The firm’s initial fundraising launched in September and was seeking to raise £38m, with an £8m target for the Kings Arms Yard VCT and £6m for each of its five other VCTs.
However, fundraising for one of the Albion VCTs focused on asset-backed investments was suspended in anticipation of changes to VCT rules subsequently announced by the government in November’s Budget.
The government increased the Enterprise Investment Scheme and VCT investment limit for knowledge-intensive companies to £10m, but cracked down on the use of lower risk schemes that take advantage of the investment vehicles’ tax benefits.
An Albion spokesperson said: “Following indications of the likely direction of the Patient Capital Review, Albion decided shortly after the fundraising was launched to suspend the £6m they had originally intended to raise for Albion VCT, which is focused on asset-based investments.”
Albion Capital said it now plans to focus on investing the money raised in technology-driven, high-growth companies, with an emphasis on digital healthcare, automation, digital security and data analytics.
The firm has expanded its presence in the technology sector in recent years, with investments including Black Swan Data, Egress, Panaseer and Oviva.
John Glencross, chief executive of EIS and VCT specialist Calculus Capital, said the Treasury has made it clear this is the “end of the road for tax-motivated, low-risk investments that are ‘capital preservation schemes’”.
Ben Yearsley, director at Shore Financial, explained each VCT has its own independent board and one of those boards changed its mind on raising money.
“Still, it’s been another good year for VCTs in terms of fundraising, driven by pension changes and crack down on more dubious schemes,” he added. “As long as performance continues, VCTs will continue to grow.”
VCTs thriving
Will Fraser-Allen, deputy managing partner at Albion Capital, said it has been a “transformative few months for the industry”.
“The government’s Patient Capital Review has recognised the value VCTs add to the economy through their support of ambitious smaller companies, but will now herald some important changes.
“The review will reshape the landscape for VCT investing and channel funding towards the most innovative growth companies. We see this as synonymous with technology and are excited about the range of opportunities in our pipeline which leverage tech to deliver novel solutions to real world business challenges.”
Annabel Brodie-Smith, communications director at the Association of Investment Companies(AIC), said the VCT industry is “thriving”.
She said: “We are having a very strong fundraising season which has been boosted by the chancellor’s endorsement of VCTs as a vital source of patient capital for early stage companies in the autumn Budget.
“With pension and other changes, investor demand is rising for access to the growth potential of some of the UK’s most exciting smaller companies, an attractive tax-free yield as well as the other tax benefits that VCTs can offer.”
