Mobeus VCTs

Offer closed - Register your interest

As at 21 January 2022, we understand the Mobeus VCTs have reached capacity and stopped accepting applications.

Please register your interest below to receive an alert as and when the VCT re-opens for subscription. Alternatively, see other VCT offers that are currently open.

Register to receive an alert

Previous offer review

Below is our review of the previous offer, which closed in January 2022. As an when a new offer will open, the review on this page will be updated. 

The four Mobeus VCTs – The Income & Growth VCT (I&G), Mobeus Income & Growth VCT (MIG), Mobeus Income & Growth 2 VCT (MIG2) and Mobeus Income & Growth 4 VCT (MIG4) – have long been stalwarts of the VCT industry. All have the same investment remit and will generally invest in the same companies, albeit usually in different proportions. 

The VCTs have a loyal and supportive base of shareholders and an impressive performance track record to date. Over the 10 years to September 2021, Mobeus VCTs account for four of the six best-performing VCTs. Over the 5 years to 30 September 2021, the VCTs generated a NAV total return (including dividends reinvested) ranging from 93.0% (MIG2) to 121.5% (MIG). So, a hypothetical £10,000 investment in September 2016 could be worth between £19,302 and £22,150, assuming dividends were reinvested, not including tax relief. Past performance is not a guide to the future.

In September 2021, Mobeus Equity Partners, the longstanding investment adviser to the Mobeus VCTs, announced its VCT management business had been acquired by Gresham House plc, the AIM-quoted asset manager that also manages the Baronsmead VCTs. The Mobeus VCTs’ investment team has transferred to Gresham House and the investment strategy remains unchanged. 

The VCTs target minimum dividend distributions of between 4p and 6p per annum but have often exceeded these levels in recent years. However, investors should remember that no dividend is guaranteed, and given recent changes to the portfolio dividends may be more irregular going forwards. 

Together, the four VCTs have net assets of £367.2 million and a portfolio of 44 investee companies (30 Sep 2021).

The current offer is comparatively small: it seeks to raise up to £35 million, with no overallotment facility. Previous offers have filled quickly, so it might be wise to act promptly if considering investing.

VCT Offer capacity Funds raised* Capacity remaining
The Income & Growth VCT (I&G) £10m £10m CLOSED
Mobeus Income & Growth VCT (MIG) £10m £10m CLOSED
Mobeus Income & Growth 2 VCT (MIG2) £7.5m £7.5m CLOSED
Mobeus Income & Growth 4 VCT (MIG4) £7.5m £7.5m CLOSED
Total £35m £35m CLOSED
Data is provided by Gresham House and is the latest available.

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.


Highlights

  • A longstanding and highly respected VCT manager
  • An experienced investment team, strengthened by its incorporation into Gresham House plc
  • Combined net assets of £367.2 million with a diverse portfolio of 44 companies
  • Around 28% of the portfolio is in mature pre-2015 investments (September 2021) which could support dividend payments, with the remainder in newer growth capital deals and liquid assets
  • Target annual dividends of 4–6p per share – average of 13.5p paid in the last five years. Dividends are not guaranteed, and past performance is not a guide to the future
  • Available in the 2021/22 tax year only
  • Minimum investment £6,000 in aggregate – you can apply online

The manager

Mobeus Equity Partners, one of the UK’s most experienced VCT investment advisers, has historically been responsible for the four Mobeus VCTs. 

In September 2021, Mobeus Equity Partners sold its VCT business to Gresham House plc, an AIM-quoted specialist alternative asset manager that also manages the Baronsmead VCTs. As part of the deal the Mobeus VCT team, including partners Trevor Hope and Clive Austin, 14 staff and three consultants, transferred to Gresham House.

Trevor Hope and Clive Austin have joined Bevan Duncan, Ken Wotton and Tania Hayes from Baronsmead to create Gresham House’s executive leadership team, responsible for the combined assets of the Mobeus and Baronsmead VCTs – more than £850 million. The leadership team will be supported by 12 members of the new investments team, six portfolio managers, two operating partners, and 14 additional support staff. 

