Octopus Investments, part of Octopus Group and the largest provider of venture capital trusts (VCTs) in the UK¹, announces the launch of a £20 million joint fundraise for its two Alternative Investment Market (AIM) VCTs.
The VCTs 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. The VCTs have existing portfolios of around 75 companies which have been built over a number of years and look to provide investors with long term growth as well as income through their established dividend policies. The latest fundraising offers investors the opportunity to invest into both Octopus AIM VCT plc (AIM VCT) and Octopus AIM VCT 2 plc (AIM VCT 2), which both target a 5% tax-free dividend yield every year.
Richard Power, Head of Smaller Companies, at Octopus Investments, said:
“AIM is now seen as the go-to-market for ambitious growth companies and is home to an increasing number of well-known brands. UK smaller companies continue to be a key driver of UK economic growth and offer a compelling investment opportunity for investors over the long term. We are seeing a strong pipeline of investment opportunities – both from newly floating and already listed AIM companies – and remain excited about the growth potential of these businesses.”
Gear4Music, which has grown to become the UK’s leading ecommerce retailer focused on musical instruments and equipment, is just one example of a successful company backed by AIM VCT and AIM VCT 2. Its management have built an impressive and increasingly international operation, with new distribution centres recently opened in Sweden and Germany.
Paul Latham, Managing Director of Octopus Investments, commented:
“There is consistently high demand from financial advisers and investors for VCTs. By providing access to the growth potential of smaller companies in a highly tax efficient manner, AIM VCTs offer a unique investment proposition and are increasingly being used to complement retirement plans. Demand is being driven largely by the reduction in the pensions lifetime allowance, which is impacting not just the super-affluent. Changes made to the tax regime for buy-to-let have also had an impact, forcing some investors to think about complementary tax-efficient investments.”
“In the tax year to April 2018 demand for VCTs grew again by 34%, reaching a total of £728 million.2. If last year’s experience is anything to go by it’s entirely possible that our AIM VCTs will be fully subscribed well in advance of tax year-end.”
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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¹ The Association of Investment Companies, July 2018
2 The Association of Investment Companies, April 2018
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 target an annual dividend of 5% of the share price. 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.
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: August 2018.