Octopus Investments (Octopus), a provider of venture capital trusts (VCTs) in the UK, has passed the GBP1 billion milestone in VCT assets under management.
Octopus is the first investment manager to reach this milestone, which comes after recent fundraising. The assets are spread across Octopus’ four VCTs, which are currently supporting more than 200 portfolio companies.
According to the latest figures from Association of Investment Companies (AIC), Octopus manages almost 25 per cent of all VCT funds, which amount to GBP4.25 billion.
Paul Latham, Head of Tax Products, at Octopus Investments, says: “VCTs have proven to be a fantastic government initiative since being introduced in 1995, providing generations of UK entrepreneurs with the vital investment they need to grow and scale their businesses. This success has been made possible by the many thousands of individual investors, for whom VCTs are seen as a valuable and impactful financial planning solution. VCTs are gaining in popularity as more advisers and investors recognise the growth potential of UK smaller companies and the tax benefits VCTs offer.”
For investors, comfortable with the risks of smaller company investing, VCTs offer attractive tax incentives including up to 30 per cent 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.
Octopus also today announced that its GBP80 million over allotment facility for Octopus Titan VCT will be opened, as the UK’s largest VCT hits its initial GBP120 million fundraising target. This takes the VCT’s total fundraising target to GBP200 million and, if fully subscribed, would take its total AUM up to circa GBP800 million. Octopus Titan VCT was the first VCT to raise a record breaking GBP200 million in 2018.
The VCT invests in early stage tech-enabled businesses with high growth potential. It offers investors access to a well-established and diverse portfolio of more than 70 potential game-changing smaller companies. These include well-known names such as Secret Escapes, the members only travel website, and Swoon, the limited-edition furniture company.
Jo Oliver, Fund Manager for Octopus Titan VCT, says: “VCTs have played a fundamental role in transforming the UK’s entrepreneurial ecosystem and helped to cement its reputation as the best place in Europe to build world class technology companies. With one of the largest investment teams in the region we meet hundreds of hugely talented entrepreneurs each year, many of whom are capable of completely transforming their industries. This is incredibly exciting for our investors as we work to deliver returns to them and support the next generation of leading global businesses.”
Latham says: “Fundraising continues at pace as expected. VCTs across the market are filling up fast or have already closed and there is a real incentive for investors to look at VCTs before tax year end. Octopus Titan VCT’s last fundraise closed in March last year, and I would expect something similar to happen again this year.”
Nick Britton, Head of Intermediary Communications at The AIC, says: “VCTs have raised GBP264 million in this tax year so far which indicates a healthy fundraising environment and continuing strong demand for VCTs. Although this figure is down compared to the same period last year (GBP483 million), 2017/18 was an exceptional year in which uncertainty over the outcome of the Patient Capital Review led to a boost in demand earlier in the tax year than usual. Otherwise, this year’s figure is consistent with previous years, for example 2016/17 (GBP221 million). Demand for VCTs has been driven by increasingly restrictive pension rules, as well as advisers’ increasing comfort in the track record of the sector, which is now in its 24th year.”
