Octopus Investments (‘Octopus’), a fast-growing UK fund management company and the largest provider of venture capital trusts (‘VCTs’) in the UK, has announced the launch of a £70 million fundraise for Octopus Titan Venture Capital Trust (‘Titan VCT’).
With over £309 million in assets under management, Titan VCT is the largest VCT on the market and has a strong track record of delivering returns for investors. Since it was first launched in 2007 it has focused on investing into early stage companies with the potential for high growth, and has earned a reputation within the industry for backing talented entrepreneurs and innovative companies with the potential to make an impact on the global stage.
Today the VCT offers investors access to a well-established and diverse portfolio of around 50 smaller companies. These range from very young early stage businesses to well-known household names including Secret Escapes, the members only holiday company.
In recent years, in light of continuing changes to pensions, many investors and financial advisers have asked for a VCT which could accept monthly contributions. Titan VCT is the first VCT in the UK to offer this service and we expect significant interest from investors. Direct debits will be taken monthly with new shares issued at around three monthly intervals.
Alex Macpherson, head of the Ventures team at Octopus and fund manager of the Titan VCT, commented:
“Titan VCT offers investors the opportunity to access a really exciting and unique portfolio of early stage companies that has been built up over the last nine years. Every year, we handpick a small selection of new investments from a pipeline of hundreds, and then work with the management teams to help those businesses realise their full potential.
In the last six months, we’ve been delighted to see Titan VCT-backed companies acquired by fantastic global businesses including Microsoft and Twitter indicating the commercial strength and talent of the UK’s young businesses. This latest fundraise gives investors the opportunity to support both established and developing portfolio companies as well as new businesses. The entrepreneurial scene in the UK is thriving, and as the largest VCT in the UK, we are lucky enough to attract some of the best investment opportunities within this sector and work with some of the most talented entrepreneurs.”
VCTs were introduced by the government in 1995 to encourage much-needed investment into the UK’s smaller companies, driving job creation and economic growth in the process. Since then, they have proved to be a vital source of funding, and have played a critical role in helping to support the next generation of UK businesses. VCTs offer a number of attractive tax incentives for those investors comfortable with the risks associated with smaller company investments. These include 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. Titan VCT has an impressive track record of paying dividends, having announced total dividends of 61p per share to investors since it was first launched
As new restrictions on lifetime and annual pension investment limits came into force from April 6, increasing numbers of people are looking at other tax efficient investment options for their retirement planning. With the classic buy-to-let investment also coming under pressure from the chancellor, many may be looking to VCTs as a complementary option for their retirement portfolios.
Paul Latham, Managing Director at Octopus Investments, said:
“This fundraise comes at an inflection point for the industry. Against the backdrop of significant pension reform, we are seeing more and more people looking for ways to complement their existing retirement planning. Many of these customers have asked us to design a VCT which could accept monthly contributions to complement how most people manage their existing retirement plans. With shares allotted quarterly, we are delighted that Titan VCT will be the first VCT to offer this service to customers.
“Last year’s fundraise saw unprecedented interest from investors with Titan VCT seeing a record £100 million raised, closing five months early. VCTs are now seen by many as a powerful planning tool and can be an attractive way to gain access to the growth potential of smaller, early stage companies.”
The share offer is open until 22 August 2017, but may close earlier. The minimum investment is £3,000. The maximum investment still qualifying for tax relief is £200,000.
 Source: The Association of Investment Companies, August 2016.
Octopus Titan VCT Performance
Octopus Titan VCT targets high levels of capital growth from a portfolio of early-stage UK companies. However, like most VCTs, rather than increasing the value of its shares, Octopus Titan VCT aims to return this investment performance back to shareholders in the form of regular and special tax-free dividends. The potential for paying tax-free dividends to investors is one of the main benefits of VCTs, although it is not guaranteed. 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 when portfolio companies are sold at a significant profit.
Five year performance
|Annual total return||1.5%||2.7%||33.8%||9.6%||11.4%|
Source: Octopus Investments, August 2016
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. Performance shown is net of all ongoing fees and costs (found on page 20). The annual dividend yield is calculated by dividing the dividends paid per annum by the NAV at the start of the period. On 27 November 2014, Octopus Titan VCTs 1,3, 4 and 5 merged into Octopus TitanVCT 2, which was then renamed Octopus Titan VCT. Past performance is not a reliable indicator of future results and may not be repeated.
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. 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 and may not be repeated. 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, 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. Issued: August 2016