Over the past few years Maven Capital Partners has undergone a significant evolution from a firm that focused on generating private equity opportunities for its six VCTs, into a more varied private equity house offering co-investment opportunities for HNWs and Family Offices, boasting a fast-growing property private equity investment arm and winning the mandate to be the adviser on a range of high-profile regional debt and equity funding vehicles.
Since Maven was formed in 2009, both the asset management industry and the firm itself, have undergone significant changes. The persistent low-yield environment, alongside technological innovation, increasing investor sophistication and greater competition to provide best-in-class investor returns, have been the key drivers behind these changes. In that time Maven has established itself as one of the leading investors in the UK SME sector, with a key differentiator being its ability to invest in the regions outside London.
In its core VCT business, Maven has consistently generated positive returns for investors. For instance its Maven VCT 3 and Maven VCT 4 have recorded increases in NAV Total Return per share for eight consecutive years, including 14 tax-free dividends paid between those VCTs since April 2015. Over the past five financial years Maven VCT 3 and 4 have generated average annual dividend yields of 10.9% and 8.7% respectively for shareholders, when taking account of the 30% initial tax relief available for investment in new VCT shares.
On Maven’s most recent VCT exit, earlier this month, from Crawford Scientific, a leading supplier of chromatography products and analytical services, which was acquired by Limerston Capital Partners, the realisation has delivered a 4.7x money multiple return and a 70% IRR for Maven clients. Last month Maven also announced a VCT offer to raise up to £30 million (with an over-allotment facility for up to a further £10 million), to take advantage of the strong pipeline of new transactions which is in evidence across the Maven regional office network.
VCTs enable investors to enjoy significant tax benefits by putting their money into entrepreneurial UK businesses, which play a fundamental role in the strength of the UK economy, and participating in their growth. VCTs have some £3.5 billion of assets under management and recent HMRC research reveals notable increases in employee numbers within VCT backed companies, with an increase of 24 employees per company where an investment had been made less than five years previously, rising to 103 per company in cases where investment had been committed for over five years.
Supplementing its support for SMEs through VCTs, Maven also now manages a number of debt and equity mandates including Finance Durham, MEIF Maven Debt Finance (part of the Midlands Engine Investment Fund), the Greater Manchester Loan Fund, NPIF Maven Equity Finance (part of the Northern Powerhouse Investment Fund) and the Scottish Loan Fund. Our work with these funds enables us to provide flexible finance solutions to entrepreneurial SMEs to support their growth and help them to reach their potential, as well as injecting money into regional economies and creating new jobs.
Maven has a hands on approach to SME investment. We establish a close working relationship with the management team, which enables us to support them successfully in meeting their strategic goals, including shaping their market proposition and senior team, and with the ultimate aim of creating value for all stakeholders. This involves providing advice at every stage of a business’s lifecycle taking them through expansion, securing further funding and eventually to an exit through a sale, typically to a trade or private equity buyer, or an IPO.
One of the key developments in private equity in the past few years has been the rise of the deal by deal investment model, whereby institutions and professional investors co-invest alongside a general partner such as Maven in selected transactions. This strategy facilitates a bespoke approach to portfolio construction, and is a good fit with the increasing prevalence off the self-directed investor, which we at Maven expect to continue as younger generations accumulate wealth and favour a more tailored attitude to investing. This [deal by deal/selective] approach to co-investment gives investors more control over their capital commitments, with the ability to create bespoke portfolios reflecting their individual objectives and sector preferences, and can offer more favourable fee structures than investing in traditional PE and hedge funds.
As it becomes more challenging to generate high yields from traditional investments, an increasing number of co-investment vehicles have emerged for alternative assets and are likely to be become a core element of in the portfolios of many Family Offices and HNWI portfolios. Commercial property is a very popular focus for such co-investments. We have witnessed increasing investor appetite for hotel developments and student accommodation. This popularity can largely be attributed to the stable income streams and above inflation rental growth boasted by these assets classes.
As well funding the expansion of our investees, Maven itself is continuing to grow. In the past year we have made eight new key appointments to our national investment operation, and opened new offices in Bristol, Durham, Newcastle and Preston, further strengthening the team’s ability to invest in SMEs across the UK and work closely with those businesses to achieve their growth plans.
As we wait for the post-Brexit dust to settle to see what the UK’s international trading relationships will look like once we have left the EU, one thing is certain: British growth businesses will be a vital cornerstone of the UK economy whatever the outcome, and at Maven we aim to give them all the support we can to realise their full potential.
Andrew Ferguson is a partner at Maven Capital Partners (pictured)