Octopus Investments, the largest provider of venture capital trusts (VCTs) in the UK, has announced a £20 million joint fundraise for its two alternative investment market (AIM) VCTs.

The VCTs provide investors with access to a wide range of AIM listed growth companies across a diverse range of sectors, from building materials and pharmaceuticals to software development and online fashion. The portfolios consist of approximately 75 companies, which aim to provide investors with long term growth alongside income through established dividend policies. 

The latest fundraising offers investors the opportunity to invest in both the Octopus AIM VCT plc (AIM VCT) and Octopus AIM VCT 2 plc (AIM VCT 2), which target a 5 percent tax free dividend yield every year.

Investors have the option to split their investment 60-40 between AIM VCT and AIM VCT 2, or to place 100 percent of an investment into either VCT. The minimum investment is £5,000.

The new share offer for AIM VCT and AIM VCT 2 is open until April 5 for the 2019-2020 tax year, and 29 November 2020 for the 2020/2021 tax year. It will close earlier if it becomes fully subscribed. In the previous tax year, both AIM VCTs filled within two months of opening.

Richard Power, head of smaller companies at Octopus Investments, said: “Although the number of companies floating on public markets has been affected by the recent market backdrop, AIM has successfully raised over £3 billion in the year to 31 October 2019. AIM remains the venue of choice for ambitious growth companies looking for access to capital to further develop their business in public markets. Our team has tremendous depth of experience and we will be looking to find those companies that we believe to have a significant growth opportunity ahead.”

Paul Latham, managing director of Octopus Investments, added: “By providing access to the growth potential of smaller companies in a highly tax efficient manner, AIM VCTs offer a unique investment proposition and are increasingly being used to complement retirement plans. Demand continues to be driven largely by the reduction in the pension lifetime allowance and recent changes to the tax regime for buy-to-let, with more people now looking for complementary tax-efficient investments such as VCTs.”

Commenting on investor demand, he concluded: “As a result, we expect VCT demand from financial advisers and investors to remain consistently high. What’s different this year is that some of the more popular VCTs are fundraising less. This is likely to they fill more quickly.”