Monday 14th April 2008
VCT fundraising better than expected
Some £219 million was raised by venture capital trusts (VCTs) over the 2007/2008 tax year, down 18 per cent on the year before. But this was better than expected, according to the Association of Investment Companies (AIC), which compiled the figures.
Annabel Brodie-Smith, communications director at the AIC, comments: ‘After a slow start, the VCT sector has had a better year for fundraising than expected if you take into account the gloomy market conditions.’
Brodie-Smith adds that lower fundraising totals are only to be expected since up-front tax relief granted on investments in VCTs was reduced from 40 to 30 per cent in the 2006 Budget. An increase in the minimum holding period from three to five years, and tighter restrictions on which companies qualify for investment, may also have made the trusts less attractive to some investors, Brodie-Smith surmises.
Of the money raised, just over half (£114 million) was from new VCT launches, with a further 43 per cent (£93 million) raised by existing VCTs.
Limited-life VCTs gained 50 per cent of the year’s fundraising total (£109 million) for the first time. Generalist VCTs accounted for 38 per cent of overall funds raised, while technology and infrastructure trusts netted eight per cent and AIM-focused VCTs four per cent.
VCTs have raised £3.4 billion for early-stage companies since they were launched in 1995. Fundraising peaked in the 2005/2006 tax year, with £779 million raised, while the worst fundraising performance came in 2003/2004, with just £50 million secured by managers.
Nick Britton
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