Octopus Investments (Octopus), a fast-growing UK fund management company and the largest provider of venture capital trusts (VCTs) in the UK¹, is announcing today the launch of a £20 million joint fundraise for its two Alternative Investment Market (AIM) VCTs, with scope for the offer to be extended by an additional £10 million.
The offer comes at the end of a year that celebrates AIM’s twentieth anniversary and has seen AIM responsible for a £25 billion contribution to UK GDP and almost three quarters of a million jobs in Britain alone³. The latest offer gives investors the potential to access the growth of UK smaller companies whilst receiving a regular income through the funds’ dividend policies.
Octopus AIM VCT (AIM VCT) and Octopus AIM VCT 2 (AIM VCT 2) both target a minimum 5% tax free dividend yield every year. The AIM VCTs offer investors access to diverse portfolios of around 70 companies, built over a number of years, across a number of different sectors. Successful companies backed by AIM VCT and AIM VCT 2 include Brooks Macdonald Group plc, an established wealth management group with over £7 billion of discretionary funds under management and over 450 staff, and Tasty plc, which operates 42 restaurants⁴ under the brands of dim t and Wildwood, with a management team that originally founded ASK restaurants.
Stuart Lewis, business line manager for VCTs at Octopus Investments, said:
“This latest fundraise follows swiftly after new share offers were announced for Octopus Titan VCT and Octopus Apollo VCT, and is in response to increased demand from financial advisers and direct investors for VCTs. The Octopus AIM VCTs have a good long term track record of delivering a steady income stream for investors via regular tax-free dividends.
“VCTs can provide real investment value and are increasingly being used as an established planning tool by investors to complement their existing portfolios. We believe that VCTs will become even more relevant to those individuals likely to be affected by the continued restrictions to the pensions lifetime allowance.”
Introduced in 1995, the same year that AIM was set up by the London Stock Exchange, VCTs were brought in by the government to encourage funding for smaller companies, helping drive economic growth and job creation. There are a number of tax incentives on offer for investors, designed to compensate investors for taking on the high risks associated with investing in smaller companies. Demand for VCTs has grown in recent years, with inflows in the last tax year reaching £429 million, the fourth-highest total ever⁵. AIM has also seen rapid growth with more than 1,000 companies currently listed, holding a combined market value exceeding £73 million⁶.
Richard Power, head of Smaller Companies at Octopus Investments, said:
“Twenty years since its introduction, AIM hosts a large number of exciting and diverse companies from established traditional family outfits through to modern and often fast-growing smaller businesses. We expect a good supply of attractive investment opportunities for our AIM VCTs, and we will continue to seek well-priced companies that offer growth potential.”
Andrew Buchanan, joint fund manager of the Octopus AIM VCTs, commented:
“For investors who are seeking growth from investing in smaller companies and regular tax-efficient dividends, AIM VCTs are a compelling investment prospect, and active management can unlock some real value.”
The new share offer for AIM VCT and AIM VCT 2 is open until 1 December 2016, or until the fundraising capacity is reached. 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.
¹ Octopus, April 2015
² Bloomberg, December 2015
³ London Stock Exchange, December 2015
⁴ As of 30 September 2015
⁵ AIC, April 2015
⁶ London Stock Exchange, November 2015
Notes to editors
One of the advantages of VCTs for income-seeking investors is that they have the potential to pay out their profits to investors in the form of tax-free dividends. Dividends cannot be guaranteed, but both Octopus AIM VCTs have dividend targets:
- Octopus AIM VCT targets a total annual dividend of 5p per share or 5% of the average share price per year, whichever is greater
- Octopus AIM VCT 2 targets a total annual dividend of 3.6p or 5% of the average share price per year, whichever is greater
- Both AIM VCTs aim to pay tax-free dividends twice a year, with regular intervals
|Octopus AIM VCT: annual return||0.0%||11.1%||34.8%||0.2%||8.4%|
|Octopus AIM VCT: annual dividend yield||9.4%||6.6%||3.2%||5.1%||9.1%|
|Octopus AIM VCT 2: annual total return||-3.3%||11.4%||32.6%||-0.1%||7.7%|
|Octopus AIM VCT 2: annual dividend yield||5.4%||5.6%||5.9%||5.0%||8.1%|
Source: Octopus Investments, 30 November 2015
The performance information above shows the total returns of Octopus AIM VCT and Octopus AIM VCT 2 for the last five years to 30 November 2015. The annual total return for Octopus AIM VCT and Octopus AIM VCT 2 is calculated from the movement in NAV (Net Asset Value) over the year to 30 November 2015, with any dividends paid over that year then added back. The revised figure is divided by the NAV at the start of that year to get the annual total return. Performance shown is net of all fees and costs. The annual dividend yield is calculated by dividing the dividends paid per annum by the NAV at the start of the period.
Past performance is not a reliable indicator of future results and may not be repeated. Dividends are not guaranteed and tax treatment is subject to change. Please note, the NAV per share may be higher than the share price, which is the price you may get for the shares in the secondary market.
For journalists in their professional capacity only. The value of an investment, and any income from it, can fall or rise. Investors may not get back the full amount they invest. Past performance is not a reliable indicator of future results. Tax treatment depends on individual circumstances and may change in the future. Tax reliefs depend on the VCT maintaining its VCT-qualifying status. VCT shares could fall or rise in value more than other shares listed on the main market of the London Stock Exchange. They may also be harder to sell. We do not offer investment or tax advice. We recommend investors seek professional advice before deciding to invest. This advertisement is not a prospectus. Investors should only subscribe for shares based on information in the prospectus, which can be obtained from octopusinvestments.com. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 3942880. Issued: January 2016.