Monaco Property Bond Offering

Transcription

1 Monaco Property Bond Offering The opportunity to ultimately own a small piece of Monaco real estate Low-entry minimum investment of just 2,000 Fixed rate of interest of 8% per annum A fixed term length of 3 years

2 Your investment will be ultimately used to invest in real estate projects in Monaco and within a 150 kilometer radius of Monaco ( Surrounding Areas ) that meet strict funding criteria, with a view to ultimately delivering strong returns. Please read the following section carefully. This brochure is a summary marketing document created to provide headline information relating to the bond offering and it cannot be relied on alone. Consequently, this Document must be read in conjunction with the Information Memorandum (IM) specific to the bond, which provides more details of the offering along with the associated risks. The IM can be provided on request by calling or by downloading it from the Azurite website. Please read the details of this investment offering in full and do not focus on the headline benefits. All potential investors circumstances are different and all investment is speculative and involves risk. You must understand the particular risks involved in this offering, and make a decision that is appropriate for your personal circumstances. We further encourage you to take independent financial advice on the contents of this document by contacting a professional advisor authorised by the Financial Conduct Authority (FCA) to conduct investment business, and who specialises in advising on investment in ISAs, bonds, shares, and other securities, including unlisted securities. The Azurite ISA is run by Northern Provident Investments, an ISA manager Authorised and regulated by the Financial Conduct Authority and enables you to invest in the bond issued by Azurite ISA Bond Co 1 Limited. Bondholders can hold

3 Contents Welcome to Azurite Some key facts about Monaco The Azurite investment offering How to invest Investment potential and Illustration The investment process The Azurite project The team and advisory committee Case studies Your next step to invest in Azurite FAQs Your capital is at risk Azurite contact details Bonds through the Azurite ISA, an Innovative Finance ISA, which grants you access to tax-free income. Tax treatment depends on the individual circumstances of each client and may be subject to change in future. This Brochure has been issued by Azurite ISA Bond Co 1 Limited and approved for the purposes of Section 21 of the FSMA by Northern Provident Investments Limited. Capital At Risk* 3

4 Welcome to Azurite Dear Investor, We are delighted to announce the launch of the offer for the Azurite mini-bonds (the Bonds ), which are secured, fixed interest, debt instruments issued by the Company. These Bonds enable Bondholders to earn an attractive fixed rate of interest of 8% per annum over 3 years. The Company will use proceeds raised from the Bonds to onward lend to Azurite UK Holdings Limited ( HoldCo ) who will then onward lend funds to Azurite Ltd ( PropertyCo ) in order to enable it to invest in real estate projects in Monaco and within a 150 kilometer radius of Monaco ( Surrounding Areas) that meet strict funding criteria, with a view to ultimately delivering strong returns to PropertyCo, Holdco, the Company and ultimately Bondholders. Bondholders can hold Bonds through the Azurite ISA, an Innovative Finance ISA, which grants them access to tax-free income. The annual ISA allowance can be invested or existing ISA balances can be transferred into the Azurite ISA. Applications for Bonds and requests to open a Azurite ISA can be made on the website Together with the Azurite ISA team, I am delighted to give Bondholders the opportunity to invest in the Bonds and look forward to your ongoing support. Yours sincerely, Nigel Robertson Director Azurite ISA Bond Co 1 Limited 4

5 Monaco is planning for the future. Azurite offers you an opportunity to be part of it.* FEATURE 1 FEATURE 2 FEATURE 3 8% Fixed rate of interest of 8% per annum 2000 Low-entry minimum investment of just 2,000 3 years A fixed term length of 3 years Azurite provides an opportunity for low-entry investment, ultimately into the Monaco real estate property market. Monaco is home to world-class sporting and entertainment events, successful sports teams and a royal family. Spoken about in the same breath as the premier world cities, Monaco punches well above its weight on the global stage. Monaco attracts a diverse range of international buyers seeking security, wealth preservation or a business base. Residential property in Monaco is now the world s most expensive, with prices set to remain at record highs. The average resale price is 4.3m or 41,400 per square meter, up 180% in a decade. Monaco continues to face high demand from the world s high-net-worth individuals, which is driving price growth and plans for new property development. The next decade will see expansion and land reclaimed from the sea, ambitious urban renewal projects and interests outside Monaco s borders. Offering a fixed rate of interest of 8% per annum over a period of 3 years, and a minimum investment of 2,000, the Azurite ISA allows you to invest in property development in one of the world s most glamorous and expensive property locations. 5

