SVG Capital plc. (incorporated with limited liability in England and Wales with registered number ) 120,000,000

Transcription

1 INSERT UNFORMATTED TEXT OFFERING CIRCULAR DATED 2 June 2008 SVG Capital plc (incorporated with limited liability in England and Wales with registered number ) 120,000, per cent. Convertible Bonds due 2016 Issue Price: 100 per cent. Sole Bookrunner and Lead Manager JPMorgan Cazenove Key Capital Co-Lead Managers The Royal Bank of Scotland Key Capital acted as Financial Adviser to SVG Capital plc

2 This Offering Circular comprises listing particulars given in compliance with the listing rules (the Listing Rules ) made under Section 73A of the Financial Services and Markets Act 2000 (the FSMA ) by the UK Listing Authority (the UKLA ). Applications have been made for the 120,000, per cent. Convertible Bonds due 2016 (the Bonds ) of SVG Capital plc (the Issuer, SVG Capital or the Company ) to be admitted to the official list maintained by the UKLA for the purposes of Part VI of the FSMA (the Official List ) and to be admitted to trading on the Professional Securities Market of the London Stock Exchange plc (the London Stock Exchange ). The Professional Securities Market is an unregulated market for the purposes of Directive 2004/39/EC (the Markets in Financial Instruments Directive). The Issuer has undertaken to apply to have the ordinary shares of the Issuer (the Ordinary Shares ) issuable upon conversion of the Bonds admitted to the Official List and admitted to trading on the Regulated Market of the London Stock Exchange. This Offering Circular is to be read in conjunction with all the documents which are incorporated by reference herein (see Presentation of Information - Documents incorporated by reference ). The Issuer accepts responsibility for the information contained in this Offering Circular. To the best of the knowledge and belief of the Issuer (which has taken all reasonable care to ensure that such is the case), the information contained in this Offering Circular is in accordance with the facts and does not omit anything likely to affect the import of such information. The Issuer has not authorised the making or provision of any representation or information regarding the Issuer, the Bonds or the Ordinary Shares other than as contained in this Offering Circular or as approved for such purpose by the Issuer. Any such representation or information should not be relied upon as having been authorised by or on behalf of the Issuer or the Managers (as defined in Subscription and Sale ). This Offering Circular is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by the Issuer, the Trustee or the Managers that any recipient of this Offering Circular should purchase any of the Bonds. Each investor contemplating purchasing Bonds should make its own independent investigation of the financial condition and affairs of, and its own appraisal of the creditworthiness of the Issuer. None of the Issuer, the Managers, or any of their respective representatives, is making any representation to any offeree or purchaser of the Bonds regarding the legality of an investment in the Bonds by such offeree or purchaser under the laws applicable to such offeree or purchaser. Each investor should consult with his or her own advisers as to the legal, tax, business, financial and related aspects of a purchase of the Bonds. Neither the delivery of this Offering Circular nor the offering, sale or delivery of the Bonds shall in any circumstances constitute a representation or create any implication that there has been no adverse change, or any event reasonably likely to involve any adverse change, in the affairs or condition (financial or otherwise) of the Issuer since the date of this Offering Circular or that the information contained in this Offering Circular is correct as at any time subsequent to its date. This Offering Circular does not constitute an offer of, or an invitation by or on behalf of the Issuer or the Managers to subscribe or purchase, any Bonds or Ordinary Shares. The Bonds and the Ordinary Shares have not been, and will not be, registered under the U.S. Securities Act of 1933 (the Securities Act ) and are subject to U.S. tax law requirements. Subject to certain exceptions, Bonds may not be offered, sold or delivered within the United States. The Bonds will initially be represented by a temporary global bond (the Temporary Global Bond ), without interest coupons, which will be deposited with a common depositary on behalf of the Clearstream Banking, société anonyme ( Clearstream, Luxembourg ) and Euroclear Bank S.A./N.V. ( Euroclear ) systems on or about 5 June The Temporary Global Bond will be exchangeable for interests in a global bond (the Global Bond ), without interest coupons, from the 40th day after the Closing Date (as defined herein) upon certification as to non-u.s. beneficial ownership. The Global Bond will be i

