Merger Update

JOINT ANNOUNCEMENT

OCTOPUS AIM VCT PLC ("AIM VCT")
OCTOPUS PHOENIX VCT PLC ("PHOENIX VCT")

9 JULY 2010

RECOMMENDED PROPOSALS:

     ·     TO RESTRUCTURE THE SHARE CAPITAL OF AIM VCT ("AIM VCT SHARE
RESTRUCTURING");

     ·     TO MERGE AIM VCT AND PHOENIX VCT (TO BE COMPLETED PURSUANT TO SECTION
110 OF THE INSOLVENCY ACT 1986 ("THE SCHEME");

     ·     FOR AN OFFER FOR SUBSCRIPTION TO RAISE UP TO £10 MILLION IN AIM VCT
("OFFER")


 (THE AIM VCT SHARE RESTRUCTURING, THE SCHEME AND THE OFFER TOGETHER "THE
PROPOSALS")

SUMMARY

The boards of AIM VCT and Phoenix VCT announced on 13 January 2010 that they
were in preliminary discussions on terms for a merger of the two companies.
Both boards are pleased to advise that discussions have concluded and they are
today writing to set out the Proposals to their respective shareholders for
consideration.  Both companies are managed by Octopus Investments Limited
("Octopus").

The Proposals will, if approved, result in a restructuring of the share capital
of AIM VCT, the merger of the companies and the fundraising by AIM VCT, creating
an Enlarged Company with net assets of over £40 million (assuming full
subscription under the Offer).

AIM VCT will complete the AIM VCT Share Restructuring to result in AIM VCT
having a share capital of ordinary shares of 1p each ("New AIM VCT Shares").
The AIM VCT Restructuring is conditional on the approval of AIM VCT shareholders
and will take place whether or not the merger is approved and becomes effective.

The merger will then be effected by Phoenix VCT being placed into members'
voluntary liquidation pursuant to a scheme of reconstruction under Section 110
of the Insolvency Act 1986.  Shareholders should note that the merger by way of
the Scheme will be outside the provisions of the City Code on Takeovers and
Mergers.  The merger will be completed on a relative net asset basis (unaudited
net assets as at close of business on the day immediately preceding the
Effective Date (as defined below) and the benefits shared by both sets of
shareholders, with the costs being split proportionately based on the merger
NAVs.  The Scheme is conditional on the approval of the shareholders of both
companies and is subject to the AIM VCT Share Restructuring having been
completed.

The merger also provides an opportunity to launch the Offer to raise up to £10
million to enable AIM VCT to participate in opportunities for investment at a
time in the UK economic cycle which the AIM VCT board and Octopus believe to be
advantageous and will open on 9 July 2010.  The Offer is conditional on the
approval of the shareholders of AIM VCT and is subject to the AIM VCT Share
Restructuring having been completed.

The Scheme is not conditional on the Offer proceeding, or vice versa.

The AIM VCT Share Restructuring, the Scheme and the Offer require the approval
of resolutions to be proposed at the AIM VCT extraordinary general meeting to be
held on 4 August 2010 ("AIM VCT Extraordinary General Meeting") and, in respect
of the Scheme only, the approval of resolutions to be proposed at the Phoenix
VCT general meeting to be held on 4 August 2010 ("Phoenix VCT First General
Meeting") and the Phoenix VCT general meeting to be held on 12 August 2010
("Phoenix VCT Second General Meeting").

The board of AIM VCT also considers it appropriate to adopt new articles of
association, renew share issue and share repurchase authorities, approve the
cancellation of the AIM VCT share premium account and capital redemption
reserve, as well as amend the investment policy and extend the life of AIM VCT.

BACKGROUND

AIM VCT was launched in February 1998 and has raised £48.4 million (net of
expenses) since inception.  The current objective of AIM VCT is to invest in a
broad range of AIM or PLUS quoted companies in order to generate income and
long-term capital growth. Investments are made selectively across a range of
sectors in companies that have the potential to grow and enhance their value.
AIM VCT has returned £19.7 million to its shareholders through dividends and
share buy-backs.  As at 31 May 2010, AIM VCT had investments in 53 companies
with an aggregate value of £16.9 million and unaudited net assets of £24.1
million (83.1p per Share). As at today's date, AIM VCT has 52 investments.

