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Downing ONE VCT launches £20 million fundraise
Investment manager Downing LLP is pleased to announce that Downing ONE VCT has launched a £20 million top-up offer, to support the growth of existing portfolio companies and take advantage of a strong pipeline of new opportunities.
This latest offer is designed for investors seeking a generalist strategy, with the advantage of attractive VCT tax reliefs. In addition to the usual lump sum offer, investors in Downing ONE can now opt for monthly subscriptions*. Downing ONE VCT is one of the larger, more diversified VCTs in the market with net assets of approximately £90 million. The current portfolio comprises approximately 80 companies.
As part of its strong pipeline of investment opportunities, Downing ONE VCT has recently committed some £3.7 million in four fast-growing UK-based companies. These include Xupes Ltd, an e-commerce retailer of luxury pre-owned jewellery.
Downing ONE VCT intends to provide an annual dividend of at least 4% p.a., based on the latest published net asset value (NAV). This is the equivalent to a tax-free yield of 5.7% p.a. on the current offer price (after 30% income tax relief). Investors also have the option to reinvest their dividends in new shares, which should qualify for the usual tax reliefs.
Commenting on the Downing ONE £20 million fundraise, Downing LLP’s Kostas Manolis, Partner and Head of Unquoted Investments, said:
“This latest fundraise comes at an exciting time for investors - there is a healthy pipeline of interesting investment opportunities in the market and signs of strong appetite for VCTs more broadly. We believe supply and demand is still skewed in favour of investors as there are many small companies with exciting prospects that are still struggling to access funding from traditional funders such as banks.”
“At the same time, the ongoing Patient Capital Review is looking at the benefits to the UK economy of VCT funds versus other types of funding. It is our belief that VCT funds are successfully delivering ‘patient capital’: the structure of the scheme allows for multiple follow-on investments to support growing companies and a long-term approach, afforded by the absence of fund-life pressure to realise investments too soon. It is for these reasons that VCTs still have a very important role to play in the long-term investment landscape, small business funding and the wider UK economy, particularly when you consider that VCT-backed companies have created 20,000 jobs since 1995.”
WHY LARGER VCTs?
Investing in a larger VCT can bring a number of benefits in comparison to smaller VCTs. These benefits include:
- Lower running costs: the annual running costs for Downing ONE are capped at 2.75% of net assets – one of the lowest expense caps in the VCT sector
- Increased liquidity: this should help facilitate Downing ONE’s intention of offering regular share buybacks at 5% discount to NAV (subject to VCT regulations, market conditions and liquidity).
- Greater diversification: currently, no single investment in Downing ONE accounts for more than 7% of the portfolio by value.
MORE ABOUT DOWNING ONE
Downing’s first VCT, Downing Absolute Income VCT 1, launched in 1997 at a price of 100p per share. By November 2013, its total return was 153.7p per share. At that point, it merged with five other VCTs to form Downing ONE VCT, with shares rebased to a price of 100p per share.
The track record of Downing ONE VCT since the merger is set out below:
Please note, past performance is not a guide to future performance.
For journalist enquiries, please contact:
Pamela Morris, the lang cat
0131 202 6037
Jean Birrell, Downing LLP
NOTES TO EDITORS
The new monthly standing order option for Downing ONE VCT allows investors to subscribe a regular amount in additional to the usual lump sum offer. These monthly subscriptions will be allotted at least quarterly by the Company.
Offer details & charges
- Offer size: £20 million top-up
- Minimum investment: £5,000
- Maximum investment: £200,000 per tax year
- Initial charge: 2% (advised retail or direct investors) 4% (execution only or professional clients)
- Management charge: 1.8% p.a. of net assets
Key risks associated with Downing ONE are listed below. Please refer to the Prospectus for a full list of risk factors.
- Capital is at risk: The value of shares in the VCT can fluctuate. There is no guarantee that the valuation of shares will fully reflect their underlying net asset value, or that you will be able to buy and sell at that valuation or at all.
- Tax reliefs are not guaranteed: the availability of the tax reliefs depends on the companies invested in maintaining their qualifying status. If Downing ONE does not maintain VCT qualifying status investors could lose the upfront 30% income tax relief and all other tax reliefs. All tax reliefs are subject to change in the future and personal circumstances. Please refer to HM Revenue & Customs’ website for further guidance on the tax reliefs available on VCT investments.
- VCT rules are restrictive: Downing ONE’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 returns for investors.
- Past performance: Downing ONE invests in small unlisted companies which, by their nature, are higher risk than larger “blue-chip” companies. Past performance is not a reliable indicator of future performance.
- This is a long-term investment: You should be prepared to hold your shares for a minimum of five years to qualify for the VCT tax reliefs available.
- Shares may be difficult to sell: it may prove difficult for shareholders to sell their VCT shares at a fair price, or at all.
- Investors may lose money: the value of shares may go down as well as up and shareholders may not receive back the full amount invested. In addition, there is no certainty as to the level of dividends.
- Future changes to legislation: the government is currently undertaking a consultation in connection with its ‘Patient Capital Review’. The outcome of this review could result in changes to government policy on tax relief for investment activities and, perhaps, legislative changes to the VCT Scheme. The government does not generally make retrospective changes to tax legislation but there can be no guarantee that changes to the VCT Scheme will not result in a further increase in the risk profile of investments that can be made by VCTs, could result in the Company having to review its dividend, share buyback or other policies or could possibly result in loss or restriction of tax relief for investors.
About Downing (www.downing.co.uk)
Downing is a London-based FCA authorised and regulated investment manager operating a broad range of tax efficient products. Its Venture Capital Trusts are a type of collective investment scheme which allow investors to support the growth of small UK businesses while receiving attractive tax reliefs in return. The investment manager has 20 years of experience, 35,000 investors and in excess of £950 million of funds under management.
This is for information only and does not form part of a direct offer or invitation to purchase, subscribe for or dispose of securities and no reliance should be placed on it. An investment should only be made based on the product literature or Prospectus. We recommend investors seek professional advice before deciding to invest. Any personal opinions expressed are subject to change and should not be interpreted as advice or a recommendation. Downing LLP is authorised and regulated by the Financial Conduct Authority in the UK (Firm Reference No. 545025). Capital is at risk. The value of investments and any income derived from may go down as well as up and investors may not get back the full amount invested. Terms and conditions apply.
 The intended dividend of at least 4% p.a. is a target and cannot be guaranteed. All dividends are subject to sufficient distributable profits, liquidity and VCT regulations.
 Intelligent Partnership VCT industry report 2016/17