Thames Ventures VCT 1 (formerly Downing ONE VCT)
Update – Thames Ventures VCT 1
In its Final Results for the year ended 31 March 2023, published on 26 July 2023, the Chairman of Thames Ventures VCT 1 stated the Board of the VCT is considering some options for the future of the Company and will look to pursue any that it concludes may benefit Shareholders and allow the Company to be better placed to serve them.
Below is our review of the most recent offer, which closed in July 2023. This page will be updated as and when more information becomes available.
In the meantime, you can see other VCTs currently available.
Thames Ventures VCT 1 (formerly Downing ONE VCT) is the product of mergers between several VCTs, some dating back to the late 1990s. It has followed several different investment strategies over the years – and is currently invested across a mix of asset-backed and growth investments (both quoted and unquoted).
The VCT now follows the same strategy as the Thames Ventures VCT 2 (formerly Downing FOUR VCT) Venture Shares and will be managed by the same investment team with a focus on two sectors: Deep Tech and Enterprise Software.
The VCT has net assets of £105.8 million (September 2022). This is split across three investment strategies – ventures, unquoted growth (41.4% of net assets), AIM-quoted (20.7%), and unquoted, yield-focused asset-backed investments (14.6%) – with the remainder in cash and cash equivalents (23.3%).
In the five years to June 2023, the VCT delivered a NAV total return of -18.6%, including dividends reinvested. Past performance is not a guide to the future, dividends are variable and not guaranteed.
- Seeking to raise up to £10 million, with a £10 million overallotment facility
- Target dividend of 4% – variable and not guaranteed
Read important documents and then apply
Please read all the offer information first
Background to Thames Ventures VCT 1
Thames Ventures VCT 1 is the new name of Downing ONE VCT, rebranded in September 2022 after Foresight Group acquired the technology ventures division of Downing LLP and the investment management contract for the Downing ONE VCT..
Foresight Group was founded in 1984 as a specialist technology venture capital manager. In total, it has £12.2 billion under management and over 40,000 clients (March 2023).
The Thames Ventures VCT 1 is managed by a team of four investment professionals transferred from Downing, supported by two international venture partners.
The investment team is led by Managing Directors Richard Lewis and Jack Eadie. Lewis was previously at Japanese bank Mitsui, investing in the US and Israel, while Eadie was a Principal at Next47, a Deep Tech and Enterprise focused €1 billion US VC fund, backed by Siemens, and spent four years at Eight Roads Ventures.
The two venture partners, located in the US and Israel, can provide access to international deal flow and support international expansion of portfolio companies.
The team will have access to Foresight’s wider resources where appropriate, although it is envisaged that the VCT will offer a distinct alternative to the other Foresight-managed VCTs.
The Thames Ventures VCT 1 is a product of several mergers, and the portfolio contains a range of assets.
Historically, the portfolio was split between yield-focused unquoted investments (typically asset-backed companies, such as pubs and care homes, and companies with predictable revenue streams, such as renewable energy plants) and quoted investments (typically established, cash-generative businesses quoted on AIM).
However, following changes to the VCT rules in 2015, the VCT has focused on growth investments in smaller, unquoted companies.
The VCT’s strategy for new investments is focused on two key sectors:
- Deep Tech – IP-rich deep technology businesses aiming to solve complex global problems with large and growing addressable markets.
- Enterprise Software – Software companies delivering workflow efficiencies and operational improvements for businesses are favoured due to their potential to scale quickly, become embedded within a company’s systems and create durable long-term recurring revenues.
Current portfolio overview
The current portfolio is valued at £105.8 million (September 2022), split across 87 holdings and three strategies:
- Ventures: unquoted growth opportunities (41.4%)
- AIM-quoted businesses (20.7%)
- Unquoted, yield-focused, typically asset-backed businesses (14.6%)
The remainder (23.3% of net assets) is held in cash.
The non-qualifying element of the portfolio is invested in OEICs, Investment Trusts and other securities.
The VCT has not provided an updated sector breakdown of the portfolio by current value.
Examples of portfolio companies
Tracsis – largest holding
Tracsis was spun out from the University of Leeds' School of Computing in 2004, following the development of crew scheduling software for rail services by Dr Raymond Kwan. Tracsis’ scheduling and rostering software (which helps railways run more efficiently) and condition monitoring hardware (which identifies possible issues with rail infrastructure before a costly failure) are now used by virtually all UK train operating companies.
More recently the company has acquired North American train software business RailComm as it looks to expand its product range and access North American train operators. Acquisitions as well as organic growth saw revenues hit c. £39 million for the six months to 31 January 2023, up 34% year-on-year.
