Bill Nixon, Maven VCTs – Meet the manager [2021] - YouTube

Hello I’m Alex Davies, founder of Wealth Club. Today I’m with

Bill Nixon of Maven Capital Partners to talk about the Maven VCTs.

Bill, for those who aren’t familiar with Maven,

tell us a bit about it and also your own background?

So Maven is a private equity fund management business that was

established in 2009. We started with 22 staff and about £100 million of capital

following our buyout, and we’ve grown that business more than six-fold

and we’ve also grown our team to almost 100 people over the last 12 years.

I’ve worked in the private equity sector for the last 30 years and I’ve just

celebrated my 20th year as a VCT fund manager.

And you’ve recently sold the company to Mattioli Woods,

tell me about that, and how’s that going to affect investors?

Well it won’t affect investors at all. Maven will continue to run as

an independent wholly owned subsidiary of Mattioli Woods.

We’ve known the Mattioli Woods senior team for a very long time,

we’ve had previous discussions about strategic partnerships

and we decided to consummate that this year. There's many synergies between

the two businesses and we concluded a sale to Mattioli Woods in June [2021].

So with the sale completed, do you intend to leave the business now?

I don’t intend to leave the business at all. Part of the arrangement I have

with Mattioli Woods is that I’ll continue as the lead VCT fund manager

for at least the next four years, and I’m committed to doing that.

Let’s talk about the Maven VCTs – what do they aim to do for investors?

Well the Maven VCTs are now long-established VCTs.

The principal objective is protection of capital, and income. And if you look

at the two VCTs making the offer this year, Maven 3 and Maven 4, they’ve delivered

I think in the last 12 years, 11 out of 12 years of total return NAV growth,

and they’re also very dividend focused, so we have a dividend policy

in both trusts of five percent a year, tax free.

What sort of companies are you looking to invest in?

We’re absolutely generalists, we invest in a whole range of different types

of companies. But sectors that we like, we’re very keen on software,

we’re keen on cybersecurity, keen on healthcare, data analytics,

funeral care – we have a funeral care investment – anything which we think

where the revenues are sticky, where there’s long-term demand. We’re less keen on

the consumer sector, where we think consumer tastes can change quite quickly.

And what about the management teams, what are you looking for there?

It’s all about the people, as you allude to. We like to see people who’ve

delivered in a previous business, who’ve achieved something for investors

or within a corporate. They’ve got to have absolute integrity and they’ve got to

reference well – we don’t want people learning on our investors’ money.

We like to back proven people.

And any red flags?

Again, you know, behavioural issues that can come out through

due diligence. If there’s any hint of misconduct in the past, you know,

we’re not interested. But, I know it’s a truism but it’s

all about management, management, management.

Tell me about some of the companies you’ve recently invested in, and why?

Well, we’ve been very busy in the last year, notwithstanding the pandemic.

We’re currently completing one new private equity transaction per month.

The two most recent deals we’ve done are RW Health, which is previously known

as Draper & Dash – that’s a market-leading healthcare analytics business, which

helps identify clients for clinical trials. And also a business called Fodabox,

which is an e-commerce business, which helps artisan food producers

get their products to market. That business did very well through lockdown

and has continued to grow post-lockdown.

What about the more established holdings in your portfolio

anything doing particularly well?

In terms of companies that are doing well, we’re now starting to see, post 2015,

you know, a number of the earlier stage companies we’ve invested in over the

last few years start to really become quite established and grow their revenues.

Three I would focus on – Quorum Cyber has grown its revenues fourfold

in the last two years. That provides cyber services to corporates, small businesses.

Bright Network is a conduit between students and employers,

has 500,000 registered students and a number of vacancies at the moment.

That’s a really very ESG friendly business. And also Relative Insight –

Relative Insight is a linguistics platform that helps retailers

tailor their offering in specific international markets.

You mentioned the pandemic earlier, so how has it affected your companies and the VCTs?

Our portfolios have been surprisingly resilient. And perhaps not surprisingly,

you know, we have a lot of companies in sectors that are non-consumer,

non-travel related, and those companies are not really affected by lockdown.

So we did take a slight reduction in NAV when the pandemic first impacted,

but that has more than recovered in the last 12 months.

A lot of VCTs we talk to, they always say they’re very involved in the companies –

how involved are you, and so other than the funding what do you add?

I mean, we take a very hands-on approach to the companies we’re involved in.

We generally always appoint the chairman, one of our team generally joins the board

as a non-executive director. We help the companies across a wide range

of disciplines – we help them with banking, we help them with

new contract discussions, we help them internationalise, and most significantly

we help them with M&A when the time comes to sell the business. We help select

the advisers, and we’re actively involved in the sale negotiations.

And you’ve moved to, like everyone else, earlier stage investment –

how risky is it, and how many companies would you expect now,

are you getting more companies going bust than you would have in your old days?

Actually very few companies go bust. Some companies, quite a number of companies

underperform or maybe take longer to get sales traction or product traction,

but it’s very unusual for a company to fail. But what we do in terms of

protecting the downside for investors is we structure the deals in such a way

that even if the ultimate sale price is lower than expected,

our investors still achieve a meaningful return.

And how about the exits – have you had many recently?

I think there’s three exits I’d probably like to highlight, in the last few months.

We sold a business called eSafe, which was a child safeguarding software business.

We sold that to private equity-backed trade, making a 1.4 times multiple.

And when did you invest in that? // About three or four years ago,

So it was, most of our holds are about four years on average, you know

a four to five year hold is not untypical. We’ve also exited,

in the last few days actually we’ve exited a business called Mojo Mortgages.

We were co-invested in that with another VCT manager, we worked

very well together on that project. We’ve just sold that business

to RVU, which is part of Zoopla. And we had our first IPO from the

private equity portfolio, we IPO’d a business called GENinCode, which is

a predictive health analytics business, which we floated on AIM

earlier [in 2021] making a 2.7 times return at IPO.

And how have the VCTs performed?

Well the two VCTs, the two Maven VCTs making new offers this year

have now done 11 out of 12 years of consistent improvements in total return NAV.

So we haven’t seen the big spikes that some of the AIM VCTs have achieved –

we’re more focused on steady progressive growth

without any large movements in NAV, and we’ve managed to

achieve that now over an extended period.

And you target a five percent dividend, is that likely to hold?

Well, we can’t make a forecast in terms of dividend, but that is the policy,

and so long as we have a regular profile of exits, as we have in the past,

then it is the board’s intention to maintain that five percent policy.

And you’ve been in the VCT industry a long time now –

what would you say are the biggest challenges you face?

The biggest challenges, that’s a very good question.

The biggest challenges are winning the best transactions, because there’s a lot of

competition in the industry, and keeping good people.

Good people are always in demand.

That’s great, and finally for those looking to put money into VCTs this year

why should they consider Maven?

Well I think we’re different from other managers in that, you know,

we are not London-centric and we’re very focused in the regions, which is

an area that is less intermediated which means that private companies

can be available at perhaps better prices. We have a hybrid private equity and AIM

approach, so although we only do, in these two VCTs we only have

about a 10 to 15% exposure to AIM, that gives investors access to

something slightly different. So we have very diversified portfolios now

with a long term track record of improvements, year-on-year

improvements in total return NAV and a five percent target dividend yield.

Bill Nixon of Maven, thank you very much.

Thank you Alex.