Amendment to Investment Advisory Agreement

Fee structure tweaks take effect in 2026, with limited near-term financial impact.

What the company is saying

Northern Venture Trust PLC is announcing a deed of variation to its investment advisory agreement with Mercia Fund Management Limited, focusing on changes to the advisory fee structure. The company highlights a reduction in the annual advisory fee from 2.06% to 2.00% of NAV, effective 1 October 2026, and an increase in the cash threshold for this fee from £20 million to £30 million. It also discloses that fees on cash balances above £30 million will rise from 1.00% to 1.75%, and that advisory fees will be calculated quarterly instead of half-yearly. The announcement states that initial management fees for new portfolio companies will be eliminated from 1 October 2026, but may continue for existing companies on follow-on capital until 1 October 2029. The Board asserts the changes are 'fair and reasonable' for shareholders, referencing advice from Howard Kennedy Corporate Services LLP, but provides no supporting analysis or quantification. The tone is procedural and neutral, emphasizing governance and compliance over financial outcomes.

What the data suggests

The data consists solely of future fee rates and calculation methods, with no disclosure of actual financial figures, historical fee payments, or projected impacts. The annual advisory fee will drop by 0.06 percentage points of NAV from 1 October 2026, but the effect on total expenses is indeterminate without NAV or fee base figures. The cash threshold for the standard fee rate increases by £10 million, but the higher fee on balances above £30 million could offset some of the headline savings. Quarterly calculation may marginally affect timing of expense recognition, but the magnitude cannot be assessed. The removal of initial management fees for new portfolio companies from 2026 could reduce costs for future investments, while the extension for existing companies until 2029 maintains some ongoing charges. No evidence is provided to support the Board’s claim of fairness or reasonableness, and the absence of financial context prevents any assessment of materiality. Overall, the data is transparent about the new structure but incomplete for evaluating financial impact.

Analysis

The announcement is a factual disclosure of amendments to the investment advisory agreement, specifically changes to the fee structure and calculation frequency, most of which take effect from 1 October 2026. The language is procedural and avoids promotional or exaggerated claims, with the only subjective statement being the Board's belief that the amendments are 'fair and reasonable.' The majority of key claims are forward-looking, as the fee changes will not be implemented for over two years, but these are contractual amendments rather than aspirational targets. There is no discussion of financial performance, profitability, or operational growth, nor is there any indication of a large capital outlay or immediate financial impact. The data supports only a governance update, not an investment signal. No hype or narrative inflation is present.

Risk flags

• ●The absence of any disclosed NAV, cash balances, or historical fee payments prevents investors from quantifying the impact of the new fee structure. Without these figures, the changes could be either beneficial or detrimental to shareholders, depending on future asset levels.
• ●The announced changes are forward-looking and will not take effect until 1 October 2026, meaning there is execution risk if circumstances change or if the agreement is amended again before implementation.
• ●The Board’s assertion that the amendments are 'fair and reasonable' is unsupported by any independent analysis or quantification, relying solely on the authority of external advisors without transparency into their reasoning.

Bottom line

This announcement is a procedural update to Northern Venture Trust PLC’s advisory agreement, with fee changes that will not affect financials until October 2026. The lack of disclosed NAV, cash balances, or actual fee amounts means investors cannot assess whether these amendments will increase or decrease costs. The Board’s claim of fairness is unsubstantiated, as no evidence or analysis is provided. No immediate investment action is warranted based on this disclosure alone. For this to become actionable, the company would need to quantify the expected financial impact of the new fee structure. The key takeaway is that this is a governance update with long-dated, uncertain financial effects.

Announcement summary

(NYSE:NVT) Northern Venture Trust PLC announces that it has entered in a deed of variation in relation to the management and investment advisory agreement novated to Mercia Fund Management Limited on 23 December 2019, pursuant to which Mercia provides investment advisory services to the Company in exchange for a performance and annual advisory fee. Pursuant to the Deed of Variation, with effect from 1 October 2026, the annual advisory fee charged to the Company will reduce from 2.06% to 2.00% of NAV. Cash and cash equivalent balances up to £30 million (increased from £20 million) will earn the annual advisory fee of 2.00%. The annual advisory fee charged on cash and cash equivalents in excess of £30 million will increase from 1.00% to 1.75%. The annual advisory fee charged will be calculated quarterly; it is currently calculated half-yearly. From 1 October 2026 Mercia will no longer charge initial management fees to the Company's new portfolio companies but may continue to charge them to existing portfolio companies on follow-on capital until 1 October 2029. The amendments to the advisory fee arising from the Deed of Variation constitute a relevant related party transaction falling within UK Listing 11.5.4R. The Board of the Company believes that the amendments to the annual advisory fee are fair and reasonable as far as the shareholders of the Company are concerned and have been so advised by Howard Kennedy Corporate Services LLP, as sponsor to the Company.

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