Triple Point EIS Service

Transcription

1 Triple Point EIS Service Information Memorandum

2 Important information This Information Memorandum ( Memorandum ), which constitutes a financial promotion for the purposes of section 21 of the Financial Services and Markets Act 2000 ( FSMA ), is issued by Triple Point Administration LLP ( TPAL ) which is authorised and regulated by the Financial Conduct Authority ( FCA ). This Memorandum does not constitute a prospectus for the purposes of the Prospectus Rules. Triple Point ( Triple Point ) is the trading name for the Triple Point Group which includes the following companies and associated entities: Triple Point Investment Management LLP registered in England & Wales no. OC321250, authorised and regulated by the Financial Conduct Authority no , Triple Point Administration LLP registered in England & Wales no. OC and authorised and regulated by the Financial Conduct Authority no , TP Nominees Limited registered in England & Wales no , and Triple Point LLP no. OC310549, all of 18 St. Swithin s Lane, London, EC4N 8AD, UK. This Memorandum may be distributed to persons falling within the following categories of investor: 1 Existing clients of a financial adviser regulated by the Financial Conduct Authority. 2 Persons who meet the criteria for being a professional client. 3 Persons who qualify as certified high net worth individuals in accordance with COBS 4.7.7(a). 4 Persons who qualify as certified sophisticated investors accordance with COBS 4.7.7(b). 5 Persons who qualify as self-certified sophisticated investors in accordance with COBS 4.7.7(c). 6 Persons who confirm that they will only invest 10% of their net assets in non-readily realisable securities by signing the Restricted Investor Statement set out in COBS By accepting this Memorandum, the recipient represents and warrant to TPAL that he is a person who falls within the above description of persons in respect of whom TPAL has approved it as a financial promotion. This Memorandum is not to be disclosed to any other person or used for any other purpose. Any other person who receives this Information Memorandum should not rely on its contents. By applying to the Triple Point EIS Service you are confirming that you are aware of the risks associated with non-readily realisable investments. You should read carefully and consider the risk summary on page 8 and 9. The Triple Point EIS Service will not be appropriate for all potential investors. You should seek advice from a financial adviser, authorised and regulated by the FCA, before deciding whether or not to invest through the Triple Point EIS Service. This document is not available to persons outside the United Kingdom and does not constitute an offer or invitation to invest in any company to any such persons. We have been advised that the Triple Point EIS Service is a managed service, which is an Alternative Investment Fund for the purposes of the Alternative Investment Fund Managers Directive ( AIFMD ). Triple Point Investment Management LLP has been appointed as the Alternative Investment Fund Manager of the Triple Point EIS Service. We have been advised that the Triple Point EIS Service is also classified as a Retail Investment Product, that it does not constitute an Unregulated Collective Investment Scheme under the Financial Services and Markets Act 2000, and will not be subject to the rules for nonmainstream pooled investments. This Memorandum should be read in conjunction with the Investor Agreement and Application Form. The Triple Point EIS Service has been designed to meet the needs of high net worth and or sophisticated investors seeking investments in EIS qualifying companies and/or inheritance tax relief through stable investments. You should consider an investment in this service as a long term investment. Investments in unquoted shares such as those to be made through the Triple Point EIS Service may carry higher risks than investments in quoted shares. The value of your investment through the Triple Point EIS Service could go down as well as up. Investing in unquoted shares may expose you to a significant risk of losing all the money you invest. Furthermore, unquoted securities may be subject to transfer restrictions and may be difficult to sell. You should consider carefully the suitability of an investment in small to medium-sized unquoted companies. Your application will be subject to your financial adviser certifying that your participation in the Triple Point EIS Service meets your objectives, that you have the expertise, experience and knowledge to understand the risks and that you are able to bear the associated risk involved in participating in the service. Investors who do not have financial advisers who will provide this confirmation will not be able to participate in the Triple Point EIS Service. Please read the Investment Management Agreement and complete the Application Form, both of which are included in this document. Triple Point is covered by the Financial Services Compensation Scheme. The Financial Services Compensation Scheme can pay compensation to qualifying investors in the event that investors have a claim and that Triple Point is unable to meet its obligations to them up to a maximum amount of 50,000. It should be noted that laws relating to specific tax incentives are subject to change, and apply differently to individuals depending on their circumstances. Potential investors should seek advice from a qualified tax adviser. Triple Point has taken all reasonable care to ensure that the facts stated in this document are true and accurate in all material respects and that there are no material facts or opinions which have been omitted which would make any part of this document misleading. Triple Point accepts responsibility accordingly. However, nothing in this Memorandum should be construed as constituting legal, taxation, investment or other advice. 16 October May 2015