Trevor Hope remains the lead manager on the Mobeus VCTs, which will continue to focus on unquoted investments – albeit some investments may list as they mature. 

This should ensure continuity in the way the Mobeus VCTs are managed and may open new opportunities, as it is expected that the two Baronsmead and four Mobeus VCTs will share unquoted deal flow. 

As part of the wider Gresham House business, Mobeus portfolio companies will have access to Technology Operating Partner Tamer Ozmen, previously CEO of Microsoft in Turkey, and Head of Portfolio Talent Hazel Cameron, who has 20 years of private equity experience. Both will provide assistance and seek to add value to the VCTs’ early-stage investee companies by drawing on their expertise and professional networks.

Investment strategy

The four VCTs have the same investment remit and invest in the same companies, albeit usually in different proportions.

Like many VCT managers, Mobeus historically focused on providing capital to fund the MBOs of larger (£10 million to £40 million turnover), established (10+ years) and profitable (£1 million to £3.5 million profit) companies. Virgin Wines (currently the largest holding in the portfolio) is one example.

Since VCT rules changed in 2015, the focus has shifted towards younger companies across three stages of maturity:

  • Early-stage businesses with revenues of around £500,000, expected to represent around 20% of new investments. These businesses will operate technology-led and disruptive business models. 
  • Mid-stage businesses generating £1+ million in revenues (expected to represent 60% of new investments). These businesses are likely to have proven unit economics and are seeking additional capital to grow sales and marketing, expand internationally, or continue product development.
  • Late-stage, profitable businesses, expected to represent 20% of new investments. 

Successful mid and late-stage investments may include follow-on funding rounds for successful businesses identified at an earlier stage. 

Mobeus has also found success in backing businesses that spin out from existing portfolio companies. These are businesses that the Mobeus team knows well, so it can invest at an early stage and progressively increase its stake. An example is Preservica, detailed below.

Prior to the 2015 VCT rule changes, the manager invested in a combination of debt and equity to generate regular income as well as capital gains. The income from these investments may help underpin dividends in the short term. However, as the portfolio becomes increasingly focused on growth investments, dividends will become more reliant on successful exits which could make dividend payments less regular, not guaranteed.

The VCTs offer exposure to a diverse range of sectors. Direct-to-consumer online retailers represent the largest sector concentration at c.39%. The shift in consumer behaviour fuelled by the pandemic has been particularly favourable to these companies. This is reflected in the short-term performance of the VCTs. 

Exit track record

In the five years to December 2021, Mobeus has sold 20 investments, generating total proceeds of £248.9 million and a total gain of £158.2 million. However, please note past performance is not a guide to the future and there have also been failures.

Red Paddle Co – Mobeus VCTsRed Paddle – Example of recent exit

Red Paddle is a designer and manufacturer of stand-up paddleboards and windsurfing products. The company was founded in 2008 and today operates in 55 countries with an 18% share of the global inflatable paddleboard market.

Mobeus originally invested £4 million in 2015. Since then, Red Paddle has almost doubled revenue and tripled EBITDA, which is in part due to recent strong growth. Red Paddle reached record levels of profitability during the pandemic, as competitors either closed or were unable to obtain enough stock to meet strong demand.

In October 2021, the company was acquired by the Myers family office, owners of Gill Marine, the outdoor performance apparel brand, generating a 4.9x return for the Mobeus VCTs. Past performance is not a guide to the future.

SuperCarers – Example of previous failure

As is inevitable with early-stage investing, not all investments work out. SuperCarers is one such example. 

SuperCarers provided an online platform connecting people seeking home care, typically for their elderly relatives, with experienced independent carers. Carers and care-seekers manage care directly, thus reducing the administrative burden and the need for care managers, enabling care to be delivered with greater flexibility and more cost effectively.

Across all four VCTs, Mobeus invested around £2.1 million into the business in March 2018. 

By 2019, the business was undertaking a restructure of its cost base after falling well behind plan and Mobeus wrote down the value of the holding accordingly. However, in July 2020 the business entered voluntary liquidation and the value of the business was written down to nil. 

