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Amati VCT & VCT 2 - New fundraising and potential merger

Sophisticated and complex high-risk tax-sensitive investments in small companies: handle with care
CrackAddick
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Amati VCT & VCT 2 - New fundraising and potential merger

#63671

Postby CrackAddick » June 29th, 2017, 2:04 pm

As per below, found on the Amati website (Unfortunately I'm not yet approved to post the link as a proper URL)

"
amatiglobal.com/press.php?date=20170628

Amati VCT and Amati VCT 2 have confirmed that that they are considering merging. They said discussions were ongoing between the two companies' boards and whether a merger was proposed or not, the boards intended to launch a joint fundraising with a prospectus to raise around £20m between the two VCTs later this year.

scotia
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Re: Amati VCT & VCT 2 - New fundraising and potential merger

#63685

Postby scotia » June 29th, 2017, 2:54 pm

Joined-UP VCTs are a nuisance to an ordered policy of sell after 5 years and reinvest. If I sell Amati 1, then I don't have to worry about recent purchases of Amati 2. But with only one Amati VCT I will in the future have to keep a 6 month separation. And there also seems to be a complication in the interim period - if the two are amalgamated, does a historic purchase of Amati 1 now Link with a recent purchase of Amati 2?

parallellines
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Re: Amati VCT & VCT 2 - New fundraising and potential merger

#63957

Postby parallellines » June 30th, 2017, 2:11 pm

Where the two VCTs are near-mirror image ( or as in the case of Hazel, exact mirror image) it could be argued that the sell and reinvest strategy is exploiting a loophole in the legislation. It might be best if the market did eliminate the abuse, so that we don't have even more onerous legislation imposed on us.

UncleEbenezer
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Re: Amati VCT & VCT 2 - New fundraising and potential merger

#63965

Postby UncleEbenezer » June 30th, 2017, 2:25 pm

parallellines wrote:Where the two VCTs are near-mirror image ( or as in the case of Hazel, exact mirror image) it could be argued that the sell and reinvest strategy is exploiting a loophole in the legislation. It might be best if the market did eliminate the abuse, so that we don't have even more onerous legislation imposed on us.

Disagree.

Sibling-VCTs have been around a lot longer than the legislation, and the lawmakers were well-aware of them. The cost of sell-one-buy-the-other is sufficiently high to prevent it looking like a substitute Enhanced Buy Back to get round the legislation. Unless and until the VCT stables find a wheeze to work around those costs.

They are arguably a loophole in other legislation: specifically, limitations to a VCT's holdings in an investee. But that's a long-standing thing, and nothing to do with investors trading VCT shares.

scotia
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Re: Amati VCT & VCT 2 - New fundraising and potential merger

#64017

Postby scotia » June 30th, 2017, 5:50 pm

Like Uncle, I also strongly disagree - I do not see a policy of selling at the end of a 5 year hold as being related to any sort of market abuse. The contract on income tax relief is for 5 years. Thereafter the sale proceeds are mine. It does seem strange that there is legislation which restricts my repurchase for 6 months - especially since a sale and repurchase of conventional equities in order to burn off Capital Gains has simply an out-of-market period of 30 days. However, ignoring the injustice of the 6 month period, I cannot see how the purchase of shares in a VCT with a completely different set of Directors can reasonably be linked to the earlier sale. In the government's consultation document, they referred to " a sale of shares held in that VCT or another VCT managed by the same management group". However following this consultation, they specifically limited the restriction to "that VCT".


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