Strategy: To invest in a portfolio of more established unquoted companies with growth potential to attain capital appreciation.
Issues
VCT: exposure level: Recent fund raises mean just over half the assets are invested.
The Investment Manager
Positives
Team: One of the longest standing managers in the VCT/EIS area, Calculus has a highly experienced and stable team.
Issues
Past performance:Write-offs over the past couple of years have adversely affected the company’s previously very good performance. An average realised 9% IRR is still credible.
Nuts & bolts
Offer period: The EIS closes on 31 August 2019. The VCT has an open offer for the 2019/20 tax year.
Diversification: The EIS aims to invest in between six and ten companies. The VCT’s existing portfolio has 27 investments with a weight of over 1%.
Valuation: Investors will receive valuations twice a year. Industry guidelines will be used, with two auditors examining the figures.
Fee Information
Fees: Mixture of direct fees and charged via the investee companies.
Performance fee: EIS: 20% on gains over a return of total capital invested; VCT: 20% on investor share of proceeds over 105p for every 100p invested.
Risks
Risk mitigation: The aim is to diversify by sector and the focus on more established companies should also help mitigate some of the risk.
Target return: Overall, the strategy is medium risk relative to other EIS/VCT products, with the target company IRR of 20% and capital return of 2.5x towards the top end of what we would expect for that risk category. The VCT targets an annual dividend of 4.5% of NAV, while also providing capital growth.