6 The Azurite ISA The key investment offering The key investment offering How to invest Monaco is currently investing extensively in its infrastructure to secure its position as a world- class business and leisure destination. Azurite ISA provides a low entry investment opportunity to ultimately invest in Monaco as it undergoes this process of becoming a world- class destination. As one of the world s most important centres for business and leisure already, Monaco has a strong, diverse economy, with property prices at record highs, and ambitious plans to cement its position on the global stage by Three new projects alone will bring more than 100,000 square metres of residential and commercial floorspace. And if this prospect isn t exciting enough, here are some key reasons to invest through the Azurite ISA: Low-entry minimum investment of just 2,000 Fixed rate of interest of 8% per annum A fixed term length of 3 years Wrapped in an ISA to give you tax free returns*** This is an Innovative Finance ISA (also known as an IFISA) IFISAs were launched by the UK Government 6th April 2016 No charge for investing in Azurite Bonds Asset backed** The advisory committee and investment team for Azurite have a wealth of experience in project financing and the Monaco residential property market. Online portfolio, for easy viewing and management of your investment through the Azurite ISA. Dedicated account manager for your investment. The Azurite offer comes as Monaco prepares for growth Strict funding criteria Recent case studies available to demonstrate previous investment growth 1 Register your interest via the website or invest through the site. Start by either clicking on the Request Call Back or Invest Now buttons on the home-page. 2 If selecting Invest Now you will be taken through to Northern Provident Investment s website and application. Enter your basic personal details (name, date of birth, , mobile, address, and choose a password) and read fully and agree to the Azurite ISA Terms and Conditions and Privacy Policy, possibly providing further identification details if requested by the anti-money laundering requirements. Then select the investor type you are next, choose how much you want to invest. 3 Pay (in Sterling only), either by a one-off direct debit or bank transfer, both done immediately through the online system. You will then be able to access your personalised dashboard. As soon as you have finished this process, you will be sent an with confirmation of your subscription for the Bonds. Within 14 days, a copy of your Bond certificate representing your holding of Bonds will be available to view and download in the drop down menu found on your dashboard page. You will be reminded by when it is ready. Azurite is a trading name of Azurite ISA Bond Co 1 Limited The Azurite ISA is Managed and is a trading name of Northern Provident Investments Limited which is Authorised and regulated by the Financial Conduct Authority (FRN: ). As with any investment, your capital is at risk. 6

7 Investment through the Azurite ISA allows you to be a part of ambitious real estate and property growth plans in Monaco. Low-entry minimum investment of just 2,000 Fixed rate of interest of 8% per annum A fixed term length of 3 years 7

8 Your investement potential Finance illustration Year Opening balance Interest Accrued Closing investement balance 1 20,000 1,600 21, ,600 1,600 23, ,200 1,600 24,800 Total Net Return 24,800 Be in the know Head to for the latest news and information from Azurite about the Bond, the Azurite ISA, IFISAs and personal finance. Your dedicated account manager will keep you up to date with any investment news. 8

9 The investment process How it works When you invest through the Azurite ISA, Azurite ISA Bond Co 1 Limited issue mini-bonds, the funds raised from this bond are then used to invest in Monaco real estate projects. As a bond holder you can hold the bonds through the Azurite ISA which grants you access to a tax free*** income. Over a 3 year term your Azurite Investment is set to give you an 8% per annum tax free return. Azurite Limited intends to take advantage of the following investment opportunities: To purchase residential real estate from the developers of new Monaco based projects off plan and sell on to other investors or end residents prior to or on completion. To purchase tired residential real estate, add value through development, refurbishment and sell on. To purchase tired property and land surrounding Monaco, develop and sell on. The advantages of investing in Monaco real estate outlined earlier in this section would not apply to any developments in the surrounding area. The company will open credit line discussions with Monaco-based banks if deemed prudent to apply leverage to transactions. 9

10 The project Background to Azurite Bond and ISA Monaco - the destination for work, play and investment By investing through the Azurite ISA, your investment will ultimately be used to invest in real estate projects in Monaco, one of the most expensive and luxurious business and leisure destinations in the world. Here are five key reasons why Monaco is an attractive destination for property and real estate development: Monaco is a low-tax centre of commerce with the characteristics of a leisure destination. This makes it appealing to high-net-worth individuals as a place to live, do business and play. Prices have adjusted in the prime residential markets of many cities, yet Monaco s continue to rise, with property prices set to remain at record highs. The average resale price is 4.3m or 41,400 per square meter, up 180% in a decade. Monaco continues to face high demand from the world s high-net-worth individuals, which is driving price growth and plans for new property development. A dynamic city state, Monaco is planning for the future in order to cement its position on the global stage. The next decade will see expansion and land reclaimed from the sea, even ambitious urban renewal projects and interests outside Monaco s borders including the port of Ventimiglia. 10

11 The team The Azurite investment team Nigel Robertson Nigel moved to Monaco following the sale of his tech company in He continued to invest in tech start up s and was the largest single seed investor in asos.com. Following on from his success he has spent the last 20 years understanding and investing in the local residential property market in Monaco. John Hall A serial entrepreneur and investor with over 40 years period commercial experience including starting and acquiring companies in various sectors including property. Now based in Monaco, John s interests predominantly lie in tech, logistics and property. Stephan Balkin Stephan was educated at the American International School in Nice, France and graduated with a BBA at the Business School Lausanne, Switzerland. In 1994 he started real estate in the South of France. He joined a Monaco based real estate business in year 2000 before starting his own company, Balkin Estates, in 2005, which he still owns and runs today. Stephan has 24 years of experience in the real estate industry, 18 years in Monaco. 11

12 Case studies The following case studies are examples of Monaco residential development projects undertaken through Balkin Estates. These are case studies to show the level of profitability that could be achieved; they were not transacted by PropertyCo: Villa Mathilda Purchased : in March 2016 (including fees) Renovation costs : 120,000 Duration of the renovation : 6 months Sold: in 2017 Profit : 26% Villa Josephine Purchased : in June 2016 (including fees) Renovation costs : Duration of the renovation : 6 months Sold: in March 2018 Profit : 37% Villa El Mandar Building : Villa El Mandar Purchased : in June 2016 (including fees) Renovation costs : Duration of the renovation : 7 months Sold: in January 2018 Profit : 48% 12

13 The next step to invest Please post the following: 1 Your completed application 2 Proof of indentity 3 Proof of address addressed to: 1.02 Boat Shed, 12 Exchange Quay, Manchester M5 3EQ * Please be aware when investing, your capital is at risk and the value of your investment can go down as well as up. You may get back less than you invested. ** The fact that the bond is asset backed would not guarantee that all capital would be repaid. This also means that there is a liquidity risk and there is likely to be a delay in repaying your capital should you request it. *** Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. 13

14 Frequently asked questions What are the Bonds? The Bonds are non-readily realisable, secured, fixed interest, transferable, debt instruments issued by the Company. To secure the obligations of the Company, each of the Company, HoldCo and StreamCo has entered into a fixed and floating charge over all its present and future assets pursuant to the Group Security Documents. The Bonds allow Bondholders to lend money to the Company in exchange for interest payments. The Bonds pay a fixed rate of interest that does not change over its life. The original full face value of each Bond is returned 3 years after it is issued. The Bond is secured on the assets of the Company, HoldCo and StreamCo. The Security Trustee holds the security on behalf of Bondholders pursuant to the Security Trust Deed. What is the IFISA? The UK Government introduced the Innovative Finance ISA (IFISA) on 6th April This new type of ISA allows individuals to use some (or all) of their annual ISA investment allowance to invest into debentures such as the Bonds, and then to receive all the interest earned tax-free. It is important to understand that with an IFISA your capital is at risk and it is important you read the associated risks with this investment in the section entitled Risk Factors of this Information Memorandum. Can I transfer funds from an existing Cash ISA or Stocks and Shares ISA into my IFISA? Yes, in order to transfer the balance from existing cash or stocks and shares ISAs to the IFISA simply complete the Application, which can be found on the Website. The IFISA Plan Manager will then contact your existing ISA manager and send to you a document pack to review, sign and return in order to arrange the transfer on your behalf. Please be aware that there is a charge associated with transferring into the Azurite ISA which is listed in the Azurite ISA Terms and Conditions. You should also check with your current provider to determine if you will be charged any exit fees. Why should I invest in the Bonds? A subscription for the Bonds should enable you to potentially achieve: a) a higher return than you are likely to receive from your bank account, which reflects the additional risk. Please see the Section headed Risk Factors to find out more about the risks associated with subscribing for the Bonds; b) to potentially diversify your investment portfolio by investing in another asset class, if you do not already have similar debt instrument and have other investments; c) Competitive annual returns- benefit from bond terms with a fixed interest rate at 8%; a low minimum investment amount of 2,000. Who can invest in the Bonds? Individuals aged 18 or over or firms, trusts, and foundations based in the UK and other select overseas territories, except the USA. You must pass any anti-money-laundering and due diligence checks that we run and be one of the following types of Bondholders: Existing clients of a financial advisor who is regulated by the Financial Conduct Authority; Persons who meet the criteria for being an elected professional client in accordance with the FCA s Conduct of Business Rules (which are regulatory rules relating to investment advice) ( COBS ) 3.5; Persons who qualify as certified high net worth individuals in accordance with COBS 4.7.7; Persons who qualify as certified sophisticated Bondholders in accordance with COBS Persons who confirm that they will only invest 10% of their net assets in non-readily realisable securities in accordance with COBS (restricted Bondholders). 14

15 How much Interest can I expect, and when is Interest paid? The terms of the Bonds are set to pay interest at a fixed rate of 8% per annum. Interest will calculated on a simple basis and paid to each Bondholder on the Redemption Date or repurchase of the Bond. A fee for the IFISA Plan Manager will be deducted from interest payments due to Bondholders. The fees payable are detailed in the Azurite ISA Terms and Conditions. The fee will be at a rate of 0.5% per annum of the amount of Bonds subscribed for. How do I get started? Register via the Website. This should take about five minutes. Start by clicking on the Request Call Back or Invest Now buttons on the home-page First, enter your basic personal details (name, date of birth, , mobile, address, and choose a password) and read fully and agree to the Azurite ISA Terms and Conditions and Privacy Policy, possibly providing further identification details if requested by the anti-money laundering requirements. Then select the investor type you are next, choose how much you want to invest. Pay (in Sterling only), either by a one-off direct debit or bank transfer, both done immediately through the online system. You will then be able to access your personalised dashboard. As soon as you have finished this process, you will be sent an with confirmation of your subscription for the Bonds. Within 14 days, a copy of your Bond certificate representing your holding of Bonds will be available to view and download in the drop down menu found on your dashboard page. You will be reminded by when it is ready. How much can I invest? Any amount of Bonds can be purchased, subject to a minimum per Application of 2,000 through the IFISA and 10,000 direct, until the subscription limit is met. How can I check how much I have invested in the Bonds? Click on the Sign in box in the top-right of the Website home-page. Sign in with your username and password (if you have forgotten your password, see I have forgotten my password. What should I do?). The dashboard will show you how much you have invested. Here you can invest more, view important documents, and change your account details. What are the risks of subscribing in the Bonds? Please read fully and carefully consider the section entitled Risk Factors. Am I protected by the Financial Services Compensation Scheme (FSCS)? The Bonds are secured investments and FSCS protection does not apply to them. Therefore, if the Company were to become insolvent or go out of business, holders of Bonds may lose all or part of their investment in the Bonds and no government or other body would be required to compensate them for such loss. There are two types of relevant FSCS protection that apply to Bondholder: deposits and investments. Deposit protection applies when money belonging to Bondholders is held in the Client Account. With investments in Bonds, this occurs initially when investor money is transferred to us to make an investment and when interest repayments and the repayment of capital are being held on behalf of Investors. While the money is in a Client Account (which is likely to be a short period) it is protected by the FSCS deposit protection which is currently 85,000 per person. Investment scheme protection may be available in cases where loss is incurred by factors such as misspelling or misrepresentation on the Company s part, on or on the part of its appointed representatives. The FSCS investment protection is currently up to 50,000 per person. 15

16 Frequently asked questions This is unlikely to significantly affect the risk that Bondholders assume when subscribing in the Bonds. The FSCS is a fund of last resort to cover any claims Bondholders might have against a firm that is in default. However, this will only be applicable to the IFISA Plan Manager and not to the Company itself. For more detail on the FSCS and their eligibility criteria see their website. Am I eligible to use the Financial Ombudsman Service (FOS)? In the first instance of any concerns that you may have with the Company please contact our customer services team at info@azuriteisa.co.uk so that we can investigate your complaint fully. Please ensure that you include all of the following information: your full name and address, your investment details, what has happened / gone wrong, and how you would like us to put it right. A member of the team will acknowledge receipt of your and will investigate the matter thoroughly before responding fully within five working days. In the event you feel that we have not resolved your concern satisfactorily, you may be entitled to complain directly about the Company, the operator of the platform, or the IFISA Plan Manager (which has approved the Memorandum) for the purpose of FSMA 2000), the operator of the Client Account, directly to the Financial Ombudsman Service. For more detail on the Ombudsman and their eligibility criteria see their website. Who is responsible for making Interest payments to me? The Company (or the IFISA Plan Manger on its behalf) is responsible for ensuring that interest is being paid to Bondholders. Interest payments are paid directly into the Bondholder s Account. Can I transfer my Bonds to someone else? Bonds are non-readily realisable securities but are transferable and Bondholders may at any time after they have been issued request that they be made available for sale on the Website for the original full face value and with the rate of Interest applicable to that Bond (and regardless as to whether the purchaser has instructed a Financial Advisor in respect of the purchase or whether the purchaser is making the purchase directly). The Company does not guarantee that Bonds listed for transfer will be purchased by other Bondholders and a transfer fee payable to the IFISA Plan Manger of 0.5% of the original full face value of the Bond which is being transferred plus a flat fee of 100 will be applied on the date of the transfer. Should you wish to transfer your Bond, please contact the Registrar via at mail@mgcs.com. Can I get my investment back early? The Company pays you a fixed rate of interest on the basis that, except in exceptional circumstances (see What happens to my Bonds if I die?) your money stays invested for the whole of the agreed term. It is possible to offer Bonds for sale to other Bondholders via the Website. We will look at early-redemption applications on an exceptional basis and will endeavour to help Bondholders where possible but it is important that you understand that you are committing your money for the term of the Bond you select. This is also covered in the Risk Factors section. What happens to my Bonds if I die? If you die while owning Bonds, your investment can be transferred to an authorised person acting on behalf of the estate. If you are acting on behalf of the estate of a deceased investor who owns Bonds, please mail@mgcs.com Can the Company prematurely redeem the Bonds? The Company has a right to redeem the Bonds prior to their Redemption subject to the payment of principal Interest outstanding on the Bonds up to their Redemption Date. What happens if I change my mind? You have the right to cancel your investment account within 14 days after the date you receive an from the IFISA Plan Manager to confirm that you have had your ISA application accepted. After this, you generally cannot get your investment back until the end of the term (see Can I get my investment back early?). To cancel within the first 14 days, please , telephone or write to the IFISA Plan Manager in accordance with the Azurite ISA Terms and Conditions. I have forgotten my password. What should I do? You can request for your password to be reset from the Website. How can I amend my account details? You can do this on your personalised dashboard. 16

