Mercia Fund Management, a UK-based technology investment specialist, is set to launch a new fund that will target digital companies.
Known as Mercia Digital Fund, the fund will invest in a diversified portfolio of innovative digital companies with high growth potential.
The Mercia Digital Fund will combine the hybrid structure of Mercia’s previous three tax efficient funds, including the Enterprise Investment Scheme and Seed Enterprise Investment Scheme (SEIS).
With a minimum investment of £25,000, the fund will target a number of sub-sectors within digital, including e-commerce, gaming, financial technology (fintech) and the internet of things (IoT).
The fund targets an annual growth rate of up to 50% (excluding tax advantage) and investors can expect to realize their portfolios in between years three and seven.
Additionally, fund offers initial tax relief of either 30% or 50%, loss relief and zero CGT on returns once qualifying shares have been held for three years.
The Mercia team has long-term partnerships with eight universities to identify investment opportunities.
Mark Payton, managing director of Mercia Fund Management, said: "The sector boasts three times higher employment growth than the wider economy, with 25% greater revenue growth than traditional firms, and a Gross Value Added (GVA) per employee of £83,000, the output within digital is nearly twice the UK average for all sectors.
"We think this combination of factors makes for an especially attractive proposition, particularly in light of the additional tax advantages available under EIS & SEIS which help to significantly offset the associated capital risk whilst enhancing prospective investment returns.
"Given the ability of the EIS/SEIS structure to convert a traditionally high-risk/return strategy into a moderate-risk/high-return opportunity, we believe this is one instance where backing Britain could prove very rewarding indeed," he added.
Mercia Fund Management has assets under management of more than £22 million.