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Performing on the Edge

Edge Investment Management is looking to raise up to £25m through a D share offer for the Edge Performance venture capital trust.

This VCT has raised £20m since launch in 2006. It invests in the live entertainment industry, concentrating on live music, theatre, sports, festivals trade shows, exhibitions and other events.

Edge performance aims for targeted returns of 160p for every 100p invested, with an emphasis on capital protection and enhanced liquidity. Its investment team includes high profile promoter Harvey Goldsmith, who was responsible for events such as Live Aid and Live 8, and Gordon Power who founded the private equity business of ProVen, now Beringea.

The directors say that the live music concert and festival market in the UK has risen steadily in the period from 1999 to 2006. Figures from Mintel show the estimated value of live music events at major venues has increased from £475m in 1999 to a forecast £743m in 2007.

The recent opening or refurbishment of key venues such as Wembley Stadium, O2 Arena and Royal Festival Hall has also increased the opportunities for live music performances in the directors’ view. They also note that live music events for under 118s, which start and finish early, allow venues to fill what would otherwise be empty time. At the other end of the age spectrum, established acts such as the Rolling Stones and U2 are attracting older fans who have the disposable income to attend.

Technology is another positive for the live events business, with the internet and mobile telephony making ticket sales more convenient.

The directors say live music and other events are characterised by immediacy, so it anticipates that returns will be generated quickly after an investment is made, then reinvested to enhance returns and liquidity.

The VCT will invest in event promoters that have negotiated an event licensing agreement with an established event promoter. These arrangements speed up access to events, artists, venues and ensure unnecessary risks are not taken with investors’ capital as guaranteed minimum returns often form part of the arrangements. Initially, the money will be invested in a range of fixed income securities and cash managed by Rothschild Private Management.

Up to 30 per cent of the money will remain in this, while the rest will go into qualifying investments. Typically 30 per cent of each investment will be in equity and 70 per cent will be secured loan stock to reduce the risk.
The VCT will also pursue sponsorship, merchandising, DVDs and internet or mobile related opportunities. However, one potential drawback is that if less than £25m is raised, the diversity of the portfolio may

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