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YFM tops up British smaller companies VCT

YFM Private Equity is raising up to £1.99m for a top-up of its British smaller companies VCT.

Proceeds from the top up of this VCT, which was launched in 1996, will be used to expand the existing portfolio. It currently comprises unquoted and Aim-listed companies, fixed-income securities and cash.

The VCT holds companies operating in traditional industries and growth companies involved in more innovative areas, with a preference for established unquoted companies. As at December 31, 2009 the company’s portfolio included 25 investments valued at  £14.12m, of which 13 were unquoted and 12 quoted mainly on Aim. Investments typically involve management buy-outs and buy-ins, acquisition funding and business development.

YFM says the economic environment has been challenging, with a slow down the number of investment opportunities coming through. However,  this is now picking up, while the VCT’s existing holdings have still managed to grow despite the difficult economic backdrop.

For example, outdoor clothing and equipment store GO Outdoors and fitted kitchen specialist Harvey Jones Holdings have opened new stores; catering service provider Waterfall Servcies has grown and diversified since its acquisition of catering firm Taylor Shaw; and medical PR agency Fishawack has recently acquired Nexus Communications in the US.

Some investors who are looking for VCT tax advantages may prefer this top-up of an established VCT because they will benefit from access to a mature portfolio at the start, unlike a separate share issue or a new VCT. New investors who subscribe now will also be eligible for any final dividend for the year ending March 31, 2010. For existing investors, the top-up means fixed costs will be spread over a wider asset base.

However, the Matrix income & growth 4 VCT and the ProVen VCTs are also issuing top-ups which could compete with this trust.

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