Octopus Investments has launched its first VCT in 10 years, offering investors an initial £20mn in shares to back innovative companies with a sustainability focus.
The 'Future Generations' VCT will invest in early-stage firms that are disrupting industries and ‘driving positive outcomes’ for the planet and society.
It will be managed by Simon King, a partner in Octopus Ventures, and the investment team behind Octopus's £1.3bn flagship Titan VCT.
The fund will align investments to three themes: ‘building a more sustainable planet’, empowering people, and revitalising healthcare.
As such it will look for companies that work towards reducing carbon emissions, protect ecosystems or create a ‘circular economy’ that removes waste.
It will also look at firms that use technology to ‘further society’, for instance those improving access to digital learning and making financial advice widely available.
Its revitalising healthcare principle means it will invest in modern healthcare industries, including software that makes healthcare services more efficient.
King said: “We will look for companies that have innovative technology; a strong and passionate management team who know their field, a large global addressable market, and the ability to sustain a competitive advantage.
“We are seeing some really exciting investment opportunities and are looking forward to working with our portfolio companies to deliver meaningful outcomes for people, the planet and our investors.”
The VCT will target an annual dividend of 5 per cent NAV per share from 2025 and the minimum investment is £3,000.
Investments can be made through online applications and are available for this tax year (2021-22) and next year (2022-23).
VCTs offer investors tax relief of up to 30 per cent of their investment on the first £200,000 invested each year, and dividends and capital gains are also tax-free. But the caveat is that investors need to hold the shares for a minimum of five years.
Simon Rogerson, chief executive officer of Octopus Group, said the combination of a period of unprecedented change and rising levels of inequality, climate change and ‘creaking’ healthcare systems created an opportunity for investors.
“We believe that some of the best returns in the future will come from companies solving society’s biggest problems.
“These companies will help build a better tomorrow, allowing us, and future generations, to live happier, healthier, and longer lives.”
Alex Davies, chief executive of Wealth Club, said sustainability was an increasingly important consideration that was shaping consumer and business spending habits around the world.
“Early-stage companies that can provide innovative solutions to address these issues could have the potential for attractive returns.
“We are expecting the launch to be popular.”
This will be the fifth VCT offering from Octopus, which also has two AIM VCTs alongside Octopus Apollo VCT and its flagship Octopus Titan VCT.
In October it launched a £40m fundraise for the Apollo VCT, which has a focus on fast-growing B2B software businesses
sally.hickey@ft.com
