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VCT firms to shun Aim after cap cut

The majority of Aim VCT providers will not be looking to raise funds in the next tax year after Chancellor Gordon Brown cut the maximum market cap of qualifying investments.

Keydata head of communications Roddi Vaughan-Thomas says any Aim VCT still looking to raise funds in the next tax year will struggle under the new rules announced in the Budget.

Vaughan-Thomas says Brown’s move was intended to remove the ability for Aim-listed firms to raise capital through VCTs as they have other ways of raising funding. Providers, including Invesco Perpetual, Keydata, Baronsmead and Axa Framlington, say they will not be looking to raise further Aim VCT funds next year following Brown’s reduction in the maximum market cap for eligible investments from £15m to £7m.

Chelsea Financial Services bond manager Matthew Woodbridge says: “The new cap is too small for most small-cap managers and in any case, many Aim VCTs have achieved critical mass. The Government has made investment in this area riskier and I doubt it will have a change of heart.”

Vaughan-Thomas says: “Any provider looking to raise funds though Aim VCTs will stru- ggle in the next tax year, with riskier investments and less choice. Even if around 40 per cent of investment is still eligible under the new rules, the complexities and lack of variety of stock now make it an unattractive proposition.”

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