Review: Albion VCTs

Archived article

Archived article: please remember tax and investment rules and circumstances can change over time. This article reflects our views at the time of publication.

If you were to sum up the Albion VCTs in a few words, ‘variety’ or ‘broad appeal’ could be likely candidates. 

Five of the six Albion VCTs are currently fundraising and the portfolio of each includes – to varying degrees – a mix of old-style asset-based investments, renewable energy projects as well as earlier and later-stage technology companies. 

The historic track record might be appealing to income conscious and growth-focused investors alike. 

Together the five VCTs have paid over £70 million in dividends in the last five years. This is equivalent to a cumulative yield of between 24%-35% of NAV, depending on the VCT. Also, as each VCT aims to pay dividends twice a year in separate months, investors in all five could potentially receive a regular income stream throughout the year. 

Growth focused investors will probably notice the capital growth of several portfolio companies. They generated £98.4 million in unrealised gains in total in the last five years. 

Dividends are in no way guaranteed and past performance is not a guide to the future. 

But what lies behind the performance? 

Source: Albion Capital. Past performance is not a guide to the future. Dividends are variable and not guaranteed. The bar chart shows Net Asset Value and cumulative dividends (paid out) over five calendar years each year (YTD to 30 September), pence per share.

The income story so far

Two main factors have supported dividends in the last five years. 

First, there is the income the VCTs receive from their legacy investments. These, no longer permitted under current rules, generated £36.7 million in income. 

Second, Albion has been able to achieve a number of exits. An example is Grapeshot, which developed a platform to better target online advertising. Albion invested in 2014. Four years later the company was acquired by Oracle, generating a return of c.10x cost for the VCTs. As ever, past performance is not a guide to the future.
 Grapeshot – Albion VCTs

The growth story so far

A number of portfolio companies have seen uplifts in their valuations. Indeed, this is what has driven the bulk of the performance.  

An example is Quantexa, a technology startup aiming to tackle complex financial crime. Albion first invested in 2017. The latest funding round in mid-2018 was based on a 10x greater pre-money valuation. Please note, valuation uplifts are unrealised.

Quantexa – Albion VCTs

This review first appeared in our investment newsletter published on 17 November 2019. Please remember, VCTs invest in smaller companies, which are high risk: you could lose all the capital you invest.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.

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