Phoenix VCT was launched in November 2002 and has raised £17.7 million (net of
expenses) since inception. Phoenix VCT's objective is to provide its
shareholders with tax-free dividends and long-term capital growth by investing
in a diverse portfolio of AIM-listed companies. Phoenix VCT has returned £6.1
million to its shareholders through dividends and buy-backs. As at 31 May 2010,
Phoenix VCT had unaudited net assets of £7.1 million (38.4p per Phoenix VCT
Share) and, in aggregate, investments in 35 companies.

VCTs are required to be listed on the Official List, which involves a
significant level of listing costs as well as related fees to ensure the VCT
complies with all relevant legislation. As a VCT becomes fully invested, its net
assets may start to decrease, primarily due to dividends, buy-backs and annual
expenses. As a result, the running costs can become a proportionally greater
burden which may have an adverse effect on the returns generated for
shareholders. A larger VCT should, therefore, be better placed to spread such
running costs across a larger investment portfolio and, as a result, may be able
to pay a higher level of dividends to shareholders over its life.

In September 2004, regulations were introduced allowing VCTs to be acquired by,
or merge with, each other without prejudicing the VCT tax reliefs obtained by
their shareholders. A number of VCTs have now taken advantage of these
regulations.

With the above in mind, the boards of AIM VCT and Phoenix VCT entered into
discussions to consider a merger of the companies to create a single larger VCT
thereby establishing a platform from which further funds could be raised. The
aim of the boards is to achieve strategic benefits and reductions in the annual
running costs for both sets of shareholders.

THE RESTRUCTURING

The AIM VCT board of directors proposes to restructure the share capital of AIM
VCT to result in a share class having a nominal value of 1p.

The AIM VCT Restructuring will be effected by each existing ordinary share of
50p being subdivided into one ordinary share of 1p and one AIM VCT Deferred
Share of 49p. The AIM VCT Deferred Shares will have no economic value and will
be bought back by AIM VCT for an aggregate amount of 1p and cancelled as issued.

The number of AIM VCT Shares in AIM VCT held by a Shareholder and the NAV per
share will not change (the creation of Deferred Shares and the repurchase merely
being a mechanism by which the AIM VCT Restructuring will be effected).

The AIM VCT Restructuring will result in a simplification of the share capital
of AIM VCT, whilst also creating capital redemption reserves from the repurchase
of the AIM VCT Deferred Shares and an increased share premium on the issue of
New AIM VCT Shares (pursuant both to the Scheme and to the Offer) which can
subsequently be cancelled, subject to the sanction of the Court, creating
distributable reserves to assist in the payment of dividends, the ability to
make market purchases of shares and for other corporate purposes.

THE MERGER PURSUANT TO THE SCHEME

Both boards consider that this merger will bring significant benefits to both
groups of shareholders through:

  * a reduction in annual running costs for the Enlarged Company compared to the
    total annual running costs of the separate companies;


  * the creation of a single VCT of a more economically efficient size with a
    greater capital base over which to spread administration, regulatory and
    management costs;


  * participation in a larger VCT with the longer term potential for a more
    diversified portfolio thereby spreading the portfolio risk across a broader
    range of investments and allowing for further investment in existing
    portfolio companies; and


  * providing the ability to maintain a buy-back programme and the potential
    payment of further dividend distributions in the future due to the increased
    size and reduced running costs of the Enlarged Company.


The mechanism by which the merger will be completed is as follows:

  * Phoenix VCT will be placed into members' voluntary liquidation pursuant to a
    scheme of reconstruction under Section 110 IA 1986; and


  * all of the assets and liabilities of Phoenix VCT will be transferred to AIM
    VCT in consideration for the issue of New AIM VCT Shares (which will be
    issued directly to shareholders of Phoenix VCT).


Following the transfer, the listing of the Phoenix VCT Shares will be cancelled
and Phoenix VCT will be wound up.

The Scheme is conditional upon notice of dissent not having been received from
Phoenix VCT shareholders holding more than 10 per cent. in nominal value of its
issued share capital.

