Having opened its two managed Venture Capital Trusts (VCTs) for non-prospectus top-up offers in early February, YFM Equity Partners (YFM) has announced that they are both now fully subscribed, ahead of schedule, achieving a further £14m of committed funds from returning investors.

The partner-led private equity firm which has offices in Leeds, Manchester, Birmingham and London, now has over £350m of funds under management, of which almost £185m is through British Smaller Companies VCT plc and British Smaller Companies VCT2 plc, which first listed on the stock exchange in 1996 and 2000 respectively. They comprise funds from more than 10,000 investors, mainly private individuals, who have each committed sums of between £3,000 and £200,000.

VCTs provide vital funding for dynamic young businesses across the UK. With two of the longest running VCTs, YFM has, over the years, supported the growth of dozens of emerging, innovative companies.

“Over the last four or five years, offers from our managed VCTs have proved very popular and it’s extremely pleasing to see this trend continuing with such a strong response to the latest round of VCT top-up fundraising – about £1.25m of funds a day were committed in the first few days of opening,” comments David Hall, managing director of YFM. “It’s testimony to the performance of our VCTs that we have received so much support from our existing investor base, with the fundraising fully subscribed so quickly.

“Interestingly, the amount invested by each shareholder is a lot less than is the common perception. For these offers shareholders on average invested less than £10,000 for each offer. This probably shows a number of things, certainly that smaller investors are recognising the consistently strong dividend streams provided by our managed VCTs, with last year an average yield of 7%, as well as the tax benefits VCTs deliver, and that VCT investment is perhaps not solely the preserve of the highest of high net worth individuals. The nature of our portfolio drives this performance and is also helping to encourage individuals to invest in developing, knowledge-intensive British SMEs.”

YFM has a strong focus and record within the digital and software sectors, for example, its VCT funds made the first PE investment into North West data transformation software company Matillion in 2016 with an initial £4m investment. The company has gone on to see exponential growth and last month completed a $100m series D fundraising with investors from Silicon Valley – one of the largest fundraisings by a Northern business in the last five years.

Hall continues: “Despite the disruption of last year, the PE landscape has remained buoyant. Having made a number of investments in the second half of 2020 and into 2021, there are lots of great opportunities to invest in smaller, innovative businesses, and, with clarity around Brexit and the easing of lockdown restrictions, we expect more opportunities to emerge as increasing numbers of businesses seek to raise capital.

“We brought forward this top-up fundraising to ensure that we have the liquidity to meet demand, and we now have £50m of funds in place to help grow and scale innovative, early stage businesses across the UK. The challenge will be keeping up with the pace of demand from the companies that are seeking to scale up.”

YFM has a portfolio of around 40 companies throughout the UK and its VCT managed funds typically invest around £3m to £10m per transaction.