UK’s largest VCT opens after a string of exits and significant portfolio growth
Octopus Investments, part of Octopus Group and the largest provider of venture capital trusts (‘VCTs’) in the UK1, today announced it has opened a new £125 million fundraise for Octopus Titan VCT (‘Titan VCT’). The launch comes after a stellar year in which the fund delivered 32.8% total returns in the 12 months to 30 June2.
The strong performance has been supported by some large exits3, including Etsy’s $1.6 billion acquisition of Depop, Snap Inc.’s $500+ million acquisition of WaveOptics, and Carlyle Group’s acquisition of Calastone. This is in addition to sizeable follow-on funding rounds4 for a number of portfolio companies such as Bought By Many, the pet insurtech business now valued at $2 billion, and the $7 billion public market listing of Cazoo, the online car marketplace, which led to significant uplifts in valuations5. Titan VCT was a very early investor in Cazoo and retained the majority of its shares in the company at listing.
Total revenues across the portfolio increased significantly from 2019 to the end of 2020, growing by 126%, while the top ten holdings by value saw revenue growth of 179%6.
Jo Oliver, Fund Manager of Octopus Titan VCT, said:
“It’s been a remarkable year for the fund, with strong returns and exceptional growth achieved despite lots of uncertainty and change caused by the pandemic. Our mission is to back world changing entrepreneurs and I think the results we’ve delivered for our investors are testament to that, with some truly extraordinary companies being built. The exciting thing is that we’ve got many other companies in the portfolio, such as Quit Genius and Elvie, that also have the potential to become global success stories.
“There’s no sign that that technology adoption is slowing down. If anything, it’s still accelerating as we emerge into a post pandemic world, and that’s creating lots of opportunities for entrepreneurs to reach new markets and build scalable businesses with global ambition. We remain extremely optimistic about the future.”
Octopus Titan VCT is the UK’s largest VCT1 and offers investors, comfortable with the risks of smaller company investing, attractive tax incentives and access to a well-established and diverse portfolio of more than 90 pioneering smaller companies.
The fund has one of the largest venture capital investment teams across Europe, with the expertise to invest across the five areas where it sees maximum potential; those being consumer, b2b software, deep tech, fintech and health.
The total return of 32.8% was made up of a 29.4p increase in the NAV – which increased from 89.5p to 113.9p – in addition to a dividend yield of 5.6%2. The VCT has also indicated it will pay a special dividend of 6p per share in December, in addition to the planned interim dividend of 2p.
Dividends paid from VCTs are tax free, which can make them an attractive source of income, especially for higher rate taxpayers. Octopus is also unusual as it offers an ISA wrapper on a VCT. This enables investors to transfer any existing ISA funds (from previous tax years 2020/21 or prior) to a new Titan VCT ISA, while maintaining all the benefits of VCT investing.
Jessica Franks, Head of Retail Investment Products, said:
“The amazing growth stories from Titan’s portfolio demonstrate the importance of VCTs, which provide crucial early-stage capital for these companies, unlocking their potential and creating thousands of jobs in the process.
“Investors increasingly recognise the growth potential of smaller companies. This is contributing to the strong demand for VCTs we’ve seen this year, with our AIM VCTs reaching capacity in record time. Demand is also being driven by restrictions to pension contributions, as more people start thinking about their lifetime allowance, as well as the continued squeeze on dividend incomes, which has prompted a search for tax free alternatives.”
In the 12 months to 30 June 2021, Octopus Titan VCT invested £95 million into 40 companies, including follow-on investments into some of the existing portfolio companies7.
The share offer is open until 20 October 2022 but may close earlier if fully subscribed. The minimum investment is £3,000 while the maximum investment qualifying for tax relief is £200,000.
-Ends-
1) AIC interactive statistics – as at 10 October 2021
2) Performance in the 12 months to 30th June 2020 – see further details including 5-year performance below. Past performance
3) Notable exits:
- Depop, the online fashion marketplace, sold to Etsy at a valuation of $1.6 billion
- WaveOptics, the augmented reality company, sold to Snap Inc. at a valuation of $500 million
- Calastone, the largest global funds network, was acquired by The Carlyle Group, generating a return of 18x Titan VCT’s initial investment, and 9x overall
- Semafone, the data security and compliance platform for call centres, was sold to Livingbridge, at a valuation that was 8.5x Titan VCT’s initial investment
- Skew, the analytics platform for cryptocurrencies, sold to Coinbase (valuation not disclosed)
4) Notable funding rounds:
- Bought By Many, the pet insurtech, raised $350 million at a new $2 billion valuation
- Elvie, the global health and lifestyle brand developing products for women, raised a £70 million Series C funding round
- Quit Genius, the world’s first digital clinic for treating multiple addictions, raised a $64 million Series B funding round
5) Cazoo, the online car retailer, became listed on the New York Stock Exchange at a $7 billion valuation less than two years after it launched following a merger with a publicly traded special purpose acquisition company (SPAC) in August. This allowed the company to raise a further $1 billion to continue its expansion across mainland Europe.
6) Octopus Titan VCT – comparison of portfolio revenues from full calendar years of 2019 to 2020.
7) Octopus Titan VCT investments completed in 12 months 30th June 2021.
Performance
Past performance is not a reliable indicator of future results and may not be repeated. Please note, the NAV per share may be higher than the share price, which is the price you may get for shares on the secondary market.
Five- year performance
| Year to 30 June | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Annual total return | 4.7% | 4.3% | 3.3% | 2.3% | 32.8% |
| Annual dividend yield | 5.2% | 5.3% | 5.3% | 5.4% | 5.6% |
| NAV (p) | 95.2 | 94.3 | 92.4 | 89.5 | 113.9 |
| Total value per share | 159.2p | 163.3p | 166.4% | 168.5p | 197.9p |
The annual total return for Octopus Titan VCT is calculated from the movement in NAV over the year to 30 June, 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.
The annual dividend yield is calculated by dividing the dividends paid per annum by the NAV at the start of the period.
Total value per share shows the sum of the NAV per share in pence and cumulative dividends per share in pence since inception for the last five years to 30 June.
NAV is the combined value of all the assets owned by the VCT after deducting the value of its liabilities. The performance shown is net of all ongoing fees and costs.
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. 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. This document is an advertisement and 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: October 2021.