With a stable of six venture capital trusts, Albion Capital provides exposure to a range of software and healthcare companies across such themes as cybersecurity, fintech, digital health and data analytics. Investing in nascent companies that the group believes will be the winners of tomorrow has attracted a different type of investor.
“When we look at the profile of new investors coming in over the past five years, they are younger and there are more females,” Fraser-Allen revealed.
“The social impact aspect is definitely having some bearing on that change and growth, and the credentials some of our companies have are extraordinary,” he added.
Portfolio companies include Healios, a platform for clinicians to offer mental health help remotely to adolescents; Oviva, which gives remote clinical advice for diabetics; and Egress, which provides encrypted email and secure data exchange.
The group is also looking at digital security.
“Data analytics is a big thing. Major organisations are now looking at how they can better collate data, manage and make decisions using the ever-increasing data their businesses have,” the manager said.
These themes soared during the Covid-19 pandemic, ensuring growth across the portfolio.
“We had lots of concerns around our existing portfolio as we just did not know how it was going to pan out. But we have actually seen resilience growth across it” the managing director said.
Albion Capital targets businesses that are developing innovative products that can reach a large target market.
“We have to believe the business is capable of being a category leader and that the market is big enough so that we can make a case to their ability to make a return of at least 10x,” Fraser-Allen said.
It sold its stake in software modelling company Process Systems Enterprise (PSE) for £20m, Grapeshot, an ad-tech business, for £30m and it offloaded broadband network G.Network.
The first two deals represented a 10x return while the G.Network sale provided a 3.8x return.
“Those are the sort of the headline [deals] but the trick is if you can consistently deliver 4x, 5x or even 6x returns you can create some very significant shareholder value,” he added.
Albion Capital currently has investments in around 70 businesses across its VCTs.