Teather & Greenwood (T&G) plans to raise up to £5m for its Alternative investment market (Aim) venture capital trust (VCT) by issuing C shares.
The money raised through this top-up issue will initially be held in fixed-interest and will go into Aim companies when suitable opportunities are found. Approximately 25 per cent of the investment will remain in fixed interest at all times.
The VCT has raised £3m since it was established in November 2001 and has invested in just two Aim companies so far. One of these, Cytomyx, supplies research to the pharmaceuticals industry and the other, Lloyds British Testing, supplies lifting equipment services.
Developing companies that are listed on Aim tend to have greater growth potential than larger quoted companies and T&G's background as a broker to Aim companies could be useful to the fund manager, John Sweet, when researching this market.
However, the Aim market has been falling in recent months, although not as much as the FTSE All Share Index. Figures from the London Stock Exchange show that in the period between December 31, 2002 and January 31, 2003, the Aim fell by 3.7 per cent while the FTSE All Share Index fell by 9.1 per cent.
Although Aim VCTs are less risky than those investing in companies at an earlier stage of development, the consensus is that it will be difficult for any VCT to raise money this year. Many companies are topping up existing VCTs instead of creating new ones and as T&G has found, it may be difficult to find suitable Aim investment opportunities.