- Eden Rock’s investment approach is to invest in growth companies with the aim of exiting within 4-7 years at 3 X profit multiples therefore targeting an IRR in excess of 25%.
- Most investments will qualify for the Enterprise Investment Scheme, which offers highly attractive tax advantages to UK tax payers.
- Risks are further mitigated by constructing a diversified portfolio using Eden Rocks first class sourcing, screening and due diligence capabilities.
Each investment decision follows a robust process including an assessment of the following attributes, which are scored to provide a filtering mechanism:
Considerations include multiple on invested capital, IRR, follow-on capital requirements and time horizon
Considerations include specific business risks, volatility of returns, capital risks (e.g. leverage), competitive environment, regulatory risks and exogenous factors (e.g. political)
As measured by sector focus, historical knowledge of the business, relationships with management, life cycle stage of business and ability to add/create value
Review of expected time to exit, maturity of business sector, free cash flow/dividend profile and capital market influences (e.g. IPO potential)
Consider protection offered via business ownership structure, minority protections, relationships with majority investors/management team and board seat/observer status
Opportunities that score sufficiently highly are then analysed in greater detail and a comprehensive investment memorandum is generated which is then considered by the Investment Committee.
All investment decisions are subject to unanimous approval by the Investment Committee.