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UK venture capital trusts end fundraising year on a high after slow start

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Fundraising was better than expected for the UK’s venture capital trust sector in the tough market conditions at the end of the 2007-08 tax year, according to the Association of Investment

Fundraising was better than expected for the UK’s venture capital trust sector in the tough market conditions at the end of the 2007-08 tax year, according to the Association of Investment Companies.

Overall, GBP219m was raised by the VCT sector, of which some GBP127m (58 per cent) came through in April, 18 per cent below the GBP267m raised during the 2006-07 tax year.

Just over half of the capital raised (GBP114m) was from new VCT launches, while 43 per cent (GBP93m) came from existing trusts raising new funds, 1 per cent from other offers, and 4 per cent from funds raised from prospectus offers issued before April 6, 2007.

Limited life VCTs almost reached 50 per cent of the year’s fundraising for the first time with GBP109m, while generalist trusts accounted for 38 per cent of overall funds raised at GBP83.8m.

Technology and infrastructure VCTs accounted for 8 per cent of overall funds raised with GBP17.3m, while AIM-focused trusts represented 4 per cent of the total at GBP9.2m.

‘After a slow start, the VCT sector has had a better year for fund raising than expected if you take into account the gloomy market conditions,’ says Annabel Brodie-Smith, the association’s communications director. ‘Clearly the funds raised are some way behind the heady fundraising levels of 2004 to 2006, when the up-front tax relief was at 40 per cent, but in historical terms they hold up pretty well.’

Level of fundraising by UK venture capital trusts has fluctuated wildly since their introduction in the 1995-96 tax year, with a low point of GBP50m in 2003-04 rising tenfold the following year to GBP505m and a record GBP779 in 2005-06. In total VCTs have attracted GBP3.4bn over the 13 years since their launch.

Founded in 1932 to represent the interests of the investment trust industry, the Association of Investment Companies today represents a broad range of closed-ended investment companies including investment trusts and venture capital trusts. The organisation has 341 members and the industry has total assets of some GBP96bn.

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