PROVIDING SHORT-TERM LENDING
TO SMALL & MEDIUM SIZED UK COMPANIES
The Velocity Credit Ventures Portfolio Management Service (“Service”) gives investors exposure to a diverse portfolio of credits to small and medium UK enterprises (“SMEs”) and managed by a team with broad corporate and financial experience.
The Service aims to preserve capital value whilst seeking to provide an annual targeted return to clients of between 3% and 6%.
Investors are allotted shares in one or more companies (“Trading Companies”).
The shares should qualify for Business Relief and therefore should be eligible for Inheritance Tax Relief after two years.
The Service is focused on capital preservation, growth and liquidity;
- The first lending business aimed at the IHT market to utilise credit default insurance.
- As a new Service, the portfolio has no legacy issues to contend with.
- Diligent loan appraisal process.
- Real time loan management system.
- UK borrowers and UK and OECD counterparties.
The service comprises two Trading Companies with complementary lending activities;
- Trade Ventures focuses on providing short-term finance for trade activities (e.g. Invoice discounting, factoring, etc.) and targets a return of 3% per annum.
- Digital Ventures will make loans to tech enabled companies to finance digital marketing to increase their subscriber base and targets a return of 6% per annum.
- Diversified credit portfolio of short-term loans provides natural liquidity.
- Withdrawal requests can be made in whole, or in part, at any time.
- Investors can choose to sell shares each year to take the growth as “income”.
- Short-term lending, cash reserves and matched bargains will help provide liquidity.
How It Works
Clients select an investment strategy from the following choices:
ClassicA focus on growth by financing trade credit to UK SMEs with a target return of 3% per annum
DynamicA focus on growth by financing venture debt to UK SMEs with a target return of 6% per annum.
BalancedA diversified participation across a blend of the Classic Strategy and the Dynamic Strategy with a target return of between 3% and 6% per annum.
Through the Service, Clients are allotted shares (“Shares”) in one or more Trading Companies. These Shares will benefit from a return derived from the profits of each Trading Company. Each Trading Company will conduct its trade through wholly owned subsidiary companies.
Each Trading Company or its subsidiary will purchase a credit default insurance from an insurance company to protect its capital. It is anticipated that this will cover between 90% and 100% of the credit risk.
Fees & Costs
Other than a 1% fee on withdrawals, the Client does not pay any fees or incur any direct costs associated with their investment in the Service. All fees and costs relating to the setup and operation of the Service and Trading Companies are met by the Trading Companies. This includes a setup fee of 4% of the amount subscribed by investors and an annual fee of 2% of each Trading Company’s net asset value payable to the Investment Advisor. All fees are subject to the applicable VAT.
The credits provided are short term with a maturity of typically between 30 days and 180 days (and in all cases less than one year). Therefore, it is expected that the Trading Companies will maintain sufficient liquidity to meet any withdrawals Investors elect to make. Investors can elect to make withdrawals at any time.
Each Trading Company will elect to have its annual financial statements audited and made available to clients, who will also receive quarterly performance reports.
What is Business Relief?
Business Relief works by reducing the value of an Investor’s estate for inheritance tax purposes. An inheritance tax liability on the estate of a deceased person, or on the transfer of assets by way of a lifetime gift, may be reduced or eliminated to the extent that the assets comprise “Relevant Business Property” (as defined in IHTA). For this purpose, “Relevant Business Property” includes shares where the company concerned is unlisted, is either a trading company or the holding company of a trading group and not carrying on excluded activity. Only sums invested in the Trading Companies would potentially be sheltered from inheritance tax. To obtain the relief, the shares must have been owned during the previous two years or must have been inherited from a spouse or civil partner and, when the spouse’s or civil partner’s period of ownership is taken into account, the combined period of ownership must be at least two years. Under current legislation, if a person chooses to sell shares from a Business Relief qualifying company, they can reinvest the proceeds into another Business Relief qualifying company, not losing the IHT relief, as long as: (i) the sales proceeds are reinvested within three years of the sale and (ii) both the original and replacement shares have been held for at least two out of the last five years in total.
