Review: Seneca Growth Capital VCT
The Seneca Growth Capital VCT is raising up to £10 million, with a £10 million overallotment facility.
- New VCT offering launched in 2018
- Raised £5.5 million in first share offer and invested £2.75 million to date across five qualifying investments
- Paid first dividend of 1.5p per share in April 2019 – dividends are variable and not guaranteed
- Seneca is an experienced growth capital investor, now managing more than £55 million of VCT and EIS growth capital
- Choose between 2019/20 and/or 2020/21 tax years
- Minimum investment £5,000 – you can apply online (see offer page for details)
The VCT is managed by Seneca Partners Limited. In 2018 it took over the management of Hygea vct plc, renamed it, and launched a new, separate B share class.
Although relatively new to the VCT market, Seneca is an experienced growth capital investor. It has raised and deployed more than £55 million of EIS and VCT growth capital investment funds into 47 SME companies through 87 funding rounds since 2012 (figures to 30 June 2019).
The Seneca Growth Capital VCT is managed by the same team behind the EIS funds, including shareholder directors Richard Manley, Ian Currie, and Tim Murphy. All three are SME specialists by background. Their previous experience includes KPMG, NM Rothschild, Cenkos Fund Managers, Altium, Apax, RBS, Deloitte and HBOS.
Directors of Seneca and key members of the management team in the wider group of Seneca branded companies invested more than £200,000 in the 2018 offer and are investing £100,000 in the current offer.
Watch a video interview with investment director John Davies:
The VCT follows the same generalist investment strategy the manager has been applying to its EIS Portfolio Service. The VCT has benefitted and is expected to continue to benefit from the same deal flow, investment process and co-investment opportunities that come from Seneca's EIS activity.
Seneca believes this allows the VCT to participate in a higher number of investments of a larger scale into more established businesses than otherwise possible for a VCT of its size.
Seneca seeks well managed businesses with strong leadership teams that can demonstrate established and proven concepts in addition to growth potential. Businesses may be unquoted or AIM listed.
The VCT raised £5.5 million under the first B Share offer.
Of this, the VCT has already invested £2.75 million into five investee companies, co-investing with Seneca’s EIS funds in all of these initial deals.
Four of the companies are unquoted and one is AIM listed.
SilkFred Ltd is a fast-growing fashion e-commerce platform. It was created in 2012 to help independent fashion brands promote and sell online. It acts as a central marketing and sales platform, charging commission in exchange for these services, so it takes minimal inventory/working capital risk on new brands, lines or products.
Today it partners with over 600 independent brands, has over 1 million monthly visitors and 500,000 customers.
SilkFred was the first B Share pool investment – the VCT invested £500k in December 2018. Seneca had previously invested in March 2018 in its EIS and was impressed by the management ability to scale the brand and improve the overall SilkFred offering.
SkinBioTherapeutics Plc (AIM listed)
SkinBioTherapeutics is a life science company focused on skin health. The Company’s proprietary platform technology, SkinBiotix®, is based upon discoveries made by CEO Dr. Catherine O’Neill and Professor Andrew McBain at The University of Manchester.
SkinBioTherapeutics targets three specific skin healthcare sectors; cosmetics, infection control and eczema. In each of these areas. The most advanced programme is focused on the application of the Skinbiotix® platform in managing sensitive skin in the cosmetics industry.
Seneca initially invested in SkinBioTherapeutics when it was admitted to AIM in April 2017. The VCT invested £720k in February 2019.
Please note, the portfolio is relatively small, so there is limited diversification and no track record. As is to be expected with all growth capital businesses, investments can fail or be subject to sudden falls in value.
The manager has not specified a dividend target. It aims to pay regular dividends as well as special dividends where significant realisations occur from the sale of its portfolio assets. As this is a new portfolio, it may take a few years for companies to mature and achieve an exit.
That said, the VCT has existing distributable reserves may be used to facilitate the payment of dividends on the B Share class in the early years. The VCT declared a maiden B Share interim dividend of 1.5p per B Share in March 2019.
Please note, dividends are variable and not guaranteed.
Charges and savings
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.
This is a relatively new VCT offering. Seneca’s expertise to date has largely been in EIS investments. If fundraising is slower than expected, or does not reach its anticipated targets, there may be a delay in allotting shares, and fewer investments will be made overall.
There are two share classes: Ordinary (relating to the original Hygea VCT) and B ordinary shares. The interests of Ordinary and B Shareholders may not always be aligned.
What to consider next
Please visit the offer page using the link below 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.
Read more and apply online
Read more about this offer, including the risks; download all the documents and apply online in minutes.Go to offer page