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VENTUS TWINS STRATEGY

Sophisticated and complex high-risk tax-sensitive investments in small companies: handle with care
VanishingPint
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Re: VENTUS TWINS STRATEGY

#331465

Postby VanishingPint » August 6th, 2020, 11:40 pm

I have a very small ven2 position from original fund raising. I did try to vote with the board here but could not login with the criteria given by the company despite several attempts.
As a long time reader of the old Fool, thanks to all involved for your efforts both with this site and with Ventus. I shall endeavour to succeed in voting next time.

UncleEbenezer
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Re: VENTUS TWINS STRATEGY

#334876

Postby UncleEbenezer » August 21st, 2020, 11:57 am

This looks commendable openness: https://www.investegate.co.uk/article.a ... 505347486W

Doesn't smell of "spin", though of course one can't be sure without having attended.


The above was my initial reaction, and I came here to ask if anyone had attended. But I guess it wasn't even open to shareholders?

127tolmers
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Re: VENTUS TWINS STRATEGY

#355669

Postby 127tolmers » November 11th, 2020, 8:12 pm

Half year results now out.

Flat outturn, lower costs offset by lower forecast prices. Good divis planned. Shareholder forum planned in early 2021 to discuss continuity vote. No share class merger before continuity vote. Mgt fee now 1.50% of NAV backdated to Aug 2019 and reducing to 1.15% from Aug 2022. Action group has delivered.

https://www.rns-pdf.londonstockexchange ... -11-11.pdf

https://www.rns-pdf.londonstockexchange ... -11-11.pdf

SpinDoctor
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Re: VENTUS TWINS STRATEGY

#355782

Postby SpinDoctor » November 12th, 2020, 10:35 am

Agreed. Really material progress; not least, the revised management fees have sheltered the NAV from a substantial downward revision due to lower power prices.
The ongoing discount to NAV remains anomalous. A single share class will help, but that should be complemented by much improved comms - refreshed website, social media account, positive engagement with the investment media, and perhaps quarterly announcements and dividends. Newsflow is shockingly infrequent in my view. If there is a positive story to tell, even of modest incremental progress, then tell it.

UncleEbenezer
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Re: VENTUS TWINS STRATEGY

#355808

Postby UncleEbenezer » November 12th, 2020, 11:33 am

SpinDoctor wrote:Agreed. Really material progress; not least, the revised management fees have sheltered the NAV from a substantial downward revision due to lower power prices.
The ongoing discount to NAV remains anomalous. A single share class will help, but that should be complemented by much improved comms - refreshed website, social media account, positive engagement with the investment media, and perhaps quarterly announcements and dividends. Newsflow is shockingly infrequent in my view. If there is a positive story to tell, even of modest incremental progress, then tell it.

I have to take issue with that. This is a mature, long-frozen portfolio: if it can tick along quietly and free of news, that suits me just fine. Communication did improve quite a lot some years back: several years ahead of the management fee coming down in response to shareholder pressure. Too much noise and one would have to wonder what they were distracting attention from!

127tolmers
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Re: VENTUS TWINS STRATEGY

#391039

Postby 127tolmers » March 1st, 2021, 8:17 am

The end game! No great surprise in the potential uplift; the board has continued to use a very conservative discount factor in doing their valuations relative to using the discount factor used by other quoted infrastructure & renewable vehicles and the discount implicit in trade deals.

Interesting to see whether a trade sale goes through unhindered or whether a (jilted) buyer launches a takeover bid.

https://www.investegate.co.uk/ventus-vc ... 00086049Q/

Value of the assets

The secondary market for the assets owned by the Companies has recovered from the disruption of the pandemic[4] and, in the opinion of the Boards, the Investment Manager and several financial advisers, is currently considered to be very favourable for sellers. The Boards recently sought indicative prices for the Companies' assets to confirm this view. This exercise has indicated that the sale of assets could be expected to deliver a premium of at least 25% and 32% to the respective weighted average share prices of Venus VCT PLC and Ventus 2 VCT PLC at the market close prior to this announcement[5]. The premium would be lower for the Companies' ordinary share classes and greater for the D share classes but nevertheless there would be a significant premium across all share classes.

