Baronsmead VCTs

Baronsmead Venture Trust (BVT), launched in 1995, and Baronsmead Second Venture Trust (BSVT), launched in 2001, are among the largest and most diverse VCTs.

Combined, they have net assets of £434 million (November 2024) and a portfolio of more than 85 companies spread across legacy management buyout (MBO) investments, AIM-quoted companies and early-stage growth investments, as well as three Gresham House equity funds and three money market funds.

The VCTs target an annual dividend of 7% of net asset value (NAV) – one of the most generous policies in the market – and have achieved this in each of their last five financial years. Dividends are variable and not guaranteed. Over the five years to 30 June 2025, the VCTs generated a NAV total return (including dividends reinvested) of 9.0% (BVT) and 9.8% (BSVT) respectively: note past performance is not a guide to the future.

• Seeking to raise £30 million, with a £20 million overallotment facility (of which £10m in use from 13 March)
• Targets an annual dividend of 7% of NAV – variable and not guaranteed
• Minimum investment: £5,000

The Baronsmead VCTs are managed by alternative asset specialist Gresham House.  

The manager is also responsible for the Mobeus VCTs as well as a range of other investment mandates – including strategic public equity, private equity, forestry, renewable energy, housing and infrastructure – overseeing a total of £8.8 billion (June 2024). 

Gresham House’s experienced team of over 30 investment professionals cover all aspects of portfolio management and investment strategy for the VCTs. 

The team is led by Trevor Hope, Chief Investment Officer (Private Equity), and Ken Wotton, Managing Director (Public Equity). Together, they oversee £856 million across the Mobeus and Baronsmead VCTs (November 2024).

In 2023, Searchlight Capital, a US private equity firm, acquired Gresham. As part of the acquisition, senior members of the VCT leadership team secured an equity stake in the business, ensuring continuity and alignment in the management of the VCTs.

Since 2015, Baronsmead has invested in a mixture of private and AIM-quoted growth capital opportunities. The portfolio also includes a sizeable allocation to legacy investments, such as management buyouts, Gresham House UK equity funds and other main market listed equities. 

Across both private and AIM-quoted investments, the VCTs seek to back companies with strong growth momentum, high-quality management teams, proven and profitable unit economics and a scalable sales model. The manager typically invests in businesses with annual recurring revenue of £1 million or more.

Companies are split into three stages of maturity – emerging, developing, and core. This helps Baronsmead determine the size of the investment, manage risk and create future deal flow if successful companies mature. 

Combined, the two VCTs have net assets of £434 million (November 2024) and a well diversified portfolio of more than 85 companies.

The combined portfolio is split between quoted (35%) and unquoted (25%) companies. The remainder is invested across three equity funds (LF Gresham House Micro Cap, LF Gresham House Multi Cap Income, and LF Gresham House UK Smaller Companies, collectively 30%) and three money market funds (10%).

Investments are spread across four sectors: technology (64%), healthcare & education (20%), business services (8%), and consumer markets (8%).

In the year to 30 September 2024, the VCTs invested £16.8 million in seven new companies and £9.6 million in 12 follow-on opportunities. Post period end, the VCTs invested a further £3 million into two new companies and £3 million into five follow-on investments.

In their last full financial year, the VCTs reported five full exits – and one partial. Of these, two were positive, two negative, with two write-offs. This delivered combined proceeds of £16.9 million at an average return of 2x investment cost. Please note, past performance is not a guide to the future.

As is to be expected, not all investments worked out. Deepverge, a life sciences business, is an example.

The company developed various AI tools for the life sciences sector and was admitted to AIM in 2017.

In April 2023, the company revised its reported revenue down by c.50%. As a result, the company had insufficient cash to continue its operations and its shares were cancelled in December 2023.

The VCTs invested a combined £3 million in July 2021. This position has now been fully written-off.

There is a dividend reinvestment plan which allows shareholders to reinvest future cash dividend payments by purchasing existing shares in the secondary market. As these are not new shares they will not be eligible for income tax relief.

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.

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 30 June 2025 was -6.3%. Over the previous five years the average discount to NAV was -5.6%.

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.

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.

The VCTs have significant exposure to AIM. AIM shares can be very volatile and could suffer extreme volatility if the market falls sharply. The difference between the buying and selling price of AIM-quoted companies is often wider than those listed on the main market. 

The VCT 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.

• Deadline for 2025/26 allotment: 30 June 2025 (9am)

The two Baronsmead VCTs are amongst the largest and most diversified of all venture capital trusts. The combined portfolio is spread across AIM-quoted companies, legacy MBO investments, early-stage growth investments, three Gresham House equity funds, and money market funds. 

The VCTs target an annual dividend yield of 7% of NAV – one of the most generous policies in the market – and have achieved this in each of the last five financial years, although past performance is not a guide to the future. These returns have historically been supported by income from legacy investments, such as MBOs and UK equities. However, as the growth capital portfolio continues to expand, dividends are likely to become lumpier and more reliant on exit proceeds.

The trusts are overseen by a large and experienced investment team, able to support the existing portfolio and find new opportunities. Furthermore, its senior members have bought into the equity of the business, ensuring continuity in the core personnel and investment approach.

In our view, the Baronsmead VCTs are a high-quality offer that gives investors exposure to the UK stock market and a burgeoning portfolio of growth capital investments. Experienced investors should form their own view. 

This financial promotion has been communicated and approved by Wealth Club Ltd on 10 January 2025

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.