Recent changes to the EIS, expanding the size of companies that qualify for funding and the amount they can raise, brings the London Stock Exchange’s Alternative Investment Market (AIM) centre stage in the world of alternatives.
The guide, available today via www.oldburlington.com, is designed to help advisers enhance and formalise their knowledge of AIM, providing an introduction and comprehensive history to the market including an overview of the types of business listed and how it differs to the London Stock Exchange’s main market. Most notably, it covers some of the key aspects that advisers should know about EIS investing on AIM.
AIM companies can offer better liquidity and scrutiny than many EIS opportunities and, with an average takeover premium of 49% in 2012, Old Burlington Investments believe that many are undervalued. Yet despite excellent prospects they struggle to find funding. At the same time, private investors find it difficult to buy new issues of shares so miss out on discounts that are often available.
The twin story of undervaluation and a much improved mechanism for tax-efficient investing presents a compelling argument for both advisers and investors to consider EIS qualifying investments on AIM.
George Osborne’s announcement in this year’s Budget that stamp duty will be scrapped on growth markets such as AIM makes the opportunity even more attractive for investors.
The guide comes on the back of the launch late last year of the Old Burlington Investments AIM Growth Fund, run in partnership with SME private equity specialist Percipient Capital. For this fund, the team will work closely with each investee over time, negotiating the timing and terms on issuance to maximise performance whilst also reducing transaction costs and securing preferred discounts on equity prices.
Commenting on the guide, Brett Williams, Managing Partner, says:
“While advisers are becoming more knowledgeable of the EIS market, many are unaware that the scheme can be used to access new share issues on AIM.
With some AIM businesses fundamentally undervalued and with recent changes in EIS legislation having pushed the small-cap market centre stage for investors, the opportunities are certainly compelling. Our guide aims to explain and clarify AIM and is intended to support advisers with new and existing clients.”
