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AIC survey reports strong year for VCT investments (FTSE Flobal Markets)

The good news for VCT investors is that a strong year for capital is being reported, with managers overwhelmingly finding a good flow of investment opportunities and some companies enhancing their investment teams finds a new survey by the Association of Investment Companies (AIC).

In a better economic environment, how are those small companies at the coal face of Britain’s economy fairing? The AIC  published its latest survey of VCT fund managers, which looks to cover around 70% of the venture capital market.  Some 67% of managers are currently finding lots of opportunities, says the survey, while 33% say there are some opportunities.  Some 58% of VCT managers say investment opportunities are at similar levels to last year, 33% say opportunities are up on last year, and 8% say opportunities are down on last year. London and the south  of the United Kingdom re equally the most favoured regions, closely followed by the Midlands & East Angliathen by the north west.  Technology/IT is the most favoured sector, followed by business services and leisure/hospitality. 

 “In terms of outlook, generalist VCT managers will continue to provide SMEs with a valuable source of capital. The leading managers have access to a steady flow of high quality transactions and the ability to attract regular investor funds. We’ve just successfully closed another top-up fundraising, having raised around £40m in the past 15 months from investors keen to access the strong tax-free returns from VCTs, and have invested in 17 profitable UK companies across a range of sectors in the past 2 years.  Our deal flow remains at healthy levels across the UK, with a number of attractive transactions in progress with our regional investment teams,” avers  Bill Nixon, managing partner of Maven Capital Partners, manager of the Maven VCTs.

Mobeus Equity Partners, Beringea, Foresight Group, YFM Private Equity, Maven Capital Partners and Puma Investments were particularly bullish in this regard, repots AIC. When it comes to SMEs securing bank debt, the picture was more mixed.  Some 50% of VCT managers say their investee companies are finding it easier to secure bank debt than five years ago; but 33% say it is worse and 17% say it is the same. This suggests VCTs continue to fill an important funding gap. Exports are seen as particularly important (and 73% expect exports to be up this year), both as a means of generating sales and diversifying economic risk.

More cautious optimism, in the context of the upcoming UK General Election, came from Dr Paul Jourdan, CEO of Amati Global Investors: "May’s general election injects uncertainty into the investment outlook for 2015. However, the kinds of small companies we look to hold in the Amati VCTs are mostly focused on specific growth niches, which can prove resilient in the absence of a major setback.” 

 

Read the full article here on the FTSE Flobal Markets website.