3 exchangeable for definitive Bonds in bearer form in the denomination of 50,000 in the limited circumstances set out in it. See Summary of Provisions relating to the Bonds in Global Form. The distribution of this Offering Circular and the offering, sale and delivery of the Bonds in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular comes are required by the Issuer and the Managers to inform themselves about and to observe any such restrictions. This Offering Circular does not constitute, and may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. For a description of certain restrictions on offers, sales and deliveries of Bonds and on distribution of this Offering Circular and other offering material relating to the Bonds, see Subscription and Sale. In connection with the offering of the Bonds, each Manager and/or its affiliates may act as an investor for their own account and may take up Bonds in the offering and in that capacity may retain, purchase or sell for their own account such securities and any securities of the Issuer or related investments and may offer or sell such securities or other investments otherwise than in connection with the offering. Accordingly, references herein to the Bonds being offered should be read as including any offering of Bonds to such Manager and/or its affiliates acting in such capacity. Such persons do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so. The Managers have not separately verified the information contained in this Offering Circular. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility is accepted by the Managers as to the accuracy, completeness or verification of the information contained in this Offering Circular or any other information supplied in connection with the Bonds or the Ordinary Shares and nothing contained in this Offering Circular is or shall be relied upon as a promise or representation in this respect, whether as to the past or the future. Each Manager accordingly disclaims, to the fullest extent permitted by applicable law, any and all liability whether arising in tort, contract or otherwise which it might otherwise be found to have in respect of this Offering Circular or any other information supplied in connection with the Bonds or the Ordinary Shares. Each person receiving this Offering Circular acknowledges that such person has: (i) not relied on any Manager in connection with its investigation of the accuracy of such information or its investment decision and each person must rely on its own examination of the Issuer and the merits and risks involved in investing; and (ii) relied only on the information contained in this Offering Circular, and that no person has been authorised to give any information or to make any representation concerning the Issuer, the Bonds or the Ordinary Shares (other than as contained in this Offering Circular) and, if given or made, any such other information or representation should not be relied upon as having been authorised by the Issuer or the Managers. In connection with the issue of the Bonds, J.P. Morgan Securities Ltd. (the Stabilising Manager ) (or any persons acting on behalf of the Stabilising Manager) may over-allot Bonds or effect transactions with a view to supporting the market price of the Bonds at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilising Manager (or any persons acting on behalf of the Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Bonds is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the Closing Date of the Bonds and 60 days after the date of the allotment of the Bonds. Any stabilisation action or over-allotment must be conducted by the Stabilising Manager (or any persons acting on behalf of the Stabilising Manager) in accordance with all applicable law and rules. Any individual intending to invest in any investment described in this Offering Circular should consult his or her professional adviser and ensure that he or she fully understands all the risks associated with making such an investment and has sufficient financial resources to sustain any loss that may arise from it. ii

4 The Managers are acting exclusively for the Issuer and no-one else in connection with the offering of the Bonds. None of the Managers will regard any other person (whether or not a recipient of this Offering Circular) as its client in relation to the offering of the Bonds and will not be responsible to anyone other than the Issuer for providing the protections afforded its clients nor for giving advice in relation to the offering of the Bonds or any transaction or arrangement referred to herein. iii

5 TABLE OF CONTENTS PRESENTATION OF INFORMATION...2 OVERVIEW OF THE OFFERING...4 RISK FACTORS...7 TERMS AND CONDITIONS OF THE BONDS...16 SUMMARY OF PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM...48 USE OF PROCEEDS...50 BUSINESS DESCRIPTION...51 PRINCIPAL SHAREHOLDERS...71 DESCRIPTION OF THE ORDINARY SHARES...72 UNITED KINGDOM TAXATION...80 SUBSCRIPTION AND SALE...84 GENERAL INFORMATION...87 CERTAIN DEFINITIONS...89

6 Presentation of financial information PRESENTATION OF INFORMATION Unless otherwise stated, all financial information relating to the Issuer incorporated by reference in this Offering Circular has been prepared in accordance with International Financial Reporting Standards and in pounds sterling. Documents incorporated by reference This Offering Circular should be read and construed in conjunction with: (1) the audited consolidated annual financial statements of the Issuer as at and for the year ended 31 December 2006 on pages 45 to 78 of the Annual Report and Accounts 2006; and (2) the audited consolidated annual financial statements of the Issuer as at and for the year ended 31 December 2007 on pages 45 to 78 of the Annual Report and Accounts 2007, together in each case with the audit report thereon, which have been previously published or are published simultaneously with this Offering Circular and have been approved by the Financial Services Authority or filed with it. Such documents shall be incorporated in, and form part of this Offering Circular, save that any statement contained in a document which is incorporated by reference herein shall be modified or superseded for the purpose of this Offering Circular to the extent that a statement contained herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not, except as so modified or superseded, constitute a part of this Offering Circular. Where documents incorporated by reference themselves incorporate information by reference, such information does not form part of this Offering Circular. Copies of documents incorporated by reference in this Offering Circular may be obtained (without charge) from the registered office of the Issuer. Forward-looking statements Some of the statements in this Offering Circular include forward-looking statements which reflect the Issuer s current views with respect to financial performance, business strategy, plans and objectives of management for future operations (including development plans relating to the Group s products and services). These statements include forward-looking statements both with respect to the Group and the sectors and industries in which the Group operates. Statements which include the words expects, intends, plans, believes, projects, anticipates, will, targets, aims, may, would, could, continue and similar statements are of a future or forward-looking nature. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause the Group s actual results to differ materially from those indicated in these statements. These factors include but are not limited to those described in the part of this Offering Circular entitled Risk Factors, which should be read in conjunction with the other cautionary statements that are included in this Offering Circular. Any forward-looking statements in this document reflect the Issuer s current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the Group s operations, results of operations, strategy and liquidity. Given these uncertainties investors are cautioned not to place any undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date of this document. Subject to any obligations under the Listing Rules, or as otherwise required by law, the Issuer undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All subsequent written and oral forward-looking statements attributable to the 2

