View more on these topics

Artemis: VCT investments ‘scarce’ after Govt rule changes

UK-Currency-Money-Coins-700.jpg

New investments at the right valuations are “scarce” following the changes to VCT rules introduced last year, says the chair of the Artemis VCT.

Fiona Wollocombe, chairwoman of the £38.5m Artemis VCT, says that it is difficult to see the full impact of the rule changes, but says “new investment opportunities at appropriate valuations remained scarce”.

The changes introduced by the Government last year placed stricter limits on the companies eligible for VCT investment, including caps on the level of funding companies can receive from VCTs and EISs over their lifetime, limits on employee numbers at companies, limits on the use of VCT money for acquisitions and further crackdowns on the types of companies eligible.

In the VCT’s half-yearly review for the six months ended 31 March 2016, the company made just one new investment, Yu Group, which provides gas and electricity to small and medium-sized businesses, and which it says is well-positioned to win market share from the ‘big six’ energy firms.

Wollocombe says: “While the company recently invested in Yu Group, attractively priced VCT qualifying deals like this remain quite scarce. It is hoped that as the new legislation becomes more widely understood, companies will look to VCTs for capital.”

As a result of the lack of investment opportunities currently available, the trust paid out a 2p per share interim dividend and a 4p per share special dividend, having realised some cash from investment disposals. The move will mean £3.2m is paid to shareholders in late June.

“While the company recently invested in Yu Group, attractively priced VCT qualifying deals like this remain quite scarce. It is hoped that as the new legislation becomes more widely understood, companies will look to VCTs for capital,” says Wollocombe.

“The board, in conjunction with the investment manager, will continue to monitor the level of new investment opportunities and this will remain a key factor in determining the level of dividends paid. The position will be reviewed again after the year end, when a decision on the final dividend for the year will be taken.”

Over the six-month period, the company sold its position in Vision Direct by Essilor International realising a £2.4m gain, which contributed 4.2 per cent to the fund’s performance.

The company also reduced its holdings in Proactis and Cohort, which had each grown to more than 7 per cent of the VCT’s holdings, and sold its entire stake in Amino Technologies, which was previously 4.6 per cent of the fund.

The VCT is currently trading at a 10.9 per cent discount to net asset value.

Recommended

2016 Global Survey of Individual Investors: How is investor behaviour rewriting the job description for financial professionals?

Trapped between expectations for near double-digit returns and strong apprehensions about investing in persistently volatile markets, investors worldwide are of the opinion that professional financial advice is worth the fee. But even though they believe individuals who work with a financial professional are more likely to achieve their goals, investors have a clear vision of […]

Home-House-Paper-Chain-700x450.jpg
2

Research points to end of the house price boom

Research suggests England’s house price boom may have hit its peak. Estate agent Haart, which operates around 100 branches, says it sees decreasing demand in the housing market, according to the FT. Haart chief executive Paul Smith says: “We believe the nation has now neared the limit in terms of price rises.” The estate agent […]

Guide

Guide: what you need to consider for your auto-enrolment project

In this guide, Johnson Fleming reveals what items you need to understand to gauge the impact of auto-enrolment on your business. The guide focuses on: the impact that your auto-enrolment scheme will have on you; assessing your workforce; understanding your staging date; reviewing your current provision; and modelling contribution levels and costs.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment