Guinness VCT

The Guinness VCT is a new VCT managed by the same team that runs the longstanding Guinness EIS and Guinness AIM EIS funds. 

Since 2010, the team has raised and invested over £300 million into more than 180 EIS- and VCT-qualifying companies, including legacy and newer growth capital investments. It has backed some of the UK’s fastest-growing startups, including Popsa, Thriva, Distributed and Cera Care, and achieved several successful exits.

The VCT takes a similar approach to Guinness’s EIS funds. It doesn’t target any particular sector, but primarily invests in more established private companies, often with over £1 million of annual revenue, with a smaller proportion in AIM-quoted businesses. 

The VCT was admitted to the London Stock Exchange in April 2023. It has net assets of £4.3 million, of which £1.6 million has been invested into five companies, two from Guinness’s existing EIS portfolio (Dragonfly Technology and Baby Mori) and three new companies (Fable Data, PlotBox and BBC Maestro) (September 2023).

The VCT hopes to pay annual dividends of 5% of NAV but dividend payments are unlikely to start before 2026 at the earliest. Dividends are variable and not guaranteed.

• Seeking to raise up to £10 million, with a £5 million overallotment facility 
  
• Targets annual dividends of 5% of NAV from 2026 – not guaranteed 
• Minimum investment £5,000; you can apply online
• Next deadline: 28 June 2024 (3pm) for final allotment in 2024/25 tax year

The manager

Guinness Asset Management was founded in 2003 by industry stalwart Tim Guinness. Tim has over 35 years of investment experience. He co-founded and ran Guinness Flight Global Asset Management until its acquisition by Investec in 1998. He then led Investec’s Global Energy Fund before launching Guinness Asset Management.

In total, Guinness Asset Management manages £7.5 billion across its equity funds, EIS funds, VCT and an IHT fund (December 2023). 

Shane Gallwey, a CFA Charterholder. leads the Guinness Ventures team of 11 investment professionals, assisted by three fund managers.

Guinness Ventures has raised and invested over £300 million into more than 180 EIS and VCT-qualifying companies since 2010.

Investment strategy

The Guinness VCT blends the investment approaches taken by Guinness’s EIS and AIM EIS funds. 

Due to the number of opportunities the team reviews, Guinness employs a quick filtering process to ensure those it sees as the most promising receive the most attention. The investment team pitches new deals to the investment committee daily, to quickly progress the strongest candidates into the next stage of assessment. 

Approximately 80-90% of the VCT’s investments are expected to be into private companies, with 10-20% to be in AIM-quoted companies. 

Private companies

Guinness looks for companies with proven technology or services requiring scale-up capital. The VCT targets young businesses with good growth potential as well as strong balance sheets and cash flows. Companies should preferably be generating revenues of £1 million or more.

Over the last two tax years (2021/22 and 2022/23), companies backed by the Guinness EIS fund had average annual revenues of £5.8 million at the point of investment. 

AIM-quoted companies 

Guinness looks for companies that operate within a growing sector, with a sound business plan, and which are not reliant on a small customer base. It also seeks experienced management teams, whose incentives are aligned with shareholders’ interests and with a demonstrable regard for effective corporate governance.

Current portfolio overview

This is a new VCT, which aims to build a portfolio of growth capital investments. 

In April 2023, the VCT was admitted to the London Stock Exchange and invested £1.6 million into five companies, two from Guinness’s existing EIS portfolio (Dragonfly Technology and Baby Mori) and three new companies (Fable Data, PlotBox and BBC Maestro). Guinness expects to make between 10 and 15 investments in its first year, not guaranteed and depending on funds raised. It may take several years to establish a well diversified portfolio.

PlotBox

PlotBox provides specialist software for cemeteries and crematoria across the UK, US and Australia. 

Founded in 2014 by husband-and-wife Sean and Leona McAllister, PlotBox pioneered the use of high-resolution drone mapping in the sector. Its software helps cemeteries monitor and manage records and plot existing graves. Since launch, the offer has expanded to include finance management, customer support and cemetery CRM services, among others. 

Today PlotBox, based in Ballymena, Northern Ireland, employs a team of 80 staff, including dedicated sales teams in North America and Australia. Customers include the Archdiocese of San Francisco and Brisbane City Council, as well as a wide range of public and private cemeteries.