7 Group or individuals acting on behalf of the Group are expressly qualified in their entirety by this paragraph. Prospective investors should specifically consider the factors identified in this document which could cause actual results to differ before making an investment decision. 3

8 OVERVIEW OF THE OFFERING The following overview refers to certain provisions of the Terms and Conditions of the Bonds, the Ordinary Shares and the Trust Deed and is qualified by the more detailed information contained elsewhere in this Offering Circular. Terms which are defined in Terms and Conditions of the Bonds have the same meaning when used in this overview. Issuer SVG Capital plc. Bonds 120,000, per cent. Convertible Bonds due The Offering Closing Date 5 June Issue Price Final Maturity Form and Denomination The Bonds are being offered by the Managers outside the United States in accordance with Regulation S under the U.S. Securities Act of per cent. of the principal amount of the Bonds. Unless previously purchased and cancelled, redeemed or converted, the Bonds will be redeemed on 5 June 2016 (the Final Maturity Date ) at their principal amount. The Bonds will initially be represented by a Temporary Global Bond, without interest coupons, which will be deposited with a common depositary on behalf of the Clearstream, Luxembourg and Euroclear systems on or about 5 June The Temporary Global Bond will be exchangeable for interests in a Global Bond, without interest coupons, from the 40th day after the Closing Date upon certification as to non- U.S. beneficial ownership. The Global Bond will be exchangeable for definitive Bonds in bearer form in the denomination of 50,000 in the limited circumstances set out in it. See Summary of Provisions relating to the Bonds in Global Form. Interest The Bonds bear interest from (and including) the Closing Date at 8.25 per cent. per annum payable semi-annually in equal instalments in arrear on 5 June and 5 December each year, commencing on 5 December Status of the Bonds Indebtedness Restriction Negative Pledge Yield Events of Default The Bonds constitute direct and unsecured obligations of the Issuer and rank pari passu and without preference among themselves. The Bonds shall be contractually subordinated to the obligations of the Issuer under certain financing documents as set out in Terms and Conditions of the Bonds Status, Subordination and Indebtedness Restriction. The Issuer may not, and will procure that none of its Subsidiaries will, incur any Subordinated Indebtedness except to the extent that, immediately following the incurrence of such Subordinated Indebtedness, the total Subordinated Indebtedness of the Issuer and its consolidated Subsidiaries is equal to or less than 20 per cent. of the consolidated total assets of the Group as shown in the most recently published consolidated balance sheet of the Issuer. None per cent. per annum payable semi-annually. The yield is calculated on the Closing Date on the basis of the Issue Price. It is not an indication of future yield. For a description of certain events that will permit the Bonds to become 4

