Unicorn AIM VCT invitation to subscribers to raise £15m successful

Investors looking for elusive dividend income, tax-free and capital growth may find it - in time through the Unicorn AIM VCT, its managers claim.

 Unicorn AIM VCT

Unicorn AIM VCT (Unicorn AIM VCT) has raised £15m, through the issue of new ordinary shares.

The Unicorn team, led by Chris Hutchinson, is experienced in small cap investing: of the £1.4 billion of assets across a range of funds Unicorn currently manages, over £471m is specifically invested in AIM-listed companies.

Since launch in 2001, Unicorn AIM VCT has delivered strong total capital gains and a consistent income stream to shareholders. It has returned 61 pence per share to shareholders since the merger of the Company with Unicorn AIM VCT II plc on 9 March 2010.

Chris Hutchinson, lead manager of the Unicorn AIM VCT said: “Unicorn’s AIM-focused VCT has a long-established track record of delivering attractive and sustainable tax-free dividend income, while also generating meaningful capital gains for shareholders over the longer term. Despite the covid-19 pandemic and ongoing uncertainty surrounding Brexit, we remain confident that we will continue to find investment opportunities that, over time, are capable of delivering this important combination of tax-free dividend income and capital growth.”

Luke Barnett, vice president at corporate investment advisers MJ Hudson said: “Unicorn AIM VCT is now the largest AIM-focused VCT in the market, with a net asset value of almost £300 million, it is also the second largest VCT on the market. As a result, it brings with it the benefits of economies of scale and potentially lower fees to investors.

“However, as with any VCT, the manager must balance the needs of both existing and incoming investors. Fundraising at scale can put the VCT under risk of cash drag, placing the Manager under pressure to deploy. As such, we are encouraged by the relatively conservative size of the current raise at £15m (excluding any over-allotment), which equates to approximately 5% of the current net asset value.

“Due to the fact that all VCTs must invest in newly issued shares, the availability of deal flow will largely be dictated by market activity, with regard to IPOs and secondary placings on AIM. Through the course of 2019, new listings were particularly weak on AIM, largely as a result of Brexit headwinds, and they failed to meaningfully improve through 2020 as the covid-19 pandemic moved front and centre. However, according to the conversations which we have had with a number of AIM managers operating within this space, activity is starting to pick up again as Brexit uncertainty dissipates and developed economies introduce unprecedented fiscal and monetary stimulus measures. Should this hold true, it will provide a good level of deal flow and capacity for AIM VCT managers, such as Unicorn to deploy any capital raised.

“According to our own performance data, the Unicorn VCT ranks in the first quartile relative to other VCTs currently listed on the LSE, over both a three- and five-year period, which is encouraging. However, the third wave of the pandemic is gaining traction and while listed markets appear to have largely ignored this, AIM is not immune to market volatility and potential downside. Investors are reminded of the sharp sell-off on AIM seen in Q4 2018, and more recently at the start of the pandemic in March last year.

“As such, while Unicorn can demonstrate one of best performance track records, the NAV of the VCT is nonetheless susceptible to periods of downturn and lower levels of volatility. Further, we note that unlike many other VCTs on offer, there is no stated share buyback policy, which means investors may need to accept a reduction in return of between 10% and 15% should they chose to exit via the share buyback mechanism.”

Further reading: An AIM venture capital trust opportunity and VCT Guide

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