Information Memorandum - Foresight Group
Information Memorandum - Foresight Group
Information Memorandum - Foresight Group
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DEALFLOW<br />
<strong>Foresight</strong> has developed an attractive pipeline of solar<br />
investment opportunities through partnering relationships<br />
with developers and specialist construction firms, and from<br />
its network of contacts with property owners and professional<br />
advisers. The UK market for solar power is predicted to expand<br />
rapidly, with DECC estimations of between 7GW and 20GW by<br />
2020, although growth could be constrained by lack of finance<br />
for projects. As a provider of such finance, with a track record<br />
in the solar industry, <strong>Foresight</strong> believes that it is an attractive<br />
RETURNS<br />
partner for developers and operators having already<br />
worked effectively with such businesses in UK, Italy and<br />
Spain. <strong>Foresight</strong> has a pipeline of UK projects totalling<br />
over £650m, has secured or is in the process of securing<br />
exclusivity on 300 MW of Solar Power Plant capacity<br />
due to be commissioned in the next six months and is in<br />
negotiations with a number of developers and their<br />
advisers regarding further suitable projects.<br />
The Fund is designed to provide attractive returns to Investors by combining Income from Investee Companies, which<br />
will be rolled up in order to achieve capital gains tax treatment on sale of the Investments, with initial tax relief of 30%<br />
relief from inheritance tax plus the opportunity to defer CGT.<br />
Illustrative investment returns to eligible Investors 1<br />
Cost of Investment 100,000<br />
Less income tax relief (at 30%) (30,000)<br />
Net Investment 2 70,000<br />
Target investment proceeds assuming exit in three to four years 3 120,000<br />
Total return on Net Investment 71.4%<br />
Average Compound Annual Return 4 14.4%<br />
Average Equivalent Annual Return (on Net Investment, assuming 45% income tax rate) 5 26.2%<br />
Average Equivalent Annual Return (on Net Investment, assuming 40% income tax rate) 5 24.0%<br />
Average Equivalent Annual Return (on Net Investment, assuming 20% income tax rate) 5 18.0%<br />
Notes:<br />
1. We have assumed adviser commission applies for the illustrative investment returns table since these are the only terms where there is certainty.<br />
These terms assume tax relief of 100% on the amount invested, deduction of 5.5% initial charge and 0.5% trail per annum paid over 4 years.<br />
Differing terms to those assumed will alter the returns. Target Returns are quoted inclusive of all <strong>Foresight</strong> fees<br />
2. Assumes single investment of £100,000 in EIS Qualifying Companies applied against an Investor’s 2013/2014 income tax liability.<br />
3. Target proceeds (assuming all investment proceeds are realised by way of a sale of EIS qualifying Shares free of CGT) are shown net of all costs. Target<br />
proceeds are an illustration only and do not represent a forecast of returns.<br />
4. Returns are calculated over a four year period and <strong>Foresight</strong> is confident that it will be able to provide an exit within three to four years.<br />
5. Equivalent Annual Return is the compound return an investor would need to achieve from an equivalent investment (which attracts the relevant personal<br />
income tax rate) in order to achieve the same return as that projected.<br />
For Investors wishing to maximise capital growth and to realise<br />
their investment within four years, <strong>Foresight</strong> aims to deliver<br />
a capital return of 120p per £1 invested in the Fund within<br />
four years. If the planned level and timing of sale proceeds<br />
is achieved, then Investors benefiting from full EIS tax reliefs<br />
would achieve a tax-free cash profit of 71.4% of their net cost<br />
of investment which equates to an average compound annual<br />
return of 14.4%, or a gross average equivalent compound<br />
annual return of 24.0% per annum (assuming that the<br />
Investor’s marginal rate of income tax is 40%) or 26.2% per<br />
annum for Investors with a marginal rate of 45%.<br />
Interest earned on cash balances held in Portfolios will be<br />
added to the relevant Investor’s Portfolio.<br />
£<br />
FORESIGHT SOLAR EIS FUND 3<br />
07