The funds, which offer investors a 30% income tax relief and tax-free returns, will provide secured loans to well-run companies finding it hard to raise finance on attractive terms from banks hit hard by the current credit turmoil.
For the qualifying investments, the VCTs will principally provide mezzanine and senior debt to well-run companies which have found that banking terms have worsened since the credit crunch began.
In addition, Shore Capital is committed to winding up the VCTs after five years (if investors vote for it) and returning the capital to investors.
The funds have a target to return at least 120 pence to investors after five years, compared to their net investment of 70 pence, giving a net return of 11.4% per annum tax free.
The funds also boast a low initial cost for investors of 2%, compared to a typical 5% to 5.5%. For every 100 pence invested, 98 pence is put to work (at a cost to the investor of 70 pence).
Shore Capital’s track record in a diversified portfolio of alternative investments is (net of fees) an IRR of 26% per annum over 11 years and 24% per annum over the last three years.
Graham Shore, managing director of Shore Capital, said: “Our aim is to devise investment products which reflect changing market circumstances. For the coming period, cash will have a premium value, which we intend to capitalise upon. In over 11 years of investing in unquoted companies we have generally delivered excellent returns in good times, whilst in more difficult conditions we have protected capital and delivered growth in net assets per share. The new Puma VCTs are structured with the objective of achieving attractive absolute returns (and distributing these tax-free to investors), taking advantage of the tax reliefs available.”