It should be stressed that this evaluation is based on expressions of interest and not binding commitments and that they may or may not result in any or all of the Companies' assets being realised or at these levels. No forecast or projection is expressed or implied.

Considerations in assessing alternatives for Shareholders

The Boards have considered the potential returns and risks for Shareholders from remaining invested, as compared to selling the assets. As part of this process, the Boards have reviewed the specific tax advantages that Shareholders may benefit from due to the Companies' VCT status.

- The current dividend payments will not be sustained from income:

o The assets are limited life, and as they age and pay dividends to the Companies, their value (the NAV) and therefore the Companies' share prices, will start to fall[6].

o Future dividends will increasingly comprise a return of capital rather than a distribution of profits. As an illustration, if the assets generate a return to Shareholders of 3% per annum after the deduction of costs, and pay a dividend yield of 5% per annum, the NAV will fall by 2% annually[7].

- The returns from shareholders remaining invested as compared to selling now are considered inadequate:

o The anticipated return to shareholders is estimated to be about 3% annually over the medium term as compared to the likely cash proceeds from a sale[8].

o The Directors consider that these returns are inadequate when compared to the wide range of risks to which Shareholders would remain exposed. As an example, if long term power price forecasts were to fall by 10%[9], the equivalent return would be less than 2% annually.

- The high costs offset the recurring tax benefits:

o The Directors do not believe that the continuing VCT tax advantages offered to Shareholders justify continuing to hold the assets.

o As investors will be aware, future dividends paid by the Companies are tax free, including those pursuant to a sale of assets[10]. Equally, any capital gains or losses are tax free[11], meaning that any future falls in the share price[12] will not qualify for any reliefs on loss.

o As set out above, the TER of the funds will increase over time; rising from around 2.3% of NAV in the near term to in excess of 3.0% in the long term[13]. This high TER is likely to offset all, or the majority, of the recurring tax benefits:

- Shareholders will receive the sale proceeds without the loss of any historical tax benefits:

o As all shareholders that subscribed to the Companies' initial offerings have been invested for more than the five years required to maintain the income tax relief available on subscription, those investors that claimed these reliefs should receive the proceeds without any loss of the income tax relief already claimed.

- Shareholders may have the opportunity to obtain the initial 30% income tax relief from a subscription to a new VCT issue:

o Should they wish to, exiting Shareholders could use the opportunity to invest in a new VCT offering which would give those Shareholders that qualify a 30% relief on income in the year of subscription[14].

Recommendation to dispose of the assets and return the proceeds to Shareholders

In conclusion of this analysis, the Boards consider that it is in the best interests of all Shareholders to dispose of the Companies' assets and to return the proceeds to Shareholders.


Next steps

Having reached this conclusion unanimously, the Boards have appointed EY as a financial adviser to assist in an orderly sale of the Companies' assets. The sale will be subject to Shareholder approval, and a Shareholder Circular will be published in the coming weeks with further information and details of the General Meeting ("GM"). Prior to the GM, an online meeting will be organised where Directors can address any Shareholder questions.

rpannell
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Re: VENTUS TWINS STRATEGY

#391378

Postby rpannell » March 2nd, 2021, 9:15 am

It's a bit like turkeys voting for Christmas, but it is good to see that the directors have the interests of the shareholders at heart. I agree with their reasoning and wonder if the same argument holds for other green energy VCTs such as Foresight Solar.

UncleEbenezer
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Re: VENTUS TWINS STRATEGY

#391474

Postby UncleEbenezer » March 2nd, 2021, 11:57 am

rpannell wrote:It's a bit like turkeys voting for Christmas, but it is good to see that the directors have the interests of the shareholders at heart. I agree with their reasoning and wonder if the same argument holds for other green energy VCTs such as Foresight Solar.

