Guinness VCT

The Guinness VCT is a new VCT managed by the same team that runs the longstanding Guinness EIS and Guinness AIM EIS funds. 

Since 2010, the team has raised and invested over £300 million into around 200 EIS- and VCT-qualifying companies, including legacy and newer growth capital investments. It has backed some of the UK’s fastest-growing startups, including Popsa, Thriva, Distributed and Cera Care, and achieved several successful exits.

The VCT takes a similar approach to Guinness’s EIS funds. It doesn’t target any particular sector, but primarily invests in more established private companies, often with over £1 million of annual revenue. Once mature, the fund may also invest in AIM-quoted businesses where it sees opportunities. 

The VCT was admitted to the London Stock Exchange in April 2023. It has net assets of £6.7 million, of which £4.3 million is invested into 12 companies (March 2024), including seven new and one follow-on investment made in the preceding six months.

The VCT hopes to pay annual dividends of 5% of NAV but dividend payments are unlikely to start before 2026 at the earliest. Dividends are variable and not guaranteed.

• Seeking to raise up to £10 million, with a £5 million overallotment facility 
  
• Targets annual dividends of 5% of NAV from 2026 – not guaranteed 
• Available for the 2024/25 and 2025/26 tax years
  
• Minimum investment £5,000 – you can apply online 
• Deadline: 31 October 2024 for 2% early bird saving

The manager

Guinness Global Investors (a trading name of Guinness Asset Management) was founded in 2003 by industry stalwart Tim Guinness. Tim has over 35 years of investment experience. He co-founded and ran Guinness Flight Global Asset Management until its acquisition by Investec in 1998. He then led Investec’s Global Energy Fund before launching Guinness Global Investors.

In total, Guinness Global Investors manages over £7 billion across its equity funds, EIS funds, VCT and an IHT fund (July 2024). 

The 16-strong Guinness Ventures team is led by Shane Gallwey, a CFA Charterholder, and includes a total of 11 investment professionals. 

Guinness Ventures has raised and invested over £300 million into around 200 EIS and VCT-qualifying companies since 2010.

Investment strategy

The Guinness VCT blends the investment approaches taken by Guinness’s EIS and AIM EIS funds. 

Due to the number of opportunities the team reviews, Guinness employs a quick filtering process to ensure those it sees as the most promising receive the most attention. The investment team pitches new deals to the investment committee daily, to quickly progress the strongest candidates into the next stage of assessment. 

Approximately 80-90% of the VCT’s investments are expected to be into private companies, with 10-20% in AIM-quoted companies once the portfolio has matured. 

Private companies

Guinness looks for companies with proven technology or services requiring scale-up capital. The VCT targets young businesses with good growth potential as well as strong balance sheets and cash flows. Companies should preferably be generating revenues of £1 million or more.

Over the previous three tax years to 2023/2024, companies backed by the Guinness EIS fund had average annual revenues at the point of investment of £5.4 million. 

AIM-quoted companies 

Guinness looks for companies that operate within a growing sector, with a sound business plan, and which are not reliant on a small customer base. It also seeks experienced management teams, whose incentives are aligned with shareholders’ interests and with a demonstrable regard for effective corporate governance.

Current portfolio overview

This is a new VCT, which aims to build a portfolio of growth capital investments. 

Since listing in April 2023 the VCT has invested £4.2 million into a portfolio of 12 companies. That includes £2.6 million in the six months to March 2024, invested across seven new investments and one follow-on investment into BBC Maestro (detailed below). The resulting portfolio is valued at £4.3 million, with £2.4 million held in cash or cash equivalents.

Post year end (31 March 2024) the company made two further investments, a £200,000 investment into Obrizum, an education technology company and a £350,000 investment into Shotscope, a golf technology business.

BBC Maestro – Largest investment

BBC Maestro offers masterclass courses with some of the most experienced creators in the world – from learning to cook with Marco Pierre White to launching a business with Peter Jones CBE.

Founded in 2019 as a partnership with BBC Studios, the platform now offers almost 200 hours of content, from around 40 ‘maestros’. Users can buy access to individual courses or pay an annual subscription for unlimited access.

In January 2024, BBC Maestro partnered with Spafax, which provides in-flight entertainment to airlines including British Airways.

Guinness first invested in April 2023 via the Guinness Ventures VCT and its EIS fund. The Guinness VCT provided further funding the in the second half of the year, taking its total investment to £600,000.

Holibob – recent investment

Holibob has created a B2B platform that helps connect travellers with the perfect experiences to complement their trips.

For instance, using Holibob an airline or a hotel booking website could offer travellers a selection of experiences in their chosen destinations as soon as they’ve booked their flight or hotel, and generate extra revenue in the process. At the same time, the platform makes it easier for travellers to find and book relevant experiences for their trips.

