The three Northern VCTs – Northern Venture Trust PLC, Northern 2 VCT PLC and Northern 3 VCT PLC – have launched a new joint share offer, to raise an aggregate of up to GBP60 million (GBP20 million per fund) in the 2017/18 tax year.
Applications under the offer will be dealt with on a first come first served basis, except that existing shareholders in each of the companies will have priority application rights until 13 October 2017. In previous launches the VCTs have experienced strong demand from investors, and in recognition of this all applicants are encouraged to submit their applications as soon as possible.
The funds raised will be invested mainly in early-stage unquoted UK companies with high growth potential. The three VCTs aim to provide investors with high long-term tax-free returns, expected to be derived mainly from capital growth in the underlying investment portfolio. As at 30 June 2017, the three VCTs had combined net assets of over GBP220 million. Over the last 22 years the Northern VCTs have invested almost GBP380 million in over 220 companies, and NVM is one of the longest established venture capital fund managers backing growing SMEs in the UK.
Tim Levett, Chairman of NVM Private Equity, says: “The Northern VCTs have a market-leading performance record and we at NVM are building on our experience of delivering returns from investing in a wide range of companies and business sectors to assemble a portfolio of companies that we think have exciting growth potential. In order to do this we are expanding our existing investment team to add new technical and market skills, and we are excited about building a diverse portfolio over the next three years.”
Since March 2016, NVM’s funds have invested GBP28 million in 11 early stage VCT qualifying businesses. In the IT sector NVM has invested in Sorted Group, Rockar, Intelling Group, Contego Fraud Solutions and Volo Commerce, in the social media and video enabled sector NVM has invested in Channel Mum and Knowledgemotion, and has also backed Lending Works which is a peer-to-peer lender, Avid Technology Group which manufactures environmentally friendly components in the automotive sector and Customs Connect Group, who are expert consultants on tariffs.
There have also been six recent profitable exits from the portfolio, with the sales of Kitwave One, Control Risks Group, Silverwing, Arleigh Group, Cawood Scientific and Optilan Group taking place in the same period, delivering combined income and capital proceeds for the VCTs of GBP31 million.
In recent years Northern Venture Trust has paid a base annual dividend of 6.0p per share and Northern 2 VCT and Northern 3 VCT have each paid a base annual dividend of 5.5p per share. As the VCT legislation is now focussed on investment in earlier stage capital growth opportunities, future dividends will be based on returns from the legacy portfolio of later stage deals as well as capital growth from the new portfolio being built, and may therefore fluctuate from year to year.
In order to provide shareholders with the opportunity to realise value after the initial five year holding period, the Northern VCTs currently have a policy of buying back their shares in the market at a 5 per cent discount to the latest published net asset value, subject to certain conditions.
The share offers are promoted by VCT marketing specialists Downing LLP, who have been working with NVM in this role since 1999.
