Octopus Titan Slashes Fees Amid Shareholder Unrest and Prolonged Losses

Octopus Titan, Britain’s largest venture capital trust, has agreed to significant cuts in management fees following deep dissatisfaction from shareholders incensed by poor returns. The trust’s board, after a protracted period of underperformance, considered replacing Octopus Investments as manager but has decided to stick with the current team on revised terms it believes give the best chance of a turnaround.

The latest move comes after Titan reported a further £147 million in losses, with its portfolio value having peaked above £1 billion in 2021 only to endure a string of writedowns since. The trust backs a range of high-growth start-ups including SkinplusMe, Flock, Oribiotech, and Amplience. Its focus on innovative and young businesses brings both promise and risk, and recent years have delivered little but frustration for investors.

According to the board, the newly agreed terms will see total annual management and non-investment services fees reduced by 17 per cent, while an additional fee rebate of as much as 20 per cent will apply if performance targets are not met during an open-ended transition. The manager’s performance fees have also been suspended until at least 2034. Notably, the notice period for terminating Octopus Investments’ contract has been cut from three years to one, making a change of manager much easier and less expensive if things do not improve.

Feedback from investors indicated widespread and deep dissatisfaction, prompting a strategic review and the possibility of moving to a new manager. However, after exploratory talks with other firms, Titan’s board judged that Octopus Investments’ experience and knowledge of a portfolio spanning more than 130 companies ultimately placed them best to navigate the trust forward. Enhanced flexibility to review both investment strategy and the performance of the portfolio manager remains a core part of the new agreement.

The trust has suffered year after year of negative performance, losing 14.1 per cent in the most recent year, 12.4 per cent in 2023, and 22.5 per cent in 2022, making it the worst-performing of its peers. The shares hit a new low at 27.5p, nearly half their net asset value of 47.7p as of June’s end. Dealmaking has paused since last summer, with plans to focus future investments in later-stage fintech and healthcare companies if and when a recovery materialises.

Chief executive of Octopus Investments, Erin Platts, acknowledged the persistently poor performance and underscored the collaborative nature of the recent review and changes. Shareholders are now being asked to approve adjustments to Titan’s investment policy at a vote scheduled for October, marking a critical juncture for the trust as it attempts to restore confidence and deliver on its ambitions for growth.