9 Redemption at the Option of the Issuer Taxation Conversion Right Conversion Period Conversion Price Conversion Price upon Change of Control Redemption for a Change of Control immediately due and payable at their principal amount, together with accrued interest, see Terms and Conditions of the Bonds - Events of Default. All, but not some only, of the Bonds may be redeemed at the option of the Issuer at their principal amount together with accrued interest to the date fixed for redemption (i) at any time on or after 20 June 2011 if the Aggregate Value (as defined herein) on each of not less than 20 dealing days in any period of 30 consecutive dealing days exceeds 65,000 or (ii) if, at any time prior to the date on which the relevant notice of redemption is given to Bondholders, Conversion Rights shall have been exercised and/or purchases (and corresponding cancellations) and/or redemptions effected in respect of 85 per cent. or more in principal amount of the Bonds originally issued. See Terms and Conditions of the Bonds - Redemption and Purchase - Redemption at the Option of the Issuer. All payments made by or on behalf of the Issuer in respect of the Bonds and Coupons will be made without withholding or deduction for any present or future taxes, duties, assessments or governmental charges of whatsoever nature unless such withholding or deduction is required by law. In that event, the appropriate withholding or deduction shall be made and the Issuer will not be required to pay any additional or further amounts in respect of any such deduction or withholding. Unless previously redeemed or purchased and cancelled, each Bond will be convertible, at the option of the holder, into Ordinary Shares of the Issuer during the Conversion Period at the prevailing Conversion Price as at the relevant Conversion Date. See Terms and Conditions of the Bonds - Conversion. The period beginning on and including 16 July 2008 and ending on and including the earlier to occur of: (i) (ii) (iii) the close of business on the date falling six calendar days prior to the Final Maturity Date; if the Bonds shall have been called for redemption by the Issuer before the Final Maturity Date, the close of business on the day which is six calendar days before the date fixed for redemption; and if a notice requiring redemption shall have been given by any Bondholder, the close of business on the day prior to giving such notice per Ordinary Share, subject to adjustment in accordance with the Conditions. In the event of a Change of Control (other than pursuant to an Exempt Newco Scheme), the Conversion Price will be adjusted downwards for a specified period as described in the Conditions. Following the occurrence of a Change of Control (other than pursuant to an Exempt Newco Scheme), the holder of each Bond will have the right to require the Issuer to redeem such Bond on the Change of Control Put Date at their principal amount together with accrued interest to (but excluding) the date fixed for redemption. 5

10 Anti-Dilution Provisions Dividend Protection Ordinary Shares Lock Up Trustee Principal Paying and Conversion Agent Governing Law Listing and Trading Clearing Selling Restrictions Anti-dilution provisions dealing with, inter alia, share consolidations, share splits, capital distributions, rights issues and bonus issues shall apply. See Terms and Conditions of the Bonds Adjustment of Conversion Price. The Conversion Price will be adjusted in respect of any dividend or distribution called a special or extraordinary dividend or capital distribution or analogous term and, if the dividend per Ordinary Share paid in any year exceeds the Reference Amount, the Conversion Price will be adjusted in respect of the amount exceeding the Reference Amount. The Ordinary Shares to be issued following conversion of the Bonds will be issued credited as fully paid, having, on the date hereof, a nominal value of 1.00 each and will rank pari passu in all respects with all fully paid Ordinary Shares in issue on the relevant Conversion Date, save as provided in Terms and Conditions of the Bonds. The Issuer has, subject to certain exceptions, agreed not to issue or sell Ordinary Shares or certain related securities for a limited period after the date of the Underwriting Agreement. See Subscription and Sale below. HSBC Corporate Trustee Company (UK) Limited. HSBC Bank plc. The Bonds and the Trust Deed will be governed by, and shall be construed in accordance with, English law. Applications have been made for the Bonds to be admitted to the Official List of the UKLA and to trading on the Professional Securities Market of the London Stock Exchange. The Issuer has undertaken to apply to have the Ordinary Shares issuable upon conversion of the Bonds admitted to listing on the Official List of the UKLA and admitted to trading on the Regulated Market of the London Stock Exchange. The Bonds have each been accepted for clearing by Euroclear and Clearstream, Luxembourg. The Bonds have the following Common Code and International Securities Identification Number: Common Code: ISIN: XS There are restrictions on the offer, sale and delivery of the Bonds, inter alia, in the United States and the United Kingdom. See Subscription and Sale. 6

