Maven Income and Growth VCTs

Maven Capital Partners (“Maven”) is a highly regarded fund manager, known for its strong regional presence. Across its ten regional offices, the business manages £727 million. Its four VCTs, with combined net assets of £258.3 million (August 2021), all now follow the same investment strategy: they primarily target unquoted businesses with robust growth prospects across a variety of sectors. They can also invest in AIM-quoted opportunities the manager considers attractive. 

The Maven VCTs are a blend of more mature management buyout investments, early-stage high-growth private companies, AIM-quoted companies, investment trusts and cash or cash equivalents. 

The current offer is seeking to raise up to £20 million, split equally between Maven Income and Growth VCT 3 (“Maven VCT 3”) and Maven Income and Growth VCT 4 (“Maven VCT 4”). The VCTs also have access to an overallotment facility of £10 million each.

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 apply

Highlights

  • Well diversified portfolio of mature unquoted companies, earlier-stage unquoted and AIM companies, investment trusts, and cash
  • Strong regional presence with 10 offices across the UK 
  • Highly regarded, well resourced team
  • Available for this tax year (2021/22) and next year (2022/23) 
  • Minimum investment of £3,000 across the two VCTs or £3,000 in one – you can apply online

The manager

Seasoned VCT investors will be familiar with Maven Capital Partners. It is a specialist manager of venture capital, private equity and property development projects, headed up by managing partner Bill Nixon. 

Maven began life as the private equity and VCT arm of Aberdeen Asset Management before Bill Nixon and the senior team led a management buyout in 2009. The business has 10 offices throughout the UK and employs more than 80 people (March 2021). 

In May 2021, Maven was acquired by Mattioli Woods Plc, the AIM-quoted national wealth and asset management business. Maven believes it will be “business as usual” following the acquisition, with no changes to its existing management team or staff. 

Maven invests in the regions as well as in London and the South East. It has nationwide coverage through its regional office network, allowing it to see and take advantage of opportunities its peers might not come across. Maven also manages funds for the British Business Bank.

The management of the VCTs is split between two teams. The investment team, which consists of 20 investment professionals, is responsible for sourcing, executing and managing the VCTs’ investments, whilst the portfolio management team, which consists of seven investment professionals, is responsible for generating and protecting shareholder value, planning exits and monitoring performance. Members of both teams operate from across Maven’s network of regional offices. Both teams are overseen by the board of each VCT.

In total Maven has £727 million under management across all its investments. Maven and its executives have previously invested around £4.5 million, in aggregate, in the Maven VCTs. Maven executives and the directors of the VCTs intend to invest at least £425,000, in aggregate, into the offers, to reflect their ongoing confidence in the long term prospects of the VCTs.

Investment strategy 

Maven’s investment team applies the same broad investment strategy across all its VCTs. It targets established, entrepreneurial businesses, led by proven management teams that Maven believes have robust growth prospects. It aims to concentrate on companies available at attractive entry multiples which have the potential to generate regular income and achieve medium to long-term capital appreciation – not guaranteed.

The VCTs will focus primarily on unquoted investments but will consider AIM opportunities as well. These two asset classes have different return profiles and could therefore provide balance and diversity to the portfolio. 

Maven’s UK-wide coverage and investment resources enable it to access a wide range of private company opportunities. Every transaction goes through a structured three-stage investment approval process, led by the relevant Maven regional deal executives and supported by the collective knowledge and expertise of Maven’s UK-wide team. Managing partner Bill Nixon, who leads the investment committee, has the final say on new investment. 

Typically, Maven invests £2 million or more per VCT deal in total. The combined size of its VCTs allows the trusts to invest in each transaction. Together the VCTs have £258.3 million in net assets (August 2021) and the co-investment policy allows each VCT to take a relatively small position in each deal. This can help Maven complete a larger number of investments and build a more diversified portfolio which could spread some of the risks of investing in smaller early-stage businesses.

Exit track record

Over the last 18-month period covering the latest half-year and annual results, the VCTs’ quoted equity exposure was the key contributor to realised returns. Maven VCT 3 has made £1.1 million of disposals, generating a realised profit of £593k. Maven VCT 4 has made £3.5 million of disposals, generating a realised profit of £2.1 million. 

The unquoted exposure generated realised returns of £440k and a loss of £378k for Maven VCT 3 and 4 respectively.

Symphonic Software – Maven VCTsSymphonic – example of previous exit

Edinburgh Napier University spinout Symphonic Software was formed in 2014. The company has developed technology that addresses a significant issue in today’s connected world: managing compliant access to data by properly authorised users.

The software gives users visibility and control over to whom, when and how data can be shared. For example, it could help a bank with the decision to allow or deny customer transactions – or request further authentication – thereby decreasing the risk of fraud without unnecessarily cumbersome checks. Or it could help a healthcare institution check whether a patient had given authorisation for a hospital doctor to see medical notes held at their GP’s surgery.

