Albion VCTs

Offer closed

As at 4pm on Tuesday 29 March the offer is fully subscribed and has closed. Applications already received with cleared funds are being processed on a first-come, first-served basis.

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The six Albion VCTs are overseen by Albion Capital, a well resourced investment manager with a 27-strong executive team led by experienced managing partner Will Fraser-Allen. Albion has been managing the VCTs and investing in technology and scale-up companies for over 20 years.

Together, the six VCTs have net assets of £545.3 million (30 September 2021) and give investors exposure to a well diversified portfolio of 73 companies, a combination of predominantly growth capital investments and a somewhat smaller legacy portfolio of income-generating, asset-based and renewable energy investments, as well as cash. 

Over the five years to September 2021, the Albion VCTs have produced NAV total returns (including dividends reinvested) ranging from 51.1% to 73.8%. Past performance is not a guide to the future. 

Each of the six VCTs targets annual dividends of 5% of net assets, paid twice a year, with each VCT aiming to pay dividends in a different month, so investors in all six VCTs could potentially receive tax-free dividends throughout the year, although remember dividends are variable and not guaranteed. 

The current offer seeks to raise up to £80 million across all six VCTs, with overallotment facilities of up to £20 million. 

The VCTs, with their fundraising targets under the current offer, are shown below.

VCT Offer capacity1 Funds raised2
Albion Venture Capital Trust (AAVC) £10m (CLOSED) £10m
Albion Development VCT (AADV) £21m* (CLOSED) £21m
Albion Enterprise VCT (AAEV) £21.5m* (CLOSED) £21.5m
Albion Technology & General VCT (AATG) £24m* (CLOSED) £24m
Crown Place VCT (CRWN) £12m* (CLOSED) £12m
Kings Arms Yard VCT (KAY) £8m (CLOSED) £8m
1. Including overallotment facilities when indicated by *
2. As of Tuesday 29 March; data provided by Albion Capital and is the latest available

Important: The information on this website is for experienced investors. It is not advice nor a research or personal recommendation to invest. If you’re unsure, please seek advice. Investments are for the long term. They are high risk and illiquid and can fall as well as rise in value, so you could get back less than you invest.


Highlights

  • Existing, mature portfolio of 73 unquoted businesses
  • Technology and healthcare specialist
  • Access to asset-based and renewable energy investments as well as growth deals
  • Experienced manager with a strong track record (past performance is not a guide to the future)
  • Target dividend of 5% of NAV a year – variable and not guaranteed
  • Directors of the Albion VCTs and Albion Capital staff hold over £5 million in the VCTs 
  • Minimum aggregate investment £6,000

The manager

Albion Capital Group LLP (“Albion”) has been managing VCTs for over 20 years. The original Albion Venture Capital Trust launched in 1996, followed by Albion Development VCT, Albion Technology & General VCT and Albion Enterprise VCT. Albion was later awarded the investment management contracts for two additional VCTs, Crown Place and Kings Arms Yard, in 2005 and 2011 respectively. 

Albion originally started life as the venture capital arm of Close Brothers in 1996, forming Albion Ventures in 2009 after a management buyout. More recently, it rebranded as Albion Capital. Currently, the Albion team manages approximately £545 million in VCT assets. 

As well as the VCTs, Albion manages and administers several other funds, including the UCL Technology Fund (University College London’s fund for commercialising the university’s research). The wider Albion Group has c.£850 million under management or administration (September 2021).

Albion’s 27-strong executive team is led by managing partner Will Fraser-Allen, who joined Albion in 2001 and is an experienced technology investor. The executive team is supported by 17 operational and support staff. 

Since 2018, Albion has made eight new hires to its executive team, including four new investment managers, an investment director, a head of marketing, a marketing associate, and Jane Reddin, an experienced talent director. Jane has over 25 years’ experience, most recently with Balderton Capital and EQT Ventures, and will be responsible for managing talent acquisition and developing management teams for Albion’s portfolio companies.

Meet the manager: Watch our interview with managing partner Will Fraser-Allen

 

Investment strategy

Historically, the Albion VCTs followed a broad investment strategy with a blend of growth and asset-based investments (such as schools and renewable energy assets). After the VCT rule changes, the strategy has transitioned to focus purely on growth opportunities.

