The tax-efficient scheme encourages investment in ‘higher-risk’, smaller start-up ventures. Firms are attracted to EIS as a relatively cheap source of finance.
In 2012 EIS rules come into force that will see the upper limit raised from £2m to £10m, making it an increasingly attractive investment. It offers 30% income-tax relief, and capital losses can be offset against income tax liability.
Gavin Drew and Ian Grundy, directors of pub operator Foundation Inns, a member of the MA250 club, have unveiled plans to launch a new company, Flagstone Cask & Grill. The company aims to grow to 15 to 20 sites with a plan to raise up to £2m this year via the EIS.
Flagstone has agreed terms of purchase on two south-east sites, expected to be completed this spring.
Drew said: “We’re looking for sites in affluent areas of the south-east — county towns and London suburbs where good value can still be attained, and to introduce a wider ale and food offer and a bit of theatre.
“We have developed three variants of the Cask & Grill concept to take advantage of opportunities in suburban and county town locations, and in larger affluent destination-village locations.
“Wherever possible we will look to introduce a microbrewery and theatre- style food offering.”
Flagstone is one of several EIS-funded pub companies launched or planned in recent months.
Last week it was revealed that Convivial London Pubs chief executive Kris Gumbrell and ex-Mitchells & Butlers executive Simon Bunn are looking to develop around 15 brewpubs under the Brewhouse & Kitchen venture, which would generate funds via an EIS.
In addition pub entrepreneurs David Bruce and Clive Watson, founders of EIS-funded Capital Pub Company, plan to form two new pubcos using the scheme: City Pub Company (East) and City Pub Company (West).