Blackfinch Spring VCT

The Blackfinch Spring VCT first listed on the London Stock Exchange in April 2020. Its maiden fundraise (which closed in September 2020) raised £4.0 million from investors and made three investments. 

The VCT launched to take advantage of deal flow that Blackfinch considers too mature for its EIS fund. It may also offer a source of follow-on funding for any successful EIS investments.

The current offer is seeking to raise up to £20 million with a £10 million overallotment facility. 

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.

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Highlights

  • New VCT targeting growth capital investments in the technology sector
  • Predominantly a portfolio of cash to deploy into new opportunities
  • Initial dividend target of 5% from 2024 (not guaranteed)
  • Aims to invest in 5-15 companies annually 
  • Available for 2021/22 tax year
  • Minimum investment £3,000, you can apply online

The manager

Blackfinch Group was founded in 2004 by Richard Cook. The business has over £450 million under management.

The group launched its first EIS in 2015 and now has over £60 million in assets across its EIS and SEIS products, and £216 million in IHT Portfolios. The majority of these funds were launched before EIS rule changes and focused on asset-backed or media investments, which are no longer permitted. Blackfinch has made changes to its team and launched Blackfinch Ventures to help it transition towards growth-style investments. Blackfinch Ventures has £15.9 million under management (February 2021). 

Blackfinch Ventures was established in 2017 and since April 2019 has been overseen by Reuben Wilcock, who previously worked as an IP specialist for the University of Southampton as well as founding and running the accelerator programme Future Worlds. Reuben is supported by three investment professionals – two investment managers and an analyst – as well as an in-house legal counsel.

Investment strategy

The VCT was launched to take advantage of deal flow that Blackfinch considers too mature for its EIS fund. It may also offer a source of follow-on funding for any successful EIS investments.

The VCT will target young, growing companies: the key difference is the stage at which they invest, with the VCT targeting more mature businesses in need of scale-up capital.

Deals will be sourced from Blackfinch’s distribution network as well as accelerator programmes such as Future Worlds.

Blackfinch spends time assessing and interviewing the founders before moving to a term sheet. After investment, each company will be monitored by a non-executive director selected by Blackfinch for their relevant experience and industry connections. 

Exit track record

There have been no exits to date.

Covid-19 impact

As the VCT made its first investment in September in 2020, there is no existing portfolio that could have been affected by the Covid-19 crisis. It is, however, conceivable that the current situation could cause delays and pose challenges in sourcing and finalising deals – something that could affect all VCTs. 

Current portfolio overview

The VCT has raised £4.0 million from investors following its first offer, which closed in September 2020. As at 1 December 2020, the VCT has invested approximately £3.1 million across its first three investee companies.

The VCT is expected to use the proceeds raised in this offer to invest in between 5-15 companies per annum, and to fully invest proceeds raised within three years. Should a lower amount be raised, the manager intends to scale down the amount invested per company, so as to still offer investors some diversification – however please note this is not guaranteed and as a new VCT currently making its first investments, investors have exposure to a limited number of investee companies. The investment team will look to provide variety by spreading investments across different sectors and stages. The anticipated holding period is between four to seven years although timeframes are not guaranteed.

Spotless Water – Blackfinch Ventures EISSpotless Water

Spotless Water is the UK’s first self-service, ultra-pure water distributor for window cleaners, car valets, dentists, and home aquarium owners.

For customers, production of ultra-pure water is time-consuming and expensive. Spotless Water has designed systems capable of reliably manufacturing ultra-pure water around the clock. 

The business works by installing self-service filling stations around the UK which can be accessed 24/7.

A recent trial with Tesco and Waves Car Wash demonstrated that each Waves site could save £24k per annum by using Spotless Water. The business has rolled out 38 dispensing stations, with the cost of each station usually returned within a year – not guaranteed. 

The VCT invested £460,000 into the business, the funds will be used to establish further stations and move the business towards a subscription model. 

Transreport – Blackfinch VCTTransreport 

Transreport is a technology platform providing solutions to the travel industry. So far, the business has launched seven SaaS solutions, the most notable being its “Passenger Assist” application.

Previously, passengers would book assistance over the phone and transport staff relied on daily printouts to coordinate support. However, this system has significant limitations, particularly in the event of train cancellations, delays, or platform changes.

In contrast, Passenger Assist allows users to book, change, and cancel assistance quickly, create profiles to specify the type of assistance required, and provides staff with live information to accommodate changes at short notice. The service has proven popular and Transreport has already secured an exclusive, long-term contract with the British rail network.

In March 2021, Blackfinch invested £1.3 million into the company as part of a £2.3 million round with Praetura Ventures. The funding will be used to accelerate expansion and explore routes into air, taxi, bus, and coach travel as well as European rail operators.

Performance and dividends

Performance figures are not yet available.

The VCT targets a dividend yield of 5% from 2024, please note dividends are variable and 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. 

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 new VCT. If fundraising is slow, shares may take some time to be allotted. If the raise is smaller than expected, costs may have a larger impact than intended. Equally, the portfolio may initially be less diverse than anticipated.

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.

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 5.5%
Early bird discount
Wealth Club initial saving 3%
Existing shareholder discount 1%
Net initial charge through Wealth Club (new investors) 2.5%
Net initial charge through Wealth Club (existing shareholders) 1.5%
Annual management charge 2%
Annual administration charge
Performance fee 20%
Annual rebate from Wealth Club (for three years)

More detail on the charges

Deadlines

Next allotment deadline: 30 September 2021 (3pm) for allotment in 2021/22

Share buyback policy

The Company may operate a buyback policy at a 5–10% discount to the latest published net asset value per share. This is not guaranteed – please see the offer documents for details.

Dividend reinvestment scheme

There is no dividend reinvestment scheme. 

Annual rebate when you invest through Wealth Club

There is no annual rebate for Wealth Club investors.

Our view

In our view, it is too early to draw conclusions on the merits of this VCT offer. Blackfinch Group launched its Ventures business in 2017. The service is headed up by Reuben Wilcock, who joined in 2019. To date, Blackfinch Ventures has attracted £15.9 million of capital overall (February 2021) and has made investments into 14 EIS-qualifying companies, of which the VCT has invested in three. The core team has been working together for only a limited period. However, within its EIS service, Blackfinch has so far been able to both attract and deploy capital efficiently.

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
5% from 2024
Initial charge
5.5%
Initial saving via Wealth Club
3% (4% existing investors)
Net initial charge
2.5% (1.5% existing investors)
Annual rebate
-
Funds raised / sought
£6.4 million / £20.0 million
Deadline
30 Sep 2021 (3pm) for 2021/22 allotment
Last updated: 17 May 2021

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