Risks Specific to the VCTs
The VCT will invest in small, high risk companies that place an investor’s capital at risk. These qualifying companies may have volatile share prices and the investments may be difficult to realise. They may be overly reliant on a few large customers and have less financial resilience. They may also have weak or negative cash flow and less management resource.
Changes in legislation may adversely affect the company’s status as a VCT and its ability to meet the investment objectives and/or reduce the level of achievable return.
Risks to the Tax Reliefs
There can be no guarantee that the VCT will meet its objectives or that suitable investment opportunities will be identified. A failure to maintain the qualifying status could result in the VCT losing the tax reliefs previously obtained, resulting in adverse tax consequences for investors. Investors who sell their VCT shares before the fifth anniversary of the share issue are likely to have to repay their income tax relief. Therefore, an investment in a VCT should be seen as a long term investment. The tax reliefs will depend on an investor’s personal circumstances and may be subject to future changes.
Risks that relate to VCT Shares
VCT shares can be difficult to sell as there can be little demand for VCT shares in the secondary market, furthermore the share price is unlikely to reflect the net asset value per share. The value of shares and the income from them can fall as well as rise. Investors may not get back the full amount invested. The VCT operates a credible share buyback policy but the Directors reserve the right to amend or suspend the application of the buyback policy. Dividend distributions are subject to performance and other factors and cannot be guaranteed. The past performance of the VCT and its underlying investments is no indicator of future performance. Investors may not get back the amount they originally invested.
On 19 September 2018, Hargreave Hale AIM VCT plc (the “Company”) launched an offer for subscription (the "Offer") of ordinary shares of 1p each in the capital of the Company to raise up to £20 million together with an over-allotment facility of up to a further £10 million (the "Over-allotment Facility"). Full details of the Offer are contained in a prospectus (the “Prospectus"), which was published by the Company on 19 September 2018.
On 28 November 2018 the Company announced that it had received valid applications in excess of £20 million and, accordingly, the directors of the Company announced that they intended to utilise £5 million of the available £10 million Over-allotment Facility.
The Company now announces that it has received valid applications in respect of the full £5 million of the Over-allotment Facility and, therefore, the directors intend to close the Offer for subscription to further applications at this time.
However, the Company reserves the right to utilise the £5 million remainder of the Over-allotment Facility at the discretion of the directors before the close of the Offer under the Prospectus. The board of the Company will update the market in due course.