Covid-19 impact

The pandemic had significant negative consequences for some UK businesses, and the companies in the Mobeus  portfolio were no exception. Net asset values fell across all four VCTs between December 2019 and March 2020 with NAV total returns of between -9.3% (MIG) to -15.5% (MIG4) in the three months to 31 March 2020.

However, following a period of strong performance from several of the largest positions within the portfolio, the VCTs saw a recovery in the second half of 2020, finishing the year significantly higher.

This continued into 2021, helped by several successful exits (including the IPO of Virgin Wines) and substantial valuation uplifts to some of the largest holdings within the portfolio including MyTutor, MPB Group, and EOTH. In the 18 months to September 2021, the VCTs delivered NAV total returns of 89.2% (I&G), 82.5% (MIG), 69.8% (MIG2), 89.8% (MIG4).

Current portfolio overview

The VCTs’ portfolios include around 44 companies, currently valued at £367.2 million (September 2021). Of these, 21 are legacy investments and 23 are growth capital companies. The VCTs are sector agnostic, although technology-enabled investments are preferred. 

Following recent exits, 44.2% of the combined Mobeus portfolio is invested in post-2015 growth capital investments. Pre-2015 investments account for 28% (September 2021). 

The VCTs’ 44 portfolio companies reported average revenues of £14.7 million in their last financial year, with average year-on-year growth of 22%. 

Combined portfolio sector breakdown (%)

Source: Gresham House, 30 September 2021.

Example portfolio companies

Virgin wines – Mobeus VCTVirgin Wines – largest holding (MBO)

The largest investment in all four VCTs is online wine retailer Virgin Wines, which floated on AIM in March 2021. Subscription wine clubs are nothing new: The Wine Society launched in 1874. But Virgin believes its wine sourcing approach, strict customer acquisition model and low fulfilment costs give it an edge over rivals. The company reported a 30% increase in revenues at its most recent set of results to June 2021, reaching £73.6 million. That’s particularly impressive given it coincides with the end of lockdown and re-opening of wine bars and pubs up and down the country – a sign the group appears to be retaining customers won during the pandemic. Take listing costs out of the picture and operating profits rose 50%. Past performance is not a guide to the future.

Mobeus initially invested in 2013, supporting a management buyout by Jay Wright and Graeme Weir, the current CEO and CFO. Mobeus invested £8.7 million across all four VCTs. The VCTs have since received £14.9 million in cash proceeds and continue to hold a £39.3 million stake in the business. 

Preservica – Mobeus VCTsPreservica – largest holding (growth capital)

Preservica was spun out of a previous Mobeus investment, Tessella, in 2015, with Mobeus initially investing £3 million. The company had developed a digital preservation system in partnership with the National Archives to store crucial digital data and documents for years. 

Effective storage for digital data is increasingly important as both the quantity of digital data produced increases and the speed of innovation renders old formats obsolete. That presents a challenge when data might need to be stored and accessed years later to protect intellectual property, meet regulatory requirements or preserve documents of cultural or academic significance.

Preservica now works with over 200 customers in 14 countries, ranging from multinational banks to US state archives. Mobeus has steadily supported that growth with further funding in 2018 (£4 million), 2020 (£2.5 million) and 2021 (£5 million). The overall holding is now valued at £28.8 million and represents the second largest investment across the four VCTs combined.

Performance and dividends

Over the 10 years to 30 September 2021, the Mobeus VCTs generated a NAV total return (including dividends reinvested) ranging from 209.3% (MIG4) to 304.8% (MIG). So a hypothetical £10,000 investment in September 2011 could be worth £40,480, assuming dividends were reinvested, not including tax relief. 

Over the 10 years to September 2021, four of the six best-performing VCTs are the Mobeus VCTs. Past performance is not a guide to the future. 

Shorter-term, in the year to September 2021 the VCTs generated a NAV total return ranging from 37.0% to 50.4%, driven by significant uplifts in value for several key holdings and realisations, including:

  • Virgin Wines (largest holding in all four VCTs) up 97.5% in the six months to June 2021 – the business was admitted to AIM in April 2021; 
  • MyTutor (top-10 holding in all four VCTs) up 94.1% in the period;
  • MPB (top-10 holding in all four VCTs) up 54.6% in the period.

