Octopus Ventures to raise the largest ever venture capital trust as demand for tax-efficient investments rockets

 
Lucy White
Octopus kites fly over Reservoir State P
Changes to government policy are driving people with cash to invest in VCTs (Source: Getty)

Octopus Ventures' Titan venture capital trust (VCT) has announced it intends to raise up to £200m, which would make it the largest ever VCT.

The tax-efficient investment vehicle is targeting £120m, with an over-allotment facility of £80m which can be exercised if the trust's board agrees it would be appropriate.

The record fundraise is driven by what Octopus sees as a thriving UK entrepreneurial scene, and booming demand from high-net-worth investors.

“The opportunity to make new investments is fantastic. The UK ecosystem is thriving at the moment,” said Jo Oliver, investment director at Octopus Ventures.

“It is by far the most active entrepreneurial ecosystem in Europe, with over 50 per cent more deals done in the UK than in any other European country.”

Added to that, a number of changes to government policy are driving people with cash to invest in VCTs.

Annual and lifetime pension caps mean many people have more money to spare, while changes to the buy-to-let marketplace are making VCTs look more attractive as a source of yield.

Alex Davies, founder of high-net-worth online investment platform Wealth Club, added: "This latest fundraise gives investors the opportunity to support some of the UK's fastest growing companies, and in doing so they benefit from a number of attractive tax incentives if the shares are held for at least five years, including 30 per cent up-front tax relief, tax-free dividends and tax-free growth.”

Read more: Tighter pension rules and high taxes are pushing investors into venture capital trusts – but can supply keep up?

Added to that, some of the new money will be ploughed into existing Octopus portfolio companies – and the firm has a strong record.

Its previous investments have included SwiftKey, which was sold to Microsoft last year, Magic Pony, which was bought by Twitter, and Secret Escapes.

Signs from last year indicate that Titan would have no problem selling new shares to raise the required capital.

According to Oliver, a number of funds which raised last year had to close their fundraising early, such was the investor demand.

Read more: Don't forget the venture capitalists! The importance of VCTs in driving UK small business growth