17 Capital at Risk Any decision to subscribe for Bonds should be based on consideration of this document as a whole, and any investment is subject to the terms of those Bonds set out in the Subscription Agreement, the Security Document and the Security Trust Deed which are each appended hereto. Any decision to subscribe for Bonds through the Azurite Innovative Finance ISA ( Azurite ISA ) shall be made subject to the Azurite ISA Terms and Conditions and the Application form you complete to make a subscription to a Azurite ISA. Prospective holders of Bonds should review the terms of these documents carefully before making a decision to invest. Please refer to the specific risk factors relating to investment through an ISA below. All decisions to subscribe for Bonds shall be subject to the Terms and Conditions for Bonds and the same considerations should be made in respect of this. Before making an investment decision, prospective holders of Bonds should (i) ensure that they understand the nature of the Bonds and the extent of their exposure to risk; (ii) consider carefully, in the light of their own financial circumstances and investment objectives (and those of any accounts for which they are acting) and in consultation with such legal, financial, regulatory and tax advisers as it deems appropriate, all the information set out in this Information Memorandum so as to arrive at their own independent evaluation of the investment and (iii) confirm that an investment in the Bonds is fully consistent with their respective financial needs, objectives and any applicable investment restrictions and is suitable for them. The Bonds are not a conventional investment and carry various unique investment risks, which prospective holders of Bonds should understand clearly before subscribing in them. In particular, an investment in the Bonds involves the risk of a partial or total loss of investment. Risk factors relating to the Company The Company may become insolvent Subscribing for Bonds means that Bondholders are lending money to the Company. Bondholders will not become shareholders or have any ownership stake in the Company. Instead, subject to the risks that we describe here, Bondholders will receive interest and at the end of the term of each Bond (when it matures), their initial investment amount back. Investing in Bonds involves the risk of the Company becoming insolvent. Should this happen, Bondholders may lose some or all of their initial investment or all of any outstanding or future expected interest payments. The principal assets of the Company will be its loans to HoldCo funded by the issue proceeds of the Bonds. The Company will have no significant assets other than the loans made to HoldCo from time to time out of the issue proceeds of the Bonds. Such loans will be used by HoldCo itself to onward lend to PropertyCo who will then invest into Monaco and surrounding areas based real estate projects. The Company is still obliged to pay amounts it owes to the Bondholder pursuant to the Bonds. Accordingly, economically the Company will be reliant upon the ability of PropertyCo to repay its loans to HoldCo and for HoldCo to repay its loans to the Company. PropertyCo will ultimately be reliant on its ability to sell the properties it has purchased to be able to repay its loan to HoldCo. Ultimately therefore, the Company s ability to repay the Bondholders will be entirely dependent on the buoyancy of the Monaco and surrounding areas property market. A commercial decision will be taken on the risks and rewards of such financing through robust due diligence processes carried out by experienced advisors. Thorough due diligence and strict monitoring of operations have the effect of reducing uncertainty and unpredictability. The Company s security may be insufficient to repay the Bondholders The position in respect of the Group Security Documents is set out in more detail in Part [7]. Whilst the Security Trustee may take security over the assets of the Company, HoldCo and/or PropertyCo the underlying assets of the Company, HoldCo and/or PropertyCo over which a charge has been granted may be insufficient to repay the secured creditors and the Security Trustee may receive less than owed. In that situation the Company may not be able to pay what it owes to the Bondholders. New rules, regulations and laws could create additional burdens for the Company The Company will be under a duty to comply with any new rules, regulations and laws applicable to its operations. Compliance with these rules, regulations and laws could create additional burdens for the Company and could have a material adverse effect on its ability to make payments to Bondholders. 17

18 Capital at Risk There may be changes in the Company s tax status or in taxation legislation Any change in the Company s tax status or in taxation legislation could affect the profitability of the Company and its ability to make payments to Bondholders. The Company has not been assigned a credit rating At the date of this Information Memorandum, the Company has not been assigned a credit rating by any independent credit rating agency and, accordingly, the Bonds have not been assigned a credit rating by any independent credit rating agency. Accordingly, Bondholders will need to make their own assessment of the credit of the Company, The Company, HoldCo and PropertyCo and the other factors which may affect the value of the Bonds without the benefit of an independent credit rating. Company reliance on other third parties The Company will also be party to contracts with a number of other third parties who will perform services in relation to the Company and/or the Bonds. In the event that any of the above parties were to fail to perform their obligations under the respective agreements to which they are a party, Bondholders may be adversely affected. The Company may decide to reinvest funds HoldCo may be in a position to repay all of the loans to the Company, with accrued interest, prior to the maturity date of the Bonds. Were that to happen, the stated intention of the Company s directors is to reinvest those funds, probably by way of further lending subject to certain parameters intended to make it similar to the loans made to HoldCo. As with any commercial lending, that would be likely to carry similar risks to those involved in the Company s loans to HoldCo (see below). The Company would not be bound to seek the consent of Bondholders before reinvesting funds in this manner. Conversely, if the Company decided not to reinvest funds and instead to repurchase Bonds, Bondholders would cease to enjoy the benefit of interest from the date of repurchase. Risk factors relating to HoldCo The principal assets of HoldCo will be its loans to PropertyCo HoldCo will have no significant assets other than the loans made to PropertyCo from time to time. HoldCo is still obliged to pay amounts it owes to the Company. Accordingly, economically HoldCo will be reliant upon the ability of PropertyCo to repay the PropertyCo Loans. PropertyCo will ultimately be reliant on its ability to generate a profit from its real estate investments in order to repay its loan to HoldCo. Accordingly, subscribing in Bonds involves the risk of HoldCo becoming insolvent. Should this happen, HoldCo may be unable to repay their obligations under the HoldCo Loan Agreements to the Company and this, in turn, could result in the Company having insufficient funds to repay the Bonds. HoldCo s security may be insufficient to repay the Bondholders The position in respect of the Group Security Documents is set out in more detail in Part 7. Whilst the Security Trustee may take security over the assets of the Company, HoldCo and/or PropertyCo, the underlying assets of the Company, HoldCo and/or PropertyCo over which a charge has been granted may be insufficient to repay the secured creditors and the Security Trustee may receive less than owed. In that situation the Company may not be able to pay what it owes to the Bondholders. New rules, regulations and laws could create additional burdens for HoldCo HoldCo will be under a duty to comply with any new rules, regulations and laws applicable to its operations. Compliance with these rules, regulations and laws could create additional burdens for the HoldCo and could have a material adverse effect on its ability to make payments to the Company. There may be changes in HoldCo s tax status or in taxation legislation Any change in HoldCo s tax status or in taxation legislation could affect the profitability of HoldCo and ultimately its ability to make payment to the Company.

