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Register now for 4 October 2022 at 3:00pm -

October Investor Forum: Shareholder value in ESG investing

The Deepbridge Technology Growth EIS is an alternative investment fund focused on companies with technologies that are at the stage of being commercialised. Funds are invested into a portfolio of three to nine companies, which are in the areas of resource and energy innovation, medical technology and high-growth IT-based solutions. The target return is £1.60 for each £1 invested (gross) over a minimum of three years. There is no income target.

Deepbridge has been the manager since early 2021. Prior to that, it was the fund advisor, with Enterprise Investment Partners as the manager.

The report goes into details of how the investment process works, sourcing and decision-making, exit strategies, post-investment governance and monitoring, fees and more. It also includes Hardman & Co’s unique fee calculation table, allowing advisors and investors to properly investigate their effect.

Why invest

Positives

  • Strategy: Well-defined investment process to invest directly in companies in selected technology areas.

Issues

  • Concentration: Portfolio may be up to nine investments, although smaller investors may get greater concentration.

 

The investment manager

Positives

  • Team: The Deepbridge team is very experienced in the relevant areas, and its committees have very strong outside members.

Issues

  • Track record: Although the team is experienced, to date, Deepbridge has had only one exit and one partial exit.

 

Nuts & bolts

  • Investing: Deployments take place on a monthly basis; so new money will usually be invested within that period.
  • Diversification: Portfolio of between three and nine companies.
  • Valuation: Unprofitable companies will be held at cost, or at last relevant transaction. Profitable companies use a discounted average multiple from relevant companies.

 

Fees

  • Fees: Only the performance fee is not charged directly to the company.
  • Performance fee: Performance fee of 20% on gross returns over £1.20 on a per company basis.

 

Risks

  • Risk mitigation: Deepbridge aims to mitigate risk by active, ongoing support of the companies and choosing conservative business plans. The companies are revenue- generating, but still immature – with the risks that this brings.
  • Target return: The target return for the fund is £1.60 for each gross £1 invested over three to four years. Individual companies tend to have much higher targets, reflecting that success in a company will give an excellent return, but there is a real risk of loss in any project.
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If you'd like to be introduced to the team at Deepbridge Capital (Funds), get in touch.

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