Our Current Offer
Pembroke are pleased to announce that we have launched a new share offer to raise up to £40 million across the 2019/20 and the 2020/21 tax years. Details of the offer and associated documents can be found in the downloadable Prospectus and Key Information Document.
I am pleased to announce that Pembroke VCT plc has launched a new share offer to raise up to £40 million. After raising over £75 million since 2012, Pembroke has invested £55 million in 40 companies. The Board is pleased with the performance to date and the continued progress of the portfolio. The additional cash will allow the Company to grow its existing portfolio of investments and take advantage of a healthy pipeline of prospective investment opportunities.
Existing portfolio of investments
New Investors will gain immediate access to a maturing portfolio of growing businesses and to a well-established dividend-paying VCT. These assets include high growth opportunities such as Plenish, Five Guys and ME+EM. Additionally, Pembroke intends to use the funds raised to make a number of follow-on investments in companies in which the Company has already invested – where further capital will accelerate their growth plans. Approximately 31% of the investments (by value) made to date have been into businesses that are now trading profitably at the operating profit level.
Following the UK’s vote in 2016 to leave the EU, the Manager has been closely monitoring the portfolio for any subsequent impact. Whilst there is still uncertainty around what the UK’s trading relationship with the EU will look like in a few years’ time, the portfolio companies should be mostly unaffected. Given they are UK based businesses and a number sell their products internationally, the majority have benefitted from the depreciation of Sterling. This should make both their products more attractive to potential customers and the portfolio companies themselves more attractive to potential buyers. The UK boasts a significant track record in the sectors in which the Company invests; this is not expected to change.
VCT regulatory changes
Changes to the VCT Rules in 2015 and 2018 restricted the types of companies that VCTs can invest in. Many VCT managers have been forced to develop new investment capabilities and hire new staff. Given the Company’s focus on providing development capital to high growth companies rather than ‘management buy-out’ transactions and mature businesses, the Board is confident that the Manager remains well placed to manage the Company and identify suitable investment opportunities. Neither the Company’s investment strategy nor the types of company it invests in has had to alter since these rule changes.
Investments made following the Finance Act 2018 are subject to a new risk-to-capital condition, which has two requirements, based on the views of a ‘reasonable’ person: i) does the company intend to grow and develop over the long term, and ii) is there the risk of a loss of capital to the investor of an amount greater than the net return? The Company believes its current portfolio and future pipeline meets these tests without difficulty, and will not need to make any meaningful changes to its investment strategy.
The Company’s objective remains the same; Pembroke provides Investors with access to a series of carefully researched investments focusing on its five key investment segments being; Wellness, Hospitality, Education, Apparel & Accessories and Media & Technology. Pembroke will continue to invest in a diversified portfolio of smaller unquoted companies. The objective is to generate significant returns, whilst enabling Investors to benefit from substantial tax advantages.
Pembroke seeks opportunities which are capable of significant organic growth and sustainable cash generation. A key feature of this strategy is an investment bias towards consumer-facing businesses which have an established brand or with the potential to develop their brand.
The B Ordinary Shares target an annual dividend of 3 pence per B Ordinary Share. Holders of B Ordinary Shares received a 3 pence dividend per B Ordinary Share on 27 September 2018, and it is proposed that a 3 pence dividend per B Ordinary Share will be paid to holders of B Ordinary Shares on 31 October 2019.
VCTs offer significant tax benefits over most investment products, including:
- income tax relief of 30% on the amount invested;
- dividend payments are tax free; and
- no capital gain arises when Shares are sold.
If you are not already, I hope you will join me as an Investor in Pembroke.
2 September 2019