Information Memorandum - Foresight Group
Information Memorandum - Foresight Group
Information Memorandum - Foresight Group
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
RISK FACTORS<br />
INVESTMENT IN SMALLER, UNQUOTED COMPANIES, BY ITS NATURE, INVOLVES A HIGH DEGREE<br />
OF RISK. INVESTORS SHOULD SEEK FINANCIAL ADVICE ABOUT WHETHER PARTICIPATION IN THE<br />
FUND IS SUITABLE FOR THEM IN THE LIGHT OF THE INFORMATION IN THIS DOCUMENT AND THEIR<br />
PERSONAL CIRCUMSTANCES.<br />
SET OUT BELOW ARE WHAT THE FUND MANAGER BELIEVES TO BE THE KEY RISKS ASSOCIATED WITH<br />
PARTICIPATING IN THE FUND. ADDITIONAL RISKS AND UNCERTAINTIES, NOT PRESENTLY KNOWN TO<br />
THE FUND MANAGER, OR WHICH THE FUND MANAGER CURRENTLY DEEMS IMMATERIAL, MAY ALSO<br />
HAVE AN ADVERSE EFFECT ON THE FUND AND ON INVESTMENTS.<br />
General risk<br />
Prospective Investors should be aware that the value of<br />
investments through the Fund can fall as well as rise. In addition,<br />
there is no guarantee that the valuation of Shares will fully<br />
reflect their underlying value, or that the Shares can be sold at<br />
that valuation. The value of Investments and income from them<br />
may go down as well as up and Investors may not get back the<br />
amount they originally invest through the Fund.<br />
Liquidity and exit<br />
The Investee Companies will be small, unquoted companies.<br />
Realisation of investments in unquoted companies can be<br />
difficult and may take considerable time. Investment in<br />
such companies by its nature is illiquid and uncertain and<br />
consequently involves a higher degree of risk than a portfolio<br />
of quoted shares.<br />
There is no market, nor is there intended to be a market,<br />
for Investments; as such, an Investment will not be readily<br />
realisable. It is not intended that any income or capital will be<br />
returned to Investors during the Three Year Period. After the<br />
Three Year Period, it may still be difficult to realise Investments<br />
or to obtain reliable information about their value as the market<br />
for shares in smaller companies is often less liquid than that for<br />
shares in larger companies, bringing with it potential difficulties<br />
in acquiring, valuing and disposing of such shares. An EIS<br />
investment should, therefore, be seen as a longer<br />
term investment.<br />
Operational risks<br />
The performance of the Fund is dependent on the ability of<br />
the Fund Manager to identify appropriate Investee Companies<br />
and on the ability of the Investee Companies to perform in<br />
line with their respective business plans. The income from the<br />
Investee Companies will depend on the revenues generated by<br />
the activities undertaken by such companies, which may be less<br />
than the costs incurred by such companies.<br />
Investment in smaller, unquoted companies, by its nature,<br />
involves a high degree of risk. Proper information for<br />
determining their value or the risks to which they are exposed<br />
may also not be available. Investment in such companies can<br />
offer good investment returns but by its nature is illiquid and<br />
uncertain and consequently involves a higher degree of risk<br />
than a portfolio of quoted shares. Realisation of investments<br />
in unquoted companies can be difficult and may take<br />
considerable time.<br />
Projects engaged in by Investee Companies may be subject<br />
to operational risks such as divergence between forecast and<br />
actual levels of solar radiation, or by changes in legislation, or<br />
by changes in the rates of revenue support, interest, inflation,<br />
foreign exchange or tax, or by changes in prices of solar<br />
panels and other capital equipment, energy, or financing, or<br />
by changes in labour, maintenance, safety or other operating<br />
costs, or by operating and technical risks, including risk of<br />
mechanical breakdown, failure to perform according to design<br />
specifications, failure to obtain accreditation and registration<br />
with Ofgem for Solar Power Plants, unavailability of grid<br />
connection, labour and other work interruptions, delays as a<br />
result of statutory and regulatory requirements, including those<br />
imposed by environmental, safety, labour and other regulatory<br />
and political authorities, or where construction operations do<br />
not proceed as planned and other unanticipated events that<br />
adversely affect operations.<br />
Investee Companies will be expected to maintain all appropriate<br />
industry standard insurances. However, failure to do so or<br />
failure to successfully claim under these insurance policies may<br />
materially impact the performance of the business in the event<br />
a claim is triggered. There are some types of losses, such as<br />
terrorism, acts or war, force majeure or other unforeseeable<br />
catastrophic events that cannot be insured at all, and situations<br />
where insurance is not adequate or as to which inadequate<br />
reserves had been established, which may adversely impact on<br />
the anticipated returns from a project.<br />
Although the intention is that Investee Companies will only<br />
engage counterparties to undertake projects where the<br />
counterparties are considered sufficiently credit-worthy,<br />
some counterparties may fail to honour some or all of their<br />
obligations under the relevant contracts which may adversely<br />
impact on the anticipated returns from a project.<br />
Investee Company performance<br />
The Investee Companies are likely to be small, thinly<br />
capitalised trading companies acting in new markets. As such,<br />
they are vulnerable to risks which might have a smaller impact<br />
on larger, better capitalised companies including management<br />
performance risks, counterparty credit risk, interest rate risk,<br />
market risks, supplier and customer concentration risks and<br />
other commercial risks which may materially impact<br />
their performance.<br />
FORESIGHT SOLAR EIS EIS FUND 3<br />
21