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VCT on the Edge of entertainment

RAM Capital Partners and Edge Investment Management are raising up to £10m for the Edge encore VCT, a limited life venture capital trust.

Limited life VCTs aim to return cash to investors at the end of a specified period. This VCT has an intended life of seven to 10 years and will focus on the entertainment and media sectors. These are areas in which Edge has specialist knowledge, having managed the Edge performance VCT since 2006.

Edge says these sectors are resilient to economic downturns and points out that subscription TV, driven by exclusive sports, HD and 3D programming, broadband, music streaming services and other content-driven businesses have continued to increase sales. The live music sector and West End theatre have also been doing well in terms of attendance and revenue.

The VCT will provide shareholders with a regular income through tax-free dividends from year two of 4.5p per share. The firm says the types of investment in which the VCT will invest are capable of generating bigger returns than normally generated by limited life VCTs.

Edge says the internet has enabled smaller independent firms to challenge established firms in these sectors, in terms of creativity and innovation, as their size and focus enables them to act more swiftly. This often leads to the big established companies acquiring smaller independent companies to access new and faster growing revenue streams, providing entrepreneurs and investors with an exit route.

This VCT may be attractive to investors who are looking for income and growth from a particular sector within a limited life VCT, with risk reduced by at least 65 per cent of investment underpinned by licensing arrangements.

However, competition may come from other limited life VCTs investing in the entertainment sector including Edge’s own performance VCT, IBIS media VCT 1 and the Ingenious media VCTs. The Ingenious VCTs, which have minimum revenue arrangements covering at least 75 per cent of the investments and a five year life, which may have more appeal to some investors.

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