Foresight Solar has taken the approach of broadening its investment mandate since the rule change, so it seems less likely to apply there. Hazel, maybe, I don't know.

I do wonder though: a VCT invests indirectly in ineligible renewable assets (windfarms/etc) by investing in companies whose assets are windfarms. Do the rules actively prevent the investee companies updating their leases and extending asset lifetimes, or is this just how Ventus has chosen to pay a higher dividend than the sector norm?

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Re: VENTUS TWINS STRATEGY

#404213

Postby cprof » April 14th, 2021, 3:27 pm

RNS released yesterday with further details of asset sale. Key points
1) General meeting 19th May for sharehoders to vote on sale.
2) Forecast that sale will take 6-9 months to complete after this meeting
3) Majority of sale proceeds returned after sale
4) Remainder will require wind up of company, which will take further 1-2 months
5) No change in estimate of sale proceeds ( as far as I can see). A bit more detail given per share class.

I wonder if we should expect an August dividend, I cannot think of a reason why not?

UncleEbenezer
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Re: VENTUS TWINS STRATEGY

#404233

Postby UncleEbenezer » April 14th, 2021, 4:20 pm

Those estimates look like a happy ending to the Ventus story.

I have instructed my nominee to vote in favour of the resolutions.

UncleEbenezer
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Re: VENTUS TWINS STRATEGY

#408514

Postby UncleEbenezer » May 1st, 2021, 10:00 am

UncleEbenezer wrote:Those estimates look like a happy ending to the Ventus story.

I have instructed my nominee to vote in favour of the resolutions.


Having already given my instruction and had it duly acknowledged, yesterday no fewer than three messages (one per holding) on the subject advising me of the meetings and inviting me to vote. I guess if I hadn't voted already, that would count as HL doing the right thing by its customers.

cprof
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Re: VENTUS TWINS STRATEGY

#410266

Postby cprof » May 8th, 2021, 1:43 pm

Ventus have released RNS "QUESTIONS PURSUANT TO THE CIRCULAR".
https://www.theaic.co.uk/companydata/0P ... nts/132263
Nothing particularly new or exceptional that would change my intention to support the boards recomendation to sell the assets

cprof
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Re: VENTUS TWINS STRATEGY

#413306

Postby cprof » May 19th, 2021, 7:00 pm

A 98+% vote for each twin to sell assets and disccontinue as VCT at today's General Meetings. A reasonable number of shares ( 10+ million in each company ) were voted.

baronspill
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Re: VENTUS TWINS STRATEGY

#421235

Postby baronspill » June 21st, 2021, 6:17 pm

Some hefty increases in NAVs across the board in the latest annual reports.

I wonder if this will lead to improved offers for the assets.

UncleEbenezer
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Re: VENTUS TWINS STRATEGY

#421267

Postby UncleEbenezer » June 21st, 2021, 8:26 pm

baronspill wrote:Some hefty increases in NAVs across the board in the latest annual reports.

I wonder if this will lead to improved offers for the assets.


More likely it reflects their expectations for sales. The factors that led to revaluations (note - in the face of falling revenues) will also have been in their minds, and those of potential buyers, when they published estimates for winding-up values.

Not complaining, mind you. Next couple of months are looking good on VCT divis (and the Northerns have yet to declare).

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Re: VENTUS TWINS STRATEGY

#443294

Postby baronspill » September 18th, 2021, 12:37 pm

Negotiations must be interesting with the current soaring energy prices. Fingers crossed a deal reflective of this can be struck.

UncleEbenezer
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Re: VENTUS TWINS STRATEGY

#445159

Postby UncleEbenezer » September 24th, 2021, 9:56 pm

baronspill wrote:Negotiations must be interesting with the current soaring energy prices. Fingers crossed a deal reflective of this can be struck.

Soaring prices due to lack of wind?

It would be good to have some idea of the timescale for winding up. Find out if the market for the assets is really as healthy as claimed - though the constant growth of the general Renewable Infrastructure sector suggests it jolly well should be!


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