3 The Triple Point EIS Service Simple Investments in Real Assets At Triple Point we focus on providing our investors with simple investments in real assets. We have provided funding to small businesses, helping them to grow while delivering value for investors, for over ten years. Our investment strategy is built around identifying the right investment, using our rigorous risk management processes. This focuses on selecting companies for funding which meet our key criteria for capital security liquidity, and transparent exit strategies. The EIS Service allows you to build a portfolio of investments which meet these criteria, but from which you can also benefit from the tax incentives of the Enterprise Investment Scheme. In this document we have set out a summary for you of the EIS Service, but if you have any questions please do not hesitate to contact us on Contents Executive Summary The Triple Point EIS Service Tax Benefits Delivering Results Risk Summary Potential Conflicts of Interest Team Making an Investment Claire Ainsworth Managing Partner Triple Point Investment Management LLP About Triple Point 16 Triple Point EIS Service 1

4 Tax Relief An investment in the Triple Point EIS Service will be eligible for 30% up front income tax relief. BPR Relief Investments held in the EIS Service for more than two years qualify for Business Property Relief. CGT Free No capital gains tax is payable on an investment s increase in value in the Triple Point EIS Service 30% 100% 100% CGT Deferral Capital gains can be deferred throughout the lifetime of the investment in the Service. Open The Triple Point EIS Service is open for investment all year round. Limited Life The EIS Service enables a rapid return of capital after the minimum holding period. Diverse Shares are typically allotted in a minimum of 2 EIS qualifying companies (advance assurance received). Stable The investments are asset backed and with good quality customers and a strong underlying business rationale. Simple The Triple Point EIS Service is a managed service which keeps life simple for investors and their advisors. 2 Triple Point EIS Service

5 Welcome The Triple Point EIS Service The Triple Point EIS Service targets high quality, asset backed simple investments which qualify for a number of EIS tax benefits. Target Criteria Target returns 1.10 to 1.15 per share Timely exits after 3 years Cash generative businesses Investment Strategy The simple strategy for the EIS service has been shaped by our extensive and successful experience in sourcing and managing EIS qualifying investments. We have a diversified pipeline of opportunities looking for funding. Timely exit We work closely with the companies in which we arrange investment to achieve an exit for investors following the three year minimum EIS holding period. Triple Point has a strong track record of achieving timely exits for EIS investors. Funding Criteria Predictable and reliable cash flows Target Sectors The EIS Service targets a range of sectors which includes infrastructure, energy and construction. For details of the sectors currently being targeted, please contact Triple Point for details. Tax Benefits 30% upfront income tax relief Tax free gains Capital gains tax referral Inheritance tax mitigation As with any investment, an EIS Service investment carries with it certain risks. An investment will not be suitable for all investors. Past performance is no guide to future performance and you may get back less than the amount you invested. Your capital is at risk. A summary of the risks is available on pages 8 to 9. High quality customers and suppliers High quality assets in the company An attractive prospective valuation Qualities that help to reduce the risk of capital loss A viable and realistic exit strategy Triple Point EIS Service 3

