Review: Pembroke VCT

The Pembroke VCT gives investors something genuinely different from – and highly complementary to – other current VCT offers.

Firstly, it invests – although not exclusively – in the hospitality and retail sectors, which tend to be neglected by most other VCTs.

Secondly, the key people in the VCT’s management team, led by Chief Investment Officer Andrew Wolfson, have started, grown and sold businesses before. They have experienced – and overcome – the challenges young companies most commonly face. Now they can use that experience to help investee companies achieve their growth potential. The team has invested £1.56 million of its own money in the VCT to date, which is a significant commitment in the relatively short timeframe (five years).

Watch our video interview with Andrew Wolfson:

A long and impressive pedigree

Retail definitely runs in Mr Wolfson’s blood. His ancestors were instrumental in turning Great Universal Stores into a retail giant. His brother is the long-serving Chief Executive of Next.

Instead of joining the family businesses, Mr Wolfson cut his teeth in building up businesses of his own. From the mid-Eighties, he’s worked with serial entrepreneur Peter Dubens, whose first venture was selling T-shirts that changed colour when exposed to heat. Five years later, the company was sold for £8 million to Coats Viyella.

A number of successful ventures followed, eventually leading to the creation of Oakley Capital and, in 2013, the launch of the Pembroke VCT.

We have met Andrew Wolfson several times and were always impressed. He runs a £61 million portfolio of 32 companies (30 September 2018). Yet he can tell you from the top of his head how many shades of nude tights portfolio company Heist Studios (a hosiery designer and retailer) sells. He can talk just as easily about the rate of sale of Plenish nut milks across Sainsbury’s, Asda, Waitrose and Marks & Spencer, and he seems to have a similar depth of knowledge of all the investee companies we have discussed with him.

Pembroke VCT – Five GuysA portfolio example

The VCT hasn’t had any significant exits yet. A number of portfolio companies look promising, although there are no guarantees. 

The best-known example is probably Five Guys, the US burger restaurant chain. Pembroke got involved even before Five Guys had its first UK site and provided growth capital to fund the UK roll-out.

The chain now comprises over 90 restaurants across the UK and the latest valuation for Pembroke’s investment shows an unrealised return of 2.2x. Past performance is not a guide to the future. Capital is at risk.

Performance

Source:Pembroke. Past performance is not a guide to the future. Dividends are not guaranteed. Chart shows Net Asset Value and cumulative dividends paid to 31 March each year, pence per share. 5 year figures not available as the B share class was first issued in 2015.

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 to register your interest in the upcoming 2019/20 share offer.

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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