Baronsmead 1 & 2 - fundraising and dividends

[naflod]

Both Baronsmeads have today announced the intention to raise a combined £25 million in the 18/19 tax year, expecting to issue the preospetus in the new year:

https://www.londonstockexchange.com/exc ... 50431.html

Both have also announced that a dividend of 3p will be payable on 21st September:

https://www.londonstockexchange.com/exc ... 50430.html
https://www.londonstockexchange.com/exc ... 50432.html

naflod

[GentlemansFamily]

this should prove to be very popular and might put me off investing in any of the other offers open at the moment

[Kidman]

I will be glad to receive the dividends but will probably pass on the fund-raising.

It is small enough to be another mad scramble and I want to see more of a track record for Baronsmead under the current rules before committing new funds to them.

[runnygum]

Exactly. Im not adding to any VCT's any more.

[scotia]

I have been selling off 5 year VCT holdings, but will probably replacing them with new VCT purchases - i.e. I'm just maintaining the amount I have invested in VCTs. I'm not sure that there will be the same rush for VCTs this year, but I do wish that Baronsmead would open their offers earlier in the tax year so that there is plenty of time to purchase alternatives if the Baronsmead offers are over subscribed.

[sinterklaas]

It is small enough to be another mad scramble and I want to see more of a track record for Baronsmead under the current rules before committing new funds to them.

£25m offer a mad scramble, do you think so?

I dont reckon it will… You'll have other big names raising at the same time e.g. Titan, Maven, probably ProVens, maybe British Smallers, Albion, also look at last year when they didn't fill their offer while Mobeus and Northerns did.

There will almost certainly be the chance to invest for those interested… Maybe a fair few, like you, want to see some post 2015 track record before they do.

[Shinyuk]

It’s bound to be well subscribed due to the paucity of other tax relief options. Like Scotia, I’m running down my VCT investments and I won’t be topping up this year at all. There are better places to invest imho.

[Kidman]

£25m offer a mad scramble, do you think so?

That is £25m for both Baronsmead VCTs in aggregate, not for each of them.

[Agrajag]

sinterklaas wrote: look at last year when they didn't fill their offer while Mobeus and Northerns did.

I believe this was mainly due to the timing of the offers. The Mobeus & Northern offers launched before Baronsmead and had already raised significant funds (plus, in Northern's case, had also received applications from new investors pending the end of the Shareholder only period.

As these offers launched early in case there were changes to VCTs in the Budget it probably wasn't prudent for the Baronsmead offers to remain open through and past the Budget given the potential restrictions that could have been imposed and therefore the offers closed early, otherwise they would have filled up.

Bottom line is, if Mobeus and Northern don't raise this year Baronsmead will probably be the most sought after offer so, if you want to invest it's probably worth keeping an eye on the launch date. My guess would be it will take just over a week to fill but who knows ? It also depends if there is an over-allotment facility.

[Kidman]

Agrajag, an excellent analysis of last year's fund-raising thank you.

One unknown (for me) this year is what is Octopus doing? Perhaps others have read about their plans. If they don't repeat their previous years' large fund-raisings, then surely there will be impact on all other offers.

[UncleEbenezer]

Agrajag, an excellent analysis of last year's fund-raising thank you.

One unknown (for me) this year is what is Octopus doing? Perhaps others have read about their plans. If they don't repeat their previous years' large fund-raisings, then surely there will be impact on all other offers.

You presumably mean Titan? Their level of reporting has gone from one of the best in the industry back when they were new, down to disgracefully opaque. I wonder if IFAs have access to anything we don't, like timely news on investments and cash piles, and portfolio details?

But I do have news from elsewhere in the Octopus stable. Octopus AIM 1&2 will raise up to £30m (£10m each + £10m overfunding) this season. That was yesterday's thud on the doormat. I think these are nowadays my pick of the Octopus stable.

[sinterklaas]

As these offers launched early in case there were changes to VCTs in the Budget it probably wasn't prudent for the Baronsmead offers to remain open through and past the Budget given the potential restrictions that could have been imposed and therefore the offers closed early, otherwise they would have filled up.

Good theory but not the case. The fundraising period straddled the Budget, they opened first week of October and closed 20 December, having raised just under their initial target, not getting into over allotment.

My guess would be it will take just over a week to fill but who knows ? It also depends if there is an over-allotment facility.

Just to test that idea, the whole VCT industry raised £728 million last year including all the divi reinvestment etc. If you suppose the offers were open for an average of 150 days (I havent worked this out, it's just a guess), that would mean circa £5m/day going in to all VCT offers in a record breaking year. So to sell out in a week a £25m offer would have to exceed that on its own.

I think you are overstating the appeal of this Baronsmead offer. In my view there will be plenty of time to invest for those that want to, and there are other houses that have arguably better pedigree for the post-2015 rules, some of which will no doubt be raising this year.

Like Scotia, I’m running down my VCT investments and I won’t be topping up this year at all. There are better places to invest imho.

Out of interest what do you think are the better places to invest? Tax efficient, or outside that area altogether?

[Agrajag]

Good theory but not the case. The fundraising period straddled the Budget, they opened first week of October and closed 20 December, having raised just under their initial target, not getting into over allotment.

You are quite correct and my apologies for the error in my recall there. However, we're both half right and half wrong. The confirmation the over-allotment facility wouldn't be used came out at the end of October well in advance of the budget on 22/11/2017. Also Baronsmead Venture Trust did close fully subscribed 6/11/2017. It was only Baronsmead Second Venture Trust that remained open but it had to close before 29/12/2017 as that was the latest date it could be extended to per the prospectus. I'm sure it would have become fully subscribed had it been able to extend further.

I think you are overstating the appeal of this Baronsmead offer. In my view there will be plenty of time to invest for those that want to, and there are other houses that have arguably better pedigree for the post-2015 rules, some of which will no doubt be raising this year.

It'll depend on which offers are raising and also investor/IFA appetite for VCT investments. If either Mobeus or Northern are out before January(& to a lesser extent BSC & Maven) the Baronsmead offers could take a while to fill up. If none of those offers launch and if investor appetite for VCT holds up my best guess is that Baronsmead could go pretty quickly. But those are two pretty big 'ifs' so you'll probably be right that they're open for a while.

Cheers.