The investment team has been investing in technology and scale-up companies since 2001 and is well regarded and experienced in the sector. Albion has since expanded its team and established itself as a healthcare and technology specialist. 

The team considers these sectors to have long-term structural growth potential, particularly as technology adoption continues to accelerate. 

At a company level, the investment team looks for B2B businesses with a unique offering, operating in fast-growing markets. Specifically, the VCTs target companies the manager believes have reached an inflection point and require additional funding to accelerate growth.

The VCTs will invest across a range of maturity stages, from seed to Series B funding rounds. Portfolio companies are broadly split into three stages, depending on turnover. It is expected most companies will have turnover greater than £1 million, with a small proportion of earlier-stage ventures. Albion believes diversification across sectors, size, and maturity of the businesses can help build ‘all-weather portfolios’. 

Exit track record

Over the three years to December 2021, the Albion VCTs have exited 22 companies, generating exit proceeds of £187 million. The most notable was the sale of Process Systems Enterprise Limited to Siemens AG, for proceeds of £21.5 million, resulting in a total return of approximately 10.4x cost. 

Other significant exits during the period include Radnor House (Twickenham) School, which, in addition to £6.2 million of dividend and interest payments, generated exit proceeds of £26.5 million on an investment cost of £8.7 million, resulting in a total return of approximately 3.8x cost. Innovation Broking Group is another example, detailed below. Please note, past performance is not a guide to the future. 

Innovation Broking – Albion VCTsInnovation Broking Group – exit example

Founded in 2015 by Paul Dickson and Howard Pearson, Innovation Broking Group is an independent corporate insurance broker and employee benefits adviser based in London and Watford. The company employs 30 staff and specialises in larger risks, global programs, and private equity-backed businesses. The business has particular expertise in the technology, health, film and TV, and charities and care sectors.

The Albion VCTs invested £300,000 in November 2015. Five years later, in November 2021, the business was acquired by Aston Lark Group, a consolidator of insurance brokers backed by Goldman Sachs. The sale generated exit proceeds of £3.25 million to the VCTs, a 10.8x realised return. Past performance is not a guide to the future. 

Mi-Pay Group – example of previous failure

As can be expected, there have also been failures. An example is Mi-Pay, which provides a fully outsourced secure payments platform for mobile network operators, specifically for prepaid mobile phones.

Albion originally invested in 2007. In 2014, the business was quoted on AIM after being acquired by AimShell Acquisitions Plc. After a prolonged period of underperformance as a public company, the business was sold in 2020 to Alphacomm BV, a Dutch online payments solution provider. The sale of the business generated a realised return of 0.03x. 

Covid-19 impact

Albion revalued its portfolios in March 2020 to reflect the impact of Covid-19. While the portfolios are diversified, several companies and sectors, such as its care homes, were more exposed, resulting in write-downs. 

This resulted in an average NAV total return of -7.2% across the VCTs in the three months to March 2020. However, companies within the health and technology sectors proved resilient, with notably strong performance from Quantexa (detailed below), Egress Software, the cyber security business, Proveca, the children’s pharmaceutical company, and Oviva, the medical nutrition counselling business. These are now the top-four holdings in the combined portfolio and have helped drive strong performance for the VCTs through to September 2021. The average NAV total return for the period March 2020 – September 2021 was 27.5%.

In the 18 months to September 2021, the VCTs also realised £90.5 million of assets which helped fund generous dividend payments over the period. 

Current portfolio overview

The six Albion VCTs have net assets of £545.3 million (30 September 2021). The net assets of each are shown below: 

VCT NAV
Albion Venture Capital Trust (AAVC) £60m
Albion Development VCT (AADV) £95.4m
Albion Enterprise VCT (AAEV) £96m
Albion Technology & General VCT (AATG) £107.8m
Crown Place VCT (CRWN) £79.5m
Kings Arms Yard VCT (KAY) £106.5m

The combined portfolio includes 73 unquoted companies, most of which with some degree of co-investment across the six VCTs. The sector breakdown of the combined portfolio is shown below; however, percentages will vary between the individual trusts. 

