New VCT Fund Launched by Shore Capital

Shore Capital has cut the ribbon on the latest Venture Capital Trust (VCT) in its Puma Investments series.

Puma VCT 9 PLC will aim to preserve its investors’ capital while also generating regular, tax-free dividends. The fund targets an annual payout of up to 6p per share, equivalent to a yield of 6 per cent, beginning in April 2015.

‘The ongoing effects of the credit crisis mean that small and medium-sized enterprises are still finding it difficult to access the funding they need from the traditional banks,’ described Eliot Kaye, investment director of the Puma VCTs.

‘As a consequence, we have seen a significant increase in our pipeline of potential investments. In particular, we are seeing many established companies which have substantial assets or predictable revenue streams, over which a first charge can be taken, thereby reducing the risks usually associated with venture capital investing. For us it’s all about backing the right management teams, adding value where we can and letting them get on with what they do best – running their business.’

Reviewing the previous Puma 8 VCT fund in February 2012, Bestinvest labelled it ‘a five-star investment’.

‘Puma makes its investments into businesses that have a high degree of security, usually in the form of a freehold asset and backed with a chunk of the entrepreneur’s own cash,’ explained Adrian Lowcock, senior investment adviser at Bestinvest. ‘A typical example might be a freehold pub or a car park.’

‘These investments are not going to experience any great growth,’ he continued, ‘but the VCT will rank highly for any cash flows during the life of the investment and will have first charge over the assets. This gives the VCT manager the security that they can always service the dividend requirement and return the investors’ money promptly after five years.’

Indeed, the first two Puma VCT funds – which debuted in 2005 – were the first such vehicles to return shareholders all their money at the end of their five-year life spans. The funds generated an annual tax-free rate of return for shareholders of 11.6 per cent through that time. Under their current legislative treatment, investors in VCTs also receive an immediate 30 per cent rebate against their income-tax liabilities.

The Puma VCT 9 fund will require a minimum investment of £5,000, and impose an annual management charge of 2 per cent and an initial fee of 5.5 per cent. The shares will be offered at 100p each.

As a further inducement, applications to participate in the fund received before 31 December 2012 will gain a bonus worth 1 per cent in additional shares.

See the full article here in the What Investment website