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Close Ventures says 85 per cent of investments fit new VCT definition

UK venture capital trust manager Close Ventures has unveiled research indicating that 85 per cent of the GBP65m investments it has made since 2005 would have qualified as VCT investments u

UK venture capital trust manager Close Ventures has unveiled research indicating that 85 per cent of the GBP65m investments it has made since 2005 would have qualified as VCT investments under the employee test announced in the last budget. The research found that more than GBP58m was placed into companies with fewer than 50 employees.

This amount far exceeds the GBP20m the firm raised for its last issue, Close Enterprise VCT. The risk of investing in VCTs was predicted to have increased under the new employee rule, since it was assumed that there were considerably fewer VCT companies with a suitably sized workforce to invest in.

Close Ventures believes its investment strategy of combining asset-backed investments with high market opportunity growth companies is complementary to the new rules and therefore mitigates any increase in risk.

‘Our research clearly demonstrates that our investment strategy would have allowed us to invest the GBP20m we raised last year under the new employee rules,’ says managing director Patrick Reeve.

‘This is good news for investors, since we are content that we would be able comfortably to invest any new VCT under these rules as we have done with the previous rules as they have come and gone over the past 10 years.’

A member of the Close Brothers group, Close Ventures launched its first VCT in 1996 and now manages seven venture capital trusts with net assets of GBP250m. The firm has returned a total of GBP65m to shareholders from its VCTs.

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