Baronsmead VCT Reports Steady NAV Growth and 7.1% Dividend Yield Amid Budget Shifts

Baronsmead VCT delivers modest NAV growth and a full 7.1% dividend yield

Baronsmead Venture Trust has posted another year of positive progress. NAV per share increased 1.5% to 53.62p (before dividends) for the year to 30 September 2025, with a total of 3.75p in dividends declared and proposed. That equates to a 7.1% tax-free yield based on the opening NAV of 52.8p – squarely in line with policy.

The year was a tale of two halves: a weak first six months followed by a rebound in H2, helped by stronger unquoted valuations and a recovery across parts of the AIM portfolio. The Company also banked a standout exit in Panthera Biopartners and kept plenty of dry powder.

Key numbers investors should know

NAV per share (30 Sep 2025, before dividends)	53.62p
Change in NAV per share	+0.78p (+1.5%)
Dividends for the year	3.75p (1.75p interim + 2.00p proposed final)
Dividend yield (on opening NAV 52.8p)	7.1%
Total net assets	£216.7 million
Net investments deployed	£10.1 million (6 new, 14 follow-ons; 19 companies)
Realisations (proceeds / gain)	£11.4 million / £1.6 million
Unquoted portfolio performance	+6.6%
AIM portfolio performance	-1.9% (FTSE AIM All Share +5.8%)
Cash and liquidity funds	\~£26.6 million (c3.9% 7-day yield)

What drove performance: unquoted strength vs AIM drag

Baronsmead’s hybrid model – unquoted growth plus AIM – showed its worth, but also its cyclicality. The unquoted book did the heavy lifting, up 6.6% for the year. AIM detracted, down 1.9%, although it improved markedly in H2.

Unquoted portfolio: exits, resilience, and a few bruises

The trophy result was the full exit of Panthera Biopartners, delivering £9.5 million of proceeds at a 3.1x money multiple on cost. CitySwift also delivered strong progress, winning significant contracts, including with Transport for London.

On the flip side, several earlier-stage holdings were written off: Cisiv, Silkfred, Azarc and Mable Therapy. That is part and parcel of VCT-style growth investing, but it underlines the need for more Panthera-like wins. Management says more exits are being negotiated – something to watch into 2026.

AIM portfolio: Cerillion weighs, Netcall and TPFG help

AIM underperformed the index for the year, primarily due to a de-rating in Cerillion, the VCTs’ largest quoted holding. The move followed the CEO selling a portion of his stake at a significant discount, despite ongoing operational strength and contract momentum. Bioventix also weakened on earnings pressure, particularly in China.

There were bright spots. Netcall continued to transition well to the cloud with strong recurring metrics, and The Property Franchise Group posted record first-half results. The manager remains constructive on the long-term prospects of many of the larger AIM positions, which typically are profitable, cash-generative, and lowly geared.

Collective funds and a new position in Strategic Equity Capital

Collective investment vehicles contributed positively overall and provide added diversification across 79 additional companies. Micro Cap returned 9.5% and Small Cap 3.2%, while Multi Cap rose 2.3% but lagged its sector.

Baronsmead also invested £5.0 million in Strategic Equity Capital plc at an average 7% discount to NAV. The discount widened temporarily amid a tender offer, but narrowed to 6.6% in early December post period end. The move fits the theme of accessing high-quality UK smaller companies at attractive entry points.

Where the new money went: six new names and steady follow-ons

Deployment totalled £10.1 million across 19 companies. New unquoted investments included:

• Nu Quantum – £1.6 million into quantum networking hardware aimed at interconnecting quantum processors.
• Much Better Adventures – £1.2 million into an online adventure travel operator.
• Spinners Group, AskBosco (Modo25), Mobility Mojo and Penfold – adding exposure to consumer, digital marketing, accessibility software and pensions infrastructure respectively.

Follow-ons were balanced and pragmatic, with £4.9 million supporting 13 portfolio companies. The largest was £1.44 million into Patchworks Integration, a retail/ecommerce integration platform. Expect more follow-on activity as recent early-stage positions mature.

Cash, dividends and discount control: investor-friendly levers

Liquidity looks healthy with ~£26.6 million in cash and liquidity OEICs, earning c3.9% on a 7-day basis. That supports the 7.1% dividend policy and enables tactical follow-ons without forced selling.

The Board aims to maintain a 5% discount to NAV via buybacks and the selective sale of Treasury shares. It also raised £25 million during the year and opened a fresh joint offer for £15 million with a £10 million over-allotment facility – £5.0 million was allotted on 20 November 2025, with more to come in early 2026.

On fees, no performance fee was paid in the period, and any future performance fee is capped at 5% of NAV. That is a welcome governor on costs, especially in a market where investors are rightly sensitive to fee structures.

Autumn Budget 2025: higher limits, lower upfront tax relief

The big policy shift lands on 6 April 2026. The government will double several VCT/EIS thresholds – including the annual company investment limit to £10 million (£20 million for Knowledge Intensive Companies) and the lifetime limit to £24 million (£40 million for KICs). The gross assets test also rises to £30 million pre-issue and £35 million post-issue.

At the same time, upfront VCT Income Tax relief falls from 30% to 20%. The Company notes a proposed 2% rise in dividend tax increases the relative value of tax-free VCT dividends, which should soften the blow over time. The open question is fundraising appetite from April 2026. For now, Baronsmead has cash, realisations, and fund exposures to keep investing.

Risks and governance: measured and methodical

Macro remains tricky: UK growth is subdued, geopolitical risk is elevated, and US tariff policy is unpredictable. Earlier-stage holdings are more sensitive to shocks, and that shows in the handful of write-offs. The FCA’s review of private markets valuation practices prompted an internal review at the manager, with the Board satisfied and minor enhancements implemented.

The Board has also put new strategic and operational performance indicators in place to hold the manager to account. That is the right stance after prior years’ challenges, and I will be watching for delivery on exits and AIM relative performance.

My take: steady, sensible progress with more to prove

This is a solid set of results in a difficult market. The 7.1% dividend is covered by a mixture of income, realisations and liquidity, the unquoted book is doing its job, and Panthera shows the upside potential when investments mature well.

The obvious negatives: AIM lagged its benchmark, and earlier-stage risks are real, as the write-offs show. The cut to upfront tax relief from April 2026 could crimp future fundraising across the sector. That said, higher VCT limits should improve long-run compounding by allowing Baronsmead to back winners for longer.

Overall, I’d call this a cautiously positive year. If the manager can string together more exits like Panthera and narrow the performance gap on AIM, the case for patient holders remains intact.

Dates for your diary

• Proposed final dividend: 2.00p per share, payable 24 March 2026 (subject to approval).
• Ex-dividend date: 26 February 2026.
• Record date: 27 February 2026.
• DRIP instruction deadline: 3 March 2026.
• AGM: 19 March 2026, with a manager presentation and Q&A to follow.