The Albion VCTs are six Venture Capital Trusts managed by Albion Capital, with a combined net asset value of £365 million as at 31 March 2018.
Plans for a joint share offer have been announced for 2018/19, although there is no detail yet on the amount or the launch date. You can register your interest here to be notified as soon as offers open.
|VCT||Latest net asset value|
|Albion Venture Capital Trust||£64.9 million|
|Albion Technology & General VCT||£72.6 million|
|Albion Enterprise VCT||£57.5 million|
|Albion Development VCT||£53.3 million|
|Crown Place VCT||£50.0 million|
|Kings Arms Yard VCT||£67.0 million|
- Existing, mature portfolio of around 60 unquoted businesses
- Experienced manager with strong track record
- Investing across all six VCT could see dividend payments in
every calendar month (dividends are variable and not guaranteed)
- Some of the portfolios include loan stock secured on the assets of investee companies
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Albion Capital is the investment manager and has managed VCTs since the launch of Albion Venture Capital Trust in 1996. As at 30 June 2017, Albion managed approximately £340 million on behalf of the Albion VCTs. It is one of the largest VCT managers.
Albion Capital also provides staff to run Albion Community Power PLC, a renewable energy power generation company; manages Albion Care Communities, which develops luxury care homes for the elderly; manages and administers the UCL Technology Fund, which has raised £50 million to commercialise University College London’s world-class research output; and owns OLIM Investment Managers, a fund manager which specialises in UK quoted equities for charities, an investment trust and private clients. Across its businesses, Albion has approximately 40 staff.
Watch an exclusive video interview with Albion Capital’s deputy managing partner Will Fraser-Allen:
Albion looks to find potential for growth in areas or sectors where the status quo is changing. Across both its asset-backed and growth investments it favours the education and health sectors because it believes demand for both will never fade. It tends to avoid companies with external borrowing.
of the portfolio at the time of the last share offer (September 2017) is shown below.
the overarching objective of the Albion VCTs is to achieve long-term growth, each
VCT adopts a different approach. The track records are markedly different. Investors
can choose to invest in a specific VCT or VCTs, or spread their investment across all trusts participating in a joint offer.
more details of the five VCTs that participated in the September 2017 share offer (the Albion Venture Capital
Trust did not raise funds at that time).
|VCT||Target dividend||Total dividends paid||Total return before tax relief (p)|
|Albion Development VCT
|It aims to offer predictable dividend income and the potential for long-term capital growth. Up to two-thirds of the portfolio is invested in loan stock secured with a first charge on the investee company’s assets – this should help fund dividend payments. The rest is in higher-risk investments in sectors such as software and computer services alongside medical technology and should help with capital growth. Performance has so far been average. Over five years it is the fourth best-performing of the Albion range and mid-table against its other generalist VCT peers, according to figures from the AIC.|
|Albion Enterprise VCT
|Like Albion Development, the aim is to give a balance between growth and stability. Risk is mitigated through diversification and loan stock investments. The portfolio has done reasonably well on a five-year view. It’s been Albion’s second best and is 15th against its peers based on NAV total return over 5 years.|
|Albion Technology & General VCT
|This is Albion’s highest-risk VCT. The VCT-qualifying part of the portfolio is invested 40% in unquoted UK tech businesses and the balance in UK non-tech unquoted companies. Up to two-thirds of the portfolio is invested in loan stock secured with a first charge on the investee company’s assets. Over 5 years it has under-performed – it ranks the lowest of the Albion VCTs over 5 years based on NAV total return. However short-term performance is more encouraging.|
|Crown Place VCT
|This VCT majors on asset-backed investments giving a strong income stream. A smaller proportion of the portfolio invests in growth businesses. Performance over the past five years has been average compared to its peers.|
|Kings Arms Yard VCT
|The focus for Kings Arms Yard is healthcare, environmental and leisure. The intention is, over time, to move half the portfolio into asset-backed opportunities across these three sectors with the aim of giving stability and income. The growth part of the portfolio is instead across a variety of sectors ranging from more stable, income-producing businesses to a limited number of higher-risk technology companies. Kings Arms Yard has been Albion’s best performer over five years to date. Against its generalist peers it ranks 8th, based on NAV total return.|
Examples of portfolio companies
To give investors a flavour of what to expect – and what’s in the portfolio now – below we describe a growth deal and an asset-backed investment.
