FORESIGHT VCT PLC FORESIGHT 2 VCT PLC ... - Foresight Group

PART I
LETTER FROM THE CHAIRMEN
FORESIGHT VCT PLC FORESIGHT 2 VCT PLC
(Registered in England and Wales
with registered number 03421340)
(Registered in England and Wales
with registered number 05200494)
Directors Foresight 1: Registered Office:
John Gregory (Chairman) ECA Court
Peter Dicks 24-26 South Park
Gordon Humphries Sevenoaks
Kent
Directors of Foresight 2: TN13 1DU
Jocelin Harris (Chairman)
Peter Dicks
David Quysner
6 September 2011
Dear Shareholder
Recommended Proposals to create and authorise the issue of Infrastructure Shares, cancel
Infrastructure Share premium, approve related party transactions and approve enhanced
buyback schemes
Infrastructure Shares
The Boards of Foresight 1 and Foresight 2 propose to offer for subscription to existing Shareholders and
new investors a new class of Infrastructure Shares which would be managed as a separate pool of
assets within each Company. The proposed Offer will be a joint share issue by the Companies to raise,
in aggregate, up to £30 million to be invested in accordance with the investment policies of each
Company.
The investment strategy and management arrangements for the Infrastructure Shares fund will be the
same for each Company. Although it is intended that the funds raised will be co-invested, each
Company’s Infrastructure Shares fund will be managed separately. Investment in infrastructure (which
includes economic infrastructure, such as roads, water, energy distribution and social infrastructure) has
become accepted by many pension funds and other institutional investors as a recognised part of their
portfolio. Infrastructure may be thought of as a sector which, to an extent, is protected from competition,
either due to natural monopolies, long-term contracts, regulation or concessions granted by public
authorities. It is an investment class which can offer diversification away from the traditional mix of
equities, bonds and real estate, and is sometimes seen as a protection against volatility and inflation.
The Boards aim to make this investment sector accessible to private investors through the Offer, taking
advantage of Foresight Group’s capacity to find, invest in and manage infrastructure opportunities. The
Boards expect that many investors will want to realise their investment at the end of the five year
minimum holding period. Each Company intends, therefore, to provide an individual roll-over option
pursuant to which investors in the Infrastructure Shares fund may advise whether they wish to stay
invested or to exit at the end of the five year minimum holding period. Foresight Group intends to select
investments that are expected to be readily saleable between the fifth and sixth anniversaries of the
close of the Offer.
Raising further funds by way of a new share class will allow the normal running costs of each Company
(a number of which are fixed) to be spread across a larger asset base, thereby benefiting existing
Shareholders who will then be responsible for a smaller proportion of the fixed costs of the Company. It
is estimated that, assuming full subscription under the Offer, the cost saving to the Foresight 2 Ordinary
Shares and Foresight 2 C Shares will be in excess, in aggregate, of £100,000 per annum and that a
similar saving will be available to the Foresight 1 Ordinary Shares. In acknowledgement of this (and
subject to the issue of Infrastructure Shares by Foresight 2), Foresight Group has agreed that the annual
cap on normal running costs in respect of Foresight 2 will be reduced from an amount equivalent to 3.6%
of the net assets of Foresight 2 to 3.0% for the duration of the existence of the Foresight 2 Infrastructure
Shares and, thereafter, 3.3%. Foresight 1 is not subject to an annual expenses cap. Although each
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