Octopus Investments has launched its latest Venture Capital Trust (VCT) offering. Octopus VCT 3&4 is a twin-structured VCT developed for individuals looking for the tax breaks associated with investing in VCTs, but with a strong focus on capital preservation and liquidity upon exit.
Octopus VCT 3&4 invests predominantly in companies from within the solar sector. This allows investors to gain access to stable and attractive revenue streams underpinned by the Government’s Clean Energy Cashback Scheme, which pays a subsidy or Feed-in Tariff (FiT), for ‘clean’ energy produced. The FiT gives 25-year RPI-linked subsidies for electricity generated by qualifying solar power installations.
It aims to generate an annual dividend stream of at least 5p per annum, starting in 2013. In order to provide liquidity for investors who may wish to exit after the five year holding period required to retain the upfront income tax relief, Octopus intends to operate a zero discount buyback policy throughout the life of the VCTs. The targeted return at the five year period is 110p.
Octopus managing director Paul Latham (pictured), says: “We see this as an extremely attractive VCT offering for investors. The key benefit of this structure is that it is a ‘limited life’ VCT but also a ‘flexible life’ vehicle for those looking for more long-term tax-free dividends.
“As most VCTs offer a buyback facility with a significant discount to net asset value (NAV), we believe the zero discount buyback policy will be seen as a great incentive for investors.”
Simon Rogerson, Chief Executive of Octopus, says: “We’re proud that Octopus has a reputation within the investment industry for listening to its investors and coming up with innovative solutions. We’ve designed a VCT with a massive amount of flexibility based upon the feedback from our investors.
“Some wanted a very long-term, tax-free income stream, whilst others wanted a five year investment. Many wanted the option to have the choice, and without the typical large discount to net asset value (NAV) that most VCTs offer on exit. We therefore built a new VCT structure designed specifically with these in mind”.
“We’ve also got an enviable record for solar investment. Thanks to our investment partner Lightsource we’ve delivered more large scale solar installations than any other investment company in the country. We’re currently raising more than £10 million a month into our solar-focused Octopus Enterprise Investment Scheme (OEIS) which, like Octopus VCT 3&4, invests companies constructing sub-50kWp sites.”
Paul Latham added: “Solar represents a unique investment opportunity, but one that is limited to the remainder of this tax year. By April 2012, solar companies will no longer be classed as qualifying investments into Venture Capital Trusts and Enterprise Investment Schemes, which means those investors who wish to take advantage of the predictable revenue streams offered by solar and the tax-friendly incentives, should be talking to their financial adviser about their options now.”
