It is autumn so it must be venture capital trust time – but will it be a flood or trickle launching?
Pembroke is out of the gates early with a £20m top-up offer to the existing £100m VCT.
‘Top-ups’ have been the only real way to invest in VCTs for many years; launching a new one is hard as investors want an immediate dividend stream – easy to achieve from a top-up but harder from a new launch.
In fact, most VCTs use the dividend as a sales aid. For Pembroke, those who invested before September 24 qualified for October’s 3p per share dividend.
After the recent merger with Pembroke’s ordinary shares, this VCT has 40 investments split across six sectors.
The sectors comprise: wellness (13 per cent weight); food, beverage and hospitality (32 per cent); education (8 per cent); design (24 per cent); media (16 per cent); and digital services (7 per cent).
It is a very “consumer-focused” VCT, which does not make it unique, but the manager is clearly trying to tap into fast-growing trends and companies.
Premiumisation is such a mishmash of a word, but it is at the heart of this VCT.
The annual fee of 2 per cent is fairly standard for VCTs. However, unlike many of its peers, Pembroke does not charge arrangement or monitoring fees to the underlying investments.
Unfortunately, performance fees are commonplace in VCTs and Pembroke is no different. As usual, the terms are largely incomprehensible and should be scrapped across the industry.
There is a 3 per cent initial charge, however there is a 1 per cent fee reduction for investors before October 31.
Pembroke is managed by a small experienced team. The portfolio looks very interesting and my only concern is those investing now buy at the March 2020 valuation; lots has gone on since then.
Ben Yearsley is an investment consultant at Fairview Investing