Baronsmead VCTs buck market trend

The UK-listed venture capital trusts managed by Isis Equity Partners have both reported healthy increases in net asset value and dividend payments.

Baronsmead VCT 1 and 2, two of the six UK-listed venture capital trusts (VCTs) managed by Isis Equity Partners, have both defied broader stock market declines thanks to a series of exits during the past twelve months.

Baronsmead VCT 1, reporting for the year ended September 2003, has paid a 10.7 pence per share cash dividend to shareholders, the result of a 26.5 per cent increase in net asset value (NAV). The increase in NAV was the result of what the firm described as a series of successful exits from unquoted investments and a sharp rise in the share prices of its Aim portfolio.

“Since launch in November 1995, Baronsmead VCT has paid 45.05p dividends per share,” said Baronsmead VCT chairman Gill Nott. “During last year we raised net proceeds of £10.3m from shareholders, some 20 per cent of the total VCT fund raising earlier in 2003.”  In total VCT 1 has raised £34m.

Both VCT 1 and 2 invest in business services, consumer markets, media, IT and healthcare. “There has been improving trends in trading within the portfolio and we now hold more than 40 companies,” said David Thorp, investment manager of Baronsmead VCT. “We have also successfully sold a number of investments in the last financial year, making sizeable profits that can then be paid out to shareholders, tax-free.”

Baronsmead VCT 2 has also published positive half year results for the six months to September 30. Since launch in April 1998, Baronsmead VCT 2, which has raised a total of £45m, has produced a total return of 30.2 per cent on the original subscription price of 100 pence per share.  By comparison, during the same period to 30 September 2003, the FTSE All-Share Index fell 16.7 per cent while the FTSE SmallCap Index rose only 5.7 per cent.

Isis said that Baronsmead VCT has generated a total return of 45 per cent since inception in 1995, while Baronsmead VCT 2 has generated a total return of just over 30 per cent since 1998. 

Fundraising for VCTs, which offer tax advantages for predominantly retail investors in unquoted companies, fell sharply from £450m in 2001 to £125m in 2002, according to data published by the BVCA.