Octopus Investments Reading time: 5 mins

UK's largest VCT reaches halfway fundraising milestone of £60 million

28 Nov 2018

The UK’s largest VCT, Octopus Titan VCT, reaches halfway point in its £120 million fundraising target in under eight weeks on the back of investor demand.

Octopus Investments, part of Octopus Group and the largest provider of venture capital trusts (‘VCTs’) in the UK (1), today announced that it has reached its half-way milestone (£60 million) in under two months for its Octopus Titan VCT. This is the fastest that Titan has raised this sum, with rising numbers of online applications helping to drive this trend.

This year Octopus is targeting another £120 million fundraise for its flagship VCT. This follows last year’s record-breaking fundraise when Titan raised a total of £200 million.

Titan offers investors, comfortable with the risks of smaller company investing, attractive tax incentives that accompany a VCT and access to a well-established and diverse portfolio of more than 65 potential game-changing smaller companies. Titan was an early investor in Zoopla Property Group, the first VCT backed business to reach a £1 billion valuation, alongside other well-known names such as Secret Escapes (2) and the snack company Graze.

Paul Latham, Managing Director at Octopus Investments, said:

“Titan continues to prove extremely popular with investors, many of whom are looking for a tax-efficient home for their money following rule changes for buy-to-let and to the pension lifetime allowance. With some industry players still adapting to last November’s rule changes or opting not to fundraise, it also looks likely that capacity in the market will be reduced this year. Yet with sustained investor demand for VCTs, there is a good chance that Titan will close well ahead of time.”

Jo Oliver, Fund Manager for Octopus Titan VCT, added:

“Titan has been investing in early-stage innovative companies since it launched ten years ago. In that time the UK has continued to build its reputation for creating truly world-class companies and developed a thriving eco-system of talented entrepreneurs. The volume and quality of investment opportunities show no sign of slowing.”

VCTs offer investors 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.

Alex Davies, Chief Executive of WealthClub:

“Pension changes, restrictions on buy to let, and the ever-increasing dividend tax, mean VCTs are one of the last relatively simple and tax efficient places for wealthier investors to put their money. All the indications are that capacity is going to be tight compared with demand this year. Therefore, investors who spot something they like should consider investing now whilst it is still available. For those looking to back tomorrow’s winners, Octopus Titan could make an excellent choice.”

The share offer for Titan is open until 12 September 2019 but will close earlier if fully subscribed. The minimum investment is £3,000 while the maximum investment qualifying for tax relief is £200,000.

Notes to Editors
(1) The Association of Investment Companies (AIC) – April 2018

(2) Titan VCT partly exited its stake in Secret Escapes in 2018. This transaction completed at a price around 80 times the initial price the shares were purchased at. (page 20 – from the Titan VCT Prospectus – 13 September 2018)

About Venture Capital Trusts

Venture Capital Trusts (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.

Dividends (as of 30 June 2018)

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 if portfolio companies are sold at a significant profit. Since its launch in 2007, it has announced total dividends of 71p per share to investors. While profits are usually paid out to investors as tax-free dividends, if the shares do rise in value, there’s also no capital gains tax to pay when you eventually choose to sell them.

Discrete 12-month performance data over the last five years

Year to 30 April 2014 2015 2016 2017 2018
Annual total return 9.6% 11.4% 7.2% 4.7% 4.3%
Annual dividend value 5.6% 5.4% 9.2% 5.2% 5.3%
Total value 137.2p 147.7p 154.7p 159.2p 163.3p

Past performance is not a reliable indicator of future results.

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. Total value is calculated as the sum of the NAV per share in pence and cumulative dividends per share in pence for the last five years to 30 April.

Just to remind you, the NAV is the combined value of all the assets owned by the VCT after deducting the value of its liabilities (such as debts and financial obligations). The performance shown is net of all ongoing fees and costs. The annual dividend yield is calculated by dividing the dividends paid per annum by the NAV at the start of the period.

The Board of Directors has determined it would be incorrect to compare the NAV of Octopus Titan VCT with those of other VCTs as different year-end dates for other VCTs would result in timing differences in each NAV calculation.

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. 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: November 2018.