Octopus Investments, part of Octopus Group and the largest provider of venture capital trusts (VCTs) in the UK, has today announced the launch of a £30 million joint fundraise for its two Alternative Investment Market (AIM) VCTs.
The VCTs offer investors access to a wide range of AIM listed growth companies across a diverse range of sectors, including pharmaceuticals, biotech, healthcare services, software development and clean energy tech. The portfolios are made up of around 90 companies, more than half of which have been held for over five years.
The VCTs aim to provide investors with long-term growth as well as income through their established dividend policies, while the team managing them has accumulated over 130 combined years of experience in smaller company investing.
The latest fundraising offers investors the opportunity to invest into both Octopus AIM VCT plc (AIM VCT) and Octopus AIM VCT 2 plc (AIM VCT 2), which both target a 5% tax free dividend yield every year. The two AIM VCTs have performed strongly over the past year, delivering a total return of 41.7% and 42.1% and both VCTs have recently declared special dividends in the period.
Richard Power, Head of Smaller Companies at Octopus Investments, said:
“Despite wider uncertainty, AIM has played a critical role in providing smaller companies with much needed growth capital over the last 18 months, cementing AIM’s position as the ‘go to’ market for ambitious growth companies. This ability to access capital has also underlined the benefits of being a listed company, contributing to a marked uptick in IPO activity and a very promising pipeline of companies looking to come to market.
“We’ve had a strong year in terms of performance, benefitting from tailwinds in sectors like software and computer services, as well as life sciences, where we had a strong weighting. However, we have always been bottom-up investors, focused on finding companies and management teams that we think can deliver significant growth over the long-term.”
The Octopus AIM VCTs portfolios are well established, giving investors the chance to access more mature growing companies which have been held for many years, as well as much younger businesses that have come to market more recently, many of which offer significant growth potential.
Ilika, an international company that has developed ground-breaking solid state battery technology applicable to a range of sectors from medtech to electric vehicles, is just one example of an exciting growth company backed by the Octopus AIM VCTs. An initial investment was made in 2020, with a second round of investment made this year to provide further growth capital following an impressive year.
An example of a much longer held business in the portfolio is Ergomed, which provides specialised services to the pharmaceutical industry and operates in over 100 countries. The VCTs first invested in 2014 and since then investors have benefitted from its significant growth.
Nick Bird, Head of Strategic Growth at Octopus Investments, commented:
“UK smaller companies, through their ability to be adaptable and nimble, have proven themselves to be a key driver of job creation and economic growth in the UK. The Octopus AIM VCTs offer retail investors an opportunity to tap into these exciting growth businesses that will continue to play a crucial role in the UK’s economic recovery following COVID-19. Smaller company investing offers high growth potential, but it comes with greater risks, with attractive tax reliefs also available to investors in recognition of this.”
The new share offer for AIM VCT and AIM VCT 2 is open until 5 April 2022 for the 2021/2022 tax year and 18 August 2022 for the 2022/2023 tax year. The offer will close earlier if it becomes fully subscribed.
Investors have the option to split their investment 60/40 between AIM VCT and AIM VCT 2, or to place 100% of their investment into either VCT. The minimum investment is £5,000.