Annabel Brodie-Smith blog: Happy 20th birthday VCTs!

It’s twenty years this April since VCTs were first launched. It now feels like a mature sector, very much in its stride.

This was brought home in a very entertaining way at our recent joint AIC/Raymond James VCT adviser seminar. Enter Alan Wallace, Octopus Investments’ energetic Senior Investment Director, who described their investor meetings with potential investee companies as “Dragons’ Den on speed!” It’s not difficult to see why, with a portfolio which includes Secret Escapes (no longer such a secret), Zoopla, and snack-box producer Graze, whose products regularly keep the healthy eaters amongst our office ticking over.

And it’s not just the speakers who impressed us: speaking of speed, one adviser flew in all the way from Hanover to London to see Alan Wallace and Unicorn AIM VCT’s Chris Hutchinson in action, and even managed to send us a thank you email the next morning. We very much like his style.

It’s been busy on the VCT front, as we have just finished filming a video which aims to bring VCT investment to life. The video features three VCT managers and three very different investee companies, which brings home the very tangible impact VCTs can have on the businesses they invest in. The now very well-known and successful Secret Escapes, backed by Titan VCT from Octopus, features alongside the fertility clinic CREATE Fertility, where a £5m investment from Livingbridge has facilitated the opening of a flagship clinic in central London.  Plus, the good old fashioned British pub doesn’t get forgotten, with an investment by Puma VCT allowing Brewhouse & Kitchen to increase the number of pubs. Watch this space for the video, as well as our soon-to-be published VCT guide, ‘Going for Growth’.

Our just-published VCT manager survey has also hammered home the dynamism of the VCT sector - if you think VCT managers are resting on their laurels, think again.  Managers are overwhelmingly finding a good flow of investment opportunities, and some are expanding their teams further. Speaking like a true ‘dragon’ on the sector, David Hughes, Chief Investment Officer at Foresight Group, commented that: “we’re pleased to see animal spirits seem to have returned and we are seeing a 20% uplift in the number of potential deals.”

It is this dynamism of British entrepreneurs which really came home in the survey, with Beringea’s Stuart Veale commenting on the UK’s “very vibrant small private company sector”, with “entrepreneurial companies delivering superior products and services.” So, it’s no surprise to see technology and telecoms the most favoured sector, followed by business services and leisure and hospitality.  Patrick Reeve, Managing Partner at Albion Ventures, comments that VCTs “are now an accepted and mature asset class” focused on “investing in growth and change.”

So, with all of that in mind, happy 20th birthday VCTs!  And if you’re wondering which VCTs have been around longest, it’s Baronsmead VCT and Northern Venture Trust.  £1,000 at the launch of each trust would have grown to £3,549 and £4,031 respectively in share price total return terms*. Their investors certainly have something to celebrate!

Data: Baronsmead VCT from 13/11/1995 to 31/01/2015, Northern Venture Trust from 01/11/1995 to 31/01/2015. Source: AIC using Morningstar, net income reinvested.  Figures exclude charges.

Disclaimer

The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance.  The value of investment company shares, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all.