Baronsmead have opened their VCT to investors, seeking £40 million, and two of the most popular and sought after VCTs are due to launch over the next fortnight including Northern and Unicorn.
All three are expected to be extremely popular with VCT investors, selling out very quickly, as seen in previous years. In addition, this year Northern is raising £18 million which is less than half of the £40 million it raised last year, which could lead to hundreds of investors missing out.
Alex Davies, CEO and founder of Wealth Club says: “The VCT season is now picking up pace as we head into the busiest final three months of the tax year, it is set to become one of the biggest on record, and may even reach the heights of last tax year. Northern and Baronsmead VCTs in particular have a legion of loyal investors and their offers are likely to sell out very quickly, but this is unsurprising when you consider how well they have rewarded investors over the years. VCT sales as a whole are soaring, as a result of pension freezes on higher earners and increasingly punitive tax thresholds. They offer investors up to 30% income tax relief and returns are paid through regular tax-free dividends, which is even more tempting for investors since the Chancellor reduced the threshold for dividends in the November Budget. Furthermore, you can invest up to £200,000 a year into VCTs.
Whilst the economic backdrop has changed dramatically over the last few years, the reasons why investors have been turning to VCTs haven’t. But it is not just about the tax relief. Investors are increasingly realising that growth and innovation are not likely to come from the large corporates you find on the main stock market, but rather from young, ambitious, and entrepreneurial start-ups. Not all will succeed but there’s now much more support compared to, say, 10 years ago – from incubators and accelerators to public and private funding – so they should have a better chance.
So far this tax year £540 million has been invested and many offers are selling out – so the message is simple if you see one you like, don’t delay as you will probably miss out.”
Highlights of the Northern VCTs include:
- Applications open this month, date to be confirmed.
- Raising £18 million across the three VCTs (last year they raised £40 million).
- The three Northern VCTs are among the longest standing in the industry, with a loyal following of investors.
- The VCTs have combined net assets of £335 million (September 2022) across a portfolio of 64 companies. Over 70% of the portfolio is now invested in unquoted growth capital opportunities, with the remainder split between legacy assets and MBO investments.
- NAV total returns over five years (including dividends reinvested) of 27.2%, 27.2% and 26.8%.
Highlights of the Unicorn VCT include:
- Raising up to £15 million.
- Largest AIM-focused VCT – £221.1 million net assets under management (September 2022)
- Established portfolio of 85 companies.
- NAV total return over 10 years (including dividends reinvested) of 130.7%.
- History of regular dividends, 97.2% of the net asset value has been paid out over the past 10 years.
- Example portfolio companies include Abcam, a supplier of antibodies to the biotech industry, Tracsis, the software provider to the rail industry, and MaxCyte, the cell engineering platform.
Highlights of the Baronsmead VCT include:
- Applications open today, 9th January 2023, raising £40 million with a £10 million overallotment facility. Minimum investment of £5,000.
- The VCTs target an annual dividend yield of 7% of NAV – one of the most generous policies in the market – and have achieved this in each of their last five financial years.
- Over the five years to 30 September 2022, the VCTs generated a NAV total return (including dividends reinvested) of 2.4% (BVT) and 5.2% (BSVT) respectively.
- The VCTs have combined net assets of £419 million (November 2022). The combined portfolio contains more than 85 companies. 41% is invested in AIM-quoted companies and 29% in unquoted companies. The remainder (30%) is split across three equity funds: LF Gresham House Micro Cap, LF Gresham House Multi Cap Income, and LF Gresham House UK Smaller Companies.
- The portfolio has a bias towards technology companies.