The VCT market will be fairly small this year, hence the preponderance of small top-up VCTs rather than brand new launches. Electra Kingsway is fairly typical of this and is looking to raise just over £2m.
First, I would say that this is entirely sensible. I would find it difficult to back a new launch when it is unlikely that much money will be raised.
Electra is one of the older names in venture capital with its investment trust having an almost 30-year track record. The VCT, managed by Nick Ross, is now over two years old and when it was launched, there was concern in some quarters that deal flow would be slow.
This is the reason that Electra investment trust deals at the large end of the scale whereas VCTs can obviously only buy into companies with gross assets under £15m. However, deal flow has not been a problem.
Currently, the fund has invested 70 per cent of its target in qualifying companies and despite a difficult two years, the NAV has increased from 95p to over 110p.
The fund will be generalist in nature and will aim to have a broadly even split between unquoted and Aim investments.
As a minimum, Nick will look for companies which have the potential to double over a three-year period. Electra is one of the oldest and most respected venture capital names in the business and Nick and his team are quietly building a solid and successful reputation in the VCT arena.
The majority of VCT investors will not have Electra as part of their portfolio. This is probably an oversight that needs correcting.
Ben Yearsley is investment manager at Hargreaves Lansdown