Review: Hargreave Hale AIM VCT 1

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.

This offer from Hargreave Hale is seeking to raise up to £20 million into the Hargreave Hale AIM VCT 1 (with a £10 million over-allotment facility).

Hargreave Hale specialises in smaller companies investing. As well as its two AIM VCTs, it is well known for its flagship fund Marlborough Special Situations, managed by Giles Hargreave, chairman of Hargreave Hale. Mr Hargreave heads the investment committee and co-manages both AIM VCTs with Oliver Bedford. 


  • Managed by one of the UK's best-resourced small and micro-cap investment teams
  • Dividend target of 5% a year, paid twice a year. Dividends are not guaranteed
  • £16.7 million returned to shareholders through dividends – past performance is not a guide to the future
  • Ongoing expense ratios of less than 2% p.a. – one of the lowest in the VCT industry
  • Diverse portfolio of circa 75 companies
  • Portfolio of mainly AIM-listed firms but also some unquoted businesses
  • 23 investments made in the last 12 months totalling £7.5 million
  • Bias towards IT, healthcare and consumer discretionary businesses
  • Early bird saving of 1% until 16 March 2018
  • Minimum investment £5,000
  • You can apply online

The manager

Hargreave Hale is a well-established fund manager that specialises in investment in smaller UK companies. It has been managing its AIM VCTs since 2004. Oliver Bedford co-manages the Hargreave Hale AIM VCTs alongside small-cap veteran Giles Hargreave. 

In total Hargreave Hale manages £5.4 billion with £3.7 billion invested in UK smaller companies. Hargreave Hale also manages several unit trust funds marketed under the Marlborough brand, including the Special Situations Fund, the UK Micro-Cap Growth Fund and the Multi-Cap Income Fund. In September 2017 Hargreave Hale was acquired by Canaccord Genuity, a global investment business headquartered in Canada. 

This is an offer for Hargreave Hale AIM VCT 1 plc. The VCT has announced plans to merge with the Hargreave Hale AIM VCT 2 to achieve efficiency and reduce running costs, subject to shareholder agreement. The two VCTs have similar holdings and investment mandate. 

Watch a video interview with Hargreave Hale VCTs’ co-manager Oliver Bedford:


The VCT looks to invest in a good spread of growth companies, mainly on AIM but also some that are unquoted. Oliver Bedford believes AIM is a misunderstood market. It is also a large one – with around 1,000 companies listed, many fast-growing dynamic companies as well as the poorer quality ones – and often overlooked by investment analysts. In his opinion, that makes for an inefficient market, which can work in favour of active investors, providing they know where to look. 

Hargreave Hale has a 14-strong investment team focused entirely on small caps, making it one of the largest UK small cap teams. They hold around 1,000 meetings a year. This provides a level of insight that cannot be matched by desktop research alone. 

The portfolio is diversified across around 65 AIM-listed and 10 unquoted companies (September 2017), with a small percentage in cash. The Hargreave Hale AIM VCT 1 will also strategically deploy money in the Marlborough Special Situations Fund, pending investment. This maintains an investor’s exposure to UK smaller companies, as an alternative to cash.

The VCT is sector agnostic: every firm is assessed on its individual merits. Mr Bedford’s view is that the characteristics that define a successful company are the same whether it is listed on AIM, on the main market or it is a private company. What is important is the quality of the management team, its intellectual property, the firm’s pricing power and growth in its own market.

Mr Bedford’s team seeks companies where it knows the management and may have backed them to deliver previously, and they seek to buy and hold. Hargreave Hale’s view is that good stocks are hard to find and so they should be held for as long as possible, to allow the portfolio to develop a core collection of maturing companies. 

The VCT is currently building its exposure to e-commerce and the on-demand economy. Mr Bedford likes the innovation and the growth he sees in this sector, with the potential to disrupt mature and established industries.

