Invest in unlisted shares

PdPaul

I'm wanting to invest in a friend's business which is a UK limited company. I want to use my SIPP funds to do this, can anyone recommend a SIPP that allows unlisted shares, I've found a list of them but looking for some recommendations really. 
Also a decent FA to help facilitate this. Looking to invest £100K over the next few months.
I'm based in North East England if anyone knows a good FA to recommend also. 

[Deleted User]

I can’t help you but it’s usually a bad idea. Angel investing is fine but one generally needs cool head, time and to spread the risk. Investing in a friend’s company can be bad news. You may need help from someone who can audit accounts. Unless the objective is to help someone and you can afford to lose the investment 

daveshep26

PdPaul said:

I'm wanting to invest in a friend's business which is a UK limited company. I want to use my SIPP funds to do this, can anyone recommend a SIPP that allows unlisted shares, I've found a list of them but looking for some recommendations really. 
Also a decent FA to help facilitate this. Looking to invest £100K over the next few months.
I'm based in North East England if anyone knows a good FA to recommend also.

OP, what's your plan for getting the money back out of the business from this investment?  I think if you substantially answer this question, you will see the viability of this proposal.  100k is a very meaty first angel investment, does this meet your overall risk profile and what return are you forecasting?

Dazed_and_C0nfused

PdPaul said:

I'm wanting to invest in a friend's business which is a UK limited company. I want to use my SIPP funds to do this, can anyone recommend a SIPP that allows unlisted shares, I've found a list of them but looking for some recommendations really. 
Also a decent FA to help facilitate this. Looking to invest £100K over the next few months.
I'm based in North East England if anyone knows a good FA to recommend also. 

I don't think you really need a salesman, sounds your already sold on the idea (good or bad).

Getting advice from an IFA would be a better option.  But you may not like their view.

squirrelpie

I didn't even know such a thing was possible, but apparently it is although it's quite specialized. A quick search for "unlisted shares sipp" (without the quotes!) showed several possible providers and also:

https://!!!!!!.uk/sipp-zone/help-choosing-your-sipp/allows-unlisted-share-purchase/

and that claims to provide a list of providers offering the facility.

As already said, look for an IFA rather than an FA, and maybe a good lawyer and accountant as well. It sounds like £100k is rather on the low side for this kind of venture, especially since your SIPP may need to be four times bigger than the amount you want to invest in the business.

JoeCrystal

And to consider what if the company goes bust? There is a reason why friends, family and money doesn't mix!

Spreadsheetman

In addition to other suggestions you need to see the shareholder agreement and get proper legal advice to see what class of shares you will be purchasing and what your rights will be as a (presumably) minority shareholder.

Some questions that immediately come to mind: what are the protections against dilution?, what happens if the majority shareholder sells their shares to another company?, what restrictions are there on you selling your shares?, what are the dividend payment obligations?

I'd tread with extreme caution as it would be easy for your investment to end up in a company that never pays dividends, prevents sale of your shares except to other shareholders and then sells out to another company with the minority shareholders forced to sell and only receiving payment based on a discounted valuation.

Dead_keen

Assuming it is a good investment and you've got the right protections in the articles and shareholders' agreement and that you hope to make multiples of your original investment...

1. It would seem silly to invest in the SIPP if you are turning a BADR gain of 10% (or normal gain of 20%) into something that is taxed at 55% (if LTA is exceeded) or 40%+ (normal IT rates).  This is especially true with the extra costs you will get making the SIPP administrator happy with the arrangement and then the annual running costs for three to ten years or whatever.

2. EIS may make much more sense.

I've seen a couple of people with successful investments in a SIPP but this was at the time when the LTA was much higher.

Marcon

Deleted_User said:

I can’t help you but it’s usually a bad idea. Angel investing is fine but one generally needs cool head, time and to spread the risk. Investing in a friend’s company can be bad news. You may need help from someone who can audit accounts. Unless the objective is to help someone and you can afford to lose the investment 

If you've exceeded the LTA at 36, you probably can!

https://forums.moneysavingexpert.com/discussion/6286797/lta-allowance-exceeded-at-36/p1

PdPaul

I was only looking for some recommendations with unlisted share purchases as already mentioned, quite niche. Thanks for the advice though from the various posters sending warning shots, but as Marcon has recognised my username and highlighted a previous post, no hiding now. 
One point to pick up on though, I'm now 37

PdPaul

The plan is to split the investment between SIPP funds and cash investment, Ideally less cash for more equity, then majority of funds from the SIPP for them extra few % of equity. Meaning my SIPP is working for me now. 
Problem will be finding a firm who will let me use my money to carry out such a transaction in a shirt timeframe, 8 weeks.