19 HoldCo reliance on other third parties HoldCo will also be party to contracts with a number of other third parties who will perform services. In the event that any of the above parties were to fail to perform their obligations under the respective agreements to which they are a party, Bondholders may be adversely affected. HoldCo s management team may change HoldCo s ability to successfully operate is largely dependent on the efforts, abilities and services of senior management and other key employees. The success of HoldCo will also depend on its ability to attract and retain qualified personnel. HoldCo may decide to reinvest funds PropertyCo may be in a position to repay all of the loans to HoldCo, with accrued interest, prior to the maturity date of the Bonds. Were that to happen, the stated intention of HoldCo s directors is to reinvest those funds, probably by way of further lending subject to certain parameters intended to make it similar to the loans made to PropertyCo. As with any commercial lending, that would be likely to carry similar risks to those involved in HoldCo s loans to PropertyCo (as to which see below). HoldCo would not be bound to seek the consent of Bondholders before reinvesting funds in this manner. Risks relating to PropertyCo PropertyCo may become insolvent PropertyCo s principal assets will be in the form of Monaco and surrounding areas based properties. PropertyCo will utilise the funds borrowed from HoldCo for the purpose of buying these properties Accordingly, subscribing in Bonds involves the risk of PropertyCo becoming insolvent. Should this happen, PropertyCo may be unable to repay its obligations under the loan agreement to HoldCo and this, in turn, could result in HoldCo having insufficient funds to repay the Company, which in turn, may result in the Company having insufficient funds to repay the Bondholders. New rules, regulations and laws could create additional burdens for PropertyCo PropertyCo will be under a duty to comply with any new rules, regulations and laws applicable to its operations. Compliance with these rules, regulations and laws could create additional burdens for PropertyCo and could have a material adverse effect on its ability to make payments to HoldCo. Property prices within the Monaco property market may fluctuate. The Monaco property market, like all property markets is cyclical and values may go up or down depending on a range of issues including political, economic and social issues. Historic performance of the property market or a particular property is not a reliable guide to future performance. A future downturn in the real estate market could severely adversely affect the value of any investments propertyco has made. There may be changes in PropertyCo s tax status or in taxation legislation Any change in PropertyCo s tax status or in taxation legislation, or which may affect PropertyCo could affect the profitability of PropertyCo and its ability to make payments to HoldCo pursuant to the [PropertyCo Loan Agreement.] PropertyCo s Reliance on other third parties PropertyCo will also be party to contracts with a number of other third parties who will perform services in relation to the Purpose. In the event that any of the above parties were to fail to perform their obligations under the respective agreements to which they are a party, Bondholders may be adversely affected. PropertyCo s management team/ advisory committee may change PropertyCo s ability to successfully operate is largely dependent on the efforts, abilities and services of senior management and advisory committee. The success of PropertyCo will also depend on its ability to attract and retain qualified personnel. 19

20 Capital at Risk Risk factors relating to BVICo Ultimate holding company BVICo is the parent company of HoldCo and as such, the ultimate holding company of the Company and PropertyCo ( Group ). BVICo will engage in contracts on behalf of each of the respective Group companies. As such BVICo will face the following risks: BVICo may become insolvent There is a general risk that the BVICo may face financial difficulty in the future and become insolvent. Should this happen, BVICo may be unable to pay its third party contractors with whom it engages on behalf of the respective Group companies. This in turn could effect the viability of the Purpose and the ability of the Company to repay the Bonds. New rules, regulations and laws could create additional burdens for BVICo BVICo will be under a duty to comply with any new rules, regulations and laws applicable to its operations. Compliance with these rules, regulations and laws could create additional burdens for BVICo. There may be changes in BVICo s tax status or in taxation legislation Any change in BVICo s tax status or in taxation legislation, or which may affect BVICo could affect the profitability of BVICo. BVICo s Reliance on other third parties BVICo will also be party to contracts with a number of other third parties who will perform services in relation to the Purpose. In the event that any of the above parties were to fail to perform their obligations under the respective agreements to which they are a party, Bondholders may be adversely affected. Risk factors relating to the Bonds The Bonds are not protected by the Financial Services Compensation Scheme ( FSCS ). Therefore, if the Company were to become insolvent or go out of business, Bondholders may lose all or part of their investment in the Bonds and no government or other body would be required to compensate them for such loss. There are two types of relevant FSCS protection that apply to Bondholders: deposits and investments. Deposit protection may apply in relation to administration of subscription monies and your ISA plans in relation to cash balances in one or more UK based bank accounts. Deposits held by UK based bank accounts are covered by the FSCS up to a minimum of 85,000 in the event of the deposit taker s default. Note that any other deposits you hold with the relevant bank(s) will also count towards this limit. With investment in Bonds, this occurs an issue when the investor money is transferred to us to make an investment and when interest repayments and the repayment of capital are being held on behalf of Bondholders. This client account will be managed by the IFISA Plan Manager. The Financial Services Compensation Scheme (FSCS) provides cover in the event that an FCA authorised firm cannot meet its obligations to certain eligible Bondholders, in which case there may be an entitlement to compensation from the FSCS depending on the type of investment and the circumstances of the claim. The FSCS protection may apply in respect of ISA Plan Management Services in relation to the IFISA Plan Manager s administration of your ISA accounts but it is not relevant to losses arising in respect of the value of the Bonds which are the investments of those ISA contracts and there will be no FSCS protection at all should you subscribe to bonds outside of the ISA wrapper. The FSCS is designed to cover certain claims eligible Bondholders might have against a firm that is in default. For more detail on the FSCS and their eligibility criteria see their website Bonds may be difficult to transfer Whilst the Bonds are transferable and whilst Bondholders may request that the Company makes their Bonds available for sale, there is no guarantee that the Bonds will be purchased by other prospective Bondholders nor is there any guarantee regarding the time it will take to complete the transfers or whether purchasers will be found. Factors affecting the ability to transfer may include, but are not limited to, market appetite, inflation, the time of redemption, interest rates and the current financial position and an assessment of the future prospects of the Company. The Bonds are categorised as illiquid assets and are non-readily realisable securities. There will be no ready market in which the Bonds may be sold 20

