Downing FOUR VCT – Healthcare Shares

New: “Meet the manager” video – watch below

Downing LLP is an experienced investment house, with over £1.5 billion of funds under management. It acts as investment adviser to four VCTs, which have cumulative assets of £186.7 million (September 2021).

Downing FOUR VCT has three active share classes:

The Healthcare Shares seek to invest in early and mid‐stage healthcare companies. The share class is overseen by Downing’s dedicated healthcare team – who is responsible for the existing healthcare portfolio. The investment strategy revolves around companies addressing four key themes: prevention, point of care, personalisation and “future pharma”.

The share class first issued shares in February 2017 and currently has net asset of £17.5 million spread across a portfolio of 13 investee companies and two Downing funds (30 September 2021). 

Under the current offer, the VCT seeks to raise up to £10 million in the Healthcare share class, with a £15 million over-allotment 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.

Read important documents and then apply


  • Focus on healthcare investments and exposure to Downing UK micro-cap funds 
  • Experienced VCT manager
  • Target 4% dividend per annum, not guaranteed 
  • Annual rebate of 0.10% for three years
  • Invest in the 2022/23 tax year
  • Minimum investment £5,000 – you can apply online

The manager

The VCT is managed by Downing LLP, whose origins date back to 1986. Downing is an experienced investment house, with over £1.5 billion of funds under management. It has four VCTs, with cumulative assets of £186.7 million (September 2021).

Downing Ventures is a division of Downing LLP that invests in early and growth-stage businesses. The team is broadly split into two groups, technology and healthcare. The latter will be responsible for sourcing and selecting investments for the Healthcare share class and for managing the wider Downing healthcare portfolio.

The healthcare team is led by Dr William Brooks who has over 30 years’ experience, including 18 years working in Venture Capital across Europe and the US. Prior to joining Downing, Dr Brooks spent 10 years at Quest for Growth, a pan-European fund investing across public and private equities. He is supported by Dr Koujiro Tambara and Matt Pierce. Dr Tambara holds a PhD in Organic Chemistry from the University of Cambridge and Mr Pierce is a chartered accountant with prior sector experience at Deloitte and Berenberg. The team will also have access to the wider resources of Downing Ventures, the Ventures Investment Committee, and Downing’s network of Venture Partners.

All three members of the healthcare team joined Downing Ventures in 2018.

Watch a video interview with manager Dr Will Brooks:


Investment strategy

The Healthcare share class targets investments into early and mid‐stage healthcare companies it believes could address global issues, particularly those accelerated by the Covid-19 pandemic.

Given the broad nature of the healthcare and life science sectors, the investment team has highlighted four key themes likely to drive its investment decisions: 

  1. Prevention – Increased digitalisation is expected to support data-led decision-making. This could potentially allow practitioners to make more informed choices, improving both patient outcomes and the allocation of primary care resources.
  2. Point of Care – Current healthcare infrastructure relies on specialised machinery and personnel for diagnostics and treatments. However, advancements in medical equipment and software appear to be leading to a shift towards more localised diagnostics and treatment, potentially allowing more immediate point of care access for patients.
  3. Personalisation – Healthcare is likely to become more personalised as technology develops, with treatments tailored to each individual. This could range from improved disease risk assessments to adjustments in doses and treatments to maximise efficacy and safety.
  4. Future Pharma – To keep pace with novel drug therapies the healthcare industry must be able to facilitate new treatments. For this reason, the fund will consider investments that support healthcare infrastructure and logistics, as well as more traditional therapeutic companies.

Downing will source deals using its global network of venture partners and sector experts. Within the UK, it will focus particularly on two important centres of research and innovation: the ‘Golden Triangle’ of Oxford, Cambridge, and London, and the ‘Silicon Gorge’ of Bristol and Bath.

Downing believes its network can also add value. Its Venture Partners are located in global hubs such as Israel and the US, potentially providing portfolio companies with opportunities to capitalise on new markets, secure additional funding, and identify potential exit options. Portfolio companies may also benefit from Downing’s ability to coinvest across its other VCT and EIS funds. It is expected Downing will coinvest to some extent in every deal.

The non-qualifying element of the portfolio is invested in OEICs, Investment Trusts and other securities in line with the investment policy. As at 31 July 2021, the Healthcare share class held 3.3% of its net assets in Downing Strategic Micro-cap Investment Trust and a further 0.1% in the Downing UK Micro-cap Growth Fund, which is closed and returning cash to investors.