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7 Tax Benefits Meeting Your Needs In recognition of the role private investors can play in supporting small business growth, in 1994 the Government introduced the Enterprise Investment Scheme which provides tax incentives for investors. The range of tax benefits available include: 30% upfront income tax relief Investors receive 30% income tax relief on investments of up to 1million per tax year, provided the investor holds the shares for a minimum of three years. All or part of the investment amount can be carried back to the previous tax year. Tax free gains Any gains realised on the disposal of EIS qualifying shares are free from capital gains tax. Capital gains tax deferral Investors with liabilities arising from the sale of an asset can defer capital gains tax by investing the proceeds in the Triple Point EIS Service within one year before and three years after the gain was realised. When the EIS qualifying shares are disposed of the deferred capital gain is brought back into charge at the then prevailing capital gains tax rate. There is no minimum or maximum amount of deferral. Inheritance tax mitigation After two years an EIS qualifying investment should qualify for 100% business property relief (BPR), which removes the investment from the estate of the investor subject to inheritance tax. Where the EIS investment replaces another which qualified for BPR and which together with the EIS investment was held for at least two of the past five years, the EIS qualifying investment should qualify for 100% BPR. Investor Tax Benefits Your need Reduced income tax liability Deferred Capital Gains Tax Mitigation against inheritance tax Tax free growth Example of EIS Service solution 30% upfront income tax relief CGT deferred for the life of the investment Investments held for 2+ years qualify for BPR No CGT to pay on increases in value on investments Triple Point EIS Service 5

8 Investment Process Our investment process is built around our expertise and experience. Before we invest, we subject every target investment to stringent and detailed analysis. Investment Due Diligence Business Plan Triple Point identifies and screens opportunities introduced by a variety of sources including corporate finance houses, industry practitioners and those which are proposed directly by entrepreneurs. Investment opportunities which meet our criteria and the strategy of the relevant fund or service are considered under our due diligence process which includes corporate and personal background checks, meetings, site visits, taking up references, and technical, financial and market due diligence. We work on the business plan with the company, stress testing it, checking assumptions and reviewing commercial contracts. Our sector and investment experience is often helpful to the entrepreneur at this stage. Negotiation Approvals We use internal and external legal support to negotiate the contractual terms of the investment. We may assist the business in negotiating key commercial contracts (e.g. construction or power supply contracts). HMRC advance assurances are obtained for VCT/EIS investments. All investments are approved by our Investment Committee. If the Investment Committee refers the proposal back to the Triple Point team responsible for the opportunity, this process can be repeated until its requirements are met or the deal is rejected. Investment Completion Monitoring Valuation and Exit The transaction reaches financial close with all the documentation being finalised and funds deployed into the company. Once the investment is completed a Triple Point representative joins the Board as an Investor Director. Our portfolio managers monitor performance by regularly assessing the business, by reviewing management information, the accounts, key performance indicators, performance against budget and profit and cash flow projections. Investment valuations and exit strategies are reviewed regularly in order to maximise value on realisation. 6 Triple Point EIS Service

9 Delivering Results Our EIS Track Record Over the past decade we have sourced, arranged and managed 350m of VCT and EIS investments. In line with the key components of the EIS investment strategy, we have a comprehensive track record in arranging exits for investors shortly after the three year EIS holding period has passed. Innovative Funding Cinema Digitisation In total Triple Point has arranged over 80m of funding for companies that led on the deployment, maintenance and operation of digital equipment at cinemas in the UK and across Continental Europe. For investors, this provided an attractive business opportunity, as digital cinema conversion and projection was paid for under the globally recognised Virtual Print Fee model, through which film studios paid for the cost of deployment over a number of years. The majority of the revenues came from the six major Hollywood Studios. Targets Achieved EIS Targets Achieved Time to exit Funds meeting target return Source: Triple Point (as at September 2015) 6 months 100% As part of this arrangement, in m of funding was arranged for five EIS companies. These companies passed their three year anniversary in May Six months later in October 2015, these companies paid 99.5% of funds to shareholders as part of the shareholder exit. The remaining funds will be paid to investors in 2016 after the liquidation process. All of the companies delivered in line with their target at launch of 1.08 to 1.12 per share, not including the EIS income tax relief available, delivering a highly credible result. Triple Point EIS Service 7

