Venture Capital Trusts Show Resilience In Higher Than Expected Fundraising
Pessimists who predicted that the 2008/09 Tax Year Venture Capital Trust (VCTs) fundraising close would only raise £50 - £100 million have been proved wrong as final figures show that £153 million has been raised by VCTs in the last tax year. In a year of global downturn, unprecedented market and credit conditions and the number of private equity firms giving up on plans to raise money from investors on the rise1, the VCT sector has proved to be resilient, particularly the “tried and tested” generalist VCTs.
The £153 million total raised is in line with VCT Managers expectations, but is a 30 per cent decrease on the prior year (£220 million) and one fifth the 2005/06 peak of £779 million. Mark Wignall of Matrix Private Equity Partners and Manager of the Matrix Income & Growth VCTs believes that this fall is largely due to the reduction in the 40 per cent up front tax break to 30 per cent.
Mark Wignall, commented: “The leading VCT Managers had fruitful fundraisings, garnering sums between £5 million and £30 million. Several Managers hit 70 per cent or more of their fundraising target, proving investor appetite for tried and tested VCTs even in challenging fundraising conditions. However the Government should now do more to stimulate the VCT sector, if we are to restore retail investment to 2005 levels into the vital area of the UK smaller company financing. VCTs have the existing infrastructure and resource to fill the finance gap created by the withdrawal of 3i and the reduction in lending by the high street banks.”
The composition of funds raised in 2008/09 and in the previous three years are set out in the full press release.
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