23 ShareSoc members who are also members of the VCT investor group met on 26 February 2020 at the East India Club. We reviewed recent successes at Ventus, Albion, Oxford, Octopus and others , which collectively demonstrated that we can make an impact on VCT companies and in particular on the boards of VCT companies.
The following action points were agreed.
- Get a better profile, by producing a set of guidelines on performance fees and directors tenure, et cetera and marking all the VCTs against these guidelines. This can be used to issue press releases and get a campaign going with more momentum.
- Send a letter to all VCT chairmen highlighting our objectives and our recent successes and what we want them to do and warning them that if they do not follow our guidelines we will initiate action to bring them into line.
- Use the lemon fool VCT board as a source to fish for new members.
- Use a paid for twitter feed to expand the VCT group membership.
- Produce a survey , jointly with VCTs of their shareholders so as to get an industry view about the key issues in the VCT arena.
- Work with the Association of Investment Companies, 10% of their members are companies, who represents directors and operates a lobby group on their behalf. The Association of Investment Companies has a separate VCT lobby body and we need to get in touch with them.
- Work with the VCT Association (this is the top 10 investment houses) who influence and lobby government etcetera in relation to VCT issues. We should establish a link with them and at least 1 of our VCT group to be the person who is this key link.
- Guidance for what is good practice. We need to write down our guidance. This links into .1
- AGM and Investor Days brochure handout . We need to produce and take a brochure/ handout to give to potential new VCT group and ShareSoc members at AGMs and Investors Days (the latter tend to get more attendees). Not only is this a great idea but it is easy to implement.
- Article in Investors Chronicle. Possibly also the Daily Mail or FT money? We can give them an exclusive on our new charter for the VCT investor group. It is the right time. The sector has a lot of long service directors who are old, pale and stale. They have had it easy for too long. The rules for VCT’s have changed but the directors have not. It is the right time to change some of these directors. There’s a need for refreshing them and for more diversity please. The approach of choosing or selecting from ones old mates is no longer appropriate.
- Policeman role. In the VCT arena there is no equivalent to L&G, ISS, etcetera to hold companies to account. We could be the people who do this. We can start quite small with some basic tests against our guidelines. This will be part of our new charter.
- Tim Grattan’s performance fees analysis. This is an excellent piece of work which needs wider publicity. By publicising this, we will be demonstrating to new VCT members that we are giving them something back in exchange for joining the VCT investors group.
- Aggressive press releases. If we want more people then we need to get our attention and we can do this by having an aggressive set of press releases. Ideas which were suggested are
- too many old people in VCTs
- VCT fees are a disgrace and need to be improved
- We need to run some aggressive campaigns and ask those involved or who have shares to join ShareSoc as a member.
- New era. What are the implications of excess capital available to fund managers. It has been quite easy in the last few years to raise new capital. The reason for this is the changing pension rules which mean that VCTs are one of the few remaining tax efficient investments. In addition to having huge amounts of cash to invest, there may be fewer alternatives because of the newer restrictions for VCT investments.
- Percentage of cash by VCT analysis. We should do this analysis and issue a press release as it is easy to do and highlights some of the benefits of the VCT investor group. We could do this for all 62 VCTs or just a sample of 20 say.
- Fees charged on the cash element. A follow up, to 17, would be to analyse these in each VCT.
- Foresight may be a candidate for a campaign. They have a new director who comes from Jersey which seems rather odd for the company which is based in the UK. It must mean it is less than easy for him to get to board meetings. It is not at all clear why there’s any benefit of having a Jersey resident as a director and there must be loads of people in the UK who could do this role. In addition, Foresight had £16,000,000 of cash on the 30th of September and since has raised £30,000,000 extra . It seems to be raising more money than the company really needs. Also an issue about the fees it charges on this cash. Also it is potentially endangering the VCT rules by having so much cash. Also the returns to existing shareholders are diluted by the new shareholders. It is questionable whether the strategy of raising money is in the interests of the managers rather than those of the shareholders.
- Baronsmead 2. The director Townsend is also a director of Gresham House who are the fund manager. This looks like it could be a conflict – if so then we should be campaigning to get him removed.
- Baronsmead. The existing chairman has been there 22 years and there has been some criticism of him. At the AGM he was economical with the truth when he said he had been Chair for 6 years. Perhaps it is time to get some new blood.
- Volunteers. It was suggested that we need a small management group to coordinate VCT activities, but there might be a wider group of volunteers. It was explained that volunteers will volunteer if there are specific tasks that are available for them to do and that they can see that the task is time-limited. Many people do not want to make open-ended commitments and hence are reluctant to volunteer. We need to structure the tasks to make them attractive to volunteers.
- VCT directors fear ShareSoc. Robin Goodfellow highlighted that we have made significant progress in a number of VCTs recently and that all VCT directors are aware of what we have done. We will be able to create an innate feeling of fear if we approach other VCTs. Robin’s view is that many VCT directors are now in fear of ShareSoc and its members.
Please join the VCT Investor Group if you hold VCTs and are interested in our activities. Go to this link and scroll down to the end and fill in the form to join us. https://www.sharesoc.org/campaigns/vct-investors-group/
Note by Cliff Weight, 6 March 2020