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Product Matters

Following hot on the heels of this column two

weeks ago when I talked about the Baronsmead VCT, I thought I would follow up with another quality generalist VCT.

It is quite a difficult year for choosing a generalist VCT as many of those looking to raise money are ones that I consider to be quality managers.

Northern Venture Managers would certainly rank alongside the best generalist VCT managers. Tim Levett and his team have proved themselves astute businessmen by selling out to Edinburgh Fund Managers near the peak in the market and buying themselves back from Aberdeen (after their takeover of Edin-burgh) for about a quarter of the original price.

Northern 3 VCT has raised over £20m and is looking to raise a further £20m through a series of new offers of £2m each over the coming few months. This is a proper generalist VCT, which will invest the majority of its funds into unquoted companies.

In total this year, across Northern&#39s three VCTs and its investment trust, over £30m has been invested in new companies split across nine different investments. This VCT will try to have a broad spread of investments, with about 65 per cent invested in well established unquoted com-panies, 15 per cent in much earlier stage unquoted companies with high growth potential and the balance into fixed income.

The structure of the deals is often along the lines of 75 per cent in loan stock and 25 per cent in equities. This structure does help to lower the risk profile compared with a pure equity structure and provides a reasonable level of income.

Ben Yearsley is investment manager at Hargreaves Lansdown

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