11 RISK FACTORS Prospective investors should consider carefully the risks set forth below and the other information contained in this Offering Circular prior to making any investment decision with respect to the Bonds. Each of the risks highlighted below could have a material adverse effect on the business, operations, financial condition or prospects of the Issuer, which, in turn, could have a material adverse effect on the amount of principal and interest which investors will receive in respect of the Bonds. In addition, each of the risks highlighted below could adversely affect the trading price of the Bonds or the Ordinary Shares or the rights of investors under the Bonds or the Ordinary Shares and, as a result, investors could lose some or all of their investment. Prospective investors should note that the risks described below are not the only risks the Issuer faces. The Issuer has described only those risks relating to its operations that it considers to be material. There may be additional risks that it currently considers not to be material or of which it is not currently aware, and any of these risks could have the effects set forth above. Prospective investors should read the entire Offering Circular, together with the documents incorporated by reference herein. Words and expressions defined in the Terms and Conditions of the Bonds below or elsewhere in this Offering Circular have the same meanings in this section. Investing in the Bonds involves certain risks. An investment in the Bonds is suitable only for sophisticated investors who have sufficient financial resources to sustain any losses from such investment and who are in a position to commit funds for a considerable period of time. Prospective investors should consider, among other things, the following: Risks relating to the Issuer The Issuer's Relationship with Permira The Issuer has committed a significant amount of its capital to Permira Funds. At 31 December 2007, approximately 78.6 per cent. of the SVG Capital Group's net asset value was represented by investments in Permira Funds. The performance of the Permira Funds is dependent upon, inter alia, Permira s expertise in sourcing, reviewing, financing and executing transactions and its ability to make judgments on investment risk, the development of portfolio companies and exit strategies for portfolio companies. In March 2005, the Issuer formalised its relationship with Permira through the Operating Agreement. It was agreed with Permira that, for the term of the Operating Agreement and subject to cashflow projections of the SVG Capital Group, agreement on terms, due diligence and Board approval, the Issuer would be an investor in future Permira Funds and would be entitled to full access to Permira IV and Permira V. A commitment to Permira V will result in an increase in the concentration of commitments to Permira Funds. The future performance of the Issuer will therefore be largely dependent on the performance of the Permira Funds in which it invests. Nevertheless, the Issuer s overall investment in Permira Funds may increase or decrease over time, and existing agreements (including the Operating Agreement) with Permira may or may not be renewed on the same terms or at all. See Business Description Relationship with Permira for further details of the Issuer's existing arrangements with Permira. The Issuer s Lack of Control of Funds and Underlying Investments As referred to above, the Issuer s portfolio consists principally of holdings in funds that are managed or advised by Permira. As a result of statutory requirements governing investment trusts in the United Kingdom, the Issuer may not hold interests in any fund which would enable the Issuer to control that fund. The Issuer also has no control over the investment decisions made by the managers of the funds or individual portfolio companies. A portfolio company is a company in which the funds invest. Although fund managers must act in accordance with investment objectives, policies and the restrictions set out in the documents establishing each fund, there can be no assurance that the fund managers will make 7

12 investment decisions in accordance with the Issuer s expectations. Funds may hold non-controlling interests in certain portfolio companies and may therefore have a limited ability to protect their positions in such investments. The Issuer has only limited rights to require fund managers to disclose information regarding a fund s portfolio. As a result, the information in this document regarding the value of the Issuer's portfolio of Permira Funds has not been verified or approved in any way by Permira (or any person on behalf of Permira). In addition, neither Permira (nor any person on behalf of Permira) has approved or verified any of the information in this document regarding Permira. General Risk Associated with Investment in Private Equity Investment in private equity involves a high degree of risk. The SVG Capital Group invests in private equity through its exposure to buy-out and development capital funds. Such investments are illiquid and might be difficult to realise, particularly within a short timeframe. The Directors seek to maintain a diversified portfolio to mitigate these risks, although the portfolio does remain concentrated with respect to private equity fund managers, as explained above. Market Conditions Any material change in the economic environment, including a slow-down in economic growth and/or changes in interest rates or foreign exchange rates, could have a negative impact on the performance and/or valuation of the portfolio companies. The Issuer's performance can be affected by a deterioration in public markets and by market events, such as the onset of the credit crisis in the Summer of 2007, which can impact not only its quoted portfolio but also the public market comparable earnings multiples used to value unquoted portfolio companies. Movements in foreign exchange rates may or may not adversely affect the value of investments in portfolio companies and the Issuer's performance. Following the onset of the credit crisis, the rate of future investment by funds is likely to slow as the pricing of new transactions adjusts to reflect the current economic uncertainty and the lack of credit in the markets. Holding periods are also likely to be longer as the rate of realisations slows in light of the deterioration in market conditions for initial public offerings and decline in merger and acquisitions activity. The value of publicly traded securities may be volatile and difficult to sell as a block, even following a realisation through listing. The impact of the credit crisis may also affect the Issuer's ability to raise funding to support its investment objective and also the level of profitability achieved on realisations of investments. New and Emerging Markets The Issuer s investment strategy may involve greater investment in funds and products with exposure to new and emerging markets in which the legal and regulatory frameworks and capital markets may be less developed than in the other main geographical markets in which the Issuer operates. Unexpected changes in such markets could have a negative impact on the value of existing investments or on the planned levels of investment, which could adversely affect investment returns. Concentration Risk The terms of some of the funds in which the Issuer invests typically allow up to 15 per cent. of commitments to that fund to be invested in a single portfolio company and various funds may be invested in the same geographic region, industry sector or portfolio company. The market value of the Issuer s portfolio may fall as a result of declines in particular industries or geographic regions or defaults by portfolio companies. Commitments and Calls on Capital The Issuer has commitments to pay future Calls in respect of its holdings in funds. At 31 December 2007, the SVG Capital Group had uncalled commitments of 1,559.7 million (2006: 1,840.3 million), compared to shareholders funds of 1,229.6 million (2006: 1,154.1 million). The Board considers cashflow forecasts at each Board meeting and expects to meet its uncalled commitments, as well as commitments to future funds, from proceeds received from its investments and from its cash resources 8

