'Ban on VCTs investing in Aim firms must go'

A BAN on venture capital trusts (VCTs) investing in most Aim-listed companies must be lifted to stop capital flowing out of the small-cap sector, a new report yesterday claimed.

Firms listed on Aim contributed 21 billion to the UK economy last year and employ 570,000 staff directly and through their supply chains, according to a study by accountancy heavyweight Grant Thornton.

Stephen Gifford, the firm's chief economist, said: "If Aim is to continue as the world's leading platform for growth companies looking to raise capital, we need to lift unnecessary restrictions on the investment criteria by VCTs and reverse the gradual erosion of fiscal incentives.

"Restrictions that mean relatively few Aim companies are eligible for investments by VCTs are obviously counterproductive. VCTs are a vital catalyst for Aim, often acting as an anchor investor that encourages other institutional funds."

The report - commissioned by the London Stock Exchange, which owns Aim - came in response to the UK government's Financing A Private Sector Recovery consultation.

Grant Thornton also called on ministers to consider allowing Aim shares to be eligible for inclusion within individual savings accounts (Isas).

More than 20 Scottish firms are listed on Aim, from Goals Soccer Centres to oil explorer Bowleven to Lees Foods and Celtic football club.