Last week we revealed how VCTs enjoyed the second highest fund raising year on record (the total amount raised by VCTs in the 2016/17 tax year was £542m) and now we can also reveal which offers were the most successful.
The analysis came from Wealth Club, a new UK investment service for high net worth investors.
Such was the demand, that many offers closed before tax year end due to limited capacity, with only four VCTs still open at the tax year deadline. What’s more, 8 of the 20 offers were extended via an over-allotment facility.
As for the leaders on the board, the analysis showed that Octopus Titan VCT raised the highest amount at £120m, including a £50m over-allotment. This is three times the size of the next largest VCT.
Wealth Club makes the point that the Octopus success is not surprising, given that it raised £100 million last year and is the UK’s largest VCT by assets under management (£426m). It also allows monthly investment and was open the longest at 195 days. Octopus also raised the most as a group, with its four VCTs (Titan, Apollo, AIM & AIM 2) raising a combined total of £148.6m.
Foresight VCT raised the second highest amount at £40m over just 46 days (2 February to 20 March). This was the third fastest overall raise and the quickest over-allotment (£20m in 12 days, a rate of £1.67m per day).
British Smaller Companies 2 VCT was the first to close (10 January) and both British Smaller Companies VCTs met their small subscription targets from existing investors. ProVen Growth & Income, managed by Beringea, was the next VCT to close (31 January) and raised the third highest amount at £39.2m.
The fastest overall raise was achieved by the three Northern VCTs, which met their combined target of £12.9m within 48 hours from existing investors (£6.45m per day). The largest fundraise in the AIM sector was £25m by Hargreave Hale across its two AIM VCTs. The fastest fundraise in this sector, and second fastest overall, was Unicorn AIM VCT (£15m in 15 days).
CEO and founder of Wealth Club Alex Davies (pictured above) said: “It was little surprise that the 2016/17 tax year was characterised by VCTs closing early and capacity filling quickly. For some time demand has threatened to eclipse supply with this year being no different as higher-earners, who can no longer invest vast sums in pensions, sought out a tax-efficient alternative. The catalyst for this demand is not just down to the reduction in both the lifetime allowance and annual allowance, but also the increased dividend tax and the crackdown on buy to let.”
Davies added: “There are still a few VCTs open for investment in the new tax year. Our preferred option is the Pembroke VCT. It is more growth-oriented than most and is also one of the lowest-cost. Investments are focused on scalable consumer brands in sectors the managers know well. Most of the companies will be earlier-stage, but Pembroke also participates in larger deals. Current investments include the Five Guys and Chilango food chains.”