Growth capital – DySIS
One of Patrick Reeve’s favourite investments made by the Albion VCTs is DySIS. The company has developed an imaging device that increases the reliability of cervical cancer examinations from 50% to 90%.
When Albion invested, the company was a research-based organisation headquartered in Greece. The technology worked but it needed serious investment to recruit, train and deploy a direct sales force. Albion helped DySIS establish a base in the UK from which it could hit the European and US markets. The business won accreditation from the UK medical guidance body NICE and it now has a direct sales force in the US. It moved from being a research-led business to being marketing and sales driven. Over 30,000 patients have now been scanned.
Albion invested because they found a good team with a good technology in a growing market. In the case of DySIS, there was a clinical need for innovation.
Asset-backed – Radnor House School
Radnor House is Britain’s first venture capital backed school. Albion invested £9 million in 2010, alongside David Paton, former Head of Sixth Form at the Harrodian School in South West London. The building, known as Pope’s Villa, is sited on the banks of the river Thames in Twickenham, and was once home to the 18th century English poet Alexander Pope. Mr Paton and the founding Headmaster, Bob Cook, opened the doors to Radnor House in 2011. Since then, the school has grown to 400 pupils in size.
Five years after the first Albion investment, the group announced in 2015 its intention to invest up to £9.5 million to fund the acquisition of Combe Bank School in Sevenoaks. In 2016, the school was renamed Radnor House Sevenoaks and now has 380 pupils.
Radnor House, according to Emil Grigov, Partner at Albion, fits Albion’s objective to create long-term, income-generative investments for VCT investors.
Exit strategy and examples
Exits are a feature of all VCTs, however Albion does tend to try and hold investments for longer than average in order to deliver higher returns to investors. The VCTs had £18 million worth of exits in 2016. Remember, past performance is not a guide to the future.
We’ve highlighted two previous exits Albion has had from its VCT portfolios. Again, we’ve picked a growth capital investment and an asset-backed deal. Please remember, past performance is no guide to the future. Investors in the current offer will be unlikely to have exposure to either of the companies described here.
Haemostatix – growth investment exited in 2016
Haemostatix is a spin out from the University of Leicester. It was established to commercialise a new technology which uses a specific peptide sequence that binds to fibrinogen – a protein pivotal in clotting. In plain English, the technology stops bleeding during and following surgery.
In May 2016 Ergomed – a Guildford-based clinical trial service provider – struck a deal to purchase Haemostatix and its pipeline of treatments for surgical bleeding. The most promising treatment, PeproStat, stops 95% of bleeds within three minutes. This compares favourably with competitors such as Floseal which stops 96% of bleeds within ten minutes.
Oakland Care Centre – asset-backed investment exited in 2014
In 2010 Albion funded the setup of a specialist dementia care facility in Chingford, Greater London. Oakland acquired a freehold site and developed a purpose-built facility for 45 residents with dementia. The care centre – named Bayfield Court – was recognised at the 16th National Care Award for ‘Best Care Home UK.’ Part of the investment rationale was the long-term demographic trend for demand for dementia care. At the point of investment it was estimated that the need for dementia care would double over the next 25 years.
For the VCTs, the company gave an attractive yield and capital growth. After four years, the company was sold to one of the largest industry consolidators.
Please remember your capital is at risk. VCTs are high risk investments and are not suitable for everyone. Investors should not invest money they cannot afford to lose.
The risks and investment objectives are different with each VCT, but with a significant proportion of the combined portfolios invested in asset-backed deals, investors are also highly exposed to commercial property.
Tax rules can change and tax benefits depend on individual circumstances.
Changes to VCTs were announced in the Autumn budget, which could affect the investment strategy of the Albion VCTs in future.
The annual management fee varies between 1.75% and 2.5%, depending on the VCT. Annual charges are capped at 2.75% to 3%, depending on the VCT. Albion is also entitled to a performance fee and administration and secretarial fees on all five VCTs. Performance fees differ ranging from base rate plus 2% as a hurdle; an RPI linked hurdle; and a dividend distribution-linked one. Some of the performance fee arrangements seem in our view overly generous towards the manager as they are linked to a small outperformance of the base rate. The manager may also receive deal completion and monitoring fees.
How to invest
We are awaiting detail regarding the amounts and dates of the planned fundraising for Albion VCTs in 2018/19.
If you would like to be notified when Albion VCT offers become available, please register your interest here.
Wealth Club aims to highlight investments we believe have merit, but you should form your own view. You should decide based 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. 15.09.2017
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