Guinness led a £5 million round in April 2023, alongside existing investor Par Equity, with the VCT investing £350,000. In December 2023, Plotbox was named in the Ireland Deloitte Technology Fast 50 2023.

Fable Data 

Fable was founded in 2018 by Luke Kennedy and Suraj Gohil. With experience as a government adviser and fund manager respectively, they set out to give decision makers access to the most up-to-date, complete consumer spending data possible. 

The firm collects anonymised European consumer transactions data from banks and provides it to investment firms and corporates, while also offering it pro-bono to government and educational institutions such as the Deutsche Bundesbank and University of Oxford. Fable’s offering helps banks commercialise their data and allows decision makers to monitor consumer activity in real time on a sector-by-sector and even company-by-company basis. HM Treasury is among the government departments using data provided by Fable for insight on economic activity alongside official statistics. 

Guinness first backed the business in April 2023, including a £350,000 investment from the VCT. In July 2023, Fable Data received the Royal Statistical Society Award for Statistical Excellence in Trustworthiness, Quality and Value. 

Exit track record

As this is a new VCT there is no track record. However, the VCT plans to invest in the same type of companies as the Guinness EIS fund, which has had several high-profile exits including ContentCal (4.3x realised return) and Pasta Evangelists (3.0x realised return). Past performance is not a guide to the future. 

An example of failure is MyHomeGroup, an online estate agent that sought to offer the benefits of a high-street estate agent without the associated costs. The company was impacted by a slowdown in property transactions in late 2019 and early 2020, and then by the lockdown. As a result, MyHomeGroup went into administration on 17 April 2020, with no residual value left to shareholders. 

Performance and dividends

The VCT is targeting an annual dividend of 5% of NAV from 2026. As this is a new VCT, there is no performance track record. 

However, it will be managed by the same team responsible for the Guinness EIS fund. 

Since adopting its growth capital strategy in 2018, the Guinness EIS fund has invested £155.8 million into 47 companies (December 2023). The fund has found some early success: it has achieved three full and three partial exits, generating total proceeds of £32.9 million, whilst the remaining portfolio shows an unrealised value of £210.9 million. Six businesses have failed (December 2023). Past performance is not a guide to the future. See the track record for Guinness EIS and Guinness AIM EIS for more details. Past performance is not a guide to the future.

Guinness EIS – performance per £100 invested in each tax year

Guinness AIM EIS – performance per £100 invested in each tax year

Dividend Reinvestment Scheme

The VCT does not expect to pay a dividend until at least 2026 – not guaranteed. 

Share buybacks

The VCT plans to operate a policy of purchasing their own shares as they become available in the market at a discount of approximately 5% to the latest published NAV. However, there is no guarantee that the company will buy back shares. The discount to NAV could also be greater or less than 5%.

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.

As this is a new VCT it will take time to build a portfolio of investments, during this time the trust is likely to be more concentrated and no dividend payments are expected until at least 2026. 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, 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.

The below table relates to the Guinness VCT Prospectus offer, including a discount for existing investors in the Guinness EIS funds. Note there are preferential terms for the Founder Shareholder Offer.

Annual rebate when you invest through Wealth Club

The Guinness 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.

Deadlines

• Deadline for final allotment in 2024/25 tax year: 28 June 2024 (3pm)
  

Our view

While the Guinness VCT is a new fund, it is overseen by a highly experienced EIS manager. The Guinness Ventures team has a strong track record of identifying and investing in fast-growing companies that have demonstrated an ability to generate revenues, have strong financials and sound business models.

The investment team is well resourced, and Guinness has raised and invested over £300 million into EIS and VCT-qualifying companies. Its existing EIS portfolio includes some of the UK’s fastest-growing small businesses. While these will not feature in the VCT at launch, there may be an opportunity to participate in later follow-on deals.

All this could make Guinness a desirable destination for entrepreneurs seeking growth capital. 

Investors should note that, the VCT will not be paying dividends for some years. The portfolio is also likely to be concentrated in the early years, potentially making it a riskier investment. Nonetheless, this may be an attractive consideration to complement an existing VCT portfolio.

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.