Amati VCT
Amati VCT was launched in 2005 as the First State AIM VCT by Dr Paul Jourdan, whilst at First State Investment Management (UK) Limited. This VCT moved with Dr Jourdan to Noble Fund Managers in 2007, where Douglas Lawson became co-manager in 2008 and the name changed to Noble AIM VCT plc. On 17th October 2008 Noble AIM VCT plc acquired Noble Income and Growth VCT PLC via a scheme of arrangement. For each share in Noble Income and Growth VCT shareholders received 0.646 shares in Noble AIM VCT. Following the management team taking over Noble Fund Managers in 2010 the VCT changed its name to Amati VCT at its AGM on 2 July 2010. David Stevenson joined as a Fund Manager of Amati VCT in February 2012.
(Noble Income and Growth VCT PLC was launched in March 2002 as T&G AIM VCT PLC, which also issued "C" shares on 8 October 2003. The Company changed its name to Noble Income and Growth VCT PLC on 22 June 2005, and the "C" shares were converted to ordinary shares on 21 December 2005 with a conversion ratio of 1.136 ordinary shares per "C" share.)
A Brief Explanation of VCTs
Investors who subscribe for new shares in a VCT are currently entitled to income tax relief of 30% of the value of their investment, up to a maximum subscription of £200,000 in any one tax year. The relief can only be claimed against income tax actually paid, or due to be paid in the same tax year as the subscription, regardless of the rate at which the tax was paid. In addition, any dividends paid by the VCT are tax free, and disposals of the shares are also free of capital gains tax (and equally losses cannot be offset against other gains). VCTs, unlike investment trusts, are also allowed to pay dividends out of capital gains.
In exchange for these tax concessions the VCT is required to fund young companies in the UK, which in turn, should help to create jobs and commercialise some of the skills and intellectual property which the UK has been so good at creating. Specifically the rules VCTs must meet in this respect determine that they must invest 70% of new funds raised in 'Qualifying Holdings' before the third financial year end after the money was raised. The rules surrounding what constitutes a 'Qualifying Holding' have changed each year since 2006 and there is the potential here for much confusion amongst investors. We have set out below a summary of how the rules work, and how they have changed over the last few years. Because the Amati VCT raised most of its funds prior to April 2006 it is able to operate predominantly under the original set of rules, which gives it considerably greater scope for making investment into companies mature enough to justify an AIM listing than it would have if it were starting from scratch today. The manager is keen to preserve this benefit for the investors, and restricts the size of any new share issues so as to maintain it.
What Amati VCT strives to be
VCTs vary a great deal over how they aim to make their qualifying investments. Amati VCT invests almost exclusively in AIM-traded companies, and seeks to find those which can become substantial businesses in a reasonable time frame. VCTs vary even more in what they do with the 30% of funds raised that are not required to be invested in qualifying holdings. Amati VCT uses this 'non-qualifying' portion of the portfolio to make up the gaps left in the qualifying one. For example, it is very rare to be able to invest in natural resources companies in the qualifying portfolio because most such companies are excluded by the rules. It is also hard to find qualifying investments with significant exposure to the growth of Far Eastern economies which is such a feature of the current economic landscape. We use the non-qualifying section of the portfolio to fill in these gaps, making investments into London listed companies, either AIM or full list, to do so. The intention is to make the portfolio as a whole an attractive smaller companies fund, which makes investments in companies capitalised up to around £2bn, albeit with a strong bias towards companies capitalised at less than £50m.