The three VCTs – Matrix income & growth VCT, Matrix income and growth 4 VCT and the income & growth VCT – invest in management buy-outs of established, profitable businesses. They provide access to combined assets of almost £100m across a portfolio of over 50 companies.
Matrix believes now is a good time to invest in smaller company MBOs. It says company valuations are attractive and smaller firms are looking to fund MBOs through investors such as Matrix because the banks are still not lending. Matrix says these are favourable conditions for new investment and also provide potential for higher valuations of its existing investments. It regards access to an established portfolio as an advantage to investors, as this increases the chances of receiving dividend income sooner.
New investments will take the form of income-yielding loan stock as well as equity, which helps to reduce risk. Matrix believes the flow of investment opportunities that come its way will enable it to invest in good businesses at attractive prices.
Since 2004, Matrix has raised over £85m for its income & growth VCTs. The firm also has an active share buyback policy at a discount to net asset value of 10 per cent or less.
Matrix expects generalist VCTs to be popular and thinks its focus on MBOs will appeal to investors. It sums up its selling points to investors as a good performance track record, significantly increased levels of tax free dividends and active management of buy-back and discount policies. Previous fundraisings for the three linked VCTs have provided returns for investors of more than 10 per cent a year
IFA firm Hargreaves Lansdown likes this offer because it invests only in established, profitable and growing businesses while including some of the lower-risk principles of limited life VCTs. However, other VCT firms such as Albion Ventures and Maven Capital Partners have issued linked offers that could provide competition.