British Smaller Companies VCTs

British Smaller Companies VCT (“BSV”) and British Smaller Companies VCT 2 (“BSC”) are among the UK’s longest-running venture capital trusts. Founded in 1996 and 2000 respectively, they have a strong following among VCT investors and their share offers have been known to fill quickly. 

The boards of the VCTs have indicated they are considering a prospectus share offer in 2018/19.

Register your interest here to be notified as and when a new share offer opens.

Highlights

  • Two of the longest established and best-regarded VCTs
  • Combined net asset value approximately £150 million (as at 30 June 2018)
  • Established and well diversified portfolio, ranging from traditional to innovative companies
  • Managed by YFM Equity Partners, which has over £220 million in assets under management

British Smaller Companies VCTs – Register your interest

The manager

Both British Smaller Companies venture capital trusts are managed by YFM Equity Partners, an independent private equity business owned by its senior management and investment team. 

YFM manages over £220 million through the British Smaller Companies VCTs and private equity funds. It has over 30 years’ experience helping small companies throughout the UK regions grow niche businesses, launch new initiatives, make transformative acquisitions and upgrade technologies and systems. 

Unlike most VCT managers, YFM has a strong presence in the UK regions through its offices in Leeds, London, Manchester, Birmingham and Sheffield. This gives it access to regional deals and enables it to invest in a less competitive market. YFM and YFM Equity Partners have a total staff of 28, of which 15 are engaged in finding, investing in and advising on investments to the British Smaller Companies VCTs and other clients.

Investment strategy and portfolio

The VCTs aim to provide shareholders with an attractive long-term tax-free dividend – variable and not guaranteed. 

The investment strategy is to create a diversified portfolio of companies, ranging from those that operate in traditional industries through to those that offer opportunities in the development and application of innovation.

The investments are spread across different sectors, with Software, IT & Telecommunications and Business Services representing the majority of the portfolios.

Most of the investee companies are unquoted, and the majority of these are management buyout deals, meaning that the companies are more likely to be established and often profitable. New VCT rules, however, no longer allow this type of deal. So, as is the case with other long-established VCTs, the portfolio split will gradually shift towards growth deals. 

Two examples of management buyout deals, ACC Aviation and Intelligent Office UK, are described below and are among the larger of the current holdings, whilst one of the latest investments, Friska, is an example of growth deal.

ACC Aviation

BSC2 – ACC AviationACC Aviation is a niche aircraft leasing and airline services business. Founded in 2002, it serves clients across the globe in all aspects of aircraft charter, leasing, interiors and aviation support services. It can charter any size of aircraft, from small VIP jets and helicopters to large commercial airliners. It has a wide range of clients from sports teams to the Ministry of Defence, tour operators, and global airlines. 

YFM Equity Partners initially backed the management team to buy out the retiring founder and expand both locally and internationally. 

Since then, ACC opened a new office in Dubai and added 25% headcount to the existing European business.

BSC2 invested £1.4 million in November 2014. The unaudited investment valuation at 30 September 2017 is £3.7 million – an unrealised multiple of 2.64x. 

Intelligent Office UK

BSC2 – Intelligent Office UKIntelligent Office UK was founded in 2001 by taking over a printing company in Edinburgh. At the time, the company had 12 staff and was struggling to survive. Today Intelligent Office is the UK’s leading provider of support services to the legal sector. It helps law firms save time and money by taking charge of administrative and secretarial services, freeing up partners’ and fee-earners’ time. 

It has more than 900 employees based in 49 locations across the UK. Its clients are mainly top 150 UK legal firms.

YFM Equity Partners invested £10 million (of which £2 million through BSC2) in May 2014, to help Intelligent Office UK expand and develop existing long-term contracts. 

Since then, Intelligent Office UK opened a second onshore shared services centre in Glasgow, grew its client base and extended its service offering with existing clients. The unaudited investment valuation at 30 September 2017 is £3 million – an unrealised multiple of 1.5x. 

Friska

BSC2 – FriskaFriska — which means healthy in Swedish — is a chain of healthy fast-food restaurant offering fresh food to eat in, take away or for office catering for breakfasts and lunches, winner of an Observer award for Best Ethical Restaurant. 

Founded in Bristol in 2009, Friska serves breakfast, lunch and coffee around its idea of “Feel Good Food”: globally inspired, locally and responsibly sourced food. Its target market is young professionals, so its store locations tend to be in central business districts.

YFM Equity Partners invested £3 million in July 2017, to help Friska expand its retail estate. At the time of the investment, Friska had eight outlets in Bristol and Birmingham with an airside site at London’s Luton airport and expected to turn over £4.6 million. 

Following YFM's investment, Friska has opened an outlet at Manchester Science Park, in the 70,000 sq ft Bright Building, and plans to follow that with outlets in the city’s central business district.

Risks

Please remember your capital is at risk. VCTs are high-risk investments and are not suitable for everyone: they are long term and illiquid. Investors should not invest money they cannot afford to lose. 

Tax rules can change and tax benefits depend on individual circumstances.

Register your interest

Details are expected in the coming months regarding this year’s fundraising for British Smaller Companies in 2018/19. In the last two tax years there have been small top-up offers, which have sold out quickly. 

If you would like to be notified of this and other VCT offers opening, 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. 11.01.2018

The details

Type
Generalist
Target dividend
-
Initial charge
-
Initial saving via Wealth Club
-
Net initial charge
None
Annual rebate
 
Funds raised / sought
-
Deadline
No current offer

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