Octopus Investments is enabling people to invest in VCTs for the first time through their ISA.
The move comes as Octopus announces the launch of the latest fundraise for its Titan Venture Capital Trust (Titan), the largest VCT in the UK, with a record-breaking target of GBP120 million with the potential for a further GBP80 million, subject to demand. The news comes on the back of growing demand for its flagship VCT.
This is the largest ever fundraise for a VCT and once fully subscribed, would take the total fund size to over GBP600 AUM, providing significant capital for investment in early stage businesses across the UK.
Titan offers investors comfortable with the risks of smaller company investing, attractive tax incentives that accompany a VCT and access to a well-established and diverse portfolio of around 50 smaller companies. These range from very young early stage businesses, such as the retail property marketplace company Appear Here, to well-known household names including Secret Escapes, the members-only holiday company. For the first time, the market-leading VCT provider will offer investors the opportunity to invest in a VCT using assets already within their ISA portfolio.
Paul Latham, Managing Director at Octopus Investments, said: “It’s a truly exciting time for VCTs. Figures have shown that during the last tax year, VCT demand was the strongest in a decade, an increase that has been fuelled by changes to pensions legislation and the buy-to-let market in recent years. VCTs are now seen by many to be a powerful planning tool, and have proved popular with those looking for a tax-efficient way to complement and diversify their portfolio.
“By enabling people to invest in a VCT through their ISA, we are opening up the VCT market to more investors. We want to give people the opportunity to access the planning benefits of a VCT and the growth potential of some of the UK’s most exciting growth companies.”
On the back of continuing changes to pensions and following requests from advisers and investors, Octopus was the first manager to introduce a direct debit scheme last year to enable investors to make monthly contributions into their VCT. Titan was the first VCT in the UK to offer this service, with new share issues to investors at around three monthly intervals.
Paul Latham adds: “As market leader, we are proud to be able to meet both adviser and investor demand for different ways to invest in a VCT, whether through an ISA or their direct debit, while helping to drive further funding into such a vibrant sector of the UK economy.”
VCTs have proved to be a vital source of funding, and continue to play a critical role in helping to develop the next generation of UK business.
Jo Oliver, fund manager of the Octopus Titan VCT, says: “Since we launched Titan ten years ago, we have seen the UK entrepreneurial scene thrive and flourish. Europe has become a hub for building world-class technology companies. In 2010 there were only two European tech businesses valued over $1 billion and yet there are now nearly fifty, only seven years later. Eighteen of these are headquartered in the UK.
“The investment opportunity for early stage investing in this country is huge. Titan often backs successful companies from the earliest stage of their development working closely with the talented entrepreneurs building them. We are incredibly excited about the strength of the pipeline of investment opportunities for us over the coming years as we enable investors to access the growth potential of these businesses.”
Alex Davies, Chief Executive and Co-Founder at Wealth Club, says: “Octopus Titan VCT has a great track record and a very experienced team behind it. This latest fundraise gives investors the opportunity to support some of the UK’s fastest growing companies. No other VCT has had the same level of success in spotting rising stars, supporting their growth from start up right through to the realisation of a successful exit to the likes of Amazon, Microsoft and Twitter. With cuts to the pension allowances, restrictions on buy to let investing and tougher taxation we expect demand from investors to be greater than ever.
“With Octopus’ latest innovative move, more people will now be able to access VCTs by using their existing ISA assets to invest in VCT shares and gain exposure to the growth potential of these companies.”
VCTs offer investors up to 30 per cent upfront income tax relief providing that shares in the VCT are held for at least five years, as well as tax-free dividends and tax-free growth. Titan has an impressive track record of paying dividends, having announced total dividends of 66p per share to investors since it was first launched.
The share offer is open until 4 September 2018, but may close earlier. The minimum investment is GBP3,000 while the maximum investment qualifying for tax relief is GBP200,000.