Last checked at 
12 Aug 2021 17:37
Publication of ProspectusDowning FOUR VCT plc (“the Company")LEI: 21380035MV1VRYEXPR9512 August 2021Publication of Prospectus
The Company has today issued a prospectus (the "Prospectus") relating to offers for subscription (“Offers”) by the Company to raise up to £10 million (with an over-allotment facility for up to a further £15 million) in each of three classes of shares – Generalist Shares of 0.1p each (to be renamed Ventures Shares), Healthcare Shares of 0.1p each and a newly created class of AIM Shares of 0.1p each – following the approval of the Prospectus by the Financial Conduct Authority.
The maximum number of shares that may be allotted under the Offers (including the over-allotment facility and shares to be allotted to management pursuant to performance incentive arrangements) are 46,521,814 Ventures Shares, 37,660,884 Healthcare Shares and 24,366,472 AIM Shares.
In addition, a circular (the “Circular”) has today been published and will shortly be sent to shareholders seeking approval of measures required, inter alia, to implement the Offers at a General Meeting scheduled to take place on 21 September 2021.
New AIM Share ClassFor over 12 years, Downing LLP has developed a team focused on investing in listed equities, which now has £350m of funds under management and comprises seven fund managers, of whom four focus on smaller companies.
The team has been monitoring the market for potential VCT qualifying companies, both in the secondary and primary markets, and has noted a steady flow of such businesses which potentially offer attractive investment opportunities. The Board is proposing to create a new AIM Share class, to be managed by this team, to take advantage of these opportunities.
The management arrangements for the AIM Shares will be implemented through an amendment to the existing investment management and administration agreement with Downing LLP. The amendment will provide that the AIM Shares (in respect of which the Company may raise up to £25 million under the Offers) will be subject to an annual management fee of 1.75% of their NAV and subject to a costs cap of 3.0%, above which Downing LLP will cover running costs attributable to the AIM Share pool. There will be no performance incentive arrangements in respect of the AIM Shares.
Sponsor and promotion agreementUnder the terms of the sponsor and promotion agreement, the Company will pay the Promoter, Downing LLP, a fee in relation to monies subscribed under the Offers (which could total up to £75 million if the over-allotment facility is fully utilised): of 4.5% where intermediary commission is payable, or 2.5% otherwise (“Promoter’s fees”). In addition, a trail commission of 0.25% per annum of the NAV of the Shares subscribed under the Offer will be payable to the Promoter, from which it will be responsible for paying trail commission to eligible intermediaries, with any excess reimbursed to the Company. Out of the Promoter’s fees, the Promoter will be responsible for paying all the costs of the Offers.
Related Party TransactionThe Investment Manager and Promoter, Downing LLP, is regarded as a related party under the Listing Rules. Therefore, the amendments to the existing investment management and administration agreement and entry into the sponsor and promotion agreement constitute related party transactions for the purpose of the Listing Rules and require Shareholder approval.
Downing LLP, as a related party of the Company under the Listing Rules, is not permitted to vote and as such will not vote (to the extent that it holds shares in the Company) on the resolutions to approve the above arrangements, to be proposed at the General Meeting. Downing LLP will take all reasonable steps to ensure that its associates (including any of its members, partners or employees) will also not vote on the relevant resolutions to be proposed at the General Meeting.
The Offers are now open and will close at 3.00 pm on 5 April 2022 for the 2021/2022 tax year and 3.00 pm on 31 May 2022 for the 2022/2023 tax year, or earlier if the Offers are fully subscribed. The Board of the Company reserves the right to close the Offer earlier, or to extend the Offer (to no later than 31 July 2022).
The Prospectus has been approved by the Financial Conduct Authority and will shortly be available to view at the online viewing facility of the National Storage Mechanism at the following website address: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Copies of the Prospectus and Circular are available, free of charge from the Company's registered office, St. Magnus House, 3 Lower Thames Street, London EC3R 6HD and on Downing's website at www.downing.co.uk/assets/d4prospectus and www.downing.co.uk/assets/d4circular.