Downing FOUR VCT plc - Generalist
Downing FOUR VCT - Generalist Share Class is raising £20.3 million and offers your clients the opportunity to support smaller UK companies with growth potential across a variety of sectors. Please read the key risks below.
- Strategy: seeking to invest in a variety of growth companies and businesses supported by tangible assets
- Portfolio: investments to be made in early stage businesses across a range of sectors
- Experience: our origins date back to 1986 and we have over £240 million of VCT funds under management (as at 30 June 2018)
The Downing FOUR Generalist Share Class is seeking to provide attractive returns to investors by investing in a portfolio of growth companies, at different stages in the business life cycle.
The Generalist Share pool will invest in companies that are likely to be generating revenues but many may still be pre-profit, with our funding expected to push them closer to break-even and profitability. Some companies may already be profitable but with cashflows that may not be enough to fuel their growth potential.
Alongside the standard lump sum available for one-off subscriptions, we have a monthly subscription option for investors to subscribe by way of a standing order. Share allotments will be made at least quarterly with tax and share certificates issued accordingly.
The key features of Downing FOUR VCT
- No penalties on exit: Downing FOUR operates a share buy-back policy at nil discount to NAV (subject to VCT regulations and liquidity). This should give shareholders the opportunity to sell their shares and exit the VCT in one transaction, at a time that suits them, with no exit penalties.
- Monthly subscription option: unlike other companies, we offer a monthly standing order option. Subscriptions are subject to a minimum lump sum of £5,000 or £500 per month (maximum £200,000 or £16,666 per month across both share classes).
- Target dividend: 4% p.a., from summer 2020. Please note, this is a target only and is not guaranteed.
- Funds awaiting investment: as returns on cash deposits are currently at very low levels, up to 70% of the funds awaiting investment will be invested into listed opportunities and/or funds managed by Downing’s Public Equity team (subject to market conditions and cashflow requirements). The focus will be on funds with micro-cap and small-cap investment strategies.
|Minimum subscription: £5,000 lump sum or £500 per month (across both share classes)||Maximum subscription: £200,000 lump sum or £16,666 per month (across both share classes)|
Method of payment for application
Payments for applications can be made by cheque, made payable to:
Downing FOUR VCT plc, or by electronic bank transfer using the payment details below.
How to apply
If you would like to invest, please first read the Prospectus before completing an application form.
VCTs are considered to be higher risk investments and your clients may lose some or all of their capital. We’ve outlined the key risks associated with an investment in the Generalist Share Class of Downing FOUR below – please refer to the Prospectus for a full list.
- Capital is at risk: the value of the shares and income derived from them can fluctuate. There’s no guarantee your clients will get back the amount they invest.
- Investments are long-term and high-risk: your clients should be prepared to hold their shares for a minimum of five years. Qualifying investments made by the Company will be in businesses which have a higher risk profile than larger “blue chip” companies and whose securities are not readily realisable and therefore may be difficult to realise.
- Tax reliefs are not guaranteed: the tax rules, or their interpretation, in relation to an investment in the Company and/or the rates of tax may change during the life of the Company. Changes may apply retrospectively, which could affect tax reliefs obtained by shareholders and the VCT status of the Company. If your clients dispose of their shares within five years of issue, they’ll have to repay any income tax reliefs originally claimed.
- Maintaining VCT status is not guaranteed: there can be no guarantee that the Company will retain its status as a VCT. Losing VCT status could lead to adverse tax consequences including a requirement to repay the 30% initial income tax relief.
- Shares may be difficult to sell: although the Company’s shares are traded on the London Stock Exchange, there may not be a liquid market in the shares and your clients may find it difficult to sell them. In addition, the price at which shares are traded may not reflect their underlying net asset value.
- Your clients cannot rely on past performance: there can be no assurances that the Company will meet its objectives or identify suitable investment opportunities. The past performance of the Company and other funds managed or advised by Downing are not a guide to future performance.
- There are investment restrictions: the Company’s ability to obtain maximum value from its investments may be limited by the VCT rules. Changes in the VCT rules may be applied retrospectively and may reduce the level of their returns. Several new investment restrictions came into force in 2015 and 2017, which include VCT funds being prohibited from being used to finance management buy-outs or the acquisition of existing businesses as well as the inclusion of a ‘capital-at-risk’ test. In addition, the maximum lifetime amount a company can receive from VCTs has been restricted, as well as limiting VCT investment to companies under a certain age.
- There are market risks: the investments the Company may make in funds comprising listed stocks will be subject to normal market fluctuations and other risks inherent in investing in securities.