Cyrus Investment Management (CIM), a specialist engineering turnaround EIS investment adviser, has launched fundraising for Cyrus Precision Engineering EIS Fund 2.
The Fund will identify undercapitalised and undervalued Precision Engineering businesses in the UK that are suitable candidates for “growth investment”: the introduction of new capital, management, products and markets that improve the value of these companies enabling them, in turn, to be sold as a single, aggregated business at a premium to a third party trade buyer after a minimum of three years.
The Fund will be looking to continue the success of CIM’s first fund, Cyrus Precision Engineering EIS 1, which has already made three successful investments in the funds core markets: Aerospace, Defence and Security: FGP Systems Ltd, a top five UK aerospace Precision Engineer; City Engineering, a specialist in precision laser cutting; and Rhino Doors, one of the UK’s few accredited manufacturers of high security doors for critical UK infrastructure.
The UK is a world centre of excellence for Precision Engineering and CIM has identified 1,500 UK Precision Engineering companies as potential targets for investment: the majority of which are SME’s with an enterprise value in the range of one to five million pounds. The UK’s smaller companies have underperformed their larger counterparts as a result of historical undercapitalisation and an on-going inability to access capital.
Individually these companies are attractive as potential investments as they retain significant unencumbered assets: machinery, stock, skilled engineering work forces, proprietary industrial designs and accreditations as well as embedded accredited relationships within the global industrial companies they service. Strategically aggregated under single management and sold as a single business they offer the potential for investors to make a significant return on their investment.
Peter Schwabach, Managing Partner of CIM, says: “In Cyrus 2 we want to build on the success of Cyrus 1 where we have been able to make investments in best in class companies at an entry point of 2-3 x EBITDA with a view to exiting the aggregated portfolio at between 6-8 x EBITDA. The UK has an active M&A market for larger Precision Engineering companies with an average value of GBP4 billion per year (2013 -2015). Investors will also benefit from the attractive tax reliefs afforded by the Fund’s EIS structure.”
In the UK, CIM is the only dedicated EIS fund manager that offers individuals the ability to invest exclusively in this asset class with a management team that has over 50 years of experience of profitably investing in, re-structuring and exiting British Precision Engineering companies.
