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Investec and Calculus go for C shares

Investec Structured Products and venture capital specialist Calculus Capital are raising up to £25m for a C share offer in the Investec Structured Products Calculus venture capital trust

The companies believe that playing to their respective strengths by investing in structured products and VCT qualifying unquoted companies will potentially enhance returns and provide a degree of protection from potential loss.

The strategy is designed to produce five annual dividends of 4.5p and a 47.5p interim target return by March 2017. It also aims for a further return of 45p per C Share, providing a total return of 115p for each C Share by March 14, 2019.

The structured products portfolio, managed by Investec, will be linked to structured products with maturities of six months to six years. The products will provide a full return of capital providing the underlying indices do not fall by more than 50 per cent without returning to at least its initial value. Capital will be at risk on a one-for-one basis if this safety net is breached and up to 20 per cent of the portfolio can be linked to global indices such as the S&P 500 and Eurostoxx 50.

Around 30 per cent will initially be invested in structured products with a maturity of more than three years to meet the 47.5p interim target return. The remainder will be invested products with maturity dates of less than three years and other near-cash investments. This part of the portfolio will gradually be reinvested in VCT qualifying unquoted companies to meet the five annual dividend payments, the annual running expenses and the further target return of 45p per C Share by March 14, 2019.

The venture capital part of the VCT is managed by Calculus, which prefers more mature unquoted companies. Calculus has particular expertise in energy, energy services, energy technology, leisure/catering, transportation and healthcare investments, but will also include undervalued firms from other sectors

The ability to invest up to 20 per cent in structured products linked to global indices gives the C shares have a wider remit than the ordinary shares, which invest only in FTSE 100 linked products. However the wider geographical net potentially leaves investors relying on several indices to remain above the 50 per cent barrier rather than just one.


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