The Lemon Fool

At a time when VCT returns are lower than they were years ago and I believe that the Sunset clause has not yet been extended in legislation we seem to have even more new players. Along with the very fledgling Seneca B and Blackfinch we have a Guinness offering and a Northern group called Praetura.

Is this because some of these groups already offer EIS investments and adding a VCT to their mix is easy or is there something else that I am missing ?

I think EIS managers are attracted by the idea of recurring fees and from reinvestment in the VCT of some proceeds.

New VCTs are at a disadvantage as they cannot pay dividends from capital for the first 3 years. The Hygea deal allowed Seneca to use existing distributable reserves for the first 3 years in return for subsidising operating costs. A win win for both parties.

New VCTs struggle with the VCT analyst recommendations unless they have a track record of EIS exits and often have to give larger initial rebates.

Pembroke seemed to flourish from new. Before that, Titan started OK, appeared to languish around T5 (which raised just half what the others had done), but really took off after that first crop of successful exits and juicy special div. But in naming those, I'm probably applying survivorship bias to those VCTs that weren't already mature when I first discovered them.

I took a look at Praetura: I kind-of liked the name, and that (unlike any of the others) I'd never heard of it. Looks like an attempt to clone the Titan model, with elements like co-investment with EIS funds. A deal-breaker for me is a Titan-style 20% management bonus with no meaningful hurdle!

127tolmers wrote:
New VCTs struggle with the VCT analyst recommendations unless they have a track record of EIS exits and often have to give larger initial rebates.

I dont think that any of them will be a serious buy for a few more years yet. It seems a long time ago since we used to actually buy new VCT offerings.

Does anyone have a view on the importance of shareholding in the VCT from the directors and probably more importantly the management group ?

Karellan wrote:

127tolmers wrote:New VCTs struggle with the VCT analyst recommendations unless they have a track record of EIS exits and often have to give larger initial rebates.

I'm (still) a little puzzled by how Pembroke became so popular before it ever had a track record?

I dont think that any of them will be a serious buy for a few more years yet. It seems a long time ago since we used to actually buy new VCT offerings.

Heh. In my first year of VCT investing I bought Titan 3 and Ventus C, both new. Both turned out to be good investments, but might've been better still if bought a year later. But my ProVen/PGI "D" shares from around the same time were a waste of money. We learn from experience, and since then I think my only new VCTs have been Foresight's specialist offerings: Solar (good) and Infrastructure (adequate).

But from time to time I look at new offerings, and ponder them!

Does anyone have a view on the importance of shareholding in the VCT from the directors and probably more importantly the management group ?

It's certainly a consideration. If I'd invested when I looked at New Century and saw the manager's huge skin in the game, I might be a lot richer now (at least, if shares had been available at the time). But that's perhaps analagous to family ITs, and those seem to trade at permanent discounts.

Something that would really motivate me is if all management bonuses were paid in shares, with a five-year lock-in. Real skin in the game, but also on a realistic level.