ProVen Growth & Income VCT
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ProVen Growth & Income VCT is a well established VCT with close to £100 million of net assets and 46 companies in the portfolio – ranging from larger, more established companies to younger ones. New investors will benefit from this already diverse portfolio as well as new investments.
ProVen Growth & Income VCT is raising up to £4.4 million. An offer to raise the same amount in the ProVen VCT is also open.
- Annual dividend target of 5% (variable and not guaranteed)
- Invests in high-growth opportunities
- Diverse portfolio including Watchfinder, Chargemaster and Maplin
- History of profitable exits and consequent special dividends – remember, past performance is not a guide to the future and dividends are not guaranteed
- Minimum investment £5,000
- Small fundraise – likely to sell out quickly
Beringea LLP has managed the ProVen VCTs since inception. It is an award-winning, specialist venture capital firm which manages close to £200 million of VCT assets and is part of an international fund management group with more than $600 million of venture capital assets under management.
It has investment teams operating both in the United States and UK, so can offer an international perspective.
Watch an exclusive video interview with Karen McCormick of Beringea:
ProVen Growth & Income VCT is raising up to £4.4 million – which is a small fundraising target so likely to sell out quickly. Until 8 November the offer is exclusively available to existing shareholders and their spouses or civil partners. New investors can apply from 9 November.
The VCT’s investment objective is to achieve long-term returns greater than those available from investing in a portfolio of quoted companies. It aims to pay yearly dividends of 5% of NAV. Please remember dividends are variable and not guaranteed.
Investment strategy and portfolio company examples
ProVen Growth & Income VCT targets companies with a strong, balanced and well motivated management team and a proven track record of achievement, preferably with a substantial shareholding in the business.
The companies might be at different stages of development but must have a proven business model targeting a large and growing addressable market.
At 31 August 2017, the latest date for which results have been announced, the portfolio comprised 45 venture capital investments with a cost of £53.4 million and a valuation of £52.4 million and cash of £57.5 million. The VCT has made one more investment since August.
Portfolio company examples – largest holdings
Chess Technologies Ltd
With a valuation of £5.8 million (31 August 2017) Chess Technologies is the largest holding in the ProVen Growth & Income VCT.
Chess Technologies Ltd provides solutions for the defence and security sectors. It marries mechanical and electro-optical engineering with video management software to provide users with discrete surveillance systems. It designs and builds extremely accurate director heads and its own daylight cameras. Unlike many competitors, it also incorporates its own software house.
Beringea originally invested in Chess Technologies in 2008.
Disposable Cubicle Curtains (trading as All In One Medical)
With a valuation of £3.6 million (31 August 2017) Disposable Cubicle Curtains is the third largest holding in the ProVen Growth & Income VCT.
It manufactures and distributes disposable curtains and blinds which actively destroy deadly and harmful pathogens to medical institutions from its manufacturing plant in Wolverhampton.
A typical fabric cubicle curtain that surrounds a hospital bed has a high probability of having developed on its surface pathogens such as MRSA, ECOLI, VRE, or CDIFF. As a result, in certain A&E wards, curtains must be changed and cleaned up to 20 times a year. The replacement of traditional linen products with disposable, anti-microbial curtains, assists medical institutions in preventing and combating the outbreak of infectious diseases amongst patients, staff and visitors.
Beringea originally invested in Disposable Cubicle Curtains in 2014.
Portfolio company examples – recent investments
In the twelve months to August 2017 the VCT invested £9.3 million into eight new companies.
DeepCrawl is one of the ProVen Growth & Income VCT’s most recent investments. Its web crawler helps brands assess the health of their website. Its tools highlight any faults on a website that may reduce search visibility and therefore traffic, and provide actionable insights to correct those faults.
All six major global advertising agency groups – WPP, Omnicom, Publicis, Havas, IPG, and Dentsu Aegis – use Deepcrawl, and so do more than half of the Fortune 500. Global brands using DeepCrawl include Microsoft, IBM, eBay, Uber, Salesforce, P&G, Home Depot, Sears, and Walmart.
ProVen Growth & Income VCT completed its £1 million investment in July 2017.
