Beringea, manager of the ProVen VCTs, has announced a top-up offer into ProVen Growth & Income VCT. It offers access to a fully invested generalist VCT focusing on growth-orientated companies. A broad range of businesses are represented, but there is a particular focus on the digital technology sector. There are several interesting-looking companies here including Fjordnet, a digital design agency, which has helped develop some award winning mobile phone applications such as BBC i-Player.
Beringea has an experienced management team which stick to a tried-and-tested investment strategy. First, they target companies in industries undergoing fundamental change driven by new technology or consumer behaviour. Second, they only invest in companies with annual sales of £1m or more with the ability to expand rapidly. They avoid unproven businesses or opportunities to turn around ailing firms. Finally, they look to control the risk of each holding in a number of ways: ensure an attractive entry price, use loan stock as part of each deal (which ranks higher in priority than equity if an investee company runs into trouble) and try to ensure intellectual property or physical assets underpin their investment.
Please note VCTs are higher risk long-term investments that are not suitable for mainstream investors, or those who need access to their money in the short term; as such we believe they are only suitable for sophisticated investors. The FSA suggest advisers only recommend them to investors with an annual income of more than £100,000 or investable assets of more than £250,000. However, as we offer an execution only service, we allow clients to make their own decision if they accept full responsibility for the suitability of the investment; if you have any doubts please contact us for advice.
Previously this VCT was run with the aim of paying out large dividends each time investments were realised. However, the emphasis will now change to growing net asset value and providing steadier, if lower, dividends of around 5% a year, though this cannot be guaranteed. In my view it could be an opportune time to invest. The portfolios contain a number of investments approaching maturity, potentially providing some good returns if they can be sold at an attractive price.
For more information on VCTs, the risks, and the tax reliefs available, please refer to the VCT section of our website. The risks of this VCT are described in more detail in the prospectus. Remember, VCTs are only for experienced investors who understand them. They invest in smaller, usually unquoted companies, some of which could struggle and even fail altogether, so you could get back less than you invest. As this VCT invests in earlier stage, more growth orientated businesses than others, risk is increased further. VCTs also have higher charges than most types of funds and usually include performance fees. There might only be one market maker for VCT shares which means they can be harder to sell than main-stream equities, and they are exposed to substantially higher risks. Please remember tax rules can change, the benefits will depend on your circumstances and that to retain the 30% income tax relief investors must hold the shares for at least five years and the VCT must retain qualifying status.
If you're interested in this VCT offer please refer to the VCT section of our website for further details and the prospectus, which should be read before investing. If you proceed with an application we'll assume that you regard yourself as a suitably sophisticated investor. If you have any doubts you should seek expert advice.