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Institutional private equity house EPIC has launched its first venture capital trust (VCT). With a fundraising target of £15 million, EPIC VCT will back buy-outs, provide development capital to established companies and fund turnarounds.

In a departure from the VCT norm, investors’ funds will not sit in cash until they are drawn down, but will be invested by EPIC in quoted, non-qualifying companies.

Duncan Palmer, investment manager at EPIC, says that 18 of the private equity firm’s investments over the past six years would have qualified as VCT investments under the rules introduced in the last Budget, which stipulate among other requirements that investee companies should have less than 50 employees.

Palmer adds: ‘Our funds were becoming too large for our smaller investments to have much overall impact, even when they were making excellent returns.

‘We decided that a VCT would be the ideal vehicle to allow us to continue investing in smaller companies.’

The VCT is targeting a dividend of 4p per year (or 3p for the first year). The fund manager’s performance fee is contingent on this dividend being paid.

EPIC’s previous VCT-qualifying investments include electrical retailer Ryness, packaging business Ex-pac and database management specialist Indicia. EPIC VCT will have no particular sector bias.

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