Renewable Energy Fund

Transcription

1 For discussion purposes only not suitable for retail clients Renewable Energy Fund Trusted Alternatives Summary Document March 2013 Under The Enterprise Investment Scheme

2 Summary Document The following key points are a summary of the opportunity to subscribe to the Old Burlington Investments Renewable Energy Fund. Please ensure you read the full text of the Old Burlington Investments Renewable Energy Fund Information Memorandum. The information set out in this summary is being provided for information purposes only and does not constitute or form part of an offer for sale of any interest in the fund. Offer Details Launch Date 1 January 2013 Closing Date 1 : Minimum Individual Investment 5,000 Minimum Fund size 2 The earlier of full subscriptions or 5 April million EIS Benefits Maximum Fund size 3 10 million Investors in EIS qualifying companies can, depending on their individual circumstances, enjoy some or all of the following benefits: Up to 30% income tax relief, reducing the cost of investment to 70p per 1 invested 1. The Manager reserves the right at its discretion to extend the closing date 2. The Manager reserves the right at its discretion to decrease the minimum fund size 3.. The Manager reserves the right at its discretion to increase the maximum fund size Fees & Charges Initial fee 3.5% Exemption from capital gain tax (CGT) on gains made from the disposal of EIS shares after three years Annual fees 2.15% (1.95% Annual Investment Advisory Fee, 0.2% Fund Manager Fee) Unlimited deferral of capital gains realised in the three years prior to, or up to 12 months after, investments made by the fund Income tax or CGT relief for a loss made on the disposal of EIS shares Inheritance tax relief if shares are held for more than two years there is no limit on the amount of the investment qualifying for this relief Custodian/nominee annual fee 0.25% RDR equivalent arrangements for any fee or other charges payable to investors' advisers are referred to in the Information Memorandum Performance fee 35% on gains over 100p per 100p invested but only if annual hurdle rate of 5% is achieved 2 Old Burlington Investments

3 Investment Outline We ve designed the Old Burlington Investments Renewable Energy Fund to bring together the principal benefits available from Enterprise Investment Scheme (EIS) qualifying companies trading in the renewable energy and energy efficiency markets. Investors can enjoy the strong regulatory framework offered by EIS combined with the ability to take stakes in a portfolio of smaller and dynamic companies in an exciting and topical industry. Renewable investments offer stable technologies and very robust revenue streams, with this fund providing the opportunity to benefit from the skills of specialist asset managers with exceptional handson experience of the renewable energy and energy efficiency markets. The fund focuses on durable revenues from state backed Feed in Tariffs (FITs), Renewable Energy Obligation Certificates (ROCs) and equivalent government incentives designed to decrease the UK s dependence on fossil fuels and increase its proportion of energy from renewable sources. Our cornerstone strategy is to work with sector specialists in each renewable market and we are proud to introduce our association with Bluefield Partners LLP, a leading solar photovoltaic asset manager. Working with Bluefield, the Fund will initially focus on operational solar energy infrastructure businesses. The solar PV sector offers a combination of low technology and operational risk, attractive stable yields over extended periods, low maintenance and high levels of cash generation; qualities which differentiate these assets from many other energy related investments. Bluefield works extensively with institutional investors and will apply the same opportunity analysis and approval processes for opportunities it presents to Old Burlington Investments. Key Benefits Assuming a four year investment period: Target return for 100p invested of 131p (120p after deduction of Performance Fee). Target net annual rate of return of net investment of 15.38% (13.10% after deduction of Performance Fee) Target gross equivalent annual rate of return on investment of 24.2% (21.6% after deduction of Performance Fee) Managed with a conservative investment strategy that aims to provide investors with mediumterm growth prospects Working with a specialist renewable asset manager and future revenues underpinned by government backed revenues and contractual income Investments in cash generative businesses Use of stable and proven technologies including solar, hydro electric, landfill gas, biomass and anaerobic digestion Socially responsible investment that offers diversification from traditional asset classes Wide range of exit routes, after minimum EIS qualifying holding period of three years, including selling energy assets to electricity companies, infrastructure funds, refinancing or management buyout EIS tax reliefs enhance returns, whilst also providing additional risk mitigation Suitability This product may be a suitable for you if you fall into one (or more) of the following categories. You should, however, seek financial advice before making any investment. You are seeking portfolio diversification and want exposure to alternative investments You are keen to expand your socially responsible investments You can make effective use of the broad range of EIS tax reliefs available You have been impacted by the reductions in pension allowances and are looking to supplement your existing pension portfolio You are looking for an investment with a holding period of three to five years You are a UK resident non dom under EIS you can bring offshore funds onshore and if invested within 45 days can generate EIS tax reliefs on your other UK taxable earnings Old Burlington Investments Renewable Energy Fund 3

