Octopus Investments, part of Octopus Group, has announced a £10 million over-allotment facility for its current AIM VCTs fundraise.
Octopus has rapidly reached the initial £20 million target* within just seven weeks and is now offering a further £10 million of fundraising capacity to meet investor demand.
The VCTs have existing portfolios of around 75 companies which have been built over a number of years and aim to provide investors with long term growth as well as income through their established dividend policies. They offer investors access to a wide range of AIM listed growth companies across a diverse range of sectors, from building materials and pharmaceuticals to software development and restaurants.
One example of a successful company backed by Octopus AIM VCTs is Gear4Music, which has grown to become the UK’s leading ecommerce retailer for musical instruments and equipment. Its management has built an impressive and increasingly international operation, with new distribution centres recently opened in Sweden and Germany.
Paul Latham, Managing Director at Octopus Investments, said:
“Summer has historically been a slower fundraising period but in the last few years, we’ve noticed that financial advisers and investors are starting their financial planning much earlier. This is the fastest we’ve ever raised £20 million for our AIM VCTs, which certainly indicates an acceleration in that trend.
“Demand continues to be driven largely by the reduction in the pensions lifetime allowance and changes to the tax regime for buy-to-let, with an increasing number of investors looking for tax-efficient alternatives to complement their retirement plans.”
Richard Power, Head of Smaller Companies at Octopus Investments, said:
“AIM is now home to a growing number of household names and is seen as the go-to-market for ambitious growth companies. In addition to the compelling long-term investment opportunity, UK smaller companies play a huge role in driving economic growth and many investors are keen to play a part in that.”
The new share offer for AIM VCT and AIM VCT 2 is open until 5 April 2019 for the 2018/2019 tax year and 2 August 2019 for the 2019/2020 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.
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Notes to editors
* £22.9 million was confirmed raised as of 21/09/2018
Performance
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 Octopus AIM VCT targets a 5% dividend yield or 5p per share, whichever is greater, and AIM VCT 2 targets a 5% dividend yield or 3.6p per share, whichever is greater. In addition, the VCTs can pay special dividends if there are significant gains from the sale of portfolio holdings. As the two VCTs pay dividends at different times of the year, investing in both VCTs offers the potential for investors to receive four dividend payments per year.
12-month performance over 5 years
| Year to 30 June | 2014 | 2015 | 2016 | 2017 | 2018 |
| Octopus AIM VCT NAV Total Return (1) | 22.8% | 0.3% | -3.5% | 25.1% | 8.2% |
| Octopus AIM VCT 2 NAV Total Return (1) | 23.1% | -0.7% | -2.6% | 24.0% | 8.1% |
| FTSE AIM All-Share Total Return (2) | 14.6% | -2.5% | -5.0% | 38.5% | 13.5% |
| FTSE All-Share Total Return (2) | 13.1% | 2.6% | 2.2% | 18.1% | 9.0% |
| Octopus AIM VCT Dividend Yield (3) | 5.9% | 2.2% | 10.9% (4) | 2.8% | 7.5% |
| Octopus AIM VCT 2 Dividend Yield (3) | 5.4% | 7.2% (4) | 5.2% | 5.9% | 5.0% |
Net asset value (NAV): this is the combined value of all the assets owned by the VCT after deducting the value of its liabilities (such as debts and financial obligations).
(1) NAV total return: This shows the yearly performance, including the dividends paid out for the last five years to 30 June 2018. This is calculated from the movement in the NAV over the year to 30 June with any dividends paid over that period 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 ongoing fees and costs (shown on page 20).
(2) FTSE AIM and All Share Total Return: Performance is shown alongside the total returns of the FTSE AIM and FTSE All Share indices, which are indicators of activity in the broader UK equity
market (source: Lipper). Note that none of these indices are used as benchmarks for the Octopus AIM VCTs.
(3) Annual dividend yield is calculated by dividing all the dividends for the 12 months to 30 June by the share price on 30 June of the prior year. For this calculation we use the record date for each dividend, which is the cut-off date by which shareholders must be on the shareholder register to receive the dividend. Note that for Octopus AIM VCT, in some years one of the record dates has fallen in June and in others it has fallen in July. Because we calculate the annual dividend yield with a year-end of 30 June, some annual dividend calculations include three regular dividends for the year and others include only one.
(4) Includes an additional special dividend of 4p per share for Octopus AIM VCT and 2p per share for Octopus AIM VCT 2 from the sale of Advanced Computer Software.
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 as well as rise. Investors may not get back the full amount they invest. 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. Past performance is not a reliable indicator of future results. Personal opinions may change and should not be seen as advice or a recommendation. 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 and the Key Information Document, 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. 03942880. We record telephone calls. Issued: September 2018.