Another example of recent investment is SMARTASSISTANT. It offers businesses unique technology to create intelligent, digital advisors that guide a customer’s decision online, on mobile and at the point of sale. Whether buying a laptop, a kayak or a mobile data plan, SMARTASSISTANT digital advisers engage users in a personalised dialogue and recommend products, services, and content based on their needs, thereby reducing choice overload, confusion, and indecision.
Clients span from Microsoft to makro, Canon, Evans Cycles and SWISS airlines.
ProVen Growth & Income VCT completed its £2 million investment in July 2017.
Performance and exits
ProVen Growth & Income VCT has a good track record at spotting, nurturing and ultimately exiting businesses with potential. This has translated in attractive returns for investors, as the chart below shows – although remember past performance is not a guide to the future.
In the twelve months to 31 August 2017 ProVen Growth & Income VCT realised five exits. These generated aggregate proceeds of £26.2 million, including the value of Netcall plc shares received as part of the MatsSoft disposal.
Three examples are described below. Please note past performance is not a guide to the future.
Third Bridge provides its clients with unique insights into companies and markets through access to industry experts and market research. It currently serves a client base of over 300 customers, including private equity funds, consulting firms, hedge funds and corporates. Since inception in 2007, Third Bridge has doubled its turnover every two years and now employs more than 600 people.
Beringea invested in Third Bridge in 2012, through its ProVen VCTs. Between 2012 and 2016 the company’s revenues grew from £8.7 million to $67.4 million, an increase of approximately 6x.
In July 2017 IK Investment Partners, a pan-European private equity company, acquired a minority stake in Third Bridge, allowing Beringea to realise its investment in full at a multiple of over 5.7x cost and an annual rate of return of over 46%.
MatsSoft is a ‘low-code’ company that enables brands like Vodafone, Nationwide, ITV and the Department for Education to build web and mobile applications with minimal coding. Beringea has supported the growth of MatsSoft over the last six years, investing over £2 million via its ProVen VCTs in 2011 and 2012. In August 2017 Matsoft was acquired by AIM-listed Netcall plc. As part of the transaction, Beringea received cash proceeds of £2.2 million and shares in Netcall valued at £0.3 million, equivalent to a multiple of 2.4x cost. There is the potential for a further earn-out based on the on the performance of Netcall's share price over the next two years.
APM Healthcare operates a chain of 18 pharmacies, trading under the name Community Pharmacies, run in joint venture partnerships with GP practices across the country.
APM Healthcare was founded in 2009. Beringea initially invested in 2011, when APM was on the verge of expanding its network from just one pharmacy having secured a number of deals with local doctors. It invested a total of £2 million in successive funding rounds. In July 2017 APM Healthcare was acquired by national pharmacy chain, Day Lewis Pharmacy. The sale generated a 3x return.
The usual risks with smaller companies exist with this VCT offer. For instance, VCT investments are illiquid and capital is at risk. Investors should only invest money they can afford to lose. The value of tax relief will depend on the circumstances of the individual investor and tax rules could change in future.
A significant proportion (18% as at 31 August 2017) of the portfolio is concentrated in just five investments: the performance of these companies will have a magnified effect on the overall performance of the VCT.
There is an initial charge of 5.5% before Wealth Club saving of 2.75%.
Existing shareholders and their spouses or civil partners also benefit from a loyalty incentive: they will receive extra ordinary shares equivalent to 1% of the amount subscribed.
The annual management fee is 2% of NAV and the annual running costs are capped at 3.25%. A performance fee of 20% also applies.
Other fees also apply: please refer to the Offer Document for full details.
Share buyback policy
The ProVen Growth & Income VCT operates a share buyback policy. It aims to buy back ordinary shares at a 5% discount to net asset value. Please note, this is not guaranteed.
From electronic store Maplin to jewellery designer Monica Vinader, which counts the Duchess of Cambridge amongst its fans, Beringea has a solid track record of investing in companies with good potential and supporting them until a profitable disposal can be achieved. We believe this is an offer worth considering. Considering the fundraising target of just £4.4 million, if you’re interested it may be prudent to act promptly.
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. 24.10.2017
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