Friends Ivory & Sime launches new Technology VCT

08 October 2001

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Friends Ivory & Sime (FIS) has announced the launch of a new Venture Capital Trust, ISIS Technology VCT plc. The VCT was launched on 1 October and is FISâ€™s sixth since 1995. The vehicle proposes to raise up to Â£25m through the issue of shares at an initial offer price of Â£1 each. It is obliged to raise a minimum of Â£3m before it can start investing. The minimum investment in the ISIS Technology VCT is Â£3000 with a maximum investment of Â£100,000 in each tax year. The closing dates are noon on 2 April 2002 for the 2001/2002 tax year (or earlier on full subscription) and noon on 31 May 2002 for the 2002/2003 tax year (or earlier on full subscription). There is an annual management fee of 2% of net assets. Annual running costs are capped at 3.5% of net assets and the annual performance fee is 20% of cash distributions made to shareholders, to be paid once cash distributions exceed 25% of initial subscriptions. FIS is using Bell Lawrie White as a placing agent but subscribers can also invest through an IFA.

As regards raising money for the VCT, FIS are not expecting an easy ride. With its focus on technology the ISIS Technology VCT may seem to many bruised investors to be the last thing they want to put money into at the moment. As John Yule, ISIS retail sales director admits: â€˜Technology is clearly not a four-letter word, but in the minds of some investors it is just as offensive. The main reason for these high emotions is that many investors bought into the top of the â€œdot-comâ€ bubble in the early part of 2000â€™. However the subsequent pricking of the â€œdot-comâ€ bubble is, argue Stephen Grant and Glen Nimmo â€“ the managers of the ISIS Technology VCT, exactly the reason why now is the right time to invest in technology. They believe that the recent drop in the price of technology shares is as exaggerated as the over-pricing was in the first quarter of 2000, which means that technology companies are currently being grossly undervalued. FIS expect to see a recovery take place in the technology sector over time, bringing with it a nice return on any investments made now. Stephen Grant offers one central argument to support his forecast of economic recovery in the technology sector: â€˜The rise of the internet has increased the information available to buyers and sellers of many products to the extent that a companyâ€™s competitive advantage can only reside in its product. Technology is important because it has the ability to give products competitive advantageâ€.

Investments

ISIS Technology VCT will be invested over a period of three years. FIS are looking to invest between Â£300,000 to Â£1m in AIM-listed and established unquoted technology companies â€“ specifically companies dealing in software and IP. The VCT is targeting a portfolio of 40 companies for an investment duration of three to four years.

People

Stephen Grant and Glen Nimmo of FIS are ISIS Technology VCT managers. JohnYule of FIS is the ISIS retails sales director.