Foresight Technology VCT – FWT shares

Launched in December 2019, the FWT shares are a share class in Foresight Technology VCT (formerly Foresight Solar & Technology VCT). 

The VCT is managed by a collaboration between alternative asset manager Foresight Group and WAE, a spinout from the Formula 1 Williams team. It focuses on early-stage, high-growth technology businesses. Foresight and WAE have been working together since 2015. The following year they launched an EIS fund which has to date deployed close to £50 million. 

The share class has net assets of £22.8 million and a portfolio of 27 companies (June 2023). In the three years to 31 December 2023, the VCT achieved a NAV total return of 3.6%. Past performance is not a guide to the future. 

• Seeking to raise £15 million with a £10 million overallotment facility 
  
• Available for 2024/25 tax year
• Targeting an annual dividend of 5% from "as soon as possible", subject to achieving profitable exits – not guaranteed
• Minimum investment £3,000 – you can apply online
• Next deadline: 30 April 2024 (noon) for applications in the 2024/25 tax year

The manager

The trust is managed by Foresight Group. Foresight Group has c.£12.2 billion of assets under management, of which £1.4 billion is within its private equity division, which manages the Foresight VCTs, EIS, and institutional private equity funds (March 2023).

WAE (formerly Williams Advanced Engineering) is the technical adviser to the VCT. It was formed in 2010 when Williams Grand Prix Engineering Limited spun out its specialist engineering division into a separate company. The business has since grown to more than 1,000 employees. In 2022, WAE was acquired by Fortescue Metals Group (FMG), an Australian mining company. WAE will remain an independent company and continues to be based at the same Oxford campus as Williams Grand Prix Engineering.

The core investment team responsible for managing the EIS and VCT is made up of 10 investment professionals: four from Foresight Group and six from WAE. The team is overseen by separate investment committees from Foresight Group and WAE. The investment team can also draw on the wider experience of Foresight Group’s c.50-strong private equity team and technical expertise from three venture partners.

In July 2023, the VCT’s general meeting approved the pooling of residual assets from the Ordinary Shares with the FWT Shares. As part of this resolution, the remaining ordinary shares will be redesignated as FWT Shares.

Investment strategy

The VCT aims to invest in early-stage companies with strong intellectual property. They should operate in attractive, substantive markets where the manager believes WAE’s technology, engineering, commercial and promotional support may offer a distinct advantage.

The team looks for certain qualities when evaluating potential opportunities. For instance, investee companies must demonstrate they have developed innovative technology that offers clear advantages to the end consumer as well as a roadmap towards commercialisation. The team avoids highly capital-intensive models, preferring to focus on companies commercialising and licensing IP as this strategy should allow them to scale more efficiently.

While the fund is sector agnostic, most opportunities are expected to align with the following themes:

• Semiconductors
  
• Future of mobility
• Future of manufacturing
• AR, VR, and immersive technologies
• Robotics 
• Future of computing
• Advanced simulation
• Medtech and scientific instrumentation

The team will look for opportunities where WAE can add value, in particular, its technical expertise should provide the team with enhanced due diligence on potential investee companies. WAE will also provide pro bono advice and support, and discounted-rate consulting to help companies develop, optimise or solve engineering problems. Foresight believes its access to this specialist technical knowledge has on occasion been instrumental in winning competitive funding rounds for investors in both the EIS and VCT. 

Please note this is not an opportunity to invest in businesses spun out of WAE, nor to co-invest with WAE. 

Current portfolio overview

The VCT has net assets of £22.8 million (June 2023) and a portfolio of 27 companies.

Examples of portfolio companies

Audioscenic – largest holding

Following years of research at the Institute of Sound and Vibration, Prof. Filippo Fazi (CTO) and Dr Marcos Simón (CSO), launched Audioscenic in 2017. 

The company has developed patented 3D audio technology, which replicates and mixes audio to mimic real-world perception. This format has already been widely adopted by content providers but is difficult to reproduce in consumer hardware without resorting to bulky multi-speaker systems. Audioscenic overcomes this by tracking an individual’s location and beaming separate soundwaves their ears from a single soundbar. 

The company has secured its first contract with Razer, a renowned gaming brand, to develop a soundbar. The product launched in Las Vegas earlier in 2023, winning multiple industry awards. The team is now focused on developing new concepts, such as multi-listener technology, and accelerating commercial adoption. 

The VCT initially invested into the business in 2020, alongside the Foresight WAE EIS Fund and IP Group. In total, the VCT has invested £1.8 million and the holding is currently valued at £2.3 million (March 2023). Past performance is not a guide to the future. 

