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Focus Interview | EIS Pioneers Continue To Set The Pace


  • By Jason Stockwell
  • EIS

Robert Davis, Deputy CEO and Head of Portfolio Management at EIS pioneers Calculus Capital, talks to GBI Magazine City Editor Neil Martin about 2018 and beyond


Within the sector, Calculus Capital can rightly claim to be the longest established EIS fund manager.

It launched the UK’s first approved EIS fund in 1999 and since then has offered growth and scale-up capital to later stage, world class businesses. The firm was founded by John Glencross, Chief Executive, and Chairman, Susan McDonald, and the team work from offices based in London.

Given its longevity and success, it’s perhaps no surprise to hear that their team are often engaged in discussions with industry and governmental representatives about possible future developments, including the recent Patient Capital Review and the Knowledge-Intensive Companies Consultation.

As for Davis, he joined Calculus in 2014 with responsibility for working with the portfolio companies in helping to build value and guide them towards a successful exit.

I began by asking him for an update on 2018 and what they expected in 2019.
‘Our approach is largely unchanged as the recent regulatory changes have not impacted our strategy for investing in companies looking for growth and scale-up capital. We’ve invested in some great companies this year and have some exciting exits in the works which will hopefully close before the end of the year.

‘Looking forward, we expect to see a continuation of the long term shift towards businesses in technology and healthcare, although we are committed to remaining as diversified investors.’

Over the past year Calculus has expanded both its investment and investor relations teams in order to maintain the quality of service to its clients and their advisers, and also continue to drive the investment pipeline opportunities forward.

As for what impact the government’s recent changes made on EIS, Davis is clear: ‘This is a positive change for tax-efficient investment, as money will now have to be focused on investing in genuinely entrepreneurial growth companies.

‘Despite the action to remove tax breaks for capital preservation schemes, it’s clear that the government remains strongly committed to EIS and VCT investing.’

Does the firm worry that future government changes could undermine the schemes effectiveness?
‘We think the current schemes work well and, whilst changes can never be foreseen, it is important to note that pretty much every country in Europe has some form of governmental incentive for investing in and supporting SMEs.’

So if they could influence changes to the schemes, what would you suggest?
‘Higher limits, both lifetime and annual, in order to allow for proper scale-up so that the UK’s world class businesses can achieve their full potential. With the present limits, EIS and VCT investing can only partially address the ‘equity gap’, such that scale-up funding is perceived to be a bigger issue than start-up funding.’

The firm sets its stall out as a diversified, later stage growth investor, but admits to an increasing emphasis on both healthcare and technology; this is where the well above average growth potential is coming from.

We move on to talk about how EIS can continue to help diversify client portfolios.
‘EIS and VCT are proven asset classes which have come of age, such that these types of investment are now seen as having an appropriate place in diversified client portfolios.’

Does this mean that advisers are more receptive to the schemes?
‘Yes, with the reductions in pension contribution caps and disincentives applied to the buy-to-let property market, EIS and VCT products are becoming a more important and more mainstream part of advisers’ product offering to their clients. The availability of independent reviews which can provide some additional comfort on the pros and cons of specific advisers is also helpful to advisers.s.’

And does he think clients are more savvy about the schemes?
‘There is far greater awareness of the schemes and their benefits, although some investors remain wary of SEIS, seeing them offering too high a risk profile. EIS and VCT offerings, particularly those focused on later stage companies are seen as being better able to manage risk.’

So should advisers continue to educate their clients about the investment opportunities in EIS?
‘There is a growing expectation amongst clients that their IFAs have sufficient knowledge around these products which is why Calculus continually offers teach-ins for advisers and advisory firms specifically on EIS and VCT.’

Does the industry need to do more to promote the schemes to a wider investor base?
‘Yes. Investors with a more developed portfolio should be considering these products and there certainly is an opportunity to raise the awareness of the benefits and relay any reservations that they might have about the risk profile. A balanced understanding of the schemes is vital.’

Are there any clouds on the horizon that might spoil the party?
‘There is growing concern, further confirmed recently by the government, that the UK isn’t producing enough qualified people for the skills required to drive growth and innovation, particularly in science and technology. The government has announced additional funding to help address this issue.’

It’s likely that Calculus will remain a pioneer in the EIS and VCT space for some years to come.


Robert Davis has over 30 years’ advisory experience with a particular expertise in M&A. Most recently he was Head of the European Business of Avendus Capital, an Indian investment bank, and was previously the Head of European M&A at Nomura International for eight years. He has also held positions at JP Morgan and Robert / Jardine Fleming.

Robert qualified as a Chartered Accountant with Price Waterhouse and holds an MA from the University of Cambridge.

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