Review: Foresight 4 VCT

If there was an accolade for the most dramatic VCT makeover, the Foresight 4 VCT could surely be a strong contender.

It started its life as an amalgamation of several previously underperforming VCTs run by other providers, which Foresight was asked to take over and revitalise.

For the last five years it has been diligently pruning the portfolios it inherited and, since 2015, started adding several new investments. Last year it merged with Foresight 3 VCT, which created a larger portfolio and facilitated cost savings and administrative efficiencies.

Today Foresight 4 VCT is a lower-cost private equity generalist VCT with a ‘refreshed’ portfolio of 19 active companies and net assets of £120 million (November 2018).

The current portfolio

The largest holding is Datapath, which represents 15% of the VCT’s assets (November 2018), expected to be 10% if the current offer is fully subscribed.

Datapath is a manufacturer specialising in video wall and data wall technology. It has around half the total global market share of controllers for video walls. Since Foresight backed the management buyout in 2007, the company has experienced tremendous growth, and has repaid the VCT 3x over already, although not without some volatility and falls, too. Past performance is not a guide to the future.

An example of recent investment is Mologic, which develops point-of-care medical diagnostic devices to help patients manage their own conditions. The company was co-founded by one of the inventors behind the well known Clearblue pregnancy test and is currently working on diagnostic devices for conditions ranging from malaria to sepsis.

Foresight 4 VCT – DatapathDatapath has clients in 100+ countries and in multiple industries from security to education and healthcare

A capable team with ambitious plans

Foresight has set an ambitious fundraising target of up to £50 million (with a £30 million over-allotment facility). If successful, the VCT could increase its size by 50%.

For a different team, this could be a tall order. However, Foresight’s experience and position in the market should help.

The award-winning management team has access to a strong pipeline of deals sourced from a network of 1,300 intermediaries, as well as from the entrepreneurs and small businesses events it hosts across the country and Foresight’s extensive personal and professional network.

The team is also able to coinvest with institutions and offer a funding package others may not be able to match. Capital is at risk.

Source: Foresight. Past performance is not a guide to the future. Dividends are not guaranteed. Chart shows Net Asset Value and cumulative dividends to 31 Mar each year, pence per share.

Risks – important

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice. 

VCTs are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

Tax rules can change and benefits depend on circumstances.

VCTs can now only invest new money in growth capital deals. Management buyouts/replacement capital deals and investments in mature companies are no longer permitted. This results in considerably higher risks. 

What to consider next

Please visit the offer page using the link below to download the provider documents, read more (including risks and charges) and apply online.

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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