Four established VCTs, predominantly invested in management buyouts (MBOs) of established profitable companies.
Mobeus Equity Partners is raising up to £80 million, including a £30 million over-allotment facility, across its four VCTs. The two larger VCTs, Mobeus Income & Growth VCT (MIG) and The Income & Growth VCT (IGV), are raising a maximum of £25 million each, while Mobeus Income & Growth 2 VCT (MIG 2) and Mobeus Income & Growth 4 VCT (MIG 4) are raising a maximum of £15 million each.
This top-up fundraise into existing VCTs offers investors immediate access to a mature portfolio. A key attractive feature of the existing portfolios is that they are predominantly invested in management buyouts, a strategy that is no longer investable in a VCT structure.
Going forward, the investment strategy will focus on smaller, faster growing companies. Mobeus ensure their conservative and risk averse approach to investing is not compromised by placing focus on companies that are already revenue generating, with established proven products or services. These companies are required to “have a clear signpost to profitability within 24 months” and must operate in markets with a clear opportunity of significant growth.
There will be implications of the risk / return profile of these VCTs especially over the medium to longer term. We suspect that the overall yield available will decrease over time, and given the focus on smaller and younger companies, we expect the risk profile to increase.
Investors who take an allocation to more than one VCT in the suite would gain exposure to a broad and balanced portfolio, benefiting from the added diversification. This is because, whilst these VCTs do co-invest, the underlying portfolios differ due to differing launch dates, size and cash availability. As such, the dividend targets differ between VCTs, ranging from 4-6p per annum. The target dividend yield for investors who take an equal allocation across the four VCTs is 5.5% (based on the latest reported net asset value).
We expect this will be one of the most popular offers this tax year and would therefore advise investors to act quickly. The last Mobeus VCT fundraising, in the 2014/15 tax year, raised £39 million in a 13 week period.
We believe this to be a significant fundraise, especially given the current cash weightings across each VCT. However, the management team are confident that this is in line with the pipeline of opportunities. The funds raised in this offer will be deployed in new investment opportunities as well as continued investment into existing portfolio companies, where applicable.
How to invest
All application forms should be sent to EQ Investors in order to qualify for the discounts. Please note that information on closing dates is provided by the VCT Managers. In practice offers may be over-subscribed earlier, or may be extended. During the two months prior to the end of the tax year we strongly recommend that applications are submitted to us as soon as possible to avoid disappointment.
The information set out above is included for information purposes only and is not an offer or an invitation to buy or sell or a solicitation of an offer or invitation to buy or sell or enter into any agreement with respect to any security, product, service or investment. Any opinions expressed do not constitute investment advice and independent advice should be sought where appropriate. All information is current as of the date of publication, subject to change without notice, and may become outdated over time.
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Venture Capital Trusts should be regarded as higher risk investments, suitable only for experienced investors who are able to withstand losses.