Exit track record

The Healthcare share class first launched in 2017 and has since invested into 15 healthcare companies. One investment, Live Better With, has been written off. Another, ADC Biotechnology, was sold for £187k, a realised loss of £1.31 million.

Whilst the share class is yet to experience a profitable exit, in June and July 2021 two investee companies, Arecor Therapeutics Plc and GENinCode Plc, floated on AIM, leading to a material uplift in the net asset value of the share class. 

Live Better With 

As is to be expected, not all investments work out. One such example is Live Better With. 

Founded in 2015 by entrepreneur Tamara Rajah, Live Better With is a healthcare platform that aims to help people with long-term medical conditions – focusing on non-medical products that make day-to-day life better for patients. The company sells a range of products worldwide from its online platform and launched its first shop in St Thomas’ Hospital in London, the UK's first physical shop for people living with cancer.

The share class first invested in the business in March 2018; however, in the year to March 2020, the board of the VCT fully wrote down the value of its investment as the business appeared unable to achieve its business plan following disappointing trading performance.

Covid-19 impact

The VCT suffered a period of disappointing performance in the first half of 2020, partly as a result of the adverse impact of the pandemic. In 2020, the trust’s net asset value fell from 77.7p on 30 September 2019 to 68.1p on 31 March 2020, before hitting a low of 65.2p in September 2020 after paying a 2.5p dividend. The primary drivers of this performance were the failure of Live Better With and the decline in the value of ADC Biotechnology.

The net asset value per share has since recovered materially, rising to 88.7p in September 2021, before falling back to 85.1p in December 2021. The uplift was driven primarily by the admission to AIM of two portfolio companies: Arecor Therapeutics Plc, and GENinCode Plc which added 6.3p and 8.2p respectively to the net asset value of the share class. Past performance is not a guide to the future.

Current portfolio overview 

As at 30 September 2021, the Healthcare share class had net assets of £17.5 million, of which, £14.5 million is invested across 13 investee companies. 

In addition, the Healthcare share class held 3.3% of its net assets in Downing Strategic Micro-cap Investment Trust and a further 0.1% in the Downing UK Micro-cap Growth Fund. 

Examples of portfolio companies

Arecor – Downing FOUR VCTArecor Therapeutics (largest holding) 

Spun out of Unilever in 2007, Arecor Therapeutics is a global biopharmaceutical company. It is targeting improvements in patient care by enhancing existing therapeutic products. The business has developed its own technology platform, Arestat, to develop a portfolio of proprietary products, as well as partnering with other pharmaceutical and biotechnology companies to enhance reformulations of existing products.

The company is currently focused on two product areas: diabetes and specialist hospital use. The diabetes division is developing an ultra-rapid acting insulin formulation that clinical studies show to be superior to existing products for patients with Type 1 and Type 2 diabetes who self-administer insulin. The business aims to enter into licensing agreements with pharmaceutical and biotechnology companies, potentially generating significant milestone payments and royalties, not guaranteed. The specialist hospital use division looks to partner with leading pharmaceutical companies to enhance existing product lines. An example is Arecor’s partnership with Hikma, the £4.4 billion London listed pharmaceuticals business. 

The Healthcare share class first invested £1.1 million alongside a £300k investment from the Ventures share class (previously called Generalist) in September 2018. In June 2021 the company listed on AIM, resulting in an uplift in valuation, while subsequent positive updates have boosted its share price. As a result the Healthcare share class holding was valued at £3.9 million at the end of September 2021, accounting for 22.1% of the portfolio. Past performance is not a guide to the future. 

Congenica__Downing Healthcare EIS KI FundCongenica

Congenica was founded in 2014 by two researchers from the Wellcome Sanger Institute, a department of the University of Cambridge, and one of the foremost centres of genomics research and innovation in the world.

Congenica has developed a clinical genomics analytical platform, which enables the accurate, rapid and scalable clinical interpretation of complex genomic data. The platform can help clinicians and researchers diagnose rare diseases and develop prognoses and treatment options much faster. 

In 2018, Congenica was selected by Genomics England as the exclusive Clinical Decision Support Platform for research use for the UK NHS Genomic Medicine Service, the first national healthcare system in the world to offer whole genome sequencing as part of routine care. This contract could allow Genomics England to diagnose ‘rare diseases’ in days rather than the average seven years it currently takes in the west.

