Octopus Investments, a fast-growing UK fund management company and the largest provider of venture capital trusts (‘VCTs’) in the UK[1], today announced that Octopus Titan Venture Capital Trust (Titan VCT) has raised a record £120 million. This is the largest ever fundraise for Titan VCT, the UK’s biggest Venture Capital Trust (VCT).
The news follows swiftly on the heels of the latest figures from the Association of Investment Companies, which revealed that VCT fundraising figures for the 2016/17 tax year to 17 February 2017 were up 43% on last year to £265.1m[2].
This is further evidence of the growth in investor demand for VCTs and the transition of VCTs to a mainstream investment for investors. With significant changes to pension regulations, including the reduction of the Lifetime Allowance, and Buy to Let investments being made less tax-efficient through new limits on mortgage interest relief and higher rates of stamp duty, investors may be looking for complementary investment solutions to plan for their retirement. Many have turned to smaller company investing as a clear way to diversify their portfolios in a tax-efficient way.
Since Titan VCT was first launched in 2007 it has focused on backing dynamic young companies with talented management teams and the potential to build the big businesses of tomorrow. For those comfortable with the risks of investing in small unlisted companies, the potential opportunity to share in the future growth of these businesses within the tax efficient wrapper of a VCT has proved attractive. Octopus Titan VCT has backed the management teams behind Secret Escapes, SwiftKey which was acquired by Microsoft last year and more recently Tails.com – an online service providing tailored dog food delivered to a customer’s door.
Stuart Lewis, Head of Tax Efficient Investments, said:
“This record fundraise signals that VCTs are now firmly in the spotlight. Their surge in popularity demonstrates that smaller company investing is now seen as an attractive option for those looking to complement and diversify their portfolios against a changing pensions backdrop.
“55% of the investors in this fundraise were new to Titan VCT, demonstrating a real surge in interest from a wider group of people. 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. However, with Titan VCT closing before tax year end – despite the record fundraise target – it is clear that interested investors may have to move quickly next year.
“With 64% of all Titan VCT investors in this fundraise investing through a financial adviser, I would urge everyone to seek professional advice to help them understand their options and develop a plan for their future.”
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.
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Notes to editors
[1] Source: Tax Efficient Review 2016
[2] Source: https://www.theaic.co.uk/aic/news/press-releases/vct-managers-comment-on-investment-opportunities-and-investor-demand-as
For journalists in their professional capacity only. The value of an investment, and any income from it, could fall or rise. Investors may not get back the full amount invested. Tax treatment depends on an investor’s 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 the shares of companies 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. 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 within the prospectus, which can be obtained from the document library. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, EC1N 2HT. Registered in England and Wales No. 3942880. Issued: March 2017.