We are the Investment Advisor to the Velocity Credit Advisors Portfolio Management Service. The Investment Manager is Sapphire Capital Partners LLP which is authorised and regulated by the Financial Conduct Authority (FCA Number: 565716). We are regulated by the Financial Conduct Authority (FCA Number 920486) as an Appointed Representative of Sapphire Capital Partners LLP. See our entry in the FCA register here.
Meet The Team
Our team has extensive experience in a wide range of relevant sectors, including financial services, legal and corporate building.
Nick spent 14 years at Deutsche Bank/Morgan Grenfell in London and New York. He was responsible for cross-border investment banking origination, advising government multi-national clients, management of a credit portfolio of c. £1,500 million and worked in OECD & emerging market countries. In 2005, he co-founded Rutley Capital Partners, the real estate private equity and investment management business of the Knight Frank group where he was also Head of Financial Services. As CEO and chairman of the investment committee of Rutley, he led the establishment, private fund-raising and subsequent flotation on the Official List of the LSE of Rutley European Property Limited, a pan European coreplus commercial property fund and oversaw the growth of assets under management to over £1 billion. He is Managing Director of Bluehaven Capital Partners a regulated corporate advisory business. Nick holds an MA in Law from Magdalene College, Cambridge.
Rajeev is the Managing Director of Velocity Capital Advisors Limited, the Investment Consultant to the Velocity (S)EIS fund that has been in operation for over 4 years. He began his career in advertising and has worked for TBWA, Leo Burnett and HHCL. Formerly the Marketing Director of Red Bull Energy Drink, UK & Ireland, he completed an MBA at the Institute for Management Development (IMD) in Lausanne. He has since founded a series of successful entrepreneurial businesses across a range of industries. These include MPPI, an Indian media fund, raising money and managing Indian property ventures, a 200mw wind farm development near Istanbul and Soho House Mumbai.
Rupert J. Strachwitz
Chief Executive Officer
Rupert began his financial services career in insurance where he was a financial risk underwriter with Frankona Rückversicherung AG. He moved into investment banking where he was a risk manager for a media finance advisor firm before joining Dresdner Kleinwort Capital in 2001 where he led the structuring and placing of alternative asset funds. He co-founded Indian Energy, a sustainable energy business, in 2007 where he was initially responsible for cross-border project finance before leading the business to a successful IPO on the London Stock Exchange. He has worked with a range of European SMEs on international expansion and raising capital. Rupert is an associate member of The Chartered Institute for Securities & Investment.
Chief Operating Officer
Tom is the COO of Velocity Capital Advisors Limited (see above). He began his career as a corporate finance lawyer at Sidley Austin LLP, advising on debt and equity capital markets, mergers and acquisitions and private equity transactions. He worked closely with a number of treasury teams focusing on bi and multilateral loan agreements, EMTN Programmes, investment grade and high yield debt issuances, and receivables financing. He joined Van Elle Limited as group managing director in March 2015, successfully steering the group through its AIM flotation in October 2016.
Chief Financial Officer
Katherine is a qualified CPA accountant who was formerly Director at Commerzbank and Senior Credit Officer, managing a EUR 4bn credit portfolio of assets and receivables-based financing, lease financing and structured finance predominantly of UK and international corporates. Previously, Katherine worked in financial services covering a range of business lines including securitisation, equity derivatives and fixed income at top tier investment banks including Deutsche Bank and HSBC.
About Velocity Capital
Velocity Credit Advisors Limited is a subsidiary of Velocity Capital Advisors Limited which was set up in 2015 as a vehicle to facilitate, via SEIS and EIS Funds, participation in exciting companies which have technology at their core. The Velocity Capital Advisors founders come from entrepreneurial backgrounds, which we believe is a real asset to our business and the investee companies. Velocity has been operating for over four years now, and in those years the SEIS and EIS funds have achieved an investee company cash exit of 6.5x, and the overall current performance of the funds is estimated to be 3.5x to 1.3x.
Your capital will be at risk and there is no guarantee of any investment return. The value of investments may go down and you could lose all of your investment. An investment in the Service means you are the beneficiary of shares in a private company which shares are not listed on any market and this means that you may not be able to sell them when you want to do so. This sort of investment does not provide a reliable source of income. The tax benefits of private company investing depend on your personal circumstances and on compliance with the relevant rules. Past performance is not a reliable indicator of future results. We do not provide investment, tax or legal advice.