Existing Albion VCT investors will note the increase in allocations towards software and healthcare, and the subsequent drop in renewable energy exposure. Albion’s exposure to care homes, captured within the healthcare sector, has also fallen following the sale of three care home assets in March 2021.

Combined portfolio sector breakdown (%)

Source: Albion, 30 Sep 2021

The combined Albion VCT portfolio is concentrated within its top 10 holdings, which account for 41.7% of net assets. The top four holdings (Quantexa, Proveca, Egress Software, and Oviva) account for 27.5% of net assets.

A summary of each VCT's unaudited investment portfolio as at 30 September 2021 is shown below. 

Asset type breakdown

VCT Asset-based companies (% of NAV) Growth companies (% of NAV) Cash and deposits less liabilities*
Albion Venture Capital Trust (AAVC) 25 33 42
Albion Development VCT (AADV) 15 69 16
Albion Enterprise VCT (AAEV) 11 73 16
Albion Technology & General VCT (AATG) 19 64 17
Crown Place VCT (CRWN) 15 53 32
Kings Arms Yard VCT (KAY) 11 51 38
Subsequent to 30 September 2021 Albion Venture Capital Trust, Crown Place VCT and Kings Arms Yard VCT have paid special dividends, reducing the percentage of cash held.

Examples of portfolio companies

Quantexa – Albion VCTsQuantexa

Big-data analytics firm Quantexa uses artificial intelligence to uncover hidden relationships and emerging risks, helping financial institutions spot and prevent fraud. Today, Quantexa’s technology is used in over 70 countries by blue-chip banks (including HSBC, Standard Chartered Bank, and Danske Bank), insurers and government organisations. 

Quantexa reported revenues of £5 million in its first full year to March 2018. It more than tripled this to £17.5 million in the year to March 2020. The business came 14th in The Sunday Times Sage Tech Track 100, which ranks the UK’s 100 fastest-growing private technology companies. 

This growth has attracted significant fundraising interest. To date, Quantexa has raised £182 million from high-profile investors, including Accenture, British Patient Capital, HSBC and Albion. 

Albion first participated in a £2.7 million funding round in 2017, just a year after the company was founded, and has since followed on across a number of funding rounds. Quantexa is currently the largest or second-largest holding within five of the Albion VCTs (all except Albion Venture Capital Trust). The latest $153 million funding round values the £10 million combined Albion VCTs' investment at £66 million, representing 12.0% of net assets (September 2021). Past performance is not a guide to the future. 

Solidatus – Albion VCTsSolidatus (Threadneedle Software) – recent investment 

Solidatus, the trading name of Threadneedle Software, was founded by Philip Dutton and Phillip Miller in February 2017 after noticing a consistent pattern of data management problems during their 35 years of consulting. So, they set about designing a tool to support data management practitioners’ productivity but it quickly became clear the tool had wider applications. 

Today, Solidatus is an intuitive and flexible web-based software solution that helps the world’s largest data-rich and regulated organisations rapidly discover, visualise, catalogue, and understand how data flows through their systems. The business is one of the UK’s fastest-growing private technology companies: it ranked 41st in the 2021 Deloitte Fast 50 having grown revenue 932% since 2017. Past performance is not a guide to the future. 

In February 2021, the business secured £14 million in a Series A funding round led by Albion alongside HSBC Ventures and Citi, two of Solidatus’ global enterprise clients. The combined Albion VCT portfolios’ holding is valued at £7 million, 1.3% of net assets (September 2021).

Performance and dividends

Over the five years to September 2021, the Albion VCTs have produced NAV total returns (including dividends reinvested) ranging from 51.1% to 73.8%. Past performance is not a guide to the future. The six VCTs aim to pay half-yearly dividends (each calculated as 2.5% of the most recently announced NAV) twice a year, each in a different month. So, an investment in all six VCTs could potentially generate a monthly income stream throughout the year (dividends are variable and not guaranteed). 

Over the five years to 31 December 2021, the six Albion VCTs have paid total dividends per share of between 6.25p – 43.1p, equivalent to between 28.1% and 59.5% of the starting net asset value on 31 December 2015.