The VCTs target dividends of 4-6p per share per year. Over the 10 years to September 2021, the Mobeus VCTs have paid cumulative dividends ranging from 112 to 132p per share. That is equivalent to a dividend yield of 107.5%–144.6% of average NAV in the period. Dividends are variable and not guaranteed.

Investors should note the portfolio is shifting in favour of growth capital investments. That may lead to less consistent dividend payments in future, although the Board has decided not to change the policy for now. 

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 Dec 2016 to 31 Dec 2021.

Dividend payments in the calendar year

Source: Morningstar. Past performance is no guide to the future. Dividends are variable and not guaranteed. The bar chart shows dividend per share paid in each calendar year.

Average dividend yield (% of NAV) history

  I&G MIG MIG2 MIG4
2017 24.40% 24.29% 24.20% 28.63%
2018 6.99% 7.16% 0% 4.70%
2019 12.09% 25.45% 20.67% 21.61%
2020 18.96% 18% 22.71% 8.72%
2021 9.63% 11.59% 18.15% 9.31%
Source: Morningstar. Average dividend yields are based on the dividends paid over the period divided by the average monthly NAV of the VCT over the same period. Past performance is not a 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. 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 3%
Early bird discount
Wealth Club initial saving 0.5%
Existing shareholder discount
Net initial charge through Wealth Club (new investors) 2.5%
Net initial charge through Wealth Club (existing shareholders) 2.5%
Annual management charge 2–2.4%
Annual administration charge See offer documents
Performance fee 15–20%
Annual rebate from Wealth Club (for three years) 0.10%

More detail on the charges

Deadlines

  • Offer closed

Dividend Investment Scheme

The Income & Growth VCT and Mobeus Income & Growth 4 VCT operate a dividend investment scheme, which enables shareholders to reinvest any future cash dividends. 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.

Share buyback policy

From time to time the VCTs may buy back their own shares through the market. The VCTs aim to maintain a mid-share price discount of approximately 5% to NAV. However, there is no guarantee that the VCTs will buy back shares and the discount to NAV could be greater or less than this. 

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 the discount (or premium).

Five-year average discount to NAV history

Source: Morningstar, 31 December 2021. The discount chart shows the average discount of all Mobeus VCTs, calculated as the closing share price at the end of each month, divided by the latest net asset value at the time. Rolling 12-month average is this figure averaged over the year.

Annual rebate when you invest through Wealth Club

The Mobeus VCTs include 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.

Our view

The four Mobeus VCTs are among the most established and successful of all VCTs. 

Since 2015 the VCTs have been transitioning towards growth investments. The Mobeus VCT portfolios include a mix of MBO investments and early-stage investments and AIM-quoted companies. 

All areas of the portfolio have contributed strongly to performance in recent years. Virgin Wines, a former MBO investment now listed on the AIM market, is a particular highlight. It is now the VCTs’ largest investment. 

More recent growth investments, like Preservica, MPB and MyTutor, have also performed well with the VCTs providing follow-on funding to support continued growth. Past performance is not a guide to the future.

The core Mobeus team is highly experienced, with a strong track record. We expect its tried and tested investment approach to continue, following the acquisition by Gresham House. The team will now have access to additional resources and expertise.

The ongoing shift towards growth investments may make dividends less regular in future years. While historic dividend targets are intact, future dividend payments will rely on exit proceeds. 

Longer term, shared deal flow between the Mobeus and Baronsmead VCTs – and access to wider Gresham House resources – could be a positive in our view, potentially improving the VCTs’ access to the most attractive companies and management teams. Together with a strong and experienced management team, and well diversified portfolio, we think this makes the Mobeus VCTs a quality offer for consideration.

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
-
Initial charge
-
Initial saving via Wealth Club
-
Net initial charge
-
Annual rebate
-
Funds raised / sought
£35.0 million / £35.0 million
Deadline
CLOSED
Last updated: 20 January 2022

News about Venture Capital Trusts. Read all