Small Cap Awards Nominee Profiles: Seneca Growth Capital VCT

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Small Cap Awards Nominee Profiles: Seneca Growth Capital VCT

As we approach the Small Cap Awards, due to take place on 25th June, Master Investor profiles some of the companies shortlisted. Seneca Growth Capital VCT has been shortlisted for the VCT Manager of the Year award.

  1. Please provide a brief description of the fund

The VCT is managed by Seneca Partners Limited, an experienced growth capital investor with a broad yet complementary skillset and a strong track record in EIS investing. The VCT has a generalist investment strategy, targeting both private and AIM quoted companies and focusing on backing well-established businesses with strong management teams. Investors also benefit from Seneca’s strong regional presence and deal flow, typically underserved by the wider VCT market.

The VCT launched its initial B Share offer in August 2018. Since then, the VCT has raised over 7m of funds, invested in a diverse portfolio of 9 companies, secured three profitable full and partial exits and paid dividends totalling 4.5p.

  1. 2019/20 was clearly a strong year for the fund, to what do you attribute your success?

The VCT has now made 9 investments into a broad mix of companies across 5 different sectors as part of a balanced return strategy for investors. The Company has paid 3 interim dividends in the same period through the B share pool. Since the start of ‘lock-down’, the Company was able to maximize returns for investors in our latest VCT investment, Genedrive plc, delivering a 2x money multiple for the VCT which added to the profit the VCT had already crystallized when it partially exited two other investments during the last 12 months.

Since launch of the B share offer in August 2018, Seneca have delivered against the strategy and the VCT now has a solid platform and track record from which to launch our third prospectus in August this year. The impact of COVID-19 has varied across our portfolio of companies with some real beneficiaries and whilst we took the decision to apply provisions against the carrying value of some of our private portfolio companies reducing the NAV per B share by 12%, the portfolio value recovered quickly to broadly in line with its pre-Covid NAV, demonstrating the strength and resilience of the diversified portfolio built to date.

The success has been built on Seneca’s track record in the SME landscape, with the Seneca group of companies that incorporates advisory, lending and equity investment expertise, and benefitting from a strong network of advisors and introducers who can add significant and genuine value across the portfolio.

  1. How would you characterise the long-term drivers for the fund?

The VCT’s investment objective to provide shareholders with an attractive income and capital return by investing its funds in a portfolio of both unquoted and AIM/NEX quoted UK companies which meet the relevant criteria under the VCT rules across varied sectors underpins the long-term drivers of the trust. The long term value and prospects will be delivered through partnering with and investing in well managed businesses with strong leadership that can demonstrate established and proven concepts and are seeking an injection of growth capital to support their continued development.

Seneca, as the Investment Manager, prides itself on investing in the regions, with a track record for focusing on value, with 67% of general investments based in the North and 13% based in other regions outside of London. We believe that the last 12 months, and particularly the start of 2020, has cast a positive trajectory for the VCT, entering the 20/21 year with a portfolio that is both solid and resilient, but also exciting and disruptive across a wide range of sectors.

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