Friends Ivory & Sime (FIS) is to offer Baronsmead 4 in November 2001, following the success of its t...
Friends Ivory & Sime (FIS) is to offer Baronsmead 4 in November 2001, following the success of its three other VCT vehicles.
The trust aims to raise £30m and will build a diversified portfolio of more than 30 holdings, primarily unquoted companies in selected growth sectors, to maximise long-term capital growth.
David Thorp, lead investment manager of the Baronsmead VCTs, said that in the current economic climate, having diversity is very important. As such, the trust will invest in all types of companies, from cake suppliers to software firms.
Thorp said: 'Fundamental to the success of Baronsmead 4 will be our sector-focused approach. I want to be in the sectors that are resilient in the downturn and can maintain their pricing power. This approach enables us to invest in more competitive companies and provides an excellent opportunity for individuals seeking long-term investment in unquoted businesses.'
The core sectors the trust will invest in are business and financial services, consumer markets, healthcare, information and technology and media and communications.
The private equity team at FIS has managed the Baronsmead family of VCTs since 1995. All of the first three VCTs have produced returns favourable to the FTSE All-Share.
Before taking tax reliefs into account, from 10 November 1995 to 30 September 2001, the NAV of Baronsmead returned 46%, compared to the FTSE All-Share which returned 60%, according to FIS. However, after taking VCT tax reliefs into account, the trust has returned some 115%.
Similarly, before tax reliefs, the NAV of Baronsmead 2 grew 22% from 2 April 1998 to 30 September 2001, compared to the FTSE All-Share, which fell 10%. After tax reliefs are taken into account, the trust returned 55%, Thorp said.
He added that through co-investment, alongside the other Baronsmead VCTs and institutional clients, Baronsmead 4 will be able to invest in larger transactions and companies than most VCTs.
The trust will also provide financial planning choices for investors over the long term through a dividend reinvestment scheme and the company's buy-back policy.
The buy-back policy offers a fixed 10% discount on shares sold. Thorp said that without the policy, discounts could range from 20% to 40% so shareholders have a greater feeling of security in the trust if they do want to sell out. As a consequence of this policy, Thorp said, less than 3% of shareholders have sold their shares in the other three VCTs.
Ben Yearsley, investment manager at Hargreaves Lansdown, said: 'I am fully behind Baronsmead 4 and will be highly recommending it. While this new trust will have more of an emphasis on healthcare and biotech companies, it will still be choosing mostly profitable businesses.'
£92bn transferred since 2015
Achievements, charity work and other happy snippets
Since first announcement