Northern VCTs

The Northern VCTs – Northern Venture Trust (NVT), Northern 2 VCT (N2VCT) and Northern 3 VCT (N3VCT) – are among the longest-standing venture capital trusts.

They have combined net assets of £379.4 million (March 2025) and a portfolio of around 65 companies, mostly growth capital investments with 10% in legacy and MBO investments.

In the five and 10 years to 30 June 2025, the VCTs have returned an average 45.9% and 77.0% – past performance is not a guide to the future.

• Seeking to raise up £35 million, with a £15 million overallotment facility (NVT and N3VCT up to £20 million each and N2VCT up to £10 million including overallotment facilities)
• Targets annual dividends of 4.5% to 5% of NAV, not guaranteed
• Minimum investment: £6,000 (£2,000 per VCT)
• Deadline: 31 March 2025 (noon) for allotment in 2024/25 tax year

The Northern VCTs are some of the longest-established, having launched in 1995 (NVT), 1999 (N2VCT) and 2001 (N3VCT).

Since December 2019, the three Northern VCTs have been managed by Mercia Fund Management, a division of Mercia Asset Management. Mercia is an AIM-quoted company responsible for £2.0 billion across venture capital, private equity, private debt, and its own balance sheet funds (March 2025).

The VCT team comprises 15 investment professionals, led by recently promoted Fund Principal Stephen Johnson. The team sits within Mercia’s Venture division, which is led by Managing Director Peter Dines, and manages £928 million with a 48-strong team and 11 offices across the UK.

Each team member maintains a local network to help source opportunities and support portfolio companies post-investment. The team has access to the wider resources of the Mercia group.

The VCTs target investments of £3-6 million (up to a total of £10 million) into companies deemed to have high growth potential. They must have demonstrated they have commercial traction and a viable business model. The VCTs may also invest in earlier-stage businesses that have developed technology, intellectual property, or contracts and embedded market relationships.

Investment opportunities are sourced through the VCTs’ dedicated investment team.

While the VCTs are generalist, Mercia has built a strong track record within the healthcare and technology sectors. Both are expected to feature strongly in investment activity.

Once in the VCTs’ portfolio, companies could potentially have access to Mercia’s other funds, which are not governed by VCT-qualifying rules and could offer replacement capital. This may appeal to entrepreneurs, helping boost the VCTs’ deal flow and ability to win competitive funding rounds, not guaranteed.

The three Northern VCTs have shared the same investment strategy since inception and currently have a combined portfolio of 63 companies and net assets of £379 million (March 2025). Most investments are common across all three portfolios.

In the 12 months to March 2025, the VCTs invested £27.7 million in six new companies (including Semble Technology, detailed below) and £16.1 million in follow-on investments.

90% of the portfolio is in growth capital investments, and 10% is in legacy or MBO investments.

In the 12 months to March 2025 the VCTs reported exit proceeds of £28.9 million, with 10 full exits reported in the last two years. Of particular note was the sale of Gentronix (detailed below), delivering proceeds of £14.8 million across all three VCTs, equivalent to a 4.4x return. The VCTs also exited their position in The Climbing Hanger, previously the VCTs’ largest holding, for around 0.7x cost.

Please note, past performance is not a guide to the future.

In the six months to September 2024 the VCTs reported exit proceeds of £17.3 million. Of particular note was the sale of Gentronix (detailed below), delivering proceeds of £14.9 million across all three VCTs, equivalent to a 4.4x return. After the period end the VCTs exited their position in The Climbing Hanger for around 0.7x cost.

Please note, past performance is not a guide to the future.

As is to be expected, not all investments go to plan. An example is Sorted Holdings.

Founded in 2013, Sorted is a delivery experience platform enabling retailers to make deliveries to customers more efficient, flexible and affordable.

The company won major contracts with high street brands following the Northern VCTs’ initial investment in 2016. However, it struggled to reach profitability. Having raised over £20 million of further investment from other investors, the company could not sustain its operational overheads and was sold in early 2024 for nominal proceeds.

At the point of exit the VCTs had invested £7.9 million into equity and £0.5 million as convertible loan notes. The £500k of loan notes remain recoverable from the acquirer and are currently valued at £660k (March 2025).

A dividend reinvestment scheme is available if shareholders wish to reinvest dividend payments by way of subscription for new shares. 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. 

The boards intend to buy back shares at up to a 5% discount to the prevailing 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 average discount to NAV across the VCTs as at 30 June 2025 was -4.9%. Over the previous five years the average discount to NAV was -7.2%.

The discount history is based on the closing share price of the VCTs 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.

The Northern VCTs include 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 (shown in the table above) of the Net Asset Value of the Offer Shares issued to you when you invest. Terms and conditions apply.

The Northern VCTs continued their recent string of exits in 2024 – the sale of Gentronix for 4.4x cost was a highlight.

The VCTs have a very well diversified portfolio, with the largest position, The Beauty Tech Group, accounting for just 5.4% of total NAV. However, as a result of the exit activity the investment portfolio is younger and more growth-focused than in the past. As a result, exits may be more infrequent whilst the portfolio matures, with the VCTs expected to place greater emphasis on follow-on investments.

The VCTs continue to benefit from a well-resourced team with a long track record of successfully exiting investments – although past performance is no guide to the future. Access to support from the wider Mercia group may enhance deal flow and provide companies with greater potential liquidity through Mercia’s institutional funds.

The Northern VCTs are among the longest-established VCTs, and remain a quality offering, in our view – you should form your own view.

This financial promotion has been communicated and approved by Wealth Club Ltd on 10 January 2025

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.