Tracsis was admitted to AIM in November 2007 at a valuation of £7 million and is now valued at approximately £270 million (June 2023). Thames Ventures VCT 1’s holding is valued at £7.0 million; the investment cost was £1.4 million (September 2022). Past performance is not a guide to the future.
Distributed – recent investment
Distributed is an online talent marketplace that helps build development teams spread across the world. It connects businesses with talented software engineers wherever they are in the world.
Capita, one of the UK’s largest business process outsourcing and professional services company, has taken an equity stake in Distributed and lists it as an internal supplier to its departments. Capita believes this could generate £10-25 million in revenue for Distributed over three years – not guaranteed. Moreover, this high-profile contract could help Distributed secure other long-term supply contracts.
Distributed featured in the Deloitte Fast 50 in 2021, reporting revenue growth of 1,343% over the previous four years. Thames Ventures VCT 1 first invested in the company in June 2022 as part of an £8 million round.
Exit track record
The VCT recorded exit proceeds of £6.8 million in the 6 months to September 2022, recognising an overall gain of £1.6 million vs cost – although this includes an element of deferred consideration. This includes over £3 million in cash and shares from the exit of e.fundamentals, previously the VCT’s largest unquoted venture investment (detailed below) and £2.75 million from the sale of legacy property developer Harrogate Street.
e.fundamentals – recent exit
e.fundamentals (Group) was set up to help retail brands manage their content across their range of online retailers. Its digital shelf analytics platform ensures a brand’s products are consistently listed with the correct pricing, regulatory and packaging information and identifies gaps in content to promote better engagement with consumers.
The business appears to be benefitting from growth within the burgeoning online grocery market, with consumer goods giants PepsiCo, Mars, and Arla integrating its digital shelf analytics platform, supporting revenue growth of more than 300% in 2021.
Thames Ventures VCT 1 first backed the business in December 2017, with subsequent investments taking the position’s total cost to £1.5 million (March 2022).
In July 2022 the VCT sold its stake to CommerceIQ for over £3 million, including £1.6 million of cash, £1.7 million of shares in CommerceIQ and a further £340,000 deferred consideration. If all realised, this would result in a total gain of £2.1 million. Past performance is not a guide to the future.
Live Better With – example of previous failure
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 VCT invested in the business in March 2018, however, in the year to March 2020, the board of the VCT had fully written down the value of its investment as the business appeared unable to achieve its business plan following disappointing trading performance. The investment is still held at nil value (March 2022).
Performance and dividends
Over the five years to June 2023, the Thames Ventures VCT 1 has delivered a NAV total return of -18.6%. Over the same period, the VCT has paid cumulative dividends of 22.0p, equivalent to 28.5% of the average net asset value. Past performance is not a guide to the future.
Note, we show VCT returns over a five-year period as a minimum, where possible. Where a VCT has followed the same investment strategy for longer, we also show returns over 10 years.
The VCT aims to pay dividends equivalent to at least 4% of its net asset value, paid twice a year, in February/March and August/September. 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 31/12/2017-30/06/2023
Dividends paid per 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 30/06/2023.
Average dividend yield (% of NAV) history
|Calendar year||Dividend as % of NAV|
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 not a guide to the future.
There is a Dividend Reinvestment Scheme which allows shareholders to reinvest future dividend payments by way of subscription for new shares, if desired. As these are new shares they should be eligible for tax relief (you will need to claim this on your tax return or directly with HMRC) and the shares will count towards the VCT annual subscription limit.
Share buy-back policy
The VCT intends to buy back shares at a 5% discount to the most recently announced net asset value. This is not guaranteed – please see the offer documents for details.
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.
Based on data from Morningstar, the discount to NAV as at 30 June 2023 was -5.16%. Over the previous five years the average discount to NAV was -6.18%.
The discount history is based on the closing share price of the VCT 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 VCTs’ share buyback facilities, although this is 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.
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.
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||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 provider documents|
|Annual rebate from Wealth Club||0.10%|
More detail on the charges
Annual rebate when you invest through Wealth Club
This 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 a percentage of the Net Asset Value of the Offer Shares issued to you when you invest (shown in the table above). Terms and conditions apply.
Thames Ventures VCT 1’s mixed portfolio is a product of its somewhat meandering past – with multiple managers and multiple investment strategies. Today, the VCT portfolio offers a blend of mature income-generating assets, both quoted and unquoted, and newer growth-focused venture investments.
The older, more mature investments may help support dividend payments – although no dividend is guaranteed. However, small private growth companies will account for a growing proportion of the portfolio.
Read important documents and then apply
Please read all the offer information first
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.
- Target dividend
- Initial charge
- Initial saving via Wealth Club
- Net initial charge
- Annual rebate
- Funds raised / sought