Examples of current portfolio companies held by the VCT

Hargreave Hale VCTs Everyman CinemasEveryman Cinemas (Everyman Media Group)

AIM-listed Everyman Media Group is a good example how a consumer-facing business can continue to trade well despite a more challenging backdrop if it has a good brand and a well-defined and strong proposition, alongside good management. In Mr Bedford’s view, the firm started to take off when a strong management team took the reins. 

Crispin Lilly, CEO, has been involved in cinema for 22 years, having worked in various roles for MGM Cinemas, Virgin Cinemas, UGC Cinemas and for the last ten years for Cineworld Cinemas where he was Vice President of Business Affairs. For the last six years he has looked after all aspects of commercial revenues including both the film and retail aspects of the business. Adam Kaye, Executive Director, founded ASK Central plc with his brother Sam in 1993. Adam studied catering at Westminster College, London and subsequently worked at City Centre Restaurants, before opening the first ASK restaurant at Haverstock Hill in 1993. ASK Central plc was sold in 2004. Adam is also currently a non-executive director of Prezzo plc and Tasty plc.

Hargreave Hale VCTs Honest BrewHonest Brew

An example of an unquoted portfolio company is Honest Brew, one of the VCT's more recent deals. Honest Brew sells beers by post. It launched its personalised craft beer subscription business in 2014 and now sells up to 1,000 different beers from 200 breweries. It has over 2,000 active subscribers. It provides consumers with much more choice than a supermarket and offers a sales platform for smaller breweries who would otherwise have little distribution. It is thus using e-commerce to connect consumers and small brands in a way that wouldn’t have been possible before. 

The UK craft beer market has grown significantly over the last ten years and now represents 5.5% of the brewing market. There could be some way to go. In the US, which leads the industry, the craft beer share of the market is 15% by volume, 20% by value and is worth circa $17 billion. 

The Hargreave Hale VCTs invested £1 million in Honest Brew in August 2017.

Target dividend 

The VCT aims to pay a dividend of 5% of the year-end net asset value twice a year. This is variable and not guaranteed. 

As the chart below shows, the dividend record of both VCTs is strong, although please remember past performance is not a guide to the future. 

Source: Hargreave Hale. Past performance is not a guide to the future. Dividends are variable and not guaranteed.


Please remember capital is at risk. VCTs are high-risk investments and are not suitable for everyone. Investors should not invest money they cannot afford to lose. 

As most of the shares are listed on AIM, the net asset value may fluctuate more than with unquoted VCTs. However, there should be more liquidity than with other more generalist VCTs. The difference between the buying and selling price of AIM-listed companies is often wider than fully listed ones. 

Tax rules can change and tax benefits depend on individual circumstances.


The charge to invest VCTs through Wealth Club is 1.5% (normally 3.5%). This includes an early bird discount on the initial charge of 1% for new investors for investment before 16 March 2018.

The VCT has an annual management fee of 1.5% of NAV: the VCT proposes this will increase to 1.7% from March 2019. There is a performance fee equivalent to 20% of dividends over 6p per share per annum. The Net Asset Value needs to be at least 95p per share and any cumulative shortfalls have to be made up before it is paid. Hargreave Hale also receives £100,000 (plus VAT) in administration and secretarial fees annually: if the two VCTs merge this is expected to change to £155,000 (plus VAT). Please see the provider documents, including the Key Information Document, for more details on fees.

Hargreave Hale AIM VCT 1 now 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 0.10% of the Net Asset Value of the Offer Shares issued to you when you invest. Terms and conditions apply.

Our view

AIM VCTs are often an afterthought when choosing where to invest in VCTs. However, Oliver Bedford makes a persuasive case for investing in AIM. The Hargreave Hale team is one of the most experienced and capable smaller company fund management teams with an excellent long-term record. This AIM VCT is one to consider, in our view.

Wealth Club aims to highlight investments we believe have merit, but you should form your own view. You should decide based 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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