The Lemon Fool

I received an email from Computershare this morning concerning a Baronsmead Fund Raise - from which I (partially) quote:-

I would like to update you on some key information about the forthcoming fundraising for Baronsmead Second Venture Trust.
Fundraising Plans
The Board has announced that joint fundraising with Baronsmead Venture Trust plc will be launched in Autumn 2019. We can now confirm that the amount we are aiming to raise is £40m with a £10m over allotment facility in aggregate. I thought it was worthwhile to confirm the following key points to help you, if you are considering participating in this fundraising:
• I cannot yet confirm the exact date of the fundraising launch as it depends to some extent, on the timing of the sign off of the prospectus but we hope that it will be on or close to Thursday 3rd October.
• To ensure equality for all potential investors in the fundraising, the allocation will be based on a “first come, first served” basis across both existing and new shareholders.
• The fundraising will be announced on the Baronsmead website (http://www.baronsmeadvcts.co.uk) and will be emailed to those of you who have signed up to electronic communications.

£40m?

Wow.

Also changing its dividend policy as per yesterday's announcement.
https://investegate.co.uk/baronsmead-ve ... 00022978N/

The new guide level of 7% of NAV represents 5.3p rather than 6.5p under the previous policy. Not a huge surprise given recent events and the VCT rule changes.

I had a couple of letters yesterday with this information too. I wonder how the fund raise will go. Could the Baronsmead train be slowing up ?

B/mead account for about 25% of my VCT holdings and were consistent good performers for a long time. I think that the proportion of AIM stocks has been a drag over the past year - other pure AIM trusts (e.g. Amati) have fared worse still. Nonetheless I'm not convinced that B/mead have adapted to the new rules yet and am not taken with a move from a cash sum dividend target to one based on a % of NAV (which is subject to the ups and downs of AIM). On that basis I'm give this raise a miss and will anticipate putting into Albion and Northern if and when they raise --- possibly also Mobeus, though they've been much affected by the rule change.

I bought and have held Baronsmead 2 (BVT) since 2012 and have just looked at XIRR of cashflows to date - totting up the initial purchase, income tax rebate, dividends, and value at current price (72.5p), and projecting forward to Friday to include the next dividend - that comes to 15.0%. I am a little flush with cash this year and looking to reduce a painful tax bill, so may buy another tranche if I'm quick enough.

I am a shareholder in both Baronsmead Trusts with a reasonable sized holding in Baronsmead 2, initially purchased in 2000 and topped up 2-3 times since then.

The return on the initial 2000 investment has been phenomenal when taking into account the fact I received 60% tax relief at that time as I had a capital gain heldover in addition to the income tax relief.

So it has been a very stable and well run VCT house for many years.

That said, performance has stagnated in more recent years and there has been the recent change in ownership of the managing team.

Fortunately or unfortunately, I have absolutely no income tax to pay this year - the joy or fear of early retirement - so will not need to consider whether they would have received further investment from myself !

email timed at 9:02 this morning - the Baronsmead Offers are now open.
You can apply online, or by email or by post.
I'll think about it - but I'm not rushing as in previous years.

I received a standard form e-mail from Baronsmead's registrars today, confirming that my application had been successful. However, the e-mail also stated that allocations could be scaled back if the offers were oversubscribed. In case others have received a similar e-mail, this is just to say that that statement is incorrect. The offers were clearly stated to be on a first come, first served basis.

I have asked the registrars to amend the acknowledgement pronto. Not impressed.

Update. In the Prospectus T&Cs (as distinct from the Subscription Form, which is silent on the point), Baronsmead do reserve the right to scale back.I assume that they will not do so, but it is simply wrong to say that these offers are on a first come, first served basis and then to introduce this uncertainty, buried away in the small print.I am going to make that point to Baronsmead.

james188 wrote:Update. In the Prospectus T&Cs (as distinct from the Subscription Form, which is silent on the point), Baronsmead do reserve the right to scale back.I assume that they will not do so, but it is simply wrong to say that these offers are on a first come, first served basis and then to introduce this uncertainty, buried away in the small print.I am going to make that point to Baronsmead.

