| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 51.64 | 12 |
| Intrinsic value (DCF) | 19.24 | -58 |
| Graham-Dodd Method | 0.39 | -99 |
| Graham Formula | n/a |
Octopus Apollo VCT plc is a UK-based venture capital trust (VCT) specializing in investments in smaller, unquoted companies, primarily focusing on development and expansion-stage businesses. Operating under the UK's VCT scheme, the fund provides tax-efficient investment opportunities for individual investors while supporting the growth of small and medium-sized enterprises (SMEs) in the UK. The fund typically invests between £1 million and £2 million per company, utilizing secured loans, ordinary and preference shares, loan stocks, and convertible securities. With an investment horizon of three to seven years, Octopus Apollo VCT aims for exits primarily through trade sales. The fund actively engages with its portfolio companies by appointing directors or observers to their boards. Octopus Apollo VCT is part of the broader Octopus Investments group, leveraging its expertise in private company investments and venture capital. The fund's focus on UK SMEs positions it as a key player in fostering innovation and growth in the domestic market.
Octopus Apollo VCT plc offers investors exposure to a diversified portfolio of UK-based SMEs with the added benefit of tax advantages under the UK's VCT scheme. The fund's focus on secured loans and structured investments provides downside protection, while its active involvement in portfolio companies enhances value creation potential. However, the fund's performance is subject to the inherent risks of investing in smaller, unquoted companies, including liquidity constraints and higher volatility. The negative net income and operating cash flow in the latest fiscal year highlight the challenges in the current economic environment. Investors should weigh the tax benefits against the fund's performance and the broader macroeconomic risks affecting UK SMEs.
Octopus Apollo VCT plc operates in a niche segment of the UK venture capital market, focusing on tax-efficient investments in SMEs. Its competitive advantage lies in its affiliation with Octopus Investments, which provides access to a robust deal pipeline and expertise in private company investments. The fund's structured investment approach, combining secured loans with equity-like instruments, offers a balanced risk-reward profile. However, the fund faces competition from other VCTs and venture capital firms targeting similar segments. The UK's VCT market is highly competitive, with numerous funds vying for attractive investment opportunities. Octopus Apollo's ability to source high-quality deals and actively manage its portfolio will be critical in maintaining its competitive edge. The fund's performance is also influenced by broader market conditions, including the availability of exit opportunities and the health of the UK SME sector.