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Mobeus I&G 4 DIS suspension

Sophisticated and complex high-risk tax-sensitive investments in small companies: handle with care
127tolmers
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Mobeus I&G 4 DIS suspension

#159486

Postby 127tolmers » August 14th, 2018, 11:56 am

https://www.investegate.co.uk/mobeus-in ... 37107691X/
https://www.investegate.co.uk/mobeus-in ... 39167540X/

Dividend Investment Scheme

A total of 788,503 new Ordinary shares were issued under the Dividend Investment Scheme during the period at a price of 74.00 pence.

The Company's Dividend Investment Scheme ("the Scheme") has historically been a practical and cost effective way for the Company to retain cash for investment and operating purposes. Given the Company's recent successful fundraising and current relatively high cash position, the Board has taken the decision to suspend the Scheme until further notice. This means that those shareholders who had opted into the Scheme will now receive cash in respect of any dividends paid by the Company while the scheme is suspended. Allowing high levels of liquidity to persist can dilute returns to shareholders. Furthermore, as a result of the changes in the Finance Act 2018, funds raised under the Scheme would have an additional impact on the VCT's qualification status conditions, commencing in respect of the Company's 2019 financial year. From the start of that year, 30% of all funds raised (including under the Scheme) have to be invested in qualifying investments, within a year of the financial year-end in which shares under the Scheme are allotted. This would have placed a further compliance hurdle on top of the Company's existing investment obligations.

Your Board will continue to keep the operation of the Scheme under review and will provide shareholders with advanced notice of any future decision to reintroduce, modify or cancel the Scheme.

Liquidity

The cash or near cash resources held by the Company as at 30 June 2018, including the liquidity held by companies preparing to trade, was £24.37 million or 42.6% of net assets. While liquidity is high, the Investment Adviser has an active pipeline of investment opportunities under review, and so this is expected to reduce over time.

The VCT continues to hold its cash in a selection of money market funds with AAA credit ratings and in a number of deposit accounts, diversified among well-known financial institutions across a range of maturities.

scotia
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Re: Mobeus I&G 4 DIS suspension

#159492

Postby scotia » August 14th, 2018, 12:15 pm

This was one of the more generous DRIS schemes - shares effectively priced at market value. I'm sorry to see it disappear.
I wonder if The Income & Growth VCT will follow suit.

naflod
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Re: Mobeus I&G 4 DIS suspension

#159604

Postby naflod » August 14th, 2018, 5:01 pm

I'm extremely unimpressed with the board on this.

Raising £15million is fine, yet continuing the DIS which last time raised £583,492 will cause dilution and possibly have an impact on VCT qualifying status.

Most of my VCT investments these days are through DIS (admitedly a plain when it come to tax return time) and as scotia states, this is/was one of the most generous.

naflod

parallellines
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Re: Mobeus I&G 4 DIS suspension

#159658

Postby parallellines » August 14th, 2018, 8:15 pm

Mobeus were fairly open that they maxed out the last fundraising ahead of rumours of draconian new restrictions on VCTs in the last November budget. By the shareholder event in January the message was no 2018/19 fundraising and probably not 2019/20 either.

I expect they are now struggling to invest it all.

james188
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Re: Mobeus I&G 4 DIS suspension

#159918

Postby james188 » August 15th, 2018, 6:28 pm

It is a great pity that HMT/HMRC did not see fit to exempt DRIS/DRIP contributions from the new tighter rules on investing proceeds. I fear that MIG4 will not be the only VCT to decide that this extra level of hassle is all too much. Given that the conclusion of the Patient Capital Review was to encourage further investment in VCTs, this seems perverse - and an unintended consequence. I hope that the relevant industry bodies will lobby the authorities to carve out DRIS/DRIP payments, but I fear that it will take the virtual demise of these arrangements before any serious attention is given to this.

james188
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Re: Mobeus I&G 4 DIS suspension

#159952

Postby james188 » August 15th, 2018, 8:16 pm

I should have added that there is fairly recent precedent for treating reinvestment schemes separately from new subscriptions. As many on this board will know, the linked purchase restrictions which were introduced a few years ago expressly carved out reinvestment contributions in determining qualifying amounts. It should not be that much of a stretch to apply the same principle to the reinvestment rules.

Kidman
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Re: Mobeus I&G 4 DIS suspension

#160084

Postby Kidman » August 16th, 2018, 11:25 am

james188 wrote:It is a great pity that HMT/HMRC did not see fit to exempt DRIS/DRIP contributions from the new tighter rules on investing proceeds.
Looking at it from the point of view of HMRC and the government, I can see why they wouldn't want to make this exemption.
I would suggest that they have already been generous granting the exemption you point out regarding the six month holding rule.
Surely the more advantageous that DRIS becomes to both the VCT companies and their investors then there will higher take-up and higher dividend payments. In other words we will be heading back towards the EBB days that were outlawed by the six month holding rule.

scotia
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Re: Mobeus I&G 4 DIS suspension

#188188

Postby scotia » December 19th, 2018, 11:25 pm

scotia wrote:This was one of the more generous DRIS schemes - shares effectively priced at market value. I'm sorry to see it disappear.
I wonder if The Income & Growth VCT will follow suit.

And Yes - The Income & Growth VCT (IGV) announced a DRIS suspension on 12th December:-
http://www.lse.co.uk/share-regulatory-n ... Suspension


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