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

Source: Morningstar. Past performance is no guide to the future. Dividends are variable and not guaranteed. The bar chart shows net asset value and cumulative dividends per share for the period 31 Dec 2016 to 31 Dec 2021.

Dividend payments in the calendar year

Source: Morningstar. Past performance is no guide to the future. Dividends are variable and not guaranteed. The bar chart shows dividend per share paid in each calendar year.

Average dividend yield (% of NAV) history

  AAVC AADV AAEV AATG CRWN KAY
2017 3.39% 5.58% 4.99% 5.75% 6.48% 4.64%
2018 6.63% 5.10% 5.05% 5.48% 6.12% 2.71%
2019 6.42% 5.35% 5.08% 4.92% 5.82% 5.32%
2020 6.98% 5.33% 5.15% 14.04% 11.72% 5.40%
2021 27.12% 5.04% 4.70% 2.36% 2.38% 10.36%
Source: Morningstar. Average dividend yields are based on the dividends paid over the period divided by the monthly average NAV of the VCT over the same period. Past performance is not a guide to the future.

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.

VCTs can now only invest new money in growth capital deals. Asset-based investments are no longer permitted. This results in considerably higher risks.

Charges and savings

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

Full initial charge 2.5%
Early bird discount
Wealth Club initial saving
Existing shareholder discount
Net initial charge through Wealth Club (new investors) 2.5%
Net initial charge through Wealth Club (existing shareholders) 2.5%
Annual management charge 1.75%–2.5%
Annual administration charge See offer documents
Performance fee 15%-20%
Annual rebate from Wealth Club (for three years) 0.10%

More detail on the charges

Deadlines

  • Final allotment in 2021/22 tax year: 5 April 2022 (2pm)
  • Final allotment in 2022/23 tax year: 30 September 2022 (2pm)

Dividend Reinvestment Scheme (DRIS)

The companies have adopted a Dividend Reinvestment Scheme under which shareholders are given the opportunity to reinvest future dividend payments by way of subscription for new shares. Subject to a shareholder’s personal circumstances, shares subscribed for under the Dividend Reinvestment Scheme should benefit from VCT tax relief. 

Share buy-back policy

The VCT intends to buy back shares at a discount in the region of 5% of net asset value. Buybacks are subject to the company having sufficient funds available and are at the discretion of the board. 

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.

The chart shows the five-year discount to net asset value history of the Albion VCTs based on the closing share price 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.

Five-year average discount to NAV history

Source: Morningstar, 31 December 2021. The discount chart shows the average discount of all Albion VCTs, calculated as the closing share price at the end of each month, divided by the latest net asset value at the time. Rolling 12-month average is this figure averaged over the year.

Annual rebate when you invest through Wealth Club

The Albion VCTs include 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.

Our view

By investing across the Albion VCTs, investors gain access to a portfolio of complementary investments via a combination of predominantly growth capital investments and a somewhat smaller legacy portfolio of income-generating, asset-based and renewable energy investments, as well as cash. Following the sale of several care home assets, the combined VCT portfolio has a strong bias towards fintech, software & technology and healthcare sectors (58.6% of net assets), which in our view is an area of strength for the VCT. Past performance is not a guide to the future.

The team has deep technology and healthcare sector expertise. Several of the portfolio’s largest holdings have demonstrated encouraging progress, such as Quantexa, the UK’s 14th fastest-growing private technology business, although there are no guarantees of future success. 

The trusts aim to pay twice-yearly dividends on different months of the year, so, if all six VCTs are held, investors could potentially benefit from tax-free dividends throughout the year – not guaranteed. Note: capacity for Albion Venture Capital Trust is very limited under this offer.

In our view, the ability to access a growing portfolio of technology and healthcare businesses combined with the potential for a regular income stream, in part supported by Albion’s legacy asset-based investments, makes this a compelling offer for consideration: experienced investors should form their own view.

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.

The details

Type
Generalist
Target dividend
-
Initial charge
-
Initial saving via Wealth Club
Net initial charge
-
Annual rebate
-
Funds raised / sought
£96.5 million / £96.5 million
Deadline
CLOSED
Last updated: 6 January 2022

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