) have two main offerings
eLight – eLight, a 100% Irish owned company founded in 2009, is Ireland’s number one solutions expert for the funding, supply, installation and management of fully guaranteed energy efficient LED lighting solutions to a range of sectors in Ireland; and
Ditchley Group – Ditchley was established in September 2014 with a strategy to become a major player in the nursing home market in Ireland. The EIIS funds raised will be used for the purposes of expanding the capacity of two fully operational nursing homes, thus maximising the value of the homes.
2. Goodbody Stockbrokers ( Dublin 4 – contact Micheál Kerley at +353 1 667 0400 )
Their offering is called the Goodbody EIIS 2016 and they do not disclose the companies prior to investing. Last year’s offering included Gaelectric as an anchor investment. Goodbodys are a solid investment house.
3. Initiative Ireland – a peer to peer lending platform – Enterprise Ireland included them in their “High Potential Start-Up” companies and headed up by ex Bank of Ireland Corporate director Padraig Rushe (M: +353 87 2343936 E: P.Rushe@InitiativeIreland.com.) Seeking to raise € 2million, they forecast an exit for investors after 5 years, with an additional c.5x Return on Investment at that time.
4. Cantor Fitzgerald Stockbrokers ( 75 St. Stephens Green, Dublin 2. Contact Eric Culliton at Tel:+ 353 (1) 6333876 & Mob: + 353 872253061) offer the Great Northern Distillery EIIS
EIIS Summary: Great Northern Distillery is seeking to raise €5m through the Employment & Investment Incentive Scheme (EIIS) 2016. Funds raised will be used by Great Northern Distillery to lay down its own whiskey stock for sale in 3 to 4 years. Once the whiskey has matured it will be sold to retail own labels and used for Great Northern Distillery’s own label whiskey brands.
Expected Term: A minimum of 4 years from date of investment.
Tax relief: 30% in year 1 with an expected further 10% in year 4 subject to certain criteria being met.
Investment: Minimum €25,000 | Maximum €150,000 (may be subject to scale back)
Closing Date: 14th December (or earlier subject to demand)
5. BALLYHOURA APPLE FARM Ballyhoura Artisan Food Park, Kilfinane, Co Limerick – direct investment (contact Gerry Murphy, Founder & Chairman gmurphy@bruhenny.com or Maurice Gilbert CEO at +353 87 274 1863 for prospectus – one of the best I have seen.)
◆ Extra security for investors as there is no bank debt in the company and over €400,000 has already been invested in developing the business.
◆ Projecting a high net (after tax) compound annual return of 11.4% for investors over the 4 year period with 30% tax refund in year 1 and 10% in Year 4.
◆ The minimum investment sum in the Apple Farm Produce Ltd EII Scheme is €25,000.
◆ Over 20 Ballyhoura Apple Farm products developed with many unique recipes. All recipes are the intellectual property of AFP.
◆ The EIIS “B” Shares will be issued to each investor and a Put and Call Share Option agreement will be executed by the individual investor and the private lender to the company Uiveradoh Consulting FZE. To comply with EIIS Revenue rules the purchase price in the Option will be the market value on the fourth anniversary of the investment. The market value on the fourth anniversary is projected to be €1 per “B” Share or par at that time.
◆ A box of 12 sample juice products will be delivered to investors each December over the 4 year period.
That is just a sample of schemes. As I said, if you are a higher rate tax payer, then having an EIIS as part of your balanced portfolio makes sense. Perhaps we can prove Mr Twain wrong again when he said “The four most dangerous words in investing are.. this time it’s different.” For further queries, you can also contact me directly at jlowe@moneydoctor.ie