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Budget 2011: Solar firms to be banned from VCT investment

Albion Ventures has welcomed the Government’s decision to crack down on some VCT and EIS providers by placing “feed-in tariff businesses” such as solar companies into the excluded activities list from April 2012.

Managing partner Patrick Reeve says a number of VCTs have been targeting investments that do not fill a policy need. He says: “Essentially, that is a business that could be covered by bank finance and the proof is that the targeted returns they are looking for from their investments is 5-6 per cent, which is far too low.”

Hargreaves Lansdown investment manager Ben Yearsley says: “The easiest way to calm it down was to say you cannot do any of it. Banks will lend if the companies are attractive enough.”

Foresight Group partner Mike Currie says there will be a rush to invest in solar before April 2012. He says: “From a cash-generative perspective, it is a good thing. It will allow us to get to the targets we need to and retain the existing projects, the Solar VCT and EIS. It will get the same quantum of cash over a limited period of time.”

Yearsley believes the Government’s plans to refocus both EIS and VCTs to ensure they are “targeted at genuine risk-capital investments” is aimed at the majority of limited-life VCTs. “It is clearly an area of the market they do not like,” he says.

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