Published: Sep 23, 2012
Focus:
Growth Capital
INDEPENDENT RESEARCH
Extract taken from a review written by Investment Analyst, Rob Morgan, on the Hargreaves Lansdown website.
Maven is a Venture Capital Trust (VCT) manager that really seems to be hitting form. The last few months has seen a flurry of activity ranging from some eye-catching disposals to some interesting-looking new investments.
Maven's unique presence in the Aberdeen oil and gas industry has been a prolific source of deals in recent years. Following on from the sale of Walker Technical Resources in June 2011, for nearly 3 times the original investment made two years earlier, successful exits of Nessco and ATR Group were completed during 2012. Nessco is a provider to telecommunications services to the energy and industrial sectors and realised 3.7 times the original investment. ATR Group, a provider of safety equipment rental services to the energy industry, provided a return of 1.7 times.
This area has been buoyant for the UK economy in recent years with a focus on efficiency and safety, which stands to benefit a wide range of Aberdeen-based support services and engineering firms. Maven's Aberdeen team continues to have a high profile, consistently beating other venture capitalists to deals with good-quality businesses.
In terms of new deals, 2012 has so far brought two significant purchases. In March Maven invested in Vodat Interntional, a provider of telecom and payment services to the retail sector, and in June they added a position in Cat Tech, a provider of chemical and industrial services to oil refineries and chemical plants.
Maven's style is conservative and disciplined, characterised by intelligent deal structuring and a hands-on approach to helping businesses grow. For instance, Maven team members typically take board positions at investee companies. They also generally take controlling stakes in businesses, so they can ultimately decide the direction should they wish. This can be helpful if things don’t go as planned and a new strategy or new personnel are required. However, their usual role is to be a supportive partner in the growth of the firm.
The extensive use of loan stock also helps control risk, though it does also limit upside. Loans generally contain a higher level of security than shares and can be secured against assets such as property. They also pay a high level of income to the VCT, which helps fund consistent dividends. The VCTs are also highly diversified across 40 or so different companies in a wide variety of sectors, which combined with the conservative approach to structuring each deal, means success is not dependent on finding one 'star' investment. It should also mean more consistent returns than more aggressively-managed VCTs.
A recent visit to Maven reaffirmed my view that they are one of the top teams in the venture capital industry. Having honed their investment process over the years I believe they are well placed to perform well for longstanding and recent investors alike.