13 and borrowings available to the Issuer. At present, the Issuer has in place a million multi-currency revolving facility (which is committed until March 2011) which can be drawn on to meet commitments as they fall due. In addition, the Issuer has issued and drawn down approximately million 2 of unsecured senior notes that were issued by way of private placement with scheduled maturity dates falling between 2013 and However, there can be no assurance that the Issuer will always be in a position to pay future Calls in full and on a timely basis. Changes in Value of the Issuer s Portfolio Investment in funds requires a long-term commitment with no certainty of return. The ability to achieve capital appreciation of the funds could be affected by any significant general change in the value of the investments held by the funds. There can be negative movements in valuations which can be due to deterioration in a specific portfolio company s performance and changes in market multiples. In highly leveraged companies, reductions in earnings may have a significantly greater impact on their valuation because of the application of a multiple to earnings in combination with the leverage itself. Private equity investments, by their nature, involve uncertainty as to the ultimate value likely to be realised upon disposal of those investments (if at all), particularly because their predominantly unquoted nature means that a ready market may not exist for them. Portfolio companies may be difficult to value and disposals, if any, of such investments may require a lengthy period of time depending on the market for such investments at the time. The value of these investments could decrease and the Issuer, as an investor in a fund, may not recover the full amount of its original investment. The value of the assets of the funds may be affected by uncertainties, such as political developments, changes in government policies, regulations, laws, taxation, currency fluctuations, currency repatriation and other restrictions, in some of the countries in which the funds may invest. The Issuer, directly or indirectly through the funds, may also be exposed to these risks. In addition to this, a fund manager s ability to realise certain assets in whole or in part may be subject to contractual restrictions such as shareholder lock-up arrangements. Save as disclosed in Business Description Information on the SVG Capital private equity portfolio Material Developments since 31 December 2007, the information in this document regarding the value of the Issuer's portfolio is stated as at 31 December The portfolio will be revalued as at 30 June 2008 and the results of such revaluation will be publicly announced once the valuation process has been completed. This will not occur before the Closing Date. As a result, the valuation of the Issuer's portfolio as at 31 December 2007 is not current and may have been adversely affected by developments of which the Issuer is not aware as well as those noted on pages 64 to 65 and which do not become apparent to the Issuer until the results of the 30 June 2008 revaluation process are finalised. In valuing its portfolio, the Issuer is dependent on such information as Permira and other fund managers may provide. This information is necessarily limited, subjective and depends on the accuracy of judgments. There can be no assurance that such information or judgments are accurate or complete. See Business Description Information on the SVG Capital private equity portfolio Material Developments since 31 December Illiquidity of the Issuer s Investments Many of the Issuer s investments will be highly illiquid and may not be capable of being realised in a timely manner or at all. Accordingly, the Issuer may not be able to sell its investments in funds at their net asset value or even at discounted prices below the net asset value. Consequently, the timing of returns, if any, to the Issuer is uncertain and unpredictable. If the Issuer wishes to transfer its holdings in any fund, the general partner or manager may have the right to refuse to consent to the transfer of an interest in such fund million has been utilised as at 31 December Using 30 April 2008 exchange rates. 9

14 Indemnities Fund documentation typically contains indemnities from each investor in the funds in favour of the general partner or manager and related persons such as directors, officers, employees and agents, in respect of specified or general liabilities incurred in connection with the business of the funds or as a result of acting in the relevant capacity. Such indemnities are often limited to the assets of the relevant funds (which include investors uncalled commitments to the fund), and therefore, as regards each investor in a fund, to the amount of the commitment of such investor to a fund. Claims under such indemnities could result in the loss in whole or in part of the Issuer s investment in any relevant funds. Clawbacks During the term of a fund the general partner or manager of the fund will in some circumstances be permitted to make capital calls on a limited basis to indemnify the general partner or manager or to pay the claims of the creditors of that fund. If such obligations arise when the fund has insufficient assets, the general partner or manager will often have a contractual right to a Clawback in order to fund these obligations. Clawback means the right of a general partner or manager of a fund to require its investors to return specified amounts of distributions received by such investors from the relevant fund if assets otherwise available to such fund are insufficient to satisfy certain liabilities of such fund. Key Individuals and Unregulated Investment Vehicles Investors in funds need to rely on key individuals to determine their investment strategies and/or to make investment and disposal decisions. The loss of any such individuals, especially at Permira or SVG Advisers, may jeopardise the investment performance of those funds, which could have an impact on the value of the Issuer. A significant portion of the funds in which the Issuer invests constitute limited partnerships and, therefore, may be unregulated investment vehicles. Operational History of the Funds Certain of the funds may have limited or no operational history. Past performance of funds, or other vehicles managed by the same persons as such funds, cannot be considered a guarantee of, or necessarily a guide to, future performance. No assurance can be given that the performance of a fund will match industry averages. Fund Leverage Could Subject Assets of the Fund to the Claims of Creditors of the Fund The general partners or managers of certain funds have the right to cause a fund to incur borrowings. The obligations under such borrowings are sometimes secured by all or a portion of the aggregate unpaid commitments of all investors in the fund. Such borrowings are generally used to bridge the period between the making of a call and the payment of such call by investors in the fund and for other cash flow purposes. The existence of leverage at the fund level could subject the assets of the fund to the claims of creditors of the fund or adversely impact the distributions to its investors. Contingent Liabilities on Disposals of Fund Investments In connection with the disposal of fund investments, a fund may be required to make representations and/or warranties about a portfolio company s business and financial affairs that are typical of those made in connection with the sale of a business. The fund also may be required to indemnify the purchaser of such investment to the extent that any such representations and/or warranties are inaccurate. These arrangements may result in the incurrence of contingent liabilities for which the general partner or manager of such fund may establish reserves or escrow accounts. In addition, investors in such funds may be required to return some or all amounts distributed to them to fund indemnity obligations. 10