The Maven VCTs initially invested in March 2019, and the business was acquired by American software company Ping Identity in November 2020 for a reported 2.9x return after a holding period of under two years for the Maven VCTs. Past performance is not a guide to the future.

Motokiki – example of previous failure

Investing in VCTs is high risk and there have been failures in the portfolio. One example is Motokiki.

Motokiki was the UK’s first price comparison site for tyres offering consumers an impartial comparison of tyres pricing and availability from a wide range of suppliers. 

The company initially secured £3 million in funding, split equally between Maven and the Development Bank of Wales. However, as a result of a change in strategy, the business struggled to maintain the rate of sales traction. An agreement could not be reached among the company’s remaining investors to provide further financial support, leading to the company entering administration in October 2019. 

Covid-19 impact

The pandemic has created a challenging environment for many businesses, particularly those with consumer-based models. The Maven VCTs have relatively little direct exposure to the retail, leisure, hospitality, and entertainment sectors. Maven’s investment approach favours companies in less cyclical and more defensive sectors, which often have contracted revenue streams. 

Maven undertook a full review of its portfolio in March 2020 and adjusted the valuation for specific companies in consumer-facing sectors. This resulted in a reduction in NAV per share for both Maven VCT 3 and Maven VCT 4. 

Maven VCT 3 saw its NAV fall from 59.92p in November 2019 to 55.91p in March 2020 after paying a 2p dividend. 

Maven VCT 4 saw its NAV fall from 70.91p in December 2019 to 64.51p. 

Both trusts have since recovered. Since March 2020, Maven VCT 3 NAV per share has risen to 60.76p (May 2021) after paying 3p in dividends Maven VCT 4 NAV per share has risen to 73.81p (June 2021), after paying 5p in dividends.

The majority of the portfolio has continued to trade satisfactorily, in Maven’s view. Past performance is not a guide to the future.

Current portfolio overview

The Maven VCTs follow the same investment strategy and will look to co-invest on all future deals, although some deals may be too small for both VCTs to participate. 

As a result, both VCTs have similar underlying portfolios with comparable asset allocation and sector exposures, a differentiator has been the exposure to AIM. Maven VCT 4 has marginally more AIM exposure at 14.3% vs 9.4% for Maven VCT 3. 

Both VCTs are well diversified. Maven VCT 4 has 119 underlying holdings, whilst Maven VCT 3 has 96.

Maven has made progress in transitioning the portfolios towards a new growth capital strategy. Both VCTs have approximately half of their net assets in unlisted growth capital investments, whilst pre-2015 investments have fallen to less than 20%.

The current portfolio breakdowns are shown below.

Asset allocation as % of net assets

As at May 2021 (Maven VCT 3) and June 2021 (Maven VCT 4)

Top 10 sector breakdown

As at May 2021 (Maven VCT 3) and June 2021 (Maven VCT 4)

Source: Maven Capital Partners, May 2021 (Maven VCT 3) and June 2021 (Maven VCT 4).

Examples of portfolio companies

Horizon Cremation – Maven VCTsHorizon Cremation (largest unquoted holding)

Founded in 2015, Horizon Cremation is a developer and operator of purpose-built crematoria in areas of Scotland where current facilities are over-stretched. 

Maven first invested in the business in May 2017. Horizon currently operates two sites: the first, in North Ayrshire, has been trading since June 2018 and the second in Staffordshire opened in April 2021. Two further sites are under development. The crematoria meet the latest environmental standards and offer enhanced levels of care for families. 

Maven believes the business is trading to plan. Horizon is the largest holding within both VCTs. Maven VCT 3 holds a £1.9 million position, on an investment cost of £1.3 million, equivalent to 4.1% of its net assets (May 2021). Maven VCT 4 holds a £3.7 million position, on an investment cost of £2.5 million, equivalent to 4.6% of its net assets (June 2021).

MaxCyte – Maven VCTsMaxCyte (largest AIM-quoted holding)

US-based MaxCyte has developed a patented, high-performance cell-engineering platform. 

The platform allows its biopharmaceutical partners – businesses engaged in drug discovery and development, biomanufacturing and cell therapy, including gene editing and immune-oncology – to unlock the potential of their products, and solve development and commercialisation problems.

The business published upbeat annual results for 2020, recording $26.2 million in revenue, up 21% year-on-year. In July 2021, MaxCyte successfully completed its dual listing on Nasdaq, raising US$201.8 million, the proceeds of which are expected to be used to expand its manufacturing capabilities and invest in automation. Past performance is not a guide to the future. 

MaxCyte is currently the largest AIM-quoted holding within Maven VCT 3 and third-largest within Maven VCT 4, accounting for 1.5% and 1.3% of net assets respectively.

