Octopus Investments becomes first investment manager to reach £1 billion in VCT assets under management

Octopus also announced the use of its over allotment facility for Octopus Titan VCT, increasing fundraising target to £200 million.

 Octopus Investments “Octopus”, part of Octopus Group and the largest provider of venture capital trusts (‘VCTs’) in the UK¹ has today announced it has passed the £1 billion milestone in VCT assets under management.

Octopus is the first and only investment manager to reach this milestone, which comes after recent fundraising. The assets are spread across Octopus’ four VCTs, which are currently supporting more than 200 portfolio companies.

According to the latest figures from Association of Investment Companies (AIC), Octopus manages almost 25% of all VCT funds, which amount to £4.25 billion².

*AIC statistics – correct as of 14 February 2019³.

Paul Latham, Head of Tax Products, at Octopus Investments, said:

“VCTs have proven to be a fantastic government initiative since being introduced in 1995, providing generations of UK entrepreneurs with the vital investment they need to grow and scale their businesses. This success has been made possible by the many thousands of individual investors, for whom VCTs are seen as a valuable and impactful financial planning solution. VCTs are gaining in popularity as more advisers and investors recognise the growth potential of UK smaller companies and the tax benefits VCTs offer.” 

 For investors, comfortable with the risks of smaller company investing, VCTs offer attractive tax incentives including up to 30% upfront income tax relief providing that shares in the VCT are held for at least five years, as well as tax-free dividends and tax-free growth.

Octopus uses over allotment facility for its Octopus Titan VCT

Octopus also today announced that its £80 million over allotment facility for Octopus Titan VCT will be opened, as the UK’s largest VCT hits its initial £120 million fundraising target. This takes the VCT’s total fundraising target to £200 million and, if fully subscribed, would take its total AUM up to c. £800 million. Octopus Titan VCT was the first VCT to raise a record-breaking £200 million in 2018.

The VCT invests in early stage tech-enabled businesses with high growth potential. It offers investors access to a well-established and diverse portfolio of more than 70 potential game-changing smaller companies. These include well-known names such as Secret Escapes⁴, the members-only travel website, and Swoon, the limited-edition furniture company.

 Jo Oliver, Fund Manager for Octopus Titan VCT, commented:

“VCTs have played a fundamental role in transforming the UK’s entrepreneurial ecosystem and helped to cement its reputation as the best place in Europe to build world-class technology companies. With one of the largest investment teams in the region, we meet hundreds of hugely talented entrepreneurs each year, many of whom are capable of completely transforming their industries. This is incredibly exciting for our investors as we work to deliver returns to them and support the next generation of leading global businesses.”

 Paul Latham commented on Titan’s fundraising:

“Fundraising continues at pace as expected. VCTs across the market are filling up fast or have already closed and there is a real incentive for investors to look at VCTs before tax year end. Octopus Titan VCT’s last fundraise closed in March last year, and I would expect something similar to happen again this year.”

 Commenting more broadly on VCT fundraising activity this tax year, Nick Britton, Head of Intermediary Communications at The AIC, said:

“VCTs have raised £264m⁵ in this tax year so far which indicates a healthy fundraising environment and continuing strong demand for VCTs. Although this figure is down compared to the same period last year (£483m), 2017/18 was an exceptional year in which uncertainty over the outcome of the Patient Capital Review led to a boost in demand earlier in the tax year than usual. Otherwise, this year’s figure is consistent with previous years, for example, 2016/17 (£221m). Demand for VCTs has been driven by increasingly restrictive pension rules, as well as advisers’ increasing comfort in the track record of the sector, which is now in its 24th year.”

-Ends-

Notes to Editors

1. The Association of Investment Companies (AIC) Industry overview, 31st January 2019
2. The Association of Investment Companies (AIC) Industry overview, 31st January 2019
3. The Association of Investment Companies – February 2019
4. Titan VCT partly exited its stake in Secret Escapes in 2018. This transaction completed at a price around 80 times the initial price the shares were purchased at. (page 20 – from the Titan VCT Prospectus – 13 September 2018)  https://octopusinvestments.com/investor/investor-centre/document-library/octopus-titan-vct-prospectus/)
5. As of 31st January 2019 – The Association of Investment Companies (AIC) Industry overview

 About Venture Capital Trusts

Venture Capital Trusts (VCTs) were introduced by the government in 1995 to encourage much-needed investment into smaller companies, driving job creation and economic growth in the process. They offer a number of tax incentives for those investors comfortable with the associated risks of smaller company investments, including up to 30% upfront income tax relief providing that shares in the VCT are held for at least five years, as well as tax-free dividends and tax-free growth. Whilst these incentives are subject to certain HMRC legislation and personal circumstances they remain very attractive for those willing to put their capital at risk through investing in a VCT.

 Dividends (as of 30 June 2018)

Octopus Titan VCT aims to pay regular tax-free dividends of at least 5p per share annually, as well as offering investors the potential for special dividends if portfolio companies are sold at a significant profit. Since its launch in 2007, it has announced total dividends of 71p per share to investors. While profits are usually paid out to investors as tax-free dividends, if the shares do rise in value, there’s also no capital gains tax to pay when you eventually choose to sell them.

Discrete 12-month performance data over the last five years

Past performance is not a reliable indicator of future results.

The performance information above shows the total return of Octopus Titan VCT for the last five years to 30 April, the VCT’s interim accounting period. The annual total return for Octopus Titan VCT is calculated from the movement in net asset value (NAV) over the year to 30 April, 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. Total value is calculated as the sum of the NAV per share in pence and cumulative dividends per share in pence for the last five years to 30 April.

Just to remind you, the NAV 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). The performance shown is net of all ongoing 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.

The Board of Directors has determined it would be incorrect to compare the NAV of Octopus Titan VCT with those of other VCTs as different year-end dates for other VCTs would result in timing differences in each NAV calculation.

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. 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: February 2019.