Northern Venture Managers, the manger of four Venture Capital Trusts (VCTs) and one listed investment trust called Northern Investors, has gained its independence from its new owner Aberdeen Asset Management via a management buyout.
Northern Venture Managers was set up Alistair Conn, Tim Levett and Michael Denny in 1988 to manage Northern Investors and became involved in the VCT market in 1995.
Northern Venture Managers lost its independence in 2000 when the founders were approached by Edinburgh Fund Managers to become part of its £7.5bn fund management operation and be the cornerstone of its move into private equity fund management. Assurances that the Edinburgh Fund Managers name could be used to raise an independent institutional fund came to nothing when Edinburgh Fund Managers got into trouble with its fund performance. That trouble was recently resolved when Edinburgh Fund Managers accepted an offer from Aberdeen Asset Management to buy the business.
This was the time for Northern Venture Managers to make a move for independence, according to Tim Levett, who cites investor unease at what being part of Aberdeen Asset Management would mean. Aberdeen Asset Management already has a significant private equity capacity in Aberdeen Murray Johnstone Private Equity and an existing VCT business.
Northern Venture Managers is paying Aberdeen Asset Management £620,000 in a pre-completion dividend, and cash of £128,700, as well as a share not to exceed £2.45m in aggregate of Northern Venture Manager’s fund management revenues for three years ending December 31, 2006.
Levett say of life post buyout: “Nearly all of the 20 employees of Northern Venture Managers are shareholders. Now that we have empowered some of the younger members of the team we can maintain the momentum in the £2.5m to £4m segment of the UK market.” Levett is expecting a busy year in 2004. He notes that Northern Venture Managers put some £25m to work in 2001 and in 2002 but this fell to £17m last year, partly as a result of the continuing uncertainty around the firm’s future status.
Plans for 2004 also include looking at raising an institutional fund that will co-invest alongside Northern Investors and expanding the VCT business. To date Northern Venture Managers has four VCTs, in 1995 it raised £15m for Northern Venture Trust plc, in 1999 it raised £21m for Northern 2 VCT plc, in 2000 it raised £22m for Northern AIM VCT, and in 2001 it raised £17m for Northern 3 VCT plc.