Matrix Private Equity hopes to raise GBP20 million from high net worth individuals and trustees, for its second fund. The Matrix Enterprise Fund will make eight to ten investments in unquoted UK companies over the space of a year. Mark Burgess, managing director of Matrix Private Equity, says Matrix hopes to raise a similar vehicle in the next tax year, depending on the market. This current fund is expected to close in March. Burgess said: “It’s a brand new product in a difficult market. We’re going to see how we get on and may extend the fund.”
The new fund is designed to appeal to experienced private investors who use IFAs, and fund trustees who are advised by accountants and solicitors. It takes advantage of the Enterprise Investment Scheme (EIS) legislation and offers individuals and trustees benefits similar to those granted by venture capital trusts. The EIS legislation gives investors relief from inheritance tax, income tax and capital gains tax. The EIS was established by the 1994 Finance Act and replaced the Business Expansion Scheme. In the past it has been used as an incentive to investors funding individual early stage companies but the Matrix Enterprise Fund will allow investors to spread their risk and participate in a portfolio of these investments.
The enterprise fund aims to make low risk, development capital investments in mature and stable companies with established revenue streams, which are profitable or expected to become profitable in the short term. Sectors likely to be of interest include retail, software, services, leisure and pubs. The fund will invest alongside investors who have worked with Matrix before. It is sponsored by Matrix-Securities, which has raised over GBP265 million for 13 VCTs in the last six years.
A team of seven, led by Burgess, and Helen Sinclair, will manage the Matrix Enterprise Fund. Matrix’s first venture capital fund, a VCT, was launched in March 2000 and raised GBP12.3 million.