In the VCT’s annual results published today (25 April), it revealed that NAV per share had fallen to 76.9p for 2022, down from 105.7p a year earlier. In 2021, the VCT reported a total return of 20.3%.
Chair Tom Leader said the decline was “disappointing”, adding that it reflected “the difficult global macro environment we have faced in the last year and follows a record year in 2021 in terms of both exit proceeds and total return”.
Explaining the fall in fortunes, Leader said, in some cases, valuations have been “adjusted downwards to reflect both the tougher conditions and lower market comparables”, as this influences what an acquirer might deem a fair price to pay for a business in the current climate.
He added: “In other cases, a decreased valuation will reflect a portfolio company’s specific performance, and we believe that, in the short term, we may unfortunately see more companies fail.
“They are operating under more difficult circumstances, targets set at the point of initial investment may be more difficult to achieve, and it may become more challenging for companies to raise funds.”