According to law firm Howard Kennedy, the UK VCT market has closed the 2016/17 financial year with the second most successful year on record.
Figures revealed that a total of 18 funds came to market raising over £500m. This was bettered only in 2004 when VCTs raised £779m.
Howard Kennedy acted for 14 funds which collectively raised over £375m.
Partner and Head of Capital Markets Keith Lassman (pictured above) said: “This is truly an impressive performance by VCTs and reflects the demand and appetite to invest in UK plc.
“What makes it all the more remarkable is that it follows tough tax changes that restrict investment by VCTs essentially into younger riskier businesses, whereas in the past most VCTs have invested in more mature businesses.”
The successful year was achieved despite VCTs no longer being able to make investments in management buy-outs and in businesses more than seven years old, or ten years for hi-tech businesses.
Lassman added: “Whilst this will have had some impact on VCT investment strategies, VCT managers have been quick to adapt. In 2016, a record 650,000 new businesses were started in the UK, many hungry for investment. VCTs will provide a key strand to the Government’s drive to encourage ‘patient capital’ investment in innovative businesses.
“Investor demand for tax-efficient investments continues to grow, and VCTs are very well placed to capitalise on the restrictions introduced on pension funds.”