15 Defaults on Capital Calls A fund s documentation generally provides for certain penalties in the event that an investor in the fund fails to meet a capital call. There is typically a grace period during which interest accrues on the unpaid amount. If the default continues, the investor may become subject to an escalating level of sanctions, including termination of the investor s right to participate in future investments, loss of its entitlement to distributions or income but not its liability for losses or expenses, mandatory transfer or sale of its interest, continuing liability for interest in respect of the defaulted amount, partial or total forfeiture of the investor s interest and liability for any other rights and remedies (including legal remedies) the general partner or manager may have against the investor. Certain funds give the general partner or manager the right to proceed directly to forfeiture proceedings following notice and continuation of default by an investor. In the case of a forfeiture, the share of the fund held by the defaulting investor would generally be allocated among the general partner or manager and the remaining investors. Consequently, any failure by the Issuer to meet any capital call may adversely affect the net asset value of the Issuer. Over-Commitment An important factor in its performance is the Issuer s over-commitment strategy. The Issuer s overcommitments could result in periods in which the Issuer has insufficient liquidity to fund its commitments or to pay other amounts payable by the Issuer. Although the Issuer will monitor cash flow projections relating to the funds, there can be no assurance that commitments to funds will be met in full or at all or otherwise that the over-commitment strategy will be successfully implemented. Failure by the Issuer to meet its commitments could result in defaults by the Issuer under the documentation pursuant to which the commitments are made, which is likely to result in the Issuer incurring losses on such commitments. Currency Fluctuations The Issuer is exposed to currency risk since the majority of its assets and liabilities are denominated in foreign currency and their sterling value can be significantly affected by movements in foreign exchange rates. Changes in rates of exchange may have an adverse effect on the value, price or income of the Issuer s investments. Increases or decreases in the value of the euro against sterling, for example, will affect the Issuer s net earnings and the value of balance sheet items. The Issuer does not normally hedge against foreign currency movements affecting the value of its investments. However, currency risk is monitored on a regular basis by the Board and cash balances are held in accordance with an agreed policy to match, as far as possible, anticipated future commitments. The Issuer's existing bank facility is a multi-currency facility. In addition, the funds are denominated in a number of currencies. The funds may, but are not required to, seek to minimise their exposure to currency fluctuations through the use of hedging techniques and instruments, but it may not be possible or practicable to hedge against consequent currency exposure. Investment Returns The Issuer s past performance is not necessarily a guide to its future performance. The investment returns to the Issuer in the future may differ materially from the historical returns of the funds and will depend, among other things, on changes in the composition of the Issuer s portfolio. The task of fund managers identifying investment opportunities in portfolio companies, managing such investments and realising a return for investors is difficult. The funds will participate in a limited number of investments and, as a consequence, the aggregate return of any fund may be adversely affected by the unfavourable performance of any single investment. There can be no assurance that the funds will be able to invest their committed capital or generate returns for the Issuer. The income from the Issuer s investments is subject to change, which in turn could affect the Issuer s investment return and may affect the amount of dividends the Issuer pays to its investors. 11