Annual running costs, excluding management fees, for AIM VCT and Phoenix VCT are
approximately £171,000 and £197,000 respectively or £368,000 in total. These
costs represent 0.71 per cent. of the AIM VCT's unaudited net asset value and
2.8 per cent. of Phoenix VCT's unaudited net asset value, in each case as at 31
May 2010. Both boards consider that this level of continued administrative
annual running costs can be materially reduced through the merger resulting in
benefits to both groups of shareholders.

The aggregate anticipated cost of undertaking the merger is approximately
£199,000, including VAT, legal and professional fees, stamp duty and the costs
of winding up Phoenix VCT. The costs of the merger will be split proportionately
between AIM VCT and Phoenix VCT by reference to their respective merger NAVs.

On the assumption that the NAV of the Enlarged Company will remain the same
immediately after the merger (and disregarding the payment of the amount
equivalent to three months' notice to the directors of Phoenix VCT referred to
below as these are one-off payments), annual cost savings for the Enlarged
Company of at least £185,000 per annum (representing 0.59 per cent. per annum of
the expected net assets of the Enlarged Company) are anticipated to be achieved
following completion of the merger. On this basis, and on the basis that no new
funds are raised or investments realised to meet annual costs, both boards
believe that the costs of the merger would, therefore, be recovered within 13
months.

Both boards believe that the Scheme provides an efficient way of merging the
companies with a lower level of costs compared with other merger routes.
Although either of the companies could have acquired all of the assets and
liabilities of the other, AIM VCT was selected as the acquirer because of its
larger size (and, therefore, a lower stamp duty cost on the transfer of all of
the assets and liabilities from Phoenix VCT).

Phoenix VCT Shareholders who do not vote in favour of the resolution at the
Phoenix VCT First General Meeting are entitled to dissent and have their
shareholding purchased by the liquidators at the break value price of a Phoenix
VCT Share. If the conditions of the Scheme are not satisfied, the companies will
continue in their current form and each board will continue to review all
options available to it regarding the future of their company.

THE OFFER

The AIM VCT board has decided to take the opportunity to also raise up to £10
million through an offer for subscription of a maximum of 11,500,000 New AIM VCT
Shares. This will provide shareholders and other investors with the opportunity
to invest in AIM VCT and benefit from the tax reliefs available to qualifying
investors in VCTs.

The AIM VCT board believe that:

  * This is an advantageous time in the economic cycle with Octopus beginning to
    see a strengthening pipeline of investment opportunities, at a time when
    prices of assets are still low by historic standards. Funds raised under the
    Offer will be invested, in part, to take advantage of any rally in
    valuations and performance of smaller companies as the pace of economic
    growth accelerates;


  * The Offer should enable AIM VCT to maintain its portfolio diversification
    and continue to maximise the use of funds raised before 6 April 2006 for
    investment in VCT qualifying investments with gross assets of up to £15
    million prior to the investment. AIM VCT maintains a policy of distributing
    realised profits to its shareholders as well as operating a share buy-back
    scheme and there is a risk that over time the size of AIM VCT will shrink
    leaving less funds available for new investments to generate future returns.
    The Offer should, therefore, also provide funds for new investments as well
    as maintaining liquidity for dividends and buy-backs;


  * New offers by VCTs continue to offer attractive tax incentives for private
    investors when compared to other types of tax efficient investment; and


  * The fixed running costs of AIM VCT will be spread over a larger asset base,
    thereby reducing costs as a percentage of AIM VCT's assets.


New AIM VCT Shares issued under the Offer will be at an Offer price equal to the
most recently published NAV of an AIM VCT Share, divided by 0.945 to take into
account Offer costs of 5.5 per cent. and rounded up to the nearest 0.1p per
share. The net proceeds of the Offer will be invested in accordance with the
investment policy of AIM VCT.

Octopus will act as promoter to the Offer and be paid a commission of 5.5 per
cent of the gross proceeds
raised from which all costs and expenses will be paid (including initial
intermediary commission and trail
commission). Any costs above this will be met by Octopus.