21 No application has been made to any Recognised Investment Exchange or MTF for the listing of the Bonds and there is no certainty that Bonds will be converted into Listed Bonds, and so there may be no ready market in which the Bonds may be sold which may, therefore, make them difficult to sell. If the Group Security Documents are enforced, Bondholders may not receive all amounts due Pursuant to the Group Security Documents, the Company, HoldCo and PropertyCo have each covenanted with the Security Trustee to pay to the Security Trustee, as trustee for the Bondholders, on demand, all monies owing by the Company to the Bondholders or to the Security Trustee (the Secured Obligations ) as and when they are due for payment. The Company, HoldCo and PropertyCo have each charged to the Security Trustee, as trustee for the Bondholders, by way of fixed (i.e. a charge relating to specific assets of a company) and floating (i.e. a charge over assets that change in quantity and/or value from time to time) charges as security for the payment and discharge of the Secured Obligations, the assets of the Company, HoldCo and/or PropertyCo (as applicable). On a winding up of the Company, HoldCo and/or PropertyCo, distributions would be made to its creditors, which would include the Bondholders, in accordance with a statutory order of priority. The expected ranking of the Bonds compared with other creditors will be as set out in the following table. Any assets of Bonds may be difficult to transfer. There will be no ready market in which the Bonds may be sold. If the Security Document is enforced, Bondholders may not receive all amounts due. On a winding up of the Company, HoldCo and/or PropertyCo, the Bondholders would rank in priority, with regards to the proceeds from those assets, behind the expenses of the liquidation, as regards the proceeds of fixed assets and as regards the proceeds of enforcement of a floating charge, behind the proceeds due to the holders of other fixed charges and the proceeds due to any preferential creditors, as highlighted in bold below: Ranking Type of Obligation Example of Obligation First Expenses of the liquidation Currently none Second Proceeds of fixed charge assets The assets of the Company, HoldCo and/or PropertyCo (as applicable) secured by the fixed charge created under the Group Security Document Third Preferential creditors Currently none Fourth Proceeds of floating charge assets The assets of the Company, HoldCo and/or PropertyCo (as applicable) secured by the floating charge created under the Group Security Document (which will include the Bonds) Fifth Unsecured creditors All other creditors Sixth Shareholders of the Company Requirement to distribute to the shareholder of the Company, HoldCo and/or PropertyCo (as applicable) If the Group Security Documents are enforced by the Security Trustee upon an Event of Default, the Company, HoldCo and/or PropertyCo, may have insufficient assets to allow Bondholders to be paid all amounts, whether of Interest or repayment of the original investment amount, due to them. If the Group Security Documents are enforced the Security Trustee receives payments in priority to Bondholders Upon the enforcement of the Group Security Documents by the Security Trustee upon an Event of Default, whilst the enforcement can be undertaken by the Security Trustee acting in its sole discretion without the need for the Bondholders having to incur the costs which would have been incurred by the Security Trustee if a meeting of the Bondholders had been required, in accordance with the terms of the Security Trust Deed the Bondholders have a right to be paid amounts due to them only after payment of the remuneration, costs, expenses and liabilities due and payable to the Security Trustee, including costs incurred by it (or any receiver appointed by it) in enforcing the Group Security Documents, which may be considerable and which will reduce the amount available for distribution to Bondholders. Bonds pay a fixed rate of Interest Bonds pay a fixed rate of Interest and there is a risk that a fixed rate will become less attractive if interest rates available elsewhere go up. Similarly, high inflation could adversely impact the real (inflation adjusted) return to a Bondholder. 21

