Calculus EIS Fund is a complying EIS fund, which will invest in 6-10 companies. The target return for each investee company is an IRR of 20% with a return of £2.5 for each £1 invested. Returns will be focussed on capital gains and investors are unlikely to receive any dividends. The aim is for the assets to be invested over the 18 months from closure of the tranche. Calculus Capital Limited is the Fund Manager and there are no other companies involved in running the fund.
Each investment will be into a company with growth potential. The target is for investors to receive shares in 6-10 companies. There will be sector diversification, with around a third in each of healthcare, technology-enabled businesses and others. As the portfolio will invest in more established companies than most EIS funds, there could be some economic sensitivity, but we would expect idiosyncratic risk to dominate. The target company IRR of 20% and multiple of 2.5x is at the upper end of what should be expected for what is, in EIS terms, a medium-risk strategy.
Calculus describes itself as having ‘privileged sources of deal flow’. Historically, it has managed to find sufficient investments, usually with little competition from other investors. The deal flow has increased in the last couple of years. The Calculus VCT will usually co-invest alongside the EIS Fund.
The investment process up to the offer is entirely internal to Calculus. The majority of the Directors on the Investment Committee are not involved in deal negotiation/diligence, bringing an independent oversight to the decision-making process.
As is the case with many EIS managers, Calculus takes a board position on investee companies. Support goes beyond that, with a combination of guidance and mentoring for management. The latter, unusually, includes a CEO/CFO forum, bringing together all the investee companies to share experiences and solutions. It may also appoint an appropriately experienced non-executive director.
The intention is that exits will come through trade sales or other normal exit routes such as IPOs. This is supported by its track record.