4 Why Renewables? Renewable energy and energy efficiency have emerged as two of the most significant areas for private investment for two good reasons: firstly, the widely understood urgency to address climate change targets and, secondly, the severe funding constraints facing renewable energy and energy efficiency businesses in the UK due to the current economic downturn. With the global consumption of energy projected to grow by 45% between 2006 and 2030, global warming will become an even greater issue. At the same time, the UK is facing an energy shortage and over the next five years up to 20% of its generation capacity will be decommissioned. The UK Government wants to ensure that renewable energy fills some of this generation gap and as a result, action is required sooner rather than later to ensure that renewable energy is obtained at a cost that keeps the UK economy competitive. Asset Manager Established in 2009, Bluefield is a leading UK based solar specialist that works with institutional as well private investors. Team members have between them engaged in the financing of over 17 billion infrastructure and energy transactions, including 225 million of solar. Working with Bluefield and its select group of solar energy construction and manufacturing specialists, Old Burlington Investments will seek to finance businesses focused on generating electricity from largescale, ground based solar PV farms generating revenues from long term Power Purchase Agreements and 20 year government backed indexlinked ROCs. The primary investment objective is to deliver stable yields and capital appreciation, avoiding development and construction risks wherever possible. Bluefield will advise on investee selection, optimising assets during their investment lifetime and maximising disposal value on any later exit. Fund Structure Investors Old Burlington Investments 1 Investment Adviser Custodian/Nominee Fund Management Thomson Taraz Fund Manager Investee Co. Investee Co. Investee Co. Investee Co. Asset Management Bluefield LLP Asset Manager 1 Old Burlington Investments is the trading name of Old Burlington Ventures LLP (OBV). OBV is an appointed representative of Sturgeon Ventures LLP which is regulated by the Financial Services Authority 4 Old Burlington Investments

5 Typical 4MW solar PV "buy and operate" EIS Solar PV Company ( m) Gross Investment 5.00 Capital Expenditure (4.68) Funding costs (0.25) Revenue Operating Costs (0.23) (0.24) (0.24) (0.25) Taxation (0.01) Net movement Opening cash balance Closing cash balance Operating Asset Value 5.23 Total Realisable Value 6.56 Less Carried Interest (0.55) Net proceeds to investors 6.01 This illustration is furnished for illustrative purposes only and is not intended to be indicative of future returns and does not represent a definitive forecast. Operating Asset Value is based the PV of future cash flows discounted at 8%. Financial Illustration 1 Investment Subscription Less Income Tax Relief at 30% Net Cost of Subscription Target Return (before tax relief) Target Return per 100p invested (before tax relief) Target Annual Rate of Return of Net Investment Target Gross Equivalent Rate of Return 2 Target Gross Return 3 ( ) 100,000 (30,000) 70, , p 15.4% 24.2% Target Net Return 4 (less Performance Fee) ( ) 100,000 (30,000) 70, , p 13.1% 21.6% 1. Based upon a single investment of 100,00 and current bank interest rates and 45% tax rates. The illustration assumes a realisation of the investment in each Investee Company four years after investment and that income tax relief is claims against the 2012/13 tax year at a rate of 30%. 2. The Target Gross Equivalent Annual Rate of Return is the rate of return that a 45% income tax rate investor would need to achieve from an equivalent invesment in order to match the return as provided by the Fund. 3. The Target Gross Return is the expected return before deduction of the Performance Fee. 4. The Target Net Return is the expected return after deduction of the Performance Fee. The illustration above is furnished for illustrative purposes only and is not intended to be indicative of future returns and does not represent a definitive forecast. Old Burlington Investments Renewable Energy Fund 5

6 Risk factors An investment in the fund involves significant risk and you are strongly recommended to seek independent professional advice before proceeding. A comprehensive discussion of the risk factors can be located in the Old Burlington Investment Renewable Energy Fund Information Memorandum, but some of the principal risks have been outlined below: The performance of the fund is contingent on the suitable investments being identified which will meet the EIS qualifying trade rules throughout the relevant period. There is no guarantee that the objectives of the fund will be met. The value of EIS qualifying shares and the income from them can go down as well as up. You may not get back the full amount invested and may, therefore, lose some or all of your investment. The various tax benefits described in this document are based on our understanding of the existing legislation and HMRC practice, which may be subject to change in the future. Next Steps You should consult your financial adviser to discuss this investment opportunity in more detail. Once a final decision is made, your adviser will complete the necessary application forms. For further information or a copy of our Information Memorandum and application forms, please speak to your financial adviser.you can also call us on or us at info@oldburlington.com. Important Information This Executive Summary is a summary of the Information Memorandum for the fund. This information does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for the fund. The content of this promotion has not been approved by an authorised person within the meaning of the Financial Services and Markets Act Reliance on this promotion for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. Any decision in connection with an investment in the fund should be made only on the basis of information contained in the Information Memorandum. If you are in any doubt about the content of the Information Memorandum, and/or this document and/or any action you should take, you are strongly recommended to seek advice from an independent financial adviser authorised under Financial Services and Markets Act 2000 (FSMA) who specialises in advising on opportunities of this type. Nothing in this document or the Information Memorandum constitutes investment, tax, legal or other advice by the manager and your attention is drawn to the section headed Risk Factors in the Information Memorandum. An investment in the fund will not be suitable for all recipients of this document or the Information Memorandum. Any references to tax laws or rates in this Executive Summary are subject to change. Past performance is not a guide to the future performance and may not be repeated. The value of the shares can go down as well as up and you may not get back the full amount invested. You should consider an investment in the fund as a mediumterm investment. Investments made by the Fund are likely to be illiquid. This document has been issued by Old Burlington Ventures LLP, 10 Old Burlington Street, London, W1S 3AG. Old Burlington Ventures LLP (FRN589641), trading as Old Burlington Investments, is the Appointed Representative of Sturgeon Ventures LLP, which is authorised and regulated by the Financial Services Authority. 6 Old Burlington Investments

7 Old Burlington Investments Renewable Energy Fund 7

8 Old Burlington Investments 10 Old Burlington Street London, W1S 3AG T: F: Ref: OBI106FEB13