Information Memorandum - Foresight Group

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