I wonder if this relates to past stampedes, where completed forms all arrived near-simultaneously. In such a circumstance there would need to be some sort of lottery - or a scaling down. Given recent performance and the change in management, I suspect there will be no stampede this time, and they will be able to close the offer in an orderly fashion when it fills up.
Baronsmead have handled this offer differently from before. To quote Wealth Club:-
Regrettably, we are unable to offer the Baronsmead VCTs.
The VCTs have structured their 2019/2020 fundraising offer in a way that facilitates only direct investment or investment through an adviser. No provision has been made for non-advisory brokers such as Wealth Club.
So there appears to be no way of checking on brokers' web sites to discover what fraction of their offer has been taken up.

interesting to see that its not available via WealthClub. But I see there is some good info on the ram capital site including tax efficient review report

https://ramcapital.co.uk/portfolio-item ... mead-vcts/

planning to do some research. Does anyone have a firm view on the quality of their offering?

relative to other VCTs, I am somewhat attracted to the quality of the companies they have in their top 10..but not too sure on the personnel involved and recent track record. I know Staffline was an issue for the NAV, I need to check on the performance of other companies they own

So far I have seen no RNS from Baronsmead concerning the fund raise. So it looks like there has been nothing like the purchase stampede of earlier years.

scotia wrote:So far I have seen no RNS from Baronsmead concerning the fund raise. So it looks like there has been nothing like the purchase stampede of earlier years.

I'm informed by IFA friend it's about £17m so far. So you're right.

The first share allotments have been made for the recent offer for subscription.

BVT 13,992,088 shares at 76.80 pence (c£10.75m)
BMD 11,596,119 shares at 78.90 pence (c£9.15m)

Hence the total as at 20 November is just under £20m, i.e. half-full ignoring the over-allotment facility.

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BVT/14316108.html
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BMD/14316109.html

I see the results are out and dire they are......(mea culpa re incompetence at being able to post links).

Completely coincidental with the fairly recent change in management ?????

Baronsmead had been an excellent VCT house over the last 20 years or so, however performance in recent years has been pedestrian and now a very poor set of results which will not fill anyone with confidence going forwards under the new management regime.

The unquoted portfolios appear to be chuntering along satisfactorily, whilst the shark filled waters of Aim investment have well and truly bitten them !

I agree that the results do not make happy reading. Staffline is the main (but not only) problem. That happened on the pre Gresham House watch. This tax year, I have invested enough to avoid dilution, but most of my VCT investment will be elsewhere.

thebarns wrote:The unquoted portfolios appear to be chuntering along satisfactorily, whilst the shark filled waters of Aim investment have well and truly bitten them !

Agreed!
I had a look at the AIM 100 chart on HL between 1/10/2018 and 30/9/2019 - the financial year of the latest Baronsmead reports. It appears to have dropped around 24%. Hence the problem - Baronsmead 1st (BVT) NAV down 10.3% and Baronsmead 2nd (BMD) NAV down 8.6 %, both before deductions of dividends.
I suspect their investment policy was heavily influenced by the meteoric rise of the AIM market from July 2016 to August 2018. Too good to last!

It may be the AIM that's down (and in mitigation, September 2018 was pretty-much top of the market), but Baronsmead this time has performed worse than the pure-blood AIM VCT sector.

Yes of course it's been good over the years, but this shows how even the best can stumble. And it's worse than just a bad year: when I sold some mainstream VCTs in the spring to raise funds towards the house purchase, Baronsmead was the only one without a decent liquid market: I was limited to selling 5000 of B1, while I had no problem selling bigger stakes in British Smaller, Northern and Octopus VCTs.

I'm not giving up on them, but I'm less happy than I was about their being my biggest VCT holding.

scotia wrote:I had a look at the AIM 100 chart on HL between 1/10/2018 and 30/9/2019 - the financial year of the latest Baronsmead reports. It appears to have dropped around 24%. Hence the problem - Baronsmead 1st (BVT) NAV down 10.3% and Baronsmead 2nd (BMD) NAV down 8.6 %, both before deductions of dividends.

UncleEbenezer wrote:It may be the AIM that's down (and in mitigation, September 2018 was pretty-much top of the market), but Baronsmead this time has performed worse than the pure-blood AIM VCT sector.

As evidenced by Unicorn, down by 6.6% in the year to September.