A specialist engineering turnaround EIS investment adviser, Cyrus Investment Management, has closed fundraising for the Cyrus Precision Engineering EIS Fund 2 having raised GBP10.5 million in new funds.
This follows on the results of CIM’s first fund, Cyrus Precision Engineering EIS 1, which within 12 months was fully invested in four precision engineering companies: FGP Systems Ltd, a tier 2 bespoke aerospace component manufacturer; City Engineering, a specialist in laser cutting and fabrication for the global energy industries; Rhino Doors, a strategic provider of security doors for the Ministry of Defence, the nuclear industry and Post Office and finally Ramp Surface Coatings Ltd, a specialist metal treatments company servicing the aerospace and nuclear submarine fleet.
All investments were made by Cyrus at very attractive entry points, the firm says, with EIS 1 providing new capital, new management and improving intercompany management systems delivering in combination increased sales and profitability.
The new funds from Cyrus Precision Engineering 2 permit the manager to continue to make further attractive investments in this niche sector with the aim to sell the investee companies after 3 years to a single trade buyer at a premium.
Peter Schwabach, Managing Partner of CIM, says, “The successful close and fundraise of the Cyrus Precision Engineering EIS Fund 2 is a welcome endorsement of our business model and our proven ability to identify and turn around best in class British Precision Engineering companies. This is a market with outstanding British Precision Engineering companies, capable after re-capitalisation and new management to deliver significant growth and profitability”.
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 SMEs 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.
The firm writes that 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.
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.