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Revamped Baronsmead goes for diversity

Ram Capital Partners and Isis Equity Partners are aiming to raise up to £15m for Baronsmead VCT 5, previously the Baronsmead Aim VCT.

This VCT was launched as the Baronsmead Aim VCT in 2006, but recently widened its investment policy to become a generalist VCT.  It now has the ability to invest in unquoted companies, as well as those trading on Aim, which will diversify the portfolio.

The VCT first raised money when the rules governing VCT qualifying investments were less restrictive, so is allowed to operate under the original rules. These allow it to invest in firms with gross assets of up to £15m instead of the £7m limit imposed on new VCTs, enabling investment in bigger companies and selection from a bigger universe of potential investments relative to a new VCT.

The directors of this VCT expect to see plenty of attractive investment opportunities due to improving market conditions over the next few years. They also point to the continued lack of bank finance for many firms, which has increased potential investment opportunities for VCTs at a time when share prices are attractive.

Recent top-ups to the Baronsmead VCTs were significantly over- subscribed so the directors believe there is demand for a VCT such as this. This VCT can also participate in bigger deals through co-investment with the other Baronsmead VCTs.

Isis has offered VCTs since the market was established in 1995. It has built up a strong track record and is likely to generate interest from IFAs who are looking for an experienced generalist VCT manager.

It is intended that within five years, the asset mix of this VCT will be similar to the other Baronsmead VCTs. However, it may take some time to complete the transition from Aim to generalist VCT. Achieving this will depend on the availability of suitable unquoted investment opportunities and the ability to sell some of the existing Aim holdings.

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