Octopus EIS

JohnSeton

I invested in an Octopus EIS just over 9 years ago. As a tax saving vehicle, it was very effective. It has also shown reasonable investment performance. Over the last few years, there have been a number of sales and consequent cash returns to me, but nothing for over a year now and there is still a significant amount of value in the fund (not far short of my original investment). I would like to get my money out, but apparently there is no mechanism for this: Octopus can hang on to my money for as long as they want, apparently - I may never get the money back! This is very unsatisfactory. 
Is there anyone else in the same boat? Does anyone know of a way of forcing Octopus to sell shares so that I can get my money out?

HappyHarry

JohnSeton said:

I invested in an Octopus EIS just over 9 years ago. As a tax saving vehicle, it was very effective. It has also shown reasonable investment performance. Over the last few years, there have been a number of sales and consequent cash returns to me, but nothing for over a year now and there is still a significant amount of value in the fund (not far short of my original investment). I would like to get my money out, but apparently there is no mechanism for this: Octopus can hang on to my money for as long as they want, apparently - I may never get the money back! This is very unsatisfactory. 
Is there anyone else in the same boat? Does anyone know of a way of forcing Octopus to sell shares so that I can get my money out?

You own unlisted shares in a number of start up businesses.  These shares are not traded on any market and so buyers will be difficult to find. You can’t force anyone, including Octopus, to buy them off you.

Hopefully you were aware of this potential issue when you purchased the EIS nine years ago?

JohnSeton

HappyHarry said:

JohnSeton said:

I invested in an Octopus EIS just over 9 years ago. As a tax saving vehicle, it was very effective. It has also shown reasonable investment performance. Over the last few years, there have been a number of sales and consequent cash returns to me, but nothing for over a year now and there is still a significant amount of value in the fund (not far short of my original investment). I would like to get my money out, but apparently there is no mechanism for this: Octopus can hang on to my money for as long as they want, apparently - I may never get the money back! This is very unsatisfactory. 
Is there anyone else in the same boat? Does anyone know of a way of forcing Octopus to sell shares so that I can get my money out?

You own unlisted shares in a number of start up businesses.  These shares are not traded on any market and so buyers will be difficult to find. You can’t force anyone, including Octopus, to buy them off you.

Hopefully you were aware of this potential issue when you purchased the EIS nine years ago?

While I cannot say with absolute certainty, I do not recall being told that this investment was potentially indefinite. Octopus could sell shares - they have sold plenty in the past - but simply don't want to do so.

k12479

JohnSeton said:
Octopus could sell shares - they have sold plenty in the past - but simply don't want to do so.

Then they would likely have to sell the most liquid ones, which would also likely be the most viable or growing businesses, to the detriment of those remaining invested in the fund.

And if the proceeds were equally distributed to all investors, it'd still be to the detriment of those who are happy to wait for better market conditions to exit the holdings.

wmb194

JohnSeton said:

HappyHarry said:

JohnSeton said:

I invested in an Octopus EIS just over 9 years ago. As a tax saving vehicle, it was very effective. It has also shown reasonable investment performance. Over the last few years, there have been a number of sales and consequent cash returns to me, but nothing for over a year now and there is still a significant amount of value in the fund (not far short of my original investment). I would like to get my money out, but apparently there is no mechanism for this: Octopus can hang on to my money for as long as they want, apparently - I may never get the money back! This is very unsatisfactory. 
Is there anyone else in the same boat? Does anyone know of a way of forcing Octopus to sell shares so that I can get my money out?

You own unlisted shares in a number of start up businesses.  These shares are not traded on any market and so buyers will be difficult to find. You can’t force anyone, including Octopus, to buy them off you.

Hopefully you were aware of this potential issue when you purchased the EIS nine years ago?

While I cannot say with absolute certainty, I do not recall being told that this investment was potentially indefinite. Octopus could sell shares - they have sold plenty in the past - but simply don't want to do so.

What were the circumstances, though? Company sale, IPO? 

Anyway, I think these might be the terms you signed up to:

"8.8 You should be aware that the investments in your portfolio are long term investments and unlikely to be "readily realisable". This means that it may be very difficult or, in some cases, impossible to sell them. Subject to clause 16.7, it is open to you to have your investments transterred to you should you wish to withdraw or if you wish to terminate your agreement with us."

https://media.octopusinvestments.com/m/22403d0dea06f8e0/original/Octopus-Ventures-EIS-Service-terms-and-conditions.pdf

Found on this page:

https://octopusinvestments.com/our-products/enterprise-investment-scheme/octopus-ventures-eis-service/

Clause 16.7 might be of interest:

JohnSeton

Thankyou all for your various comments, which are most appreciated and provide much food for thought.

nick1234

I buy VCT’s and accept these are 5 years+ with no secondary market.  Octopus and others do sometimes offer distributions as they exit companies when they list etc and maybe they facilitate secondary market..

for me i got the initial tax reflief, annual dividends of 5% (not all pay this) and all returns are tax free, so accept the higher risks