ProVen VCT - new offer

The ProVen VCT and ProVen Growth & Income VCT are seeking to raise £60 million in a combined offer with a £20 million over-allotment facility.

Chelsea Client Discount

  • There is a 5.5% initial charge but we are able to provide an early bird 3.5% discount for new investors and 4.5% for existing shareholders on the first £5million received by each VCT before 15 February 2019.
  • The minimum investment is £5,000.

Chelsea View

ProVen is an experienced growth capital investor with a strong track record, as evidenced by the recent exits of Chargemaster and Watchfinder. These were sold more than three and nine times ProVen's initial investment respectively.*

Furthermore, recent rule changes disqualifying VCTs from conducting management-buy-out and lending at higher rates have had little affect on ProVen's well established skill set. The investment process is robust and backed by a highly experienced 12 person committee that has 85 years of combined experience in small and medium enterprise investing. ProVen uses this experience by taking a very active role in the management of the companies it invests in, including, in certain circumstances, the right to replace under-performing managers.* Given their recent successful exits we expect the early bird offer on this subscription to expire quickly.

Strategy

ProVen typically invests in companies with revenue of between £1 and £25 million, with an established track record of demand for their goods or services, it does not fund start ups, instead seeking companies that are already established. Careful consideration is also given to the quality of the management team, with an emphasis on those management teams being incentivised through substantial share holdings in the business. ProVen seeks to manage risk by investing in a diversified portfolio of qualifying companies. Where possible it also structures its investments so as much capital is recovered on exit as possible. It searches for opportunities on the basis that there is a clear route to profitable exit after a 4-5 year time frame.**

Portfolio

Investors have the opportunity to benefit from an established portfolio of holdings. At the latest announcement of results 31 August 2018 the combined number of venture capital investments totalled 42 companies. A significant proportion of these companies trade in markets overseas, including North America, Europe, Asia and Australia. There are several maturing companies in the portfolio, with the managers aiming to conduct exits within the next 1-2 years. Potential proceeds will be paid-out to investors in line with ProVen's dividend policy. ProVen VCT recently paid the highest special dividend in its history: 25.25p. This came from the sale proceeds of Watchfinder and Chargemaster.*

Recent exits

Year of sale Company ProVen Investment^ (£m) Sales Proceeds^ (£m) Multiple of investment
2018 Chargemaster £3.5m £11m 3.14x
2018 Watchfinder £3.18m £28.25m 8.88x
2017 Third Bridge £3m £17.28m 5.76x

Dividend Policy

The dividend policy of both VCTs is to target a dividend yield of 5% of NAV, with the possibility of special dividends in the event of large realisations. On 22 October 2018 the Board paid a special dividend of 25.25p per share for ProVen VCT and 4.5p per share for ProVen Growth and Income VCT.*** This was paid to investors from the proceeds of the Chargemaster and Watchfinder exits.*

Dividend History^^

Period to the end of February 2013 2014 2015 2016 2017 2018
ProVen VCT 5.1% 7.3% 4.8% 6.4% 5.0% 8.9%
ProVen Income and Growth VCT 4.9% 7.4% 5.2% 7.0% 5.6% 14.8%

Track Record

NAV Total Return(Capital and Income reinvested^^^

Company name 1 year (%) 3 year (%) 5 year (%)
ProVen VCT 23.17 37.91 48.88
ProVen Growth and Income VCT 11.18 22.59 29.11
VCT Generalist Sector 9.15 20.42 37.67

Why invest into VCTs?

  • 30% income tax relief on the amount subscribed, provided the VCT shares are held for at least five years
  • Tax-free dividends
  • Capital gains tax exemption

How to invest?

You can find links to application forms and the Key Investor Documents below. Please read these, and return the application forms to Chelsea's office.

The minimum investment is £5,000, with £2,500 minimum per VCT.

Please note that Chelsea feel that the risk rating of 3/7 is not representative of the risk on this investment - the Chelsea research department feels it is much higher.

To find out about other VCT offers currently open, please visit our dedicated page.

* ProVen Securities note, 2019
** ProVen Offer information and application form, 2019
*** ProVen VCT: Half-year report, 2018
^ Combined investment of both VCTs
^^ Dividend yield is calculated as the dividend growth per Ordinary Share for the year, dividend by the NAV per Ordinary Share at the start of the year. The NAV per Ordinary Share may fall over the course of the year as a result of the payment of dividends. No account is taken above of the initial tax relief.
^^^ Source: AIC 09/01/2019, VCT Generalist sector, weighted average. Data as at: 08/01/2019.

Important Notice

Please be aware that VCTs are long-term investments. VCTs usually invest in small, unquoted companies and therefore carry a greater risk than many other forms of investment. In addition, the level of charges are often greater than unit trusts and OEICs. Past performance is not necessarily a guide to the future. The value of investments, and the income from them, can fall as well as rise, due to market and currency fluctuations and you may not get back the amount originally invested. All our featured products should be regarded as medium to long-term investments. Chelsea Financial Services offers an execution-only service. If you require investment advice you should contact an expert adviser. Tax assumptions are subject to statutory change and the value of tax relief (if any) will depend upon your individual circumstances.