This year will undoubtedly be one of the best
for venture capital trusts for some time.
A whole raft of existing and new names will be seeking funds as they capitalise on the higher popularity of VCTs due to increased tax rebates for investors.
The fact that many new names will be entering the market brings problems as investors and IFAs struggle to sort the wheat from the chaff. Well, Baronsmead 2 VCT is a candidate for the wheat.
Isis Equity Partners, which manages the Baronsmead family of VCTs, is one of the biggest names in this area of the market and also has one of the best track records.
It is shareholder-friendly, has a big team in place to effectively manage the assets and, more important, has a very good track record of investing the money and then realising that investment later down the line.
This is a C-share issue that is looking to raise £20m. This pot of money will be managed separately from the existing portion of the VCT. Both classes of share will then be merged, probably in 2007.
Isis tends to focus on established profit-making companies. In addition, the companies it invests in need to be able to prosper in a lowinflation environment.
VCTs will raise a lot of money this year. However, investors will be discerning and the best ones will probably sell out fairly quickly. Do not be surprised if this happens to Baronsmead 2 VCT as Isis is recognised as one of the best managers of venture capital money at present.
Ben Yearsley is investment manager at Hargreaves Lansdown