MANAGEMENT, ADMINISTRATION AND PERFORMANCE INCENTIVE ARRANGEMENTS

Octopus is the investment manager of AIM VCT and of Phoenix VCT and also
provides administration and secretarial services to both companies. An annual
management and administration fee is payable to Octopus by AIM VCT of an amount
equivalent to 2 per cent. of the net assets of AIM VCT (exclusive of VAT, if
any). In respect of Phoenix VCT, separate annual management and administration
fees are payable to Octopus of an amount equivalent to 2 per cent. of the net
assets of Phoenix VCT (exclusive of VAT, if any) for the former and £25,000
(exclusive of VAT, if any and as increased by RPI increases) for the latter.

Octopus will continue to provide investment management and administration
services to the Enlarged Company following the merger on the same annual fee
basis as above for AIM VCT (ie an amount equivalent to 2 per cent. of the net
assets of AIM VCT (exclusive of VAT, if any) and without any further separate
charge for administration services.

In support of the merger, and so that all gains may remain with shareholders,
Octopus has already agreed to forego all future performance incentive fee
payments by both AIM VCT and Phoenix VCT and the existing entitlements have,
therefore, been terminated.

THE AIM VCT BOARD

Both boards of directors have considered what the size and future composition of
the AIM VCT's board should be following the merger and it has been agreed that
the existing AIM VCT board will continue in its current form (Stephen
Hazell-Smith being regarded as the Phoenix VCT representative retained on the
AIM VCT board for these purposes).

The aggregate annual remuneration for the AIM VCT board following the merger
will remain at £61,180 (plus applicable employers National Insurance
Contributions). This is an annual cost saving of £53,000 across the two
companies (disregarding the payment of an amount equal to three months' notice
to each of the directors of Phoenix VCT as final directors' fees whilst Phoenix
VCT is in liquidation - the Phoenix VCT directors have agreed to waive all
further directors' fees in respect of Phoenix VCT if the Scheme becomes
effective).

AMENDMENT TO THE AIM VCT ARTICLES

The AIM VCT board proposes to adopt new articles of association to reflect the
AIM VCT Share Restructuring, as well as take the opportunity to update the AIM
VCT's articles of association to reflect the new provisions introduced by the
Companies Act 2006 and shareholder regulations which have come into force over
the last two years and market practice.

AMENDMENT TO THE AIM VCT INVESTMENT POLICY

The AIM VCT board believe that there may be opportunities to invest in companies
that seek pre-IPO funds, participation in which would be in the interest of its
shareholders.  The AIM VCT board have, therefore, proposed a resolution at the
AIM VCT Extraordinary General Meeting to sanction this by amending the
investment policy of AIM VCT.

EXTENSION TO THE LIFE OF AIM VCT

In light of the Offer and to ensure that AIM VCT can look forward to a
successful long-term future, it is proposed to extend AIM VCT's life beyond the
minimum five year holding period that applies to investors who wish to obtain
upfront income tax relief. A resolution has, therefore, been proposed at the AIM
VCT Extraordinary General Meeting to extend the life of AIM VCT to 2016.

AIM VCT SHARE ISSUE AND REPURCHASE AUTHORITIES AND CANCELLATION OF THE AIM VCT
SHARE PREMIUM ACCOUNT AND CAPITAL REDEMPTION RESERVE

In order to implement the merger, the AIM VCT board will need to be authorised
to issue New AIM VCT Shares pursuant to the Scheme.  It is also proposed to
renew and increase shareholder authorities at the AIM VCT Extraordinary General
Meeting to issue shares (having disapplied pre-emption rights) for the purposes
of the Offer and other general purposes and make market purchases of shares.

The AIM VCT Restructuring will create additional capital redemption reserves and
the issue of New AIM VCT Shares pursuant to the Scheme and the Offer will result
in the creation of further share premium. The AIM VCT board considers it
appropriate to obtain approval of shareholders at the AIM VCT Extraordinary
General Meeting to cancel the share premium account and the capital redemption
reserve to create (subject to court sanction) further distributable reserves to
fund distributions to Shareholders and buy-backs, to set off or write off losses
and for other corporate purposes.

