Octopus Investments, part of Octopus Group and the UK’s largest Venture Capital Trust (VCT) manager1, today announced the launch of a new £35 million fundraise for its Apollo VCT.
Apollo VCT, the second largest VCT in the UK2, invests in a diversified portfolio of business-to-business (B2B) software companies with high growth potential. The companies, while early-stage and therefore high risk, tend to be more established with existing recurring revenues and the potential for significant expansion. This can be achieved through increased investment in sales and marketing, further R&D or through geographic expansion.
The VCT is managed by an investment team of 11 within Octopus Ventures, one of Europe’s largest venture capital investors. The team is led by Richard Court, Partner, who has more than 15 years of experience in UK smaller company investing.
In the 12 months to 31 July 2022, Apollo VCT delivered a 12.2% annual total return and an annual dividend yield of 11.2%. Over five years, Apollo VCT has provided a 27.3% total return for investors3.
Richard Court, Fund Manager for Apollo VCT said:
“Over the past 12 months, B2B software has proved itself to be a very resilient, robust sector, providing plentiful opportunities to invest in exciting high-growth technology companies. Despite the market volatility in the first half of the year, Apollo VCT was able to deliver positive returns to investors. For investors willing and able to take on the high-risk nature of VCT investments, Apollo VCT investors have benefited from backing pioneering UK software companies and contributing to the UK’s growth agenda. Their investments have supported companies that include building diversity & inclusion-focused recruitment platforms and cloud technology for tradespeople, among others.
“Looking ahead there are undoubtedly some clouds on the horizon, including a challenging macroeconomic outlook, but we’re still seeing a strong pipeline of interesting technology businesses coming through. Through previous periods of economic uncertainty, including the dot com crash and the financial crisis, we’ve seen the technology sector’s ability to innovate and invest for the long term really shine through. In five-ten years, we’ll be talking about the businesses that invested for growth throughout this period. With lower entry valuations becoming the new normal, now is the time for investors to invest in those future winners.”
During 2021, Apollo VCT had a record year for investing, with more than £70 million deployed into B2B software companies. It added 10 companies to its now 43-strong portfolio, with sub-sectors including software platforms for alternative investments and holiday rentals.
The latest addition to the portfolio is Wazoku, an innovation management software platform that allows companies to innovate more effectively at scale. The business was founded in 2011 and has grown strongly over the years, developing a suite of products in the innovation management space. It has approximately 90 customers, including HSBC, NASA, Waitrose and Novartis, with a presence in Europe, USA, and Latin America. Apollo VCT’s investment will be used to further accelerate its growth internationally by investing in sales & marketing and product development.
A portfolio company showing promise is TRI, a Cambridge-headquartered business whose software helps organisations that conduct clinical trials to manage their risks and improve the operational efficiency of those trials. Having initially backed the company in 2018, Apollo VCT has since made further investments to accelerate the development of TRI’s product suite, bringing new innovations to this vital sector.
In 2021, Apollo VCT successfully exited three of its investments, including selling Veeqo, an ecommerce fulfilment platform based in Wales, to Amazon. The Octopus Ventures team first invested in Veeqo in March 2019 and supported Veeqo’s growth through expansion into the US, doubling head count and assisting with hiring additions to an industry-leading management team. Octopus Ventures has a dedicated Talent team, which helps its portfolio companies hire and retain the best managerial talent to help them realise their growth potential.
Kristy Barr, Distribution Director for Sales and Customer at Octopus Investments, said:
“VCTs continue to grow in importance as a way for retail investors to access smaller UK companies, while providing a vital source of funding for companies with high growth potential. Undoubtedly buoyed by the Government’s intention to continue its support for VCT legislation beyond the sunset clause in 2025, we’ve seen really strong demand for our AIM VCTs and expect Apollo VCT to follow that trend.
“From our conversations with advisers, we know that three things are driving sentiment towards VCTs. Firstly, some investors are looking for private markets opportunities to diversify their portfolio given the current volatility and uncertainty in the public equity, bond and foreign exchange markets. Beyond asset class, investors see the opportunity, in a savings-eroding inflationary environment, to benefit from the tax relief that an investment in a VCT provides. With relatively low minimum investment amounts, advisers are looking to VCTs to meet a range of financial planning solutions for those clients who are comfortable with the high risks associated with the asset class.”
The minimum investment amount for Apollo VCT is £5,000. The new share offer is open until 31st March 2023 for the 2022/2023 tax year and 19 October 2023 for the 2023/2024 tax year. The offer will close earlier if it becomes fully subscribed.
Notes to editors:
- The Association of Investment Companies, Interactive Statistics – as at September 2022
- The Association of Investment Companies, October 2022
- Five year Apollo VCT performance (see table below)
|Annual total return||-0.6%||2.7%||3.0%||18.4%||12.2%|
|Annual dividend yield||22.3%||6.3%||3.2%||7.8%||11.2%|
|Total value (p)||117.5p||118.8p||120.2p||128.7p||134.9p|
The performance information above shows the total return of Octopus Apollo VCT for the last five years to 31 July 2022.
The annual total return for Octopus Apollo VCT is calculated from the movement in net asset value (NAV) over the period to period end, with any dividends paid over the period then added back. The revised figure is divided by the NAV at the start of the period to get the annual total return. Performance shown is net of all ongoing fees and costs.
The annual dividend yield is calculated by dividing the dividends paid during the period by the NAV at the start of the period. Please note, the NAV per share may be higher than the share price, which is the price you may get for the shares on the secondary market.
Please note data is unaudited and may be subject to change.
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. This is not 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: October 2022.