Davy Stockbrokers has said it expects "a huge demand" for Business Expansion Scheme (BES) investment opportunities in the wake of the Budget increase on the limits that apply.
Davy and BDO Simpson Xavier have launched a new BES scheme aimed at raising up to €15 million to invest in SME/owner managed businesses wishing to expand. The limit for the amount of BES funding that can be invested in any company was increased to €2 million from €1 million in the Budget, while the maximum an individual investor can invest was increased to €150,000 from €31,750.
"For the investor, the increase in the limit means BES is one of the largest tax breaks available to individual taxpayers," said Michelle O'Keeffe, a director with Davy. "Because of this, Davy expects a huge demand from its client base and have increased its fund to €15 million."
She noted that, with the BES an individual investor can put in as little as €5,000.
Sinéad Heaney, senior manager with BDO Simpson Xavier, said she had no doubt there was a sufficient number of companies to make use of the extra funds.
The Davy BES fund is the longest running in the State with more than €85 million invested in 130 companies over the past 12 years. While Davy sources the investors, BDO uses its contacts to identify the companies that form the pool into which the investors' money is placed.
The investors receive an immediate tax allowance on their investment and expect to receive their full investment back after five years.
Previous Davy BES funds have invested in companies such as Boru Vodka, Java Republic, Big Red Book, Wrights of Howth and Waterfern Wind Farm, Co Leitrim.
Ms Heaney said funds had been invested in food, software and electricity-generating companies. However, she said she would have liked to have seen a shift in the scheme in the Budget to make it possible for more types of non-manufacturing companies to participate.
She said a lot of companies supplying environmental compliance services were being set up but the scheme could not be used by them.
Ms Heaney did not agree with the views of commentators who have said the investment limit per company should have been raised to €15 million or higher. She said such a change would see funds being channelled away from the type of small operation on which the scheme was originally focused.
