Cantor Fitzgerald throws its clout behind sustainable enterprise

Cantor Fitzgerald throws its clout behind sustainable enterprise

The veteran EIIS player has a track record in supporting high-growth businesses that also address environmental and social needs

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21st November, 2021

Cantor Fitzgerald Ireland Corporate Finance Limited is one of Ireland’s firms most experienced in structuring and placing EIIS investments. As a global financial services firm serving over 7,000 institutional clients around the world, the Cantor Fitzgerald network extends across 25 countries.

Conor McKeon is head of corporate finance at the financial services business. “EIIS is a space in which our corporate finance team has been very active,” he said. “We raise funds on an individual company basis as opposed to a fund-based offering, and have successfully raised in excess of €78 million across 32 investments since the introduction of the scheme in 2011. This has included a broad spectrum of projects across the renewable energy, healthcare, food manufacturing and technology sectors.

“We look at a business for a potential EIIS fundraise on a stand-alone basis: evaluate the business plan, the sector in which it operates and the management team. We invest in companies that demonstrate long-term sustainable growth. We have a track record in supporting high-growth businesses that also address environmental and social needs, seeking to improve the fabric of these business by bringing ESG considerations to the table which allow us to better understand the ESG risks these companies are exposed to in the long term.

“While it is vital that the market sector has potential for growth, we also evaluate how investors will be able to exit an EIIS investment. Under the EIIS rules the investment must be held for a minimum of four years, after which exit may come by way of a share buyback, sale of the business or perhaps floating on the stock exchange. From our perspective it is important for the business to have a strategy by which they envisage an exit after the four-year hold period.”

Despite the EIIS rule changes introduced in 2019, which sought to simplify the process and make it more investor friendly – in particular the 40 per cent tax relief obtained up front and investee companies self-certifying they are a qualifying company – the overall level of investment has fallen in recent years.

“The EIIS process requires further streamlining,” said McKeon. “The introduction of the General Block Exemption Regulation (GBER) (the EU state aid rules) has become a disincentive to companies considering EIIS and this has meant that the level of capital raised fell to below €50 million last year. However the appetite for the scheme from individual investors remains strong.”

Equally the rule that companies cannot have been trading for more than seven years has proved challenging. There are many companies trading for more than seven years that need growth capital.

In the year-to-date Cantor Fitzgerald has successfully raised €5 million in EIIS capital for BioAtlantis Limited, a biotechnology company headquartered in Tralee, Co Kerry. BioAtlantis produces biostimulants to protect crops from abiotic stresses, resulting in yield increases for the grower.

Its key products are derived from the processing of seaweed, both sourced in Ireland and from abroad. During the initial years, operations were focused on research and development and in 2015 construction of a new production facility in Tralee was undertaken.

“The global market for biostimulants is forecasted to experience significant growth over the next five years in line with the push towards sustainable agriculture practices,” said McKeon. “BioAtlantis will use the new capital raised to fund the expansion of its production facility in Tralee to launch new products and to enter new international markets.”

Cantor Fitzgerald has also recently launched its latest EIIS raise for Farra Marine Limited. Farra Marine is an Irish crew transfer vessel (CTV) operator founded in 2020. CTVs are a vital part of the offshore wind supply chain, ensuring the safe and efficient transport of technicians and equipment during both construction and operations of offshore wind farms.

The company services the offshore wind market in the UK and Europe with the aim of being the CTV market leader in the Irish market. It is about to begin commercial operations with its first vessel, the Farra Orla, due to arrive in Europe in the coming weeks.

A state-of-the-art 27-metre vessel, the Farra Orla has been constructed by Penguin Shipyard in Singapore, one of the largest aluminium shipbuilders globally. The €5 million EIIS fundraise through Cantor Fitzgerald will be used to fund working capital and expand the fleet of new CTVs.

“This is a very interesting opportunity in a sector that we are confident will experience significant growth over the next number of years,” McKeon said. “The importance of an increased supply of renewable energy was further highlighted at the recent Cop26 global meeting.

“Both BioAtlantis and Farra Marine are examples of companies that demonstrate business objectives in line with the UN Sustainable Development Goals and which have a positive impact on the environment – one of the screening criteria we apply when evaluating a project for investment.

“We see the Employment and Investment Incentive Scheme as a key source of growth capital to support high-growth Irish businesses and we are delighted to see the recent budget outline continued support with the Minister’s announcement of an extension of the scheme for a further three years to December 2024.”

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