Close Venture Management (CVM) is launching its largest venture capital trust (VCT) to date. It is seeking to raise up to £45m with the aim of providing investors with a regular and predictable source of income combined with the prospect of longer term capital growth.
The fund will invest around 45% of the net funds raised in lower risk, ungeared property-based businesses operating in the leisure sector and with a particular emphasis on public houses. The remaining funds will be invested in UK high growth businesses across a variety of sectors. These will range from lower risk, income producing businesses to higher risk technology companies. CVM is setting aside 10% of the funds raised from this new VCT to invest in spin-out companies from Brunel University Enterprises Limited.
Once the funds have been fully invested an annual net revenue dividend of around 3.5 pence per share will be paid.
The minimum subscription level for the offer is £3m and investors will benefit from the new VCT tax reliefs introduced in the UK budget this year. Investors may receive income tax relief at 40% on the amount invested, provided the shares are held for a minimum of three years.
Patrick Reeve, managing director of CVM, said: “We don’t see it a problem to raise this amount. We believe that the launch of our latest VCT comes at a time when, owing to the recent changes in the tax regime, incentives for investing in a VCT could not be better.” He adds: “If you make it look as much like a pension as you can, the more attractive this vehicle becomes to investors.”
The fund is designed to be low risk through its investment in the leisure sector. CVM’s first generalist VCT launched in 1996 and also invests in ungeared property-based businesses and is the best performing of CVM’s generalist funds. The fund has raised around £43m so far and produces a high dividend yield and is currently trading above its net asset value.