The £103.6 million fees for the year to June 2025 are slightly higher than the £103.1 million taken the previous year, bringing total management fees since Fern’s inception in 2010 to approximately £900 million.
Fern Trading: A Complex Web of Companies
Fern Trading comprises almost 330 companies spanning renewable energy, broadband fibre, housebuilding, and lending. It forms a key part of Octopus’s inheritance tax service, sheltering clients from the 40% tax levied on estates over the £325,000 nil-rate band. Including the additional residence allowance, the potential tax-free threshold per person rises to £500,000.
Fern is owned by roughly 18,000 Octopus clients, with its value determined internally. Octopus says this is based on “international private equity and venture capital valuation guidelines,” placing the current market value at £3.47 billion, a significant premium over net assets, which fell 12% to £2.16 billion. Net debt increased by 23% to £1.04 billion.
Octopus charges a 2.5% management fee on Fern’s value up to the first £3 billion, with the percentage falling by 0.25 points for every additional £500 million.
Losses Driven by Broadband Division
Fern reported rising losses despite an 8% revenue increase to £685 million. The largest contributor to the losses was its broadband division, including AllPoints Fibre and the Vorboss enterprise network in London.
The division incurred a £125 million impairment charge, with underlying earnings falling £135 million further into the red, on top of £142 million in 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.”
Independent Criticism
A leading independent financial adviser criticised the fee structure:
“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.”
The adviser added he would not recommend such products to clients.
Octopus Response
An Octopus spokesperson emphasised long-term growth and investment:
“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.”
Background on Octopus Investments
Octopus Investments, run by Erin Platts, is part of the Octopus Group co-founded in 2000 by Simon Rogerson (CEO), Christopher Hulatt, and Guy Myles. Fern Trading aims to deliver a long-term annual return of 3% for investors while providing inheritance tax relief.
