TP10 follows on from previous Triple Point VCTs. TP5 raised over £18m in the 2008/09 tax year and a dual VCT offer, TP70 I and II, raised £46m the previous tax year.
The company has designed TP10 for more risk averse investors, with the intention to provide more realisable and secure returns than is generally the case when investing in venture capital. It will invest in VCT-qualifying investments that offer contracted revenues, liquidity and a low risk of capital loss. It is expected that the majority of companies in the portfolio will be involved in supplying essential services to blue chip companies, the NHS and other public sector bodies.
To reduce the risks to capital that are associated with investment in unquoted companies, TP10 will focus on firms with contracted revenues from financially sound companies, while some investments will be in companies that have a strong asset base. Investments may take the form of loans and as a limited life VCT, there will be a planned exit for investors after five years.
Initially, the money raised from this share issue will be invested in cash or cash equivalents until suitable VCT qualifying companies are found.
Investment opportunities will be identified through Triple Point’s network of contacts and the company already has a pipeline of potential investments worth over £50m in the health, leisure, communication, environmental, social enterprise and technology sectors. These opportunities are at various stages from early discussion to due diligence and negotiation. The leisure sector accounts for over 50 per cent of this pipeline.
Triple Point intends that 70 per cent of the portfolio will be invested in qualifying VCT investments by the third year, but no more than 15 per cent will be invested into each company. Up to 30 per cent of the portfolio will remain in cash or cash equivalents.
Attempting to reduce risks in a high-risk area of investment and providing an exit after five years could be useful for investors who want the tax benefits of a VCT, but not at the expense of liquidity and their original capital.
However, Triple Point is not alone in offering these features and may face competition from providers such as Octopus and Albion Ventures.