Seneca Growth Capital VCT
Update (30 July 2020): Intention to fundraise announced
The Seneca Growth Capital VCT has announced it expects to issue a further prospectus shortly to enable the Company to continue to raise funds for the ongoing development of the B share portfolio. You can register your interest below.
We will update our review as soon as the new offer documents are available. You can read excerpts of our previous review below.
Register your interest now – no obligation
Review of Seneca Growth Capital VCT 2019/20 share offer
This review was written in September 2019; information is the latest available as at that date.
- New VCT share class launched in 2018
- Raised £5.5 million in first share offer and invested £2.75 million to date across five qualifying investments
- Paid dividend of 3p per share in 2019 – dividends are variable and not guaranteed
- Seneca is an experienced growth capital investor, now managing more than £55 million of VCT and EIS growth capital
- Minimum investment £5,000
The VCT is managed by Seneca Partners Limited. In 2018 it took over the management of Hygea vct plc, renamed it, and launched a new, separate B share class.
Although relatively new to the VCT market, Seneca is an experienced growth capital investor. It has raised and deployed more than £55 million of EIS and VCT growth capital investment funds into 47 SME companies through 87 funding rounds since 2012 (figures to 30 June 2019).
The Seneca Growth Capital VCT is managed by the same team behind the EIS funds, including shareholder directors Richard Manley, Ian Currie, and Tim Murphy. All three are SME specialists by background. Their previous experience includes KPMG, NM Rothschild, Cenkos Fund Managers, Altium, Apax, RBS, Deloitte and HBOS.
Directors of Seneca
and key members of the management team in the wider group of Seneca branded companies invested more
than £200,000 in the 2018 offer and are investing £100,000 in the current offer.
Watch a video interview with investment director John Davies:
The VCT follows the same generalist investment strategy the manager has been applying to its EIS Portfolio Service. The VCT has benefitted and is expected to continue to benefit from the same deal flow, investment process and co-investment opportunities that come from Seneca's EIS activity.
Seneca believes this allows the VCT to participate in a higher number of investments of a larger scale into more established businesses than otherwise possible for a VCT of its size.
Seneca seeks well managed businesses with strong leadership teams that can demonstrate established and proven concepts in addition to growth potential. Businesses may be unquoted or AIM listed.
The VCT raised £5.5 million under the first B Share offer.
Of this, the VCT has already invested £2.75 million into five investee companies, co-investing with Seneca’s EIS funds in all of these initial deals.
Four of the companies are unquoted and one is AIM listed.
SilkFred Ltd is a fast-growing fashion e-commerce platform. It was created in 2012 to help independent fashion brands promote and sell online. It acts as a central marketing and sales platform, charging commission in exchange for these services, so it takes minimal inventory/working capital risk on new brands, lines or products.
Today it partners with over 600 independent brands, has over 1 million monthly visitors and 500,000 customers.
SilkFred was the first B Share pool
investment – the VCT invested £500k in December 2018. Seneca had
previously invested in March 2018 in its EIS and was impressed by the
management ability to scale the brand and improve the overall SilkFred offering.
SkinBioTherapeutics Plc (AIM listed)
SkinBioTherapeutics is a life science company focused on skin health. The Company’s proprietary platform technology, SkinBiotix®, is based upon discoveries made by CEO Dr. Catherine O’Neill and Professor Andrew McBain at The University of Manchester.
SkinBioTherapeutics targets three specific skin healthcare sectors; cosmetics, infection control and eczema. In each of these areas. The most advanced programme is focused on the application of the Skinbiotix® platform in managing sensitive skin in the cosmetics industry.
Seneca initially invested in SkinBioTherapeutics when it was admitted to AIM in April 2017. The VCT invested £720k in February 2019.
Please note, the portfolio is relatively small, so there is limited diversification and no track record. As is to be expected with all growth capital businesses, investments can fail or be subject to sudden falls in value.
The manager has not specified a dividend target. It aims to pay regular dividends as well as special dividends where significant realisations occur from the sale of its portfolio assets. As this is a new portfolio, it may take a few years for companies to mature and achieve an exit.
That said, the VCT has existing distributable reserves may be used to facilitate the payment of dividends on the B Share class in the early years. The VCT paid 3p per B Share in total in 2019.
Please note, dividends are variable and not guaranteed.
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 relatively new VCT offering. Seneca’s expertise to date has largely been in EIS investments. If fundraising is slower than expected, or does not reach its anticipated targets, there may be a delay in allotting shares, and fewer investments will be made overall.
There are two share classes: Ordinary (relating to the original Hygea VCT) and B ordinary shares. The interests of Ordinary and B Shareholders may not always be aligned.
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.
|Full initial charge||5.5%|
|Early bird discount||—|
|Wealth Club initial saving||5.5%|
|Existing shareholder discount||—|
|Net initial charge through Wealth Club (new investors)||0%|
|Net initial charge through Wealth Club (existing shareholders)||0%|
|Annual management charge||2%|
|Annual administration charge||See details|
|Annual rebate from Wealth Club (for three years, until 17 Jan 2020)||0.30%|
More detail on the charges
This offer is now closed.
The board intends to buy back shares at up to a 5% discount to the prevailing net asset value. This is subject to availability and board and shareholder approval. Please see the offer documents for details.
Dividend Reinvestment Scheme (DRIS)
There is currently no Dividend Reinvestment Scheme.
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 0.30% of the Net Asset Value of the Offer Shares issued to you when you invest. You will find the terms and conditions for annual rebates within our Terms of Business.
How to invest
The VCT is not currently open to new subscriptions, but intends to launch a share offer in 2020/21. Please register your interest now to hear as soon as VCT offers open.
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.
- Target dividend
- Initial charge
- Initial saving via Wealth Club
- Net initial charge
- Annual rebate
- Funds raised / sought
- Coming soon
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