EXPECTED TIMETABLE

The Scheme

AIM VCT Extraordinary General Meeting               2.00 pm 4 August 2010

Phoenix VCT First General Meeting                   2.30 pm 4 August 2010

Effective date of the AIM VCT Share Restructuring   4 August

Amendment to the listing of the AIM VCT shares      5 August 2010
arising out of the AIM VCT Share Restructuring

Phoenix VCT register of members closed              11 August 2010

Calculation date for the Scheme                     after 5.00 pm 11 August 2010

Suspension of listing of Phoenix VCT Shares         after 7.30 am 12 August 2010

Phoenix VCT Second General Meeting                  11.00 am 12 August 2010

Effective Date for the transfer of assets and       12 August 2010
liabilities of Phoenix VCT to AIM VCT and issue of
New AIM VCT Shares

Announcement of results of the meetings and         12 August 2010
completion of the Scheme (if applicable)

Cancellation of the Phoenix VCT share listing       after 8.00 am 13 March 2010

Admission of and dealings in the New AIM VCT Shares 13 August 2010
issued pursuant to the Scheme to commence

Certificates for New AIM VCT Shares (arising from   25 August 2010
the AIM VCT Share Restructuring or issued pursuant
to the Scheme) dispatched

The Offer

Offer opens                                 9 July 2010

Allotment of New AIM VCT Shares             Monthly

Admission of and dealings in New AIM VCT    3 business days following allotment
Shares issued pursuant to the Offer to
commence

Certificates for New AIM VCT Shares         within 14 business days of allotment
pursuant to the Offer dispatched

Offer closes*                               30 April 2011

*The Offer will close earlier than the date stated above if it is fully
subscribed. The AIM VCT directors reserve the right to close the Offer earlier
or to extend the Offer and to accept applications and issue New AIM VCT Shares
at any time prior to or after the closing date.

DOCUMENTS AND APPROVALS

AIM VCT shareholders will receive a copy of a circular convening the AIM VCT
Extraordinary General Meeting to be held on 4 August 2010 (together with the AIM
VCT prospectus) at which AIM VCT shareholders will be invited to approve
resolutions in connection with the Proposals.

Phoenix VCT shareholders will receive a circular convening the Phoenix VCT First
General Meeting on 4 August 2010 and the Phoenix VCT Second General Meeting on
12 August 2010 (together with the AIM VCT prospectus) at which Phoenix VCT
shareholders will be invited to approve resolutions in connection with the
Scheme.

Copies of the AIM VCT prospectus and the circular for AIM VCT and Phoenix VCT
have been submitted to the UK Listing Authority and will be shortly available
for inspection at the UK Listing Authority's Document Viewing Facility which is
situated at:

Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
Telephone: [phone]


Investment Manager and Administrator for AIM VCT and Phoenix VCT
Octopus Investments Limited
Andrew Buchanan or Kate Tidbury
Telephone: [phone]

Company Secretary for AIM VCT and Phoenix VCT
Celia Whitten
Telephone: [phone]

Solicitors to AIM VCT and Phoenix VCT
Martineau
Kavita Patel
Telephone: [phone]

Sponsor to AIM VCT
Charles Stanley Securities
Luke Webster/Russell Cook
Telephone: [phone]

The directors of AIM VCT accept responsibility for the information relating to
AIM VCT and its directors contained in this announcement.  To the best of the
knowledge and belief of such directors (who have taken all reasonable care to
ensure that such is the case), the information relating to AIM VCT and its
directors contained in this announcement, for which they are solely responsible,
is in accordance with the facts and does not omit anything likely to affect the
import of such information.

The directors of Phoenix VCT accept responsibility for the information relating
to Phoenix VCT and its directors contained in this announcement. To the best of
the knowledge and belief of such directors (who have taken all reasonable care
to ensure that such is the case), the information relating to Phoenix VCT and
its directors contained in this document, for which they are solely responsible,
is in accordance with the facts and does not omit anything likely to affect the
import of such information.

Martineau are acting as legal advisers for AIM VCT and Phoenix VCT and for no
one else in connection with the matters described herein and will not be
responsible to anyone other than AIM VCT and Phoenix VCT for providing the
protections afforded to clients of Martineau or for providing advice in relation
to the matters described herein.

Charles Stanley Securities, a division of Charles Stanley & Co Limited, which is
authorised and regulated in the United Kingdom by the Financial Services
Authority, is acting as sponsor for AIM VCT and no one else and will not be
responsible to any other person for providing the protections afforded to
customers of Charles Stanley Securities or for providing advice in relation to
any matters referred to herein.



[HUG#1430709]








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