4th November 2009

Albion Ventures predict VCT market could double

Albion Ventures, one of the UK’s leading venture capital investors, predicts that the Venture Capital Trust market could double in size this tax year to £250-£300 million from £150 million in the tax year 2008/2009. Albion believes that VCTs have become more attractive due to a combination of the following factors:

• Comparatively greater tax benefits: VCTs, with 30% income tax relief, tax free income and no capital gains on disposal, have become more attractive for higher rate tax payers following reduced tax reliefs on pensions and prospective rises in income tax;


• Low bank lending: Many banks are still reluctant to lend to smaller business meaning investors like Albion that do not use bank finance with their investments are able to select from a wider and therefore more attractive pool of potential investments;


• Market timing: History shows that investing at a depressed point in the economic cycle can lead to strong returns.

Patrick Reeve, Managing Partner at Albion Ventures said: “Last year the VCT market was valued at £150 million. I think £250-300 million is a healthy estimate as the 2009 Budget worked in our favour with the negative changes to pensions and income tax. Smaller unquoted companies are actively seeking alternatives to bank investment since many banks are still reluctant to lend.”