Baronsmead VCTs look to raise £40 million

23 September 2020 – With shareholder early bird savings of 0.5% and 0.75% for existing shareholders until 30 October (or on the first £7.5m raised in each of the 2 VCTs), Baronsmead is looking to raise £40 million, with a £35 million over-allotment facility across two VCTs.

Baronsmead is one of the more established VCT providers, having delivered a strong track record off the back of a blended strategy of unquoted and quoted AIM investing. In the past, much of the VCT performance has been supported by a portfolio of unquoted asset backed investments. Lately, however, the VCTs have had more of an AIM bias due to an overall rise in these holdings. Baronsmead is intending to even this out, with a future deal flow heavily weighted toward unquoted early stage companies.

The unquoted portion of the portfolios is managed by Bevan Duncan, who has worked in VCTs for 15 years. He works within a management team of four who boast a combined 50 years in the industry. Going forward, the unlisted pot of holdings will tilt more towards riskier growth equity, as asset backed investments no longer qualify. Investors can still benefit from these legacy holdings as they account for half of the unquoted investments. However, investors should bear in mind that the risk of the VCTs will increase overtime.

The AIM part of both strategies is managed by the highly experienced Ken Wotton, who also manages the LF Gresham House UK Micro Cap and LF Gresham House UK Multi Cap Income funds, both of which are on the Chelsea Selection. These two funds also make up a part of the unqualified portfolio. Ken's AIM strategy has held up positively during the pandemic and provided the VCTs with resilience. This has, in part been because Ken has a preference for tech and healthcare stocks which have performed well during COVID. For example, Ken invested into Ideagen, a governance, risk and compliance software company, in 2013 with an initial investment of £3m. To date the business has realised proceeds and income of £10m, and Baronsmead still maintains a £10m position (Aug, 2020).

Baronsmead has an ambitious dividend target of 7% and investors should take note that this is not guaranteed. To invest, please visit our VCT page to download a prospectus, or contact 020 7384 7300 to order one.

Published on 23/09/2020