EIP have been confirmed as a finalist for the Most Impactful Investment Award at this year’s Growth Investor Awards being held on 8 November.
The growth award is specifically targeted at investments which have not only achieved growth, but also provided high levels of employment, nurtured talent, made full use of technology, developed infrastructure and assets, and finally, made an impact on the wider community.
EIP’s entry is based on their investments made via their Imbiba Leisure EIS Fund, which invests in EIS opportunities within the bar, restaurant, event, catering and hospitality sectors in Central London. EIP has raised around £40m for Imbiba over the last 5 years, which has been spread between 5 companies, with 2 more investee companies on the way, making a total of 7. Each company in turn builds up a portfolio of between 6 and 10 sites. So, with investors typically getting a spread of 3 companies, they end up with a diversified portfolio of around 18 Central London bar/restaurant units. EIP launch a new EIS Fund every year. The Imbiba businesses are built up over a period of 4-5 years, then sold on to secondary buyers like private equity funds.
Employment is a key part of the Imbiba offer. Depending on size and location of venue, an individual site can easily employ anything from 30 to 100 staff. Imbiba operating units enjoy a stylish décor and have a “buzz” about them. Imbiba also have the reputation of being excellent employers, so engaging and retaining staff has never been an issue.
Through their excellent property contacts and their reputation as reliable operators, Imbiba are able to secure some of the best sites to be found in Central London. The typical property deal is a long lease (usually 15-25 years). On exit after 4-5 years, there will usually still be a good 20 years left to run on the leases and these can have considerable value. Leases are either existing leases or new ones in prestigious new developments – Kitty Hawk in the City and the next Darwin & Wallace site in the Battersea Power Station development are good examples.
With EIP’s support, not only has Imbiba delivered growth through its various businesses, it has also contributed to the economy and fulfilled the Government’s requirement of proving the effectiveness of the EIS. EIP raised £7m of EIS funding (over two years) for an Imbiba company, which has turnover of £10m and pre-tax profits of £1.5m. So it pays corporation tax, it pays rates, stamp duty and VAT and finally, it employs close to 150 people, all of whom pay income tax. A quick back of the envelope calculation would suggest the business generates tax revenue of around £2.5m a year, for a one-time investment by the Government of just £2.1m (30% of £7m)!
In recent years, Imbiba has been instrumental in bringing high style to local neighbourhoods. An example would be the opening of No 32 The Pavement in Clapham in 2014, bringing West End quality to an inner London suburban location. Clapham had never seen anything like it before! The unit was mobbed from the day it opened and has consistently exceeded its turnover and profit forecasts. Imbiba also has a knack of replacing failed operations with highly successful fresh new concepts. Imbiba took over a failed restaurant/coffee shop operation next to the Royal Exchange in the City, turning it into Banking Hall, now considered one of the top City venues for large functions catering for up to 850 people.
The successful model which Imbiba and EIP have developed delivers profitable businesses, happy investors, satisfied customers, proud staff, and above all, beautiful premises, which all adds up to a powerful cocktail!
Martin Sherwood, Partner
Martin Sherwood has many years’ experience of small company fundraising and in particular the tax-efficient investment market, specialising in the Hospitality & Leisure Sectors. Martin is currently chairman of the four British Country Inns companies and of Halcyon Hotels and Resorts plc, which is in joint venture with Luxury Family Hotels, which he helped launch 20 years ago. He was founder and head of Tax Efficient Solutions, first at Teather & Greenwood (1997-2004) and subsequently at Smith & Williamson (2004-2010), which he left to found Enterprise.
Martin has been closely involved in both Venture Capital Trusts and Enterprise Investment Schemes (EIS) since their inception, and is a founder director of the EIS Association, the official trade association of the EIS industry. Martin works very closely with a wide range of Hospitality & Leisure entrepreneurs and has a significant network of investors and professional contacts as well as being a serial investor in his own right.