The funds ProVen VCT and ProVen Growth & Income VCT, which are managed by venture firm Beringea, have exited their stakes in Saffron Digital, a developer of video delivery platforms, the firm announced. HTC Corp., a designer of smart phones, bought the company for 30 million pounds ($48 million). With the deal, the funds saw a multiple of 5.8 times the cost of the original investment, generating an IRR of 65%.
Funds ProVen VCT and ProVen Growth & Income VCT (PGI VCT), managed by venture firm Beringea LLP, have sold their stake in Saffron Digital, a developer of video delivery platforms, for a multiple of 5.8 times the cost of the original investment, generating an IRR of 65%.
The ProVen VCTs invested GBP1.15 million in Saffron Digital in 2007. The company was sold to the HTC Corporation, a global designer of smartphones listed on the Taiwanese Stock Exchange, for GBP30 million on 7 February 2011.
The sale of Saffron is another in a series of successful exits by the ProVen VCTs from companies in the digital media sector. Previous investments in the sector include Mergermarket, which realised a return of 14 times the original investment when it was sold to the Financial Times, and iLG Digital, which delivered an IRR of 115%.
Trevor Hope, Chief Investment Officer of Beringea, the manager of the ProVen VCTs, commented:
“The success of Saffron demonstrates what a digital media company in the UK can achieve when a dedicated, highly-skilled management team is able to draw on the support of experienced and knowledgeable investors.”
Stuart Veale, Managing Partner of Beringea, added:
“This is another example of the ProVen VCTs delivering outstanding results for shareholders. With an established portfolio of investments in both ProVen VCTs’ and PGI VCT’s ordinary share classes, we are expecting several more profitable disposals over the next couple of years.”
ProVen Growth & Income VCT’s original ordinary shares have the second best performance since launch of all VCT launches. Investors in the original share issue in 2001 have received total tax free dividends of 146.9p, an average of 14.7p per year. With the tax benefits available to VCT investors this equates to an average annual yield of 24.5% p.a. for a 40% taxpayer. The total return from launch is 193.7p, which is equivalent to an annual rate of return of 14% p.a.
This compares to the average annual return on the FTSE All-Share index over the same period (with dividends reinvested) of 3.9% p.a. Both PGI VCT’s and ProVen VCT’s original ordinary shares are the best performing VCT issues of their respective launch years.
The initial proceeds from the sale of Saffron represent profits of 11.4p per new ordinary share in PGI VCT and 7.8p per ordinary share in ProVen VCT, based on the number of shares in issue on 7 February 2011. As both VCTs have a policy of distributing realised profits to shareholders, it is likely that the disposal of Saffron will give rise to dividends to the VCTs’ shareholders in due course.
ProVen Growth and Income VCT and ProVen VCT are both open for new investment. PGI VCT is seeking to raise GBP15m through an offer for new ordinary shares and ProVen VCT is seeking to raise up to GBP1.4 million through an offer for ordinary shares. Both offers for the 2010/11 tax year close on 5 April 2011.
Beringea is an international venture capital firm with offices in London, Detroit and Shanghai. In the UK Beringea manages ProVen VCT, ProVen Health VCT, ProVen Growth & Income VCT and Global Rights Fund II. Beringea launched its first VCT in 1996, making it one of the most experienced VCT managers in the UK. ProVen Growth & Income and ProVen VCT are highest performing VCTs of their launch years, respectively, according to http://www.taxefficientreview.com For more information please visit http://www.provenvcts.co.uk and http://www.beringea.co.uk .