Northern VCTs oversubscribed within two days

Three Northern VCTs have raised £13m in two days as products across the industry become oversubscribed in record time.

Filings to the Stock Exchange this morning confirmed the Northern Venture Trust, Northern 2 and Northern 3 have all raised £4.3m having only opened for fundraising on Tuesday.

NVM Private Equity chairman Tim Levett says they were expecting a high level of demand, as they had not raised new funds since 2013 and the offers were limited to a total of £13m by the prospectus rules. 

“As it turned out, the volume of applications was even greater than expected, which suggests there is a lot of money available for investment in VCTs this year and a relative shortage of quality offers in the market,” Levett says.

Sixty per cent of VCTs across the industry are now at capacity in contrast with previous tax years when most inflows take place in March and the first week of April.

ProVen Growth & Income and the Unicorn AIM VCT closed their offers last week , while the Maven VCT 6 closed this week.

The VCT market could shut-up doors well ahead of the tax year end, Tilney Group managing director Jason Hollands says. 

Demand is there for sure, fuelled by further cuts to the pension lifetime allowance and the new tapered annual pension allowance for higher earners that were both implemented this tax year. This is prompting some investors to look for alternative tax efficient investment to pensions.

“VCTs are also on the radar of income seekers as yields can be high – and their dividends are tax free.”

This comes as changes to VCT and EIS deals meant many funds are already sitting on a lot of cash and haven’t needed to fundraise this year or are seeking a reduced amount of cash from existing shareholders.

The Baronsmead VCTs, the Mobeus VCTs and Puma have postponed their planned offers.

Hollands recommends the Hargreave Hale AIM VCTs and the Triple Point Income E-Share for investors seeking to buy into the tax-efficient products. He adds the Albion VCTs as another good pick, but warns these are 82 per cent at capacity.