ProVen VCTs

The two ProVen VCTs – ProVen VCT (PVN) and ProVen Growth & Income VCT (PGI) – are the longest-standing VCTs with a focus on growth investing. 

The manager invests in a broad range of opportunities, from B2B software and data providers to consumer brands. While it has a particular reputation for backing e-commerce companies, it has enjoyed success across the spectrum. Fast-growing companies from Watchfinder to Chargemaster have come out of the ProVen stable. 

The two VCTs have combined net assets of £330 million and a portfolio of over 50 companies (November 2023) with a bias towards the B2B software and consumer sectors, accounting for 42% and 34% of invested assets respectively. The manager operates in both the UK and US, giving it a transatlantic outlook unusual in the sector.

In the 10 years to December 2023, PVN and PGI have produced a NAV total return (including dividends) of 50.0% and 33.6% respectively. Over the five years to December 2023, returns were 3.5% and 3.7% respectively. Past performance is not a guide to the future.

• Seeking to raise up to £30 million, with a £10 million overallotment facility 
  
• Target dividends of 5% of NAV – variable and not guaranteed
• Available for the 2024/25 tax year
• Minimum investment: £5,000 (£2,500 per VCT) – you can apply online 
• Next deadline: 26 April 2024 (3:00 pm) for final allotment in 2024/25 tax year

The manager

Since inception, the two ProVen VCTs have been managed by Beringea LLP, the UK arm of transatlantic venture specialist Beringea LLC. Beringea as a whole has successfully backed entrepreneurial businesses for over 30 years and currently manages UK and US venture capital funds of more than $800 million, including over £330 million of VCT assets in the UK and $465 million across four institutional funds in the US (November 2023). The manager’s international footprint means it can provide on-the-ground support to help companies expand across the Atlantic.

The VCTs are directly managed by an investment team of 10. This includes Founding Partner Malcolm Moss, Managing Partner Stuart Veale, and Chief Investment Officer Karen McCormick. 

The investment team is assisted by the wider UK Beringea team of 30, which provides assistance to portfolio companies, including in-house legal and marketing expertise.

Investment strategy

The ProVen VCTs launched in 2000 (PVN) and 2001 (PGI) and have always focused on growth capital investments. 

Over the years, the funds have progressively converged towards identical investment mandates. Today, it’s expected they will mirror each other and co-invest on each new deal, albeit in different amounts. This does mean there are some differences; for instance, marketing software provider CreativeX is the largest position within PGI but a smaller position within PVN. 

An ideal portfolio company should have a proven commercial business with an exceptional team capable of taking the company to exit. The majority of portfolio companies are tech-enabled and relatively capital light, with the potential, in Beringea’s view, to deliver a profitable exit within three to four years – not guaranteed. 

Beringea will only invest in companies that are either already profitable, or where the manager sees a clear path to profitability. It aims to be a key part of the team with significant influence in the business. That may include using its transatlantic experience to support expansion into the US where appropriate.

In recent years, ProVen’s growing list of successful founders has helped create proprietary deal flow and value for the VCTs. As an example, the VCTs’ largest holding, Luxury Promise, the pre-owned luxury handbag marketplace, was introduced to Beringea by one of the co-founders of successful exit Watchfinder. 

Current portfolio overview

The combined portfolio contains over 50 companies (November 2023) and a blend of new and maturing growth assets.

In the nine months to November 2023, Beringea made one new investment, into ready-to-drink cocktail maker MOTH Drinks, and one follow-on investment into construction management software company Archdesk.

Combined portfolio sector breakdown (%) – invested assets

Examples of portfolio companies

Luxury Promise – largest combined holding

Luxury Promise is an online premium marketplace for buying, selling – or even swapping – luxury fashion and accessories, particularly designer handbags from brands such as Hermès, Chanel, and Louis Vuitton.

Officially launched in 2017 by Sabrina Sadiq, a former lawyer and experienced luxury goods authenticator, Luxury Promise was the world’s first resale platform to evaluate, authenticate, sell and buy pre-owned luxury goods using artificial intelligence to help price and authenticate items.

A vendor can submit a picture online and receive an instant valuation. After an item is sold, the vendor sends it to Luxury Promise, which authenticates it, repairs it if needed, sends it to the buyer and receives a commission on the sale. It has proven popular with customers, with sales rising 450% between 2019 and early 2022.

The ProVen VCTs first invested in mid-2020 following a referral from Lloyd Amsdon, co-founder of previous successful exit, Watchfinder. The company’s most recent funding round, which raised $11 million in February 2022, saw the group win backing from Pierre Denis, the former Jimmy Choo chief executive and Francois Delage, the ex-CEO of De Beers, with ProVen also supporting the round.

To date the two VCTs have invested a total of £11.7 million, a position currently valued at £18.8 million (November 2023). Past performance is not a guide to the future.

Lucky Saint – recent investment 

The alcohol-free beer sector is worth an estimated £255 million a year in the UK and is expected to grow 8% a year until 2027. Lucky Saint, the trading name of Not Another Beer Co Ltd, is part of the growing movement towards lower alcohol consumption. 

