Busy times for Northern Venture Managers

Northern Venture Managers (NVM) has raised GBP22.04 million through the latest share issue for Northern 2 VCT and plans to launch Northern 3 VCT in September. The top-up share issue for Northern 2 VCT was announced in January. It closed on the June 28 and brings the net assets of the VCT to over GBP40 million. NVM hopes to raise GBP25 million from private individuals for it’s new VCT.

The offer for Northern 2 VCT had a maximum target of GBP25 million. Alastair Conn, managing director of NVM, said: “In an ideal world it would have been nice to meet the target.” However in a year when at least three VCTs have been withdrawn after failing to attract sufficient investors the issue represents a successful raising. He added: “In the current climate investors are going for well-established investors with a good track record, and we’re one of them.”

Northern 2 VCT was launched in 1999 and raised GBP21 million through an initial public share offer. The Northern 3 VCT will be the third generalist trust raised by NVM since 1995, it also manages an AIM-focused VCT and the Northern Investors Company. Altogether the three existing VCTs have raised GBP100 million.

The first VCT, a 1995 vintage, is almost fully invested and a large proportion of the capital raised in the first issue of Northern 2 VCT has also been committed. Conn is optimistic about deal flow: “If anything deal flow is on the increase. We expect a number of deals we’re working on to complete in the next couple of months.”

He said the company is seeing a lot of activity in the South of England, NVM opened a Reading office a year ago and has recently added investment executive Karl Harridence (previously with Ernst and Young) to that team. Newcastle and Edinburgh, more traditional hunting grounds of Northern Venture Managers, are still proving fruitful on the deal front and Richard Gibson, previously co-fund manager of Ley Gee’s technology based VCT, has joined NVM’s Edinburgh office as an investment executive.

The new VCT will invest in smaller unlisted UK companies, including new AIM issues, across a spread of industry sectors and financing stages. It will co-invest with the other funds managed by NVM on deals such as NVM’s recent commitment to a GBP34 million round raised by biotech company, Cyclacel. NVM’s most recent investment in DxS, a Manchester-based biotech company, included capital from the first two generalist VCTs and the Northern Investors Company. NVM covers a broad spectrum of investment opportunities under GBP5 million.

“We expect Northern 3 VCT to be one of the most popular issues this year. NVM is currently seeing a strong flow of new deals, and following the recent adjustment in the quoted markets we are finding that companies’ advisors are taking a much more realistic view on deal pricing, which should have a beneficial impact on future investment returns, ” said Conn.

The issue will be sponsored by Brewin Dolphin Securities and investors can have their shares allotted in either or both of the current and next tax years. As with NVM’s previous VCTs the Northern 3 VCT aims to combine income yield and long-term capital growth from UK companies. Under the VCT legislation it will maximise tax-free capital and income returns to shareholders.