NVM looks to raise £50m to fund additional SME investment programme
PRIVATE equity fund NVM is looking to raise an additional £50m for investment in high growth SMEs, many in the Midlands.
Northern Venture Trust, Northern 2 VCT and Northern 3 VCT are all Venture Capital Trusts (VCTs) managed by NVM Private Equity. The funds raised will be invested mainly in later-stage unquoted UK companies with high growth potential.
The three VCTs aim to provide investors with high long-term tax-free returns through a combination of dividend yield and capital growth. As at June 30, 2013, the three VCTs had combined net assets of £185m. In the past 10 years, more than £200m has been invested by NVM’s funds in VCT qualifying investments.
Tim Levett, chairman of NVM Private Equity, said: “Due to the overwhelming demand for our Northern Venture Trust and Northern 2 VCT linked share issue at the beginning of 2013, we decided to give investors the opportunity to participate in a larger offering across all three of our VCTs. This will provide us with more funds to invest in businesses across the UK – further strengthening our portfolio.”
Over the past 12 months, NVM’s funds have invested more than £30m in six growing businesses: Silverwing, Haystack Dryers, Intuitive, Cleveland Biotech (Holdings), Kirton Group and Buoyant Holdings. There have also been some profitable exits from the portfolio, with the sales of Paladin Group, Interlube Systems, Tikit Group and IG Doors taking place during the same period, delivering combined income and capital proceeds for the VCTs of over £27m.
“Our Northern VCTs are well-established funds with a policy of investing jointly in new opportunities. Currently, over 85% of their VCT-qualifying portfolios are commonly held in 33 investments across a range of different industry sectors. Investors in the new share offers will therefore gain immediate exposure to a common portfolio of mature and diverse smaller UK companies with high growth potential,” added Levett.
In the VCTs’ latest completed financial years, Northern Venture Trust paid tax-free dividends of 6p, with Northern 2 VCT and Northern 3 VCT each paying 5.5p –all in line with the trust’s stated targets. Dividends have been at or above the target levels for the last five financial periods.
From inception to June 30, 2013, the three funds have generated a total return (latest net asset value plus cumulative dividends paid) of 201.9p, 150.2p and 144.2p respectively.
In order to provide shareholders with the opportunity to realise value after the initial five year holding period, the Northern VCTs have a policy of buying back their shares in the market at a 10% discount to the latest published net asset value, subject to certain conditions.
The share offers are promoted by VCT marketing specialist Downing, which has been working with NVM since 1999.