16 Competition for Investments The funds may face competition from other entities having similar investment objectives. Potential competitors include other investment partnerships and companies, strategic industry acquirers and other financial investors investing directly or through affiliates. Furthermore, over the past several years, there has been a substantial increase in the size and number of private equity funds that have been formed. New funds with similar investment objectives may be formed in the future. The private equity investment industry in which the funds are engaged is highly competitive. There can be no assurance that the funds will be able to locate and complete investments which satisfy each fund s rate of return objectives or realise such investments, or that the funds will be able to invest fully their committed capital, in which cases the funds could generate lower than expected returns. Leverage in Portfolio Companies The funds investments are expected to include companies whose capital structures may have significant leverage. Such investments are inherently more sensitive to declines in revenues and to increases in expenses and interest rates. The leveraged capital structure of such investments will increase the exposure of the portfolio companies to adverse economic factors such as downturns in the economy or deterioration in the condition of the portfolio company or its industry. Additionally, the securities acquired by the funds may be the most junior in what will typically be a complex capital structure, and thus subject possibly to the greatest risk of loss. Regulatory Environment The regulatory environment in which the Group operates is increasingly complex and the Group faces a number of regulatory risks. Breaches of regulations such as the Listing Rules could give rise to detrimental consequences, including damage to the Group's reputation. Key regulatory risks have been identified and appropriate monitoring of such risks is undertaken on behalf of the Board. Three of the Issuer's subsidiaries: SVG Advisers Limited, SVG Investment Managers Limited and SVG Managers Limited are authorised and regulated by the Financial Services Authority. Notwithstanding anything in this risk factor, this risk factor should not be taken as implying that the Issuer will be unable to comply with its obligations as a company with securities admitted to the Official List. Management Fees, Expenses and Carried Interest Management fees and fund expenses are paid by the funds and amounts representing Carried Interest may be paid by the funds from time to time depending on performance. Carried Interest may be calculated on the basis of unrealised gains which may not, in fact, be realised. This may have an effect on the valuation of the funds. SVGA Group SVG Advisers has, over the period from 31 December 2001 to 31 December 2007 and taken as a whole, demonstrated a significant growth in earnings, with growing assets and commitments under management, and increasing external income from investment advisory services. However, there can be no assurance that such rate of growth will continue. The activities of the SVGA Group, which include managing structured products, may have an impact on the business and reputation of the Issuer. Taxation The Directors have in the past managed, and intend to continue to manage, the affairs of the Issuer so that it should satisfy the current conditions for approval by HMRC as an investment trust under Section 842, and for these purposes the Directors intend that the Issuer's income will be derived wholly or mainly from shares or securities, as determined for the purposes of that section. One of these conditions in particular restricts the investments a company seeking such approval can make. Satisfying this condition will mean, inter alia, that the Issuer will not be able to acquire shares or securities in any one company if 12

17 such shares or securities (taken together) would represent more than 15 per cent. of the Issuer's investments by value at the time of acquisition. For this purpose, unit trust schemes will be treated as companies and units therein as shares of such companies. There are also special rules under which all of the Issuer's holdings in companies which are members of a group (where group means a company and its 51 per cent. subsidiary companies, as defined for tax purposes), will, in each case, be aggregated and treated as a holding in one company for the purposes of this test. Further, if the Issuer's interest in a company increases due to further investment in that company (including further investment in the same company by different funds or co-investment), the whole of such interest will be treated as having been acquired at the time of the increased investment for the purposes of testing whether the above condition is satisfied. A breach of Section 842 could result in the Issuer being subject to corporation tax on realised gains on the sale of its investments. However, the Issuer has strict controls in place with the aim of satisfying the current conditions for approval under Section 842 and utilises specialist tax advisers to provide advice on changes to taxation legislation and practice. Any change in taxation legislation or practice could affect the value of the Issuer's investments and, as a result, its performance. Change of Law This document has been prepared by the Issuer on the basis of laws, rules and regulations (and interpretations thereof) in force as at the date of this document. Such laws, rules and regulations (and interpretations thereof) may be subject to change or adverse interpretations and that may result in the Issuer s business and/or financial position and/or prospects being adversely affected. Risks relating to the Bonds Bonds may not be a suitable investment for all investors Each potential investor in the Bonds must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should: (i) (ii) (iii) (iv) have sufficient knowledge and experience to make a meaningful evaluation of the Bonds, the merits and risks of investing in the Bonds and the information contained or incorporated by reference in this Offering Circular or any applicable supplement; have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Bonds and the impact such investment will have on its overall investment portfolio; understand thoroughly the terms of the Bonds and be familiar with the behaviour of financial markets in which they participate; and be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks. The Bonds may be redeemed prior to maturity The Conditions provide that the Bonds are redeemable at the Issuer s option in certain limited circumstances and accordingly the Issuer may choose to redeem the outstanding Bonds at times when prevailing interest rates may be relatively low. In such circumstances an investor may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as that of the Bonds. Modification, waivers and substitution The Trust Deed contains provisions for calling meetings of Bondholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Bondholders including 13