Pathway One VCT looks to raise Â£5m

10 December 2001

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The Pathway One VCT is seeking Â£5.05m from retail investors through the offer for subscription of 20,200,000 ordinary shares at 25p each, with a minimum individual subscription of Â£2,500 and multiples of Â£500 payable thereafter. A minimum floor of 4,200,000 ordinary shares at 25p per share (Â£1.05m) has been set, which will provide the VCT with Â£140,000 for expenses and commission, and working capital requirements of Â£860,000. The directors of the company have undertaken to invest Â£430,000 of which Â£50,000 has already been invested during the process of company formation.

In relation to fees, there is a front-end fee of Â£80,000 in respect of stock exchange fees and advisorsâ€™ remuneration. Additionally, the company has agreed to issue warrants to Ruegg & Co (placing agents) and to Beaumont Cornish Ltd (sponsors) enabling those two firms to subscribe to ordinary shares at the offer price at any time within the date of admission. The number of shares covered by the adviser warrants will be 5% of the issued share capital of the company after the issue of those â€˜adviser sharesâ€™. Additionally, the company has agreed to pay Ruegg & Co a commission of 3% of all funds raised in relation to the offer. Management fees will run at 3% per annum on a NAV basis; performance related incentives take the form of â€˜performance warrantsâ€™.

Investments

The VCT will invest in expansion-stage companies, pre-IPO companies and some OFEX or AIM listed companies. In addition to the standard criteria, the VCT will invest in companies that have the potential for achieving an exit within three years. Although Pathway One will not have a specific sector focus, not more than 20% of the VCTâ€™s investments will be to property companies. Commitments made to investee companies will be in the Â£100,000 to Â£500,000 range with larger investments sometimes considered, although none of the VCTâ€™s investments will represent more than 15% by value of its total investments. In co-investment and syndication situations, the directors of Pathway One are happy for the company to either lead a round or to participate. In either such circumstance, syndication fees will not be charged by the VCT. Equity arrangement fees of 5% will be charged to the client company, and these would include any due diligence fees that would have been paid for in the first instance by the VCT; abort fees will be borne by the VCT. In relation to directorâ€™s fees, it is likely that these will find their way back into the VCT, although this has not been finalised.

People

Pathway One VCT is governed by five directors. Norman Riddell (chairman) has over 30 years experience in investment management, Richard Henstock (managing director) has a background in the brewing and biochemistry sector. Gordon Arbib (director) is the former chairman and managing director of Multicore Solders Limited from 1974 to 2000. Philip Lovegrove (director) has been involved in asset management, corporate finance and corporate recoveries for over 40 years and from 1984-7 he was a director of Gartmore Anthony Torrance (director) was appointed a Sloan Fellow of the London Business School in 1973. He has extensive experience in running investment management companies, organising company turnarounds and in managing UK authorised unit trusts. Philip Harris has extensive experience of industrial manufacturing and service businesses in technology companies, and has been appointed COO.