Review: ProVen 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.

The two ProVen VCTs – ProVen VCT and ProVen Growth & Income VCT – had a bumper year in 2018. In the six months to December alone, they have successfully exited four long-term investments.

The most high-profile and profitable exit was Watchfinder, the world’s leading online marketplace for pre-owned luxury watches. It received investment from the ProVen VCTs in 2014 and four years later it was acquired by Richemont, the Swiss group, which owns brands such as Cartier and Vacheron Constantin. The sale generated a return of 8.89x for the VCTs.

The recent string of realisations is, in our view, a well deserved reward for the investment manager’s longstanding commitment to finding and backing young companies with strong growth potential. Past performance is not a guide to the future and young businesses are inherently higher risk.

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Impressive dividend track record

The target annual dividend yield is 5% of Net Asset Value (NAV). In the past six years, the average annual dividend yield was 10.6% for ProVen VCT and 7.04% for ProVen Growth & Income VCT. These figures are before the boost provided by VCT tax relief.

Source: Beringea. Net Asset Value and cumulative dividends paid to 28 Feb each year, excluding 2019 (where it is as at Nov 2018). Past performance is not a guide to the future. Dividends are not guaranteed.

Monica Vinader - ProVen VCTsWhat might investors expect?

As ever, there are no guarantees the VCTs will continue to deliver positive returns.

That said, three factors might offer some comfort to investors.

Firstly, the VCTs have been applying the same investment strategy since inception. They probably have the longest track record in growth capital investment of any VCT. Every success strengthens ProVen’s position in the market and should make it easier for the team to secure good-quality deals.

Secondly, both VCTs still have a large portfolio which includes several mature companies with the potential for exits in the next few years, although this is not guaranteed. An example is jewellery designer and retailer Monica Vinader. The ProVen VCTs invested in 2010 and in 2016 sold 60% of their holding, generating a 12x return on the original 2010 investment. Both VCTs still own equity in the company.

Thirdly, the management team is extremely credible and experienced.

Indeed, in our view, this is one of the strongest VCT offers currently available.

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 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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