Review: Maven 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.

By this time last year, Wealth Club clients had invested more money into the Maven VCTs 2018/19 offer than into any other VCT. This year Maven Income and Growth VCTs 3 (Maven VCT 3) and 4 (Maven VCT 4) are raising only £15 million between them and there’s no overallotment facility. So, if history is anything to go by, the current offer might not be around for long. 

Interested investors may want to consider acting sooner rather than later.

A blend of old and new

The current offer could give investors access to a mature portfolio of diverse investments.

At one end of the spectrum, there are the established, later-stage companies in which Maven invested prior to the VCT rule changes. 

An example is Ensco 969 (trading as DPP) – the largest holding in Maven VCT 4 and the second largest in Maven VCT 3. DPP is a mechanical and electrical contractor that provides maintenance to 6,000 bars, restaurants and hotels. Founded 30 years ago in Hampshire, last year it generated more than £10 million in turnover with operating profits of £776k. 

At the other end of the spectrum there are younger, earlier-stage businesses with high growth potential but also higher risk. Maven has been one of the most active managers in recent years, with 36 new private equity and 18 AIM investments completed since January 2015 through its VCTs. 

An example is York-based Rockar, which has created an e-commerce platform to sell cars and operates digital stores in shopping centres. The company was founded in 2011 by Simon Dixon, who had previously built the UK’s third largest car retailer. Rockar has since worked with car brands including Hyundai, Mitsubishi, Ford and Jaguar Land Rover. 

Maven invested in July 2016 alongside NVM Private Equity, manager of the Northern VCTs. At the time the company had a turnover of £15.9 million with EBITDA of -£1.4 million. By the end of 2018 turnover had more than trebled to £47.9 million and EBITDA was £553k. Please note, past performance is not a guide to the future. Rockar is still a young company and, like all VCT investments, high risk. 

Rockar – Maven VCTsA history of exits and dividends

Since 2015 Maven has completed 14 VCT realisations, generating total returns of up to 7.1x cost. 

A recent example is Hull-based GEV Holdings, which specialises in wind turbine blade maintenance. The company was sold to Bridges Fund Management in July 2019, generating 2.7x returns for Maven investors.

GEV Holdings – Maven VCTs

Profitable realisations, combined with the income the VCTs receive from their older-style portfolios, have supported generous dividend payments, equivalent to a cumulative yield of 62% of NAV (Maven VCT 3) and 52% of NAV (Maven VCT 4) over the last five years. Note, however, recent total returns are more muted.

As ever, dividends are not guaranteed and past performance is not a guide to the future. Indeed, dividend distributions are likely to become less consistent for VCTs in general, as they transition towards a greater proportion of new higher-risk growth capital investments which tend to take longer to mature, and do not typically generate income. 

Source: Maven. Past performance is not a guide to the future. Dividends are variable and not guaranteed. Chart shows Net Asset Value and cumulative dividends (paid out) over five years, to 30 September, pence per share.

"It’s all about the regions"

One of the key points of difference between Maven and other VCT managers is its regional focus. To quote fund manager Bill Nixon, “it’s all about the regions”.

Maven has one of the industry’s largest investment and portfolio teams, with more than 20 executives sourcing, executing and managing VCT investments from 12 offices across the UK, from Bristol to Aberdeen.

This widespread presence across the UK means Maven has access to deals more London-centric VCTs might miss.

Mojo – Maven VCTs

Mojo Mortgages – recent investment

Three hours to complete an application form and up to 40 days to receive an offer: the traditional way to apply for a mortgage can often be stressful and almost invariably time consuming. Unless you use a service such as Mojo Mortages, an online mortgage broker and adviser. In that case, 10 days from application to offer is all it takes on average. 

Founded in April 2018 in Macclesfield, Mojo has completed 3,000 mortgages worth £500 million over the past 18 months, and seen 500% growth in mortgage sales. In addition to direct sales, Mojo has developed a white label service. So, for instance, Monzo customers can compare personalised mortgage deals and book an advice call with one of Mojo’s mortgage experts from Monzo’s app. The partnership platform has so far driven recommendations for £140 million worth of mortgage capital in twelve months.

Maven co-led a joint £3.25 million investment alongside NVM Private Equity in February 2019. The investment will help support the company’s growth plans and continue its platform development.

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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