By Fiona Henderson The Seymour Pierce VCT will look to relaunch later this year when it believes ...
By Fiona Henderson
The Seymour Pierce VCT will look to relaunch later this year when it believes retail investor sentiment is likely to be more positive.
The VCT, which was looking to raise a minimum of £3m and targeting £7.5m, has been withdrawn as a result of poor market conditions.
The pull of this venture capital trust follows the recent withdrawal of the Harvest VCT and it highlights concerns that there are many new venture capital trusts that will find difficulty in attracting money. This is a result of a combination of many more VCTs on the market compared to previous years and low market sentiment from investors, according to Martin Churchill, director of research at tax shelter report, www.taxshelterreport.co. uk.
John Mackay, group chief executive at Seymour Pierce Group, said that in view of current stock market conditions and their effect on VCT issues the company had reluctantly decided to withdraw the trust. He added: "We have advised those investors who had submitted subscriptions for this trust. The company intends to return to the market with similar specialised venture capital trusts once stock market conditions improve."
Irene Redman, private equity manager at Seymour Pierce added: "We will sit down with the directors after the end of the tax year. Along with some experts in the field we will decide when would be the right time to re-enter the market. The London Stock Exchange is ready to take us back at any time, we will wait for the right timing."
The trust has refused to disclose how much it had actually raised during its offer period.
When pulling a venture capital trust the investment managers, directors and administration sit down and make collective decisions on the state of the trust, Redman said. "All parties had become unhappy with the situation. We contacted the UK listing authority and the stock exchange to inform them of our intentions to close the VCT. This enables all appointments to be cancelled and notify them in advance of our plans. Then we decided to make a public announcement and returned all investor money."
Pavilion was the manager for the trust, which was to invest in Aim companies. The investment objectives were to initially invest the proceeds of the issue in cash deposits and fixed interest. The managers hoped to have at least 70% invested in high growth companies that would be or are traded on Aim. The thought was that the portfolio would consist largely of qualifying investments.
The pull of yet another venture capital trust highlights the demand for VCT money compared to the amount of willing investors this year, Churchill said.
Redman added that when the markets are low retail investors want to keep their money in less risky products. "We anticipate going back into the market when investment administrators, managers and directors agree that times are more attractive to retail investors. We offer the product and incur the costs so it is not in our interest to relaunch until we are more confident of success."
The fund was not very well known and suffered from a lack of marketing in a newly competitive area, according to Ben Yearsley, investment manager at Hargreaves Lansdown. In comparison to the Harvest VCT and Seymour Pierce, the Artemis VCT, which was on offer over the same time period, has raised £33m and is now fully subscribed.
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