The venture capitalist is looking to raise extra funding by 5 April as it believes the technology market now offers investment opportunities
Venture capitalist Yorkshire Fund Managers is to issue a further £10m worth of shares in its British Smaller Companies VCT2 product.
The initial VCT2 issue, which raised £6.8m, is now fully invested, with the exception of a strategic reserve.
Yorkshire is looking to raise the funding by 5 April as it believes the technology market now offers excellent investment opportunities following last year's dramatic falls.
The new shares have an issue price of 100p, with a minimum subscription of £3,000 per application and no maximum investment amount. The full VCT tax reliefs are only available on investments up to £100,000.
As it is a top-up issue for an existing product, initial costs are lower than they might otherwise be and have been capped by Yorkshire at 4.75%, of which 3% is payable to intermediaries as commission.
The annual management fee of 2.5%of NAV is at the upper end of the pricing scale for a technology VCT. By comparison, the annual management charge on the Isis Technology VCT is 2%.
Yorkshire said this type of product is research intensive and, as such, costs more to administer and manage effectively.
The group added that it offers tax relief on a scale not available through more mainstream investment vehicles, further justifying charges above the level associated with investment trusts, Oeics and unit trusts.
British Smaller Companies VCT2 seeks to invest in a broad range of start-up, early-stage and established businesses, primarily in the technology, advanced engineering and life sciences sectors. Potential investment companies must be able to demonstrate their capacity and determination to achieve significant growth over the medium term of five to seven years.
The company's directors have all worked in the technology sector, either developing businesses or specialising in identifying investment opportunities within the sector.
When selecting investments, the group also works closely with Cambridge-based technology business consultant, Generics Group, and two Generics employees sit on the board. Recent investments have included Syngenix, Amino Holdings and Tamesis.
Yorkshire's managing director, Phil Cammerman, believes in the past many people have failed to appreciate that VCTs represent a long-term play on the market.
This has led to disappointment in some quarters over their short to mid-term performance and has contributed to the perception that VCTs are a tax-efficient, rather than an investment, product.
He said: 'When we invest in companies, the money is used for development, design and marketing purposes. These are new companies that take some time to reach the point when they can be brought to market, a process that can last up to 10 years.
'It's at this point that the bulk of investor return is generated. Investors who leave before this stage are cutting themselves off from very significant returns.'
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