Fund manager Octopus Investments has launched two more venture capital trusts (VCT) that will invest predominantly in solar companies.
Octopus VCT 3 and 4 is a twin-structured VCT, which has been launched to take advantage of the ‘limited window’ now open that enables investors to receive tax relief for solar investments through the VCT and Enterprise Investment Schemes (EIS).
The trusts will invest in companies that receive revenue from the government’s Clean Energy Cashback Scheme, which pays a subsidy that is known as a Feed-in Tariff (FIT) for clean energy produced and fed back to the national grid.
The scheme was changed earlier this year after concerns were raised that large-scale solar farms were taking advantage of the tariffs. Under the FIT changes, after April 2012 solar companies will no longer be classed as qualifying investments into VCTs and the EIS.
Octopus says the two new VCTs will aim to generate an annual dividend stream of at least 5p a year, starting in 2013, and will operate a zero discount buyback policy throughout the life of the VCTs.
Octopus managing director Paul Latham comments, ‘The key benefit of this structure is that it is a ‘limited life’ VCT but also a ‘flexible life’ vehicle for those looking for more long-term tax-free dividends. As most VCTs offer a buyback facility with a significant discount to net asset value, we believe the zero discount buyback policy will be seen as a great incentive for investors.’
