The advantages of co-investment schemes for VCT shareholders

tax efficient vehicles

VCT co-investment allows managers to put their own capital into a percentage of investments made by the VCT and they can receive a performance fee, helping to stimulate outperformance

Co-investment by individual venture capital trust (VCT) managers came to the attention of the financial press in the autumn of 2005 when several commentators questioned their validity and benefit to shareholders. At this time, conflicts of interest and cherry picking were cited as two potential areas that could disadvantage investors. But how valid are these accusations and what are the advantages of co-investment schemes for VCT shareholders? Equity performance incentives date back to the early days of the highly successful UK private equity industry. This was during the 1980s when Limite...