This VCT aims for growth and a high level of income by taking a lower risk approach. The non-qualifying element, in which all the money raised will initially be invested, will comprise corporate bonds and corporate bond funds, funds of hedge funds and other products that aims for absolute returns.
The VCT qualifying part of the portfolio will invest through senior secured loans to the small unquoted – but established – UK companies in its portfolio. This gives the VCT the ability to take security over their assets and reduce risks for investors. As well as unquoted companies the VCT may hold companies trading on Aim and Plus markets. It will avoid high risk companies, preferring solid and well managed companies that need expansion capital or those subject to a buy-in or buy-out. These companies may have previously borrowed money from banks but since the banks are now reluctant to lend, these small businesses are now looking for finance through venture capital.
Shore Capital has been investing in smaller companies for 15 years and has built a range of seven other VCTs. Two of these VCTs are now in the process of winding up and it is intended that the life of Puma VCT 8 will be reviewed after five years with a view to returning cash to investors at that point. This means it is a planned exit VCT. This type of VCT tends to focus on lower-risk investments as these should provide an easier exit but the returns may not be as high as some VCTs that make higher risk investments.
The VCT will provide regular dividends of up to 5p for each share and this will have a bearing on the types of investments that are chosen. If the underlying investments have not produced enough income to pay the dividends, distributions can still be made using available cash reserves but this could erode the capital value.