22 Capital at Risk A Bondholder Resolution may be passed against the wishes of a Bondholder or a group of Bondholders In accordance with the terms of the Subscription Agreement, Bondholder Resolutions are passed by a majority of the Aggregate Nominal Amount of the Bonds. There will be no separate meetings of Bondholders holding a particular Series. This may mean that a Bondholder Resolution is passed against the wishes of a Bondholder. Investors applying for Bonds directly will not receive the additional rights and protections applicable to Bondholders who are advised by a Financial Advisor Investors applying for Bonds directly will not receive the additional rights and protections applicable to Bondholders who are advised by a Financial Advisor and which are triggered by their relationship with a Financial Advisor (not with the Company), and which may include: a suitability assessment in the form of a personal recommendation by the Financial Advisor to say that Bonds are suitable for an individual investor s circumstances; and additional recourse to Financial Services Compensation Scheme investment protection and the Financial Ombudsman Service which may cover cases where loss has been caused by bad investment advice (although as stated in the risk factors on page 12, Bonds themselves are not protected by the FSCS). Risk factors relevant to investment in Bonds through an Innovative Finance ISA Investment made through a Azurite ISA may only be made on the terms set out in the Azurite ISA Terms and Conditions and the Application form which an investor signs to subscribe for such an ISA. Investors must review carefully the terms set out in these documents before applying for a Azurite ISA account. The IFISA Plan Manager is Northern Provident Investments Limited which is Authorised and regulated by the Financial Conduct Authority. A client money services provider (as designated by the IFISA Plan Manager from time to time) holds the client monies in relation to the Azurite ISA in segregated account per Bondholder (each a Bondholder Account ). Investors are clients of the IFISA Plan Manager and the ISA Client Money services provider, and all rights and entitlements with respect to that client relationship are set out in the Azurite ISA Terms and Conditions to which Bondholders must refer. Should investment be made in bonds outside of the Capital ISA Investors will not be clients of the IFISA plan managed and the firm will simply facilitate investment within the bond for the investor on behalf of the company. The IFISA Plan Manager (or any of its relevant partners for which the IFISA Plan Manager makes arrangements or procures that arrangements are made in respect of the Azurite ISA) cease to hold the necessary permissions in order to carry out their respective roles, it is expected that all reasonable efforts will be made to transfer the Azurite ISA contracts to another suitably authorised firm which can act as the IFISA Plan Manager, or make suitable alternative arrangements for alternative partners, but such is not guaranteed. The Azurite ISA may be terminated in accordance with the Azurite ISA Terms and Conditions in certain circumstances. Fees payable to the IFISA Plan Manger may significantly reduce returns for subscribers. The fees payable by Bondholders to the IFISA Plan Manager are set out in the Azurite ISA Terms and Conditions. Subscribers investing smaller sums in the Azurite ISA should be particularly aware of these fees (especially where a fixed fee applies) and should carefully consider the impact these could have on the proposed investment. The legislation relating to IFISAs may change. Levels of tax and tax relief could change in the future. Marketing The Marketing Firm promotes both the Bonds and the ability to hold them through the Azurite ISA on terms [1] [2] which have been agreed between the Company and the Marketing Firm. The Company has appointed the Marketing Firm as its agent with the intention that this will enable the Marketing Firm to carry on any exempt activities for the purposes of the UK s Financial Services and Markets Act 2000 ( FSMA ) which are involved in connection with the marketing of the Company s Bonds on the basis agreed between the Marketing Firm and the Company. The involvement of the Marketing Firm is dependent on the Marketing Firm s continued appointment as the Company s agent. The Company and the Marketing Firm each have the right to terminate the appointment of the Marketing Firm at any time on one month s notice. Should it decide to do so, the parties would need to discuss alternative arrangements, whether by the appointment of another agent or the making of arrangements with a suitably authorised firm for promotion activities or an appointed representative thereof. 22

23 In the event that the appointment of the Marketing Firm were to terminate prior to the maximum subscription amount of the Bonds being achieved the continued progress of the Purpose (either to timescale or at all) would be threatened. This might result in the Company being unable to redeem the Bonds, plus accrued interest thereon, on their Redemption Date or at all. There may be changes in the law, regulations or administrative practices The structure of the issue of the Bonds is based on English law, regulatory and administrative practice in effect as at the date of this Information Memorandum, and has due regard to the expected tax treatment of all relevant entities under UK tax law and the published practice of HMRC in force or applied in the UK as at fee date of this Information Memorandum. No assurance can be given as to the impact of any possible change to English law, regulatory or administrative practice in the UK, or to UK tax law, or the interpretation or administration thereof or to the published practice of HMRC as applied in the UK after the date of this Information Memorandum. The Security Trustee is not responsible or liable, for any loss incurred by the Bondholders relating to a failure of the Company to make payments The Security Trustee is not responsible, nor will it be liable, for any loss incurred by the Bondholders relating to a failure of the Company to make payments (whether of Interest or repayment of the original investment amount) to the Bondholders when due. Modification and waivers The Terms and Conditions contain provisions for calling meetings of Bondholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Bondholders including Bondholders who did not attend and vote at the relevant meeting and Bondholders who voted in a manner contrary to the majority. The Terms and Conditions also provide that the Security Trustee may, without the consent of all the Bondholders, agree to certain modifications of, or to the waiver or authorisation of certain breaches or proposed breaches of, any of the provisions of the Bonds. Azurite ISA is a trading name of Northern Provident Investments Limited which is Authorised and regulated by the Financial Conduct Authority (No ). Registered in England and Wales (No ). Northern Provident Investments Limited is not covered by the Financial Services Compensation Scheme. Northern Provident Investments Limited is registered with the Office of the Information Commissioner No. ZA Registered Office: Northern Provident Investments Limited, 3rd Floor, 207 Regent Street, London W1B 3HH 23

24 6 Snow Hill London EC1A 2AY United Kingdom T: E: Azurite ISA is a trading name of Northern Provident Investments Limited which is Authorised and regulated by the Financial Conduct Authority (No ). Registered in England and Wales (No ). Monaco is currently investing extensively in it s infrastructure to secure its position as a world- class business and leisure destination. What the Azurite ISA provides, is an opportunity to invest at a low entry level and to be part of this ambitious real estate and property growth plans.