The manager of a private company at the centre of a scheme to avoid inheritance tax has taken more than £100 million in fees for the second year running, despite the business racking up losses in excess of £400 million.
Octopus Investments, which manages the little-known Fern Trading, pocketed £103.6 million in fees in the year to June 2025, marginally ahead of the £103.1 million the previous year, despite pre-tax losses at Fern widening from £185 million to £420 million.
It brings total management fees earned by Octopus since Fern’s inception in 2010 to about £900 million.
Fern, which is made up of almost 330 companies spanning renewable energy, broadband fibre, housebuilding and lending, is a core part of Octopus’s inheritance tax service.
The business is owned by about 18,000 Octopus clients, with Fern’s value determined by an internal share price, which the manager says is calculated according to “international private equity and venture capital valuation guidelines”.
Octopus calculates that the business has a present market value of £3.47 billion — a big premium to net assets, which fell 12 per cent to £2.16 billion in the past financial year, while net debt increased by 23 per cent to £1.04 billion.
Octopus, which also provides head and back office services to Fern, takes a 2.5 per cent management fee on the business’s value up to the first £3 billion, with the charge falling by 0.25 of a percentage point on every £500 million after that.
One leading independent financial adviser said: “There seems to be no connection between the fees that Octopus takes and the performance of the underlying assets. Shareholders seem to be paying Octopus to destroy value.” He said he would not recommend such products to his clients.
Fern said there were “several factors” behind its rising losses in a year when revenues rose 8 per cent to £685 million.
The key one was the loss-making broadband wing, whose companies include the wholesale brand AllPoints Fibre and the Vorboss enterprise network in London. Fern took a £125 million impairment charge against that division, while underlying earnings from the unit fell £135 million in the red, on top of the £142 million losses the previous year. Fern warned that fibre “operating losses are anticipated to continue for the next few years as we build our target customer base”.
Octopus Investments, which is run by Erin Platts, is part of the Octopus Group, which was co-founded in 2000 by Simon Rogerson, its chief executive, and Christopher Hulatt and Guy Myles.
It targets a long-term annual return for investors in Fern of 3 per cent, while sheltering them from inheritance tax, which is levied at 40 per cent of the value of a person’s estate over the “nil rate band”, presently standing at £325,000. An additional residence nil-rate band of £175,000 on homes left to beneficiaries brings the potential tax-free allowance per person to £500,000.
An Octopus Investments spokesperson said: “Fern Trading continues to invest, alongside its existing portfolio, in growing new business areas that are expensive to build but will generate revenues over decades to come. This initial high operational expenditure, particularly in the fibre portfolio and alongside certain one-off impairments, is the key driver of these losses.
“Where challenging market conditions have required writedowns of Fern Trading’s existing fibre investments, we have identified these through our regular and robust valuation committee process, which includes an independent review, and reflected them transparently in Fern Trading’s share price and accounts.”