The business appears to be gaining traction. In 2022, it secured $12 million of funding to develop its technology and in 2023 reported a 152% increase in booking value through its platform. Holibob has also partnered with several well-known travel brands, from global travel search engine KAYAK to Amadeus, which provides ticketing software for airlines and other travel operators.

In March 2024, the Guinness VCT invested £320,000 into the business as an extension to the $12 million investment round. 

Exit track record

As this is a new VCT there is no track record. However, the VCT plans to invest in the same type of companies as the Guinness EIS fund, which has had several high-profile exits including ContentCal (4.3x realised return) and Pasta Evangelists (3.0x realised return). Past performance is not a guide to the future. 

An example of failure is MyHomeGroup, an online estate agent that sought to offer the benefits of a high-street estate agent without the associated costs. The company was impacted by a slowdown in property transactions in late 2019 and early 2020, and then by the lockdown. As a result, MyHomeGroup went into administration on 17 April 2020, with no residual value left to shareholders. 

Performance and dividends

The VCT is targeting an annual dividend of 5% of NAV from 2026. As this is a new VCT, there is no performance track record. 

However, it will be managed by the same team responsible for the Guinness EIS fund. 

Since adopting its growth capital strategy in 2018, the Guinness EIS fund has invested £172.5 million into 51 companies (June 2024). The fund has found some early success: it has achieved three full and three partial exits, generating total proceeds of £32.9 million, whilst the remaining portfolio shows an unrealised value of £216.0 million. Past performance is not a guide to the future. See the track record for Guinness EIS and Guinness AIM EIS for more details. Past performance is not a guide to the future.

Guinness EIS – performance per £100 invested in each tax year

Guinness AIM EIS – performance per £100 invested in each tax year

Dividend Reinvestment Scheme

The VCT does not expect to pay a dividend until at least 2026 – not guaranteed. 

Share buybacks

The VCT plans to operate a policy of purchasing their own shares as they become available in the market at a discount of approximately 5% to the latest published NAV. However, there is no guarantee that the company will buy back shares. The discount to NAV could also be greater or less than 5%.

Risks: important

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice. 

VCTs are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

To retain the tax benefits, VCTs should be held for at least five years. If you sell VCT shares and reinvest in new shares of the same VCT (including any mergers) within six months, tax relief can be restricted. Tax rules can change and benefits depend on circumstances.

As this is a new VCT it will take time to build a portfolio of investments, during this time the trust is likely to be more concentrated and no dividend payments are expected until at least 2026. If the raise is smaller than expected, costs may have a larger impact than intended. Equally, the portfolio may initially be less diverse than anticipated.

Charges and savings 

A summary of the main charges and savings is shown below. The net initial charge shown includes the Wealth Club saving and any early bird discount. The investment may have additional charges and expenses: please see the provider documents including the Key Information Document for more details, offer price and share allotment calculation methodology.

Please note, capacity – for the offer or any early bird savings – can be reached early, and we may not be notified of this by the VCT in real time.

Annual rebate when you invest through Wealth Club

The Guinness VCT includes an annual rebate for Wealth Club investors, payable for the first three years. 

This is a rebate of our renewal commission and should be equivalent to a percentage (shown in the table above) of the Net Asset Value of the Offer Shares issued to you when you invest. Terms and conditions apply.

Deadlines 

• Deadline for 2% early bird saving: 31 October 2024
• Deadline for 1.75% early bird saving: 30 November 2024
• Deadline for 1.50% early bird saving: 31 December 2024
• Deadline for 1.25% early bird saving: 31 January 2025
• Deadline for 0.25% early bird saving: 28 February 2025
• Deadline for final allotment in the 2024/25 tax year: 4 April 2025 (noon) 
• Deadline for final allotment in the 2025/26 tax year: 27 June 2025 (3pm)

Our view

While the Guinness VCT is a new fund, it is overseen by a highly experienced EIS manager. The Guinness Ventures team has a strong track record of identifying and investing in fast-growing companies that have demonstrated an ability to generate revenues, have strong financials and sound business models.

The investment team is well resourced, and Guinness has raised and invested over £300 million into EIS and VCT-qualifying companies. Its existing EIS portfolio includes some of the UK’s fastest-growing small businesses. While these will not feature in the VCT at launch, there may be an opportunity to participate in later follow-on deals.

All this could make Guinness a desirable destination for entrepreneurs seeking growth capital. That’s reflected in the VCT's first year, with investments made into twelve business across a variety of sectors. There has been a positive uplift in valuation from one business, PlotBox, with all other investments held at cost. 

Investors should note that, the VCT will not be paying dividends for some years. Despite fairly rapid deployment the portfolio will likely remain concentrated in the early years, potentially making it a riskier investment. Nonetheless, this may be an attractive consideration to complement an existing VCT portfolio.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.