Pinder, Fry & Benjamin spent the last day of the tax year telling the 200 investors in its Venture Technologies Academic Research Partners VCT they would have to put their cash elsewhere.
According to Charles Fry, director at Pinder, Fry & Benjamin, investors were offered an alternative Pinder VCT. However, many chose to move their money to other companies.
The Pinder board pulled its VCT after the lead investor into Venture Technologies University Partners, Pinder’s institutional fund, withdrew its subscription earlier in the week.
“We were raising an institutional fund of up to £50m alongside the VCT,” said Fry. “On Tuesday, the lead investor, which was to put in £10m, rang up and said that in view of market conditions, which were pretty awful, they would not proceed with the investment.” Fry would not name the investor concerned.
Because the VCT was to invest alongside the now non-existent institutional fund, the Pinder board sensationally decided to pull it as well, even though it had reached £2m, double its minimum subscription.
“The institutional fund had a good panel working with the universities,” said Fry. “As the institutional fund had been pulled, we felt the whole investment philosophy of the VCT would also be lost.”
Fry said the decision had been made from a shareholder’s perspective. “When we write a prospectus, we envisage a certain set of circumstances,” he said. “They changed, and we felt the investors were not getting the deal they signed up for.”
However, had investors shown more interest in the VCT, which was supposed to close at about £30m, it would have launched in spite of the institutional fund’s demise. “If the VCT had raised £10m or £20m, it could have gone ahead,” said Fry. “As it was, we would have been investing £2m across four university research departments. ”
The timing of the withdrawal – on the last day of the tax year – seems incredibly bad, as investors had only a few hours to secure their capital gains and income tax relief in an alternative investment vehicule.
But according to Fry, the situation was not as bad as it looked. “In a VCT, you can go back a year to protect your capital gains. So us pulling the VCT doesn’t really make a difference unless you made your capital gains on April 5 last year,” he said. “As far as the 20 per cent income tax relief is concerned, investors will be able to claim it back this year instead of last.”
Pinder's VCT is the latest to fall victim to a lack of interest in retail products. Harvest and Seymour Pierce also recently pulled their VCT funds.