VyperCore – recent investment

Founded in June 2022, VyperCore is building on more than a decade of research to redesign computer processing capacity.

The company’s co-founder and CTO, Ed Nutting, developed its “data accelerator card” during his time at the University of Bristol. Essentially, it improves processing speeds by transferring a memory-intensive task from software applications to its proprietary hardware. This can improve security, significantly reduce CPU demand, and boost software performance by up to 10x.

The technology works with all leading processor designs and does not require a change to the existing codebase, making integration simple. The company has proof of concept, with a view to building and selling its data card within the next two to three years.

The company completed a £4 million funding round in March 2023. The VCT invested c.£670,000 alongside co-investors Octopus Ventures, Science Create Ventures, British Growth Fund, and Silicon Roundabout Ventures. 

Exit track record

While the VCT has yet to record an exit, Foresight WAE Technology EIS (which invests in the same type of companies) has seen two positive realisations: Codeplay (15.9x return on cost) and Flusso (3x return on cost). Past performance is not a guide to the future.

There have been no failures in either the VCT or EIS portfolios to date, however, given the nature of early-stage investing these should be expected.

Performance and dividends

The share class targets a dividend yield of 5% "as soon as possible” – although as a new VCT this may still be some years away – please note dividends are variable and not guaranteed. Dividend payments will depend on the VCT achieving any positive exits and realising profits – not guaranteed.

In the three years to September 2023, the VCT achieved a NAV total return of 3.6%. Past performance is not a guide to the future. Note, we show VCT returns over a five-year period as a minimum, where possible. Where a VCT has followed the same investment strategy for longer, we also show returns over 10 years.

NAV and cumulative dividends per share over five years (p) 

Dividend reinvestment scheme

There is no dividend reinvestment scheme.

Share buy-back policy

The company aims to operate a buy-back policy at a 10% discount to net asset value for the first five years after the VCT launched (with the intention to narrow this to 5% thereafter). This is not guaranteed - please see the offer documents for details.

Discount history

VCT shares are traded on the London Stock Exchange. Similar to investment trusts, the share price can fluctuate and can be different from the VCT’s net asset value (NAV), i.e. the value of the VCT’s underlying investments. The difference between the share price of a VCT and its net asset value per share is called a discount.

Investors should note the VCT has less than a five-year track record. Trading of the VCT’s shares will be immaterial and any consideration of the share price movements in relation to the net asset value per share will be inconclusive. The discount history will be published once the VCT has a five-year track record.

Investors looking to sell their VCT shares may get a better price using the VCT’s share buyback facility, although this is not guaranteed.

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. 

To retain the tax benefits, VCTs should be held for at least five years. If you sell VCT shares and reinvest in new shares of the same VCT (including any mergers) within six months, tax relief can be restricted. Tax rules can change and benefits depend on circumstances.

This is a new VCT share class and while the fund is small there will be limited diversification and while the VCT hopes to start dividend payments “as soon as possible” this may still be some years away.

Charges and savings

A summary of the main charges and savings is shown below. The net initial charge shown includes the Wealth Club saving and any early bird discount. The investment may have additional charges and expenses: please see the provider documents including the Key Information Document for more details, offer price and share allotment calculation methodology.

Please note, capacity – for the offer or any early bird savings – can be reached early, and we may not be notified of this by the VCT in real time. Shareholders in any VCT managed by Foresight are eligible for the 0.5% existing investor discount.

Annual rebate when you invest through Wealth Club

The VCT includes an annual rebate for Wealth Club investors, payable for the first three years. This is a rebate of our renewal commission and should be equivalent to a percentage (shown in the table above) of the Net Asset Value of the Offer Shares issued to you when you invest. Terms and conditions apply.

Deadlines

• Deadline for applications in the 2024/25 tax year: 30 April 2024 (noon)
  

Our view

The Foresight Technology VCT – FWT shares has a distinct and disciplined sector focus that adds variety to the VCT landscape and could potentially add value. The combination of a large asset management business with a cutting-edge advanced engineering business may create a compelling destination for entrepreneurs seeking funding. 

The Foresight WAE Technology EIS proposition has enjoyed some success in raising capital from investors. Through the VCT, the team has deployed the capital into 27 deep technology businesses so far, investing alongside some of the world's leading venture capital investors. Please note the track record is limited, and there are no guarantees. You should form your own view.

Foresight Group has ambitions to grow the VCT considerably over the coming years. If Foresight is successful, investors will gain exposure to a growing portfolio of deep technology and advanced engineering businesses.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.