Amati & Amati 2 VCTs

The Amati AIM VCTs have a net asset value of £111.3 million (6 Sep 2017). They predominantly invest in companies listed on AIM, although they may also buy unquoted ones.

In June 2017 the two VCTs announced they are considering a merger, and intend to launch a joint fundraising for around £20 million later this year. Dates and further details of this offer are yet to be announced. Register for VCT alerts and we will notify you when the offer is available:


  • Run by Dr Paul Jourdan, an 18-year veteran of investing in smaller companies
  • Focus on cash-generative and growing companies
  • Targets an annual dividend of 5-6% of year-end NAV (not guaranteed)
  • Diversified portfolio of over 50 holdings with a growth bias

The manager

Dr Paul Jourdan is chief executive and co-founder of Amati Global Investors (also previously a professional violinist playing for the City of Birmingham symphony orchestra). He has been a specialist smaller company fund manager for over 18 years, first at Stewart Ivory (later taken over by First State) and then Noble Fund Managers. Dr Jourdan launched the First State AIM VCT in 2005, which is now known as Amati VCT. The other managers are Douglas Lawson, who co-founded Amati, and David Stevenson. Both are very experienced. Amati partners have invested approximately £1.3 million of their own money in the two VCTs. In total Amati manages over £175 million in assets, £111 million of which is in the VCTs.

The VCTs

As both the Amati VCT and the Amati VCT 2 are longstanding VCTs, they have fully invested portfolios. The average market value of companies in Amati VCT is £133 million and £144 million for companies in VCT 2. As at 1 Sep 2017 there are 57 investments in Amati VCT and 59 in VCT 2. Although these VCTs are managed separately, they are becoming more aligned and differences are mainly now due to historical investments.

Target return and strategy

The annual dividend target for these VCTs is 5-6% of the year-end net asset value. Therefore, this dividend could fluctuate more than other VCTs which are targeted on a “pence per share” basis. This is a target and is variable and not guaranteed. Other than dividends, capital growth is an objective. To achieve these aims, Dr Jourdan will invest in a range of AIM-listed companies and the occasional unquoted one.

The rule change allowing AIM stocks to be held in ISAs for IHT purposes has had a massive impact in the market, especially on companies that are profitable, have good management, strong cash flow and pay dividends. However, according to Dr Jourdan, these stocks are expensive. Within the VCT, he is targeting companies he thinks will become ‘IHT-friendly’ stocks in a few years, but now still need to generate cash and make profits.

Dr Jourdan looks for several attributes in companies he is considering. High barriers to entry and a sustainable competitive advantage are important as is revenue visibility and growth. A strong balance sheet is also desirable so the company can self-finance future growth. Attention will also be paid to areas of the market which he believes are overlooked, for example due to lack of broker coverage, or because the company is operating in an out of favour sector. 

The VCTs invested almost £6 million of new money into qualifying companies in 2015, interestingly mostly as “follow-on” investment into existing portfolio companies. In 2016, five new investments were made from a much smaller pool of new qualifying deals (one of the consequences of the new VCT rules).

One of the newer investments was into Bilby in 2015, a gas maintenance business and property services company based in South East London. Landlords must have their appliances tested annually by law; this is one of the services Bilby offers, mainly dealing with local authorities and housing associations. As it is such a geographically defined area, costs are easier to control making the business scalable. The business generates large amounts of cash and has paid healthy dividends to date; note past performance is not a guide to the future. 

As well as qualifying holdings, these VCTs also typically invest about 10-15% of assets into the TB Amati Smaller Companies fund, also managed by Dr Jourdan and his team. Exposure to this fund – of which 65% is invested in AIM, mostly AIM 100 stocks – adds extra diversification to the VCTs.

Dividend history

Source: Amati Global Investors. Past performance is not a guide to the future; dividends are variable and not guaranteed.

Exit strategy

There is no explicit exit strategy; however, being AIM-listed could provide a natural exit route for many of the stocks held in the portfolio. Note, however, that they could still be hard to sell and should be considered a long term, illiquid investment. Some companies may get taken over, some may move on to the main market of the London Stock Exchange and be easier to sell, others may be of interest to IHT investors. 


As with other AIM-listed VCTs, the net asset value may well fluctuate more than with unquoted VCTs. In addition, even though the underlying companies’ shares may have a listing, there is no guarantee of a buyer. The difference between the buying and selling price of AIM-listed companies is often wider than fully listed ones.

Please remember capital is at risk. VCTs are high risk investments and are not suitable for everyone. Investors should not invest money they are not prepared to lose. Tax rules can change and tax benefits depend on individual circumstances.


Initial charges for the upcoming offer are to be confirmed. The annual management fee is 1.75%, with total annual costs capped at 3.5%. There are no performance fees on either VCT. This is a welcome move in a sector that traditionally has them. Amati may be entitled to deal arrangement and monitoring fees where it makes investments in unquoted companies, although the manager rarely makes such investments.


Dr Paul Jourdan is an experienced and talented fund manager. These well-diversified VCTs are tilted towards growth, although companies generally must be profitable and dividend paying. The strategy of seeking those investments that will be of interest to IHT investors in a few years’ time is an interesting one. Finally, exposure to the Amati Smaller Companies fund adds an extra level of diversification.

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. 08.09.2017

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