Performance and dividends

Maven VCT 3 NAV per share increased from 59.92p in November 2019 to 60.76p in May 2021, after paying 5p in dividends. Maven VCT 4 saw its NAV rise from 70.91p in December 2019 to 73.81p in June 2021, after paying 5p in dividends. Over five years to June 2021, Maven VCT 3 and 4 have delivered a NAV total return of 15.35% and 19.31% respectively. 

Over the last five years to 30 June 2021, Maven VCT 3 has paid an average annual dividend of 7.64p per share, while Maven VCT 4 has paid an average annual dividend of 7.68p per share. 

Maven VCT 3 has a net asset value of 60.76p per share (May 2021). Maven VCT 4 has a net asset value of 73.81p per share (June 2021). 

Unlike most other VCTs, Maven does not specify a dividend target. As a result of VCT rule changes since 2016 – which have required VCTs to have an earlier-stage focus – Maven expects distributions to become more closely linked to realisation activity. Please note, past performance is not a guide to the future, dividends are variable and not guaranteed.

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 31/12/2015 – 30/06/2021.

Dividend payments in the calendar year

Source: Morningstar. Past performance is not a guide to the future. Dividends are variable and not guaranteed. Dividends paid per calendar year to 30 June 2021.

Average dividend yield (% of NAV) history

  Maven VCT 3 Maven VCT 4
2016 6.42% 5.32%
2017 21.95% 16.68%
2018 16.60% 17.56%
2019 3.28% 2.77%
2020 7.08% 4.45%
YTD 1.72% 2.81%
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. 

The VCTs have some exposure to AIM. AIM shares can be very volatile and could suffer extreme volatility if the market falls sharply.

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. 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 1.25%-1.5%
Wealth Club initial saving 3%
Existing shareholder discount
Net initial charge through Wealth Club (new investors) 1.25%
Net initial charge through Wealth Club (existing shareholders) 1%
Annual management charge 2.5%
Annual administration charge See details below
Performance fee See details below
Annual rebate from Wealth Club (for three years) 0.10%

More detail on the charges

Deadlines

  • Deadline for early bird discount: 28 January 2022
  • Deadline for allotment of shares in 2021/22: 4 April 2022
  • Deadline for allotment of shares in 2022/23: 27 May 2022

Dividend investment scheme

The company operates a dividend investment scheme which enables shareholders to reinvest any future cash dividends in Ordinary shares. These new shares should qualify for VCT tax reliefs that are applicable to subscription for new VCT shares, however, please remember tax rules can change and depend on circumstances.

Share buyback policy

Both VCTs operate a policy of purchasing their own shares subject to market conditions, available liquidity, and the maintenance of its VCT status, at a discount of up to 5% of the latest published Net Asset Value (NAV). However, there is no guarantee that either company will buy back shares. Please note, this discount control mechanism does not prevent the share price periodically trading at discounts greater than 5% of NAV.

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 Maven 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 VCT’s share buyback facility, although this is not guaranteed.

Maven VCT 3 – Five Year Discount to NAV history

Maven VCT 4 – Five Year Discount to NAV history

Source: Morningstar. Past performance is not a guide to the future. Dividends are variable and not guaranteed. Dividends paid per calendar year to 30 June 2021.

Annual rebate when you invest through Wealth Club

The VCT offer 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 Application Amount you invest. You will find the terms and conditions for annual rebates within our Terms of Business.

Our view

In our view, Maven has a well resourced and experienced investment team. Its acquisition by Mattioli Woods Plc is not expected to result in changes to the existing management team. 

The VCTs benefit from Maven’s strong regional presence – a resource it appears to have put to good use, making growth capital investments into 43 investee companies since the rule changes in 2015. It is these new early-stage investments which the manager expects to drive performance for both VCTs in future, although there are no guarantees. The relatively young unquoted portfolio has yet to contribute materially to the performance of the VCTs. However, the VCTs have benefitted from their exposure to the AIM market, where strong performance from companies such as MaxCyte and Ideagen have added to the performance of the VCTs. 

As new investments are made and the VCTs raise more funds, the proportion of the portfolio in legacy investments will decrease. However, those legacy investments continue to provide a modest income to the VCTs. 

Both VCTs contain large and diverse portfolios. Maven VCT 3 has 96 investee companies within its portfolio, Maven VCT 4 has 116. The underlying assets are spread across unlisted growth capital investments, mature MBO investments, AIM-quoted companies, investment trusts and cash or cash equivalents and could therefore add diversification to a VCT portfolio. 

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
Unspecified
Initial charge
5.5%
Initial saving via Wealth Club
4.25% (4.5% for existing shareholders)
Net initial charge
1.25% (1% existing shareholders)
Annual rebate
0.10%
Funds raised / sought
£1.0 million / £20.0 million
Deadline
28 Jan 2022 for early bird
Last updated: 21 September 2021

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