In July 2021, Congenica announced its genomic interpretation software is now CE marked so its customers can use it for the diagnosis of genetic diseases as part of standard care. This brings Congenica closer to its vision of genomic medicine being routinely incorporated into clinical practice at a global scale.

Downing Ventures initially invested £2.1 million in 2019, with the Downing FOUR Healthcare share class contributing £0.75 million. Downing Ventures has since participated in a $50 million Series C investment round in November 2020, alongside investors Parkwalk, Legal & General and Tencent, the Chinese tech giant, to fund the further development of the company’s clinical genomic analysis software and data platform. 

To date, the Healthcare share class has invested £1.18 million into Congenica and the stake is currently valued at £1.2 million, 6.9% of net assets (September 2021). Past performance is not a guide to the future. 

Performance and dividends 

The share class aims to pay dividends equivalent to at least 4% of its net asset value. Please note, dividends are variable and not guaranteed. 

The performance of the share class is shown below. Since launching in 2017, the share class has endured two failures within the portfolio which materially impacted the net asset value per share. The net asset value has since recovered strongly, driven primarily by the admission to AIM of two portfolio companies: GENinCode Plc, which raised £17 million at a £42 million market capitalisation in July 2021, adding 8.2p to the NAV per share of the share class, and Arecor Therapeutics Plc, which raised £20 million at a £62.5 million market capitalisation in June 2021, adding 6.2p to the NAV per share of the share class. Past performance is not a guide to the future.

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 31/12/2017 - 31/03/2022.

Dividends paid per calendar year

Source: Downing. Dividends paid in each calendar year since 2017. Dividends are variable and not guaranteed and past performance is not a guide to the future.

Average dividend yield (% of NAV) history

Calendar year Dividend as % of NAV
2020 3.58%
2021 3.47%

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 no 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. Management buyouts, replacement capital deals and investments in mature companies 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. 

There is a performance fee of 20% of dividends paid, which applies if the total return of the share class is above the hurdle rate of £1.06 for 31 March 2022, rising by 3p per annum thereafter. This is unusual: performance fees are typically calculated as a percentage of the total return (net asset value plus cumulative dividends), which in our view better aligns the manager’s interests with those of shareholders.

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 4.5%
Early bird discount
Wealth Club initial saving 2.25%
Existing shareholder discount
Net initial charge through Wealth Club (new investors) 2.25%
Net initial charge through Wealth Club (existing shareholders) 2.25%
Annual management charge 2.5%
Annual administration charge See offer documents
Performance fee 20%
Annual rebate from Wealth Club 0.10%

More detail on the charges


  • Deadline for receipt of applications for final allotment in 2022-23 offer: 3pm on 31 May 2022

Dividend Reinvestment

The Company does not operate a dividend reinvestment scheme.

Share buy-back policy

The VCT intends to buy back shares at a 0% discount to the most recently announced 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.

Investors should note the Healthcare share class of the VCT does not yet have a sufficient track record for us to show a complete five year track record. Any consideration of the share price movements in relation to the net asset value per share will therefore be inconclusive. We expect to publish the discount history chart once the VCT has the necessary track record.

Investors looking to sell their VCT shares may get a better price using the VCT’s share buyback facility, although this is not guaranteed.

Annual rebate when you invest through Wealth Club

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 0.10% of the Net Asset Value of the Offer Shares issued to you when you invest. Terms and conditions apply.

Our view

The first three years of the Healthcare share class’s life have proved challenging for investors. The concentrated nature of the portfolio meant two poorly performing investments, Live Better With and ADC Biotechnology, had a disproportionally large negative impact on the value of the trust and contributed to the decline in NAV per share to a low of 65.2p by September 2020. Both investments have since been written off and will no longer act as a drag on the portfolio. 

In the summer of 2021, the share class has experienced an uplift in performance. Two AIM flotations led to a material recovery in the net asset value of the share class to 88.7p by September 2021 (before falling back to 85.1p in December 2021). Within the portfolio there appear to be a number of promising investee companies, including Congenica, Arecor Therapeutics Plc, and GENinCode Plc. Investors should note this is a highly concentrated and single sector-focused portfolio. 

For experienced investors looking for exposure to the healthcare sector, the VCT contains some interesting investments which may complement a wider VCT portfolio, in our view.

Read important documents and then apply

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

Target dividend
4% of NAV
Initial charge
Initial saving via Wealth Club
Net initial charge
Annual rebate
Funds raised / sought
£2.4 million / £10.0 million
31 May 2022 (3pm) for 2022/23 allotment
Last updated: 8 March 2022

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