Founded in 2018, Lucky Saint makes alcohol-free beer from only four natural ingredients in a 400-year-old Bavarian brewery following Reinheitsgebot (the German purity law).

Today Lucky Saint is the UK’s number one independent alcohol-free beer, and the fourth most popular alcohol-free beer brand overall. Sales have doubled year-on-year and, at the start of 2024, its beer was available in 7,000 pubs, bars, and restaurants, as well as major retailers such as Waitrose, Sainsbury’s, and Tesco. 

The ProVen VCTs led the company’s £10 million Series A investment round in January 2023, alongside JamJar Investments (the fund setup by the founders of Innocent Smoothies) and Warburtons chairman, Jonathan Warburton. At the time, the raise represented Europe's largest alcohol-free beer investment. In total, the VCTs invested a combined £5 million.

Exit track record

In the nine months to November 2023 the VCTs exited their remaining position in jewellery designer Monica Vinader. Combined with their earlier partial exits, this generated a total return of between 7.7x and 7.8x.

The VCTs also sold their stakes in Aistemos for 1.7x cost and received modest proceeds from the sale of Firefly and Sealskinz (disposals completed in the previous financial year).

Past performance is not a guide to the future.

Monica Vinader – recent exit

Monica Vinader is an award-winning jewellery brand, founded by sisters Monica and Gabriela Vinader. Described as affordable luxury, the company offers high-quality and responsibly sourced designs without an eye-watering price tag. 

Since launching in 2008, the business has garnered a loyal following, with notable customers including Jennifer Lopez, Kendall Jenner, and the Princess of Wales. Revenues quadrupled to c.£100 million over the last six years.

The ProVen VCTs originally backed the business in 2010 and later sold 60% of the combined stake in 2016 for a 5.2x return on cost. In March 2023, Monica Vinader agreed a strategic sale to Bridgepoint Development Capital IV, a private equity fund. The VCTs realised their remaining holding for initial proceeds of £8.7 million, bringing total proceeds to between 7.7x (PVN) and 7.8x cost (PGI). Past performance is not a guide to the future.

MYCS – example of previous failure

As is to be expected, not all investments work out. Online furniture retailer MYCS is an example.

The company had to hold large quantities of expensive stock for extended periods. This caused problems when loan providers introduced lending caps in March 2022 at the same time as consumer confidence fell sharply. 

In response to these challenges, MYCS entered into a merger with another private equity-backed business. The ProVen VCTs invested a total of £10.9 million in the business. The VCTs will not receive any proceeds from the merger, although there is the possibility of some contingent returns should the buyer secure a future sale of the enlarged group. 

Performance and dividends

Whilst the ProVen VCTs have a good longer-term track record, driven primarily by profitable exits, recent performance has proved more challenging with write-downs to key portfolio holdings (Plum Guide, Papier, Fnatic, Thread, Zoovu and Luxury Promise).

In the 10 years to December 2023, PVN and PGI have produced a NAV total return (including dividends) of 50.0% and 33.6% respectively. Over the five years to December 2023, returns were 3.5% and 3.7% respectively. 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.

The VCTs target an annual dividend yield of approximately 5% of NAV, variable and not guaranteed. Over the five years to December 2023, the VCTs have delivered a cumulative dividend yield of 24.5% (PVN) and 25.1% (PGI), based on the starting NAV of each VCT over the period – dividends are variable and not guaranteed.

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

 Dividend payments in the calendar year

Dividend Reinvestment Scheme

The VCTs operate a dividend investment scheme that allows shareholders to reinvest future cash dividend payments in new shares if desired. As these are new shares they should be eligible for tax relief (you will need to claim this on your tax return or directly with HMRC) and the shares will count towards the VCT annual subscription limit. 

Share buybacks

The boards intend to buy back shares at up to a 5% discount to the prevailing net asset value. 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.

Based on data from Morningstar, the average discount to NAV as at 31 December 2023 was -8.7%. Over the previous five years the average discount to NAV was -6.4%.

The discount history is based on the closing share price of the VCTs at the end of each month, divided by the latest net asset value at the time. Past performance is not a guide to the future. Investors looking to sell their VCT shares may get a better price using the VCTs’ share buyback facilities, 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.

Charges and savings

A summary of the main charges and savings is shown below. The net initial charge shown includes the Wealth Club saving. 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. 

Annual rebate when you invest through Wealth Club

The VCT offer 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 

• Final allotment in 2024/25 tax year: 26 April 2024 (3:00 pm)
  

Our view

The ProVen VCTs have a long and successful track record of growth capital investing, having achieved several profitable exits – most recently with the sale of jeweller Monica Vinader to Bridgepoint (detailed above). 

More recent performance has been mixed, with failures such as MYCS offset against the portfolios’ successful consumer and software investments, such as camera reselling platform MPB Group and marketing software/data platform CreativeX. 

Beringea has been backing entrepreneurial businesses for the last 30 years and has a highly experienced management team. The VCTs have continued to deploy capital into an encouraging pipeline of predominantly consumer and SaaS investments, Lucky Saint (detailed above) is one such example. 

In our opinion the manager is highly credible and Beringea’s transatlantic connections set it apart from some other VCTs, although investors should form their own view.

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.