10 Risk Summary This summary is designed to help investors and their advisers understand the principal risks associated with an investment through the Triple Point EIS Service. It is important that you understand these risks before making an investment. Prospective investors should seek advice from a qualified financial adviser to ensure that the Triple Point EIS Service is suitable for their individual needs and circumstances. Tax law may change, as may the legal and regulatory parameters within which markets operate. Triple Point does not advise either on the merits of this opportunity or on its suitability for individual investors. This summary does not set out all the risks associated with making an investment through the Triple Point EIS Service. Risk to Capital The value of an investment may go down as well as up and investors may not get back the amount they invested. Investors should not consider investing unless they are able to bear the risk of losing their entire investment. It is possible that the targeted returns will not be achieved when the investments are sold, or that one or more of the companies in your portfolio may fail, resulting in your shares being sold for substantially less than their original cost, or returning no value at all. Triple Point will not be liable for any losses incurred. Performance Prospective investors should be aware that past performance is no guide to future performance. Any statements made regarding expected future performance are projections rather than guarantees. There is no guarantee that the business strategy will be achieved. Any fees, charges or expenses payable will also affect returns. Investment Risk Investments in private companies can involve a higher degree of risk than investments in larger investment-grade companies and can result in substantial losses. The market price of shares may not fully reflect the underlying net asset value. Net asset valuations may be derived from unaudited records and the production of such valuations may be delayed. Investments are not as readily realisable as investments in the shares of companies listed on the London Stock Exchange. Investments arranged through the Service will be illiquid and investors will find it difficult to realise their investment. Business Risk Company performance is dependent on the quality of customer base and revenue streams, strength of management and controls and the value of any assets held as security. The businesses in which the EIS Service arranges investment may be affected by competition, interest rates, inflation, employment rates and other macroeconomic factors over which the investment manager has no control. Tax Risk Triple Point cannot provide tax advice. Investors should seek advice from a qualified financial or taxation adviser on the suitability of an investment in the Triple Point EIS Service. Triple Point will only arrange investments through the Triple Point EIS Service into companies that are reasonably believed to have EIS qualifying status; however, there can be no guarantee that a company will maintain such status. Tax relief, rates of tax and bases of tax are subject to change. The tax reliefs described in this memorandum are based on current legislation and practice. Interpretation and the value of tax reliefs depends upon the circumstances of the investor. The 4 Triple Point EIS Service 8 Triple Point EIS Service

11 availability of business property relief is assessed by HMRC on a case-by-case basis based on the circumstances at the time of death of the investor. Diversification Investments may be arranged into a single company or companies in a single sector. This limited diversification could increase the risk for investors. Reliance on the Investment Manager Triple Point has been appointed as the alternative investment manager of the Triple Point EIS Service. The skills and expertise of the individuals at Triple Point will be critical for the performance of the Triple Point EIS Service and the loss or impairment of any of those individuals could have a material adverse impact on performance. Therefore, success will depend upon the ability of the investment manager to identify, source, select, complete, and monitor appropriate investments. year period, the EIS income tax and CGT reliefs on the investment will be lost. Any CGT liability deferred as a result of making the investment will, potentially, be brought back into charge. Companies which receive investment from the Triple Point EIS Service are expected to generate high quality cash flows. This may make them an attractive proposition for sale and there is also the potential for refinancing. However, there is no assurance that either a sale or refinancing will be achieved. Although there can be no assurance that investors will be able to dispose of their shares after the three-year holding period, Triple Point is committed to ensuring a timely exit for investors and has a strong track record in managing such exits for EIS investors. Investment Period and Exit Investors should be aware that the minimum holding period for an EIS investment is three years and an EIS investment cannot be exited before this date. The three-year holding period starts on either the date of the most recent investment into each EIS company or the date on which the company begins trading, whichever occurs later. If an investor wishes to exit from their investment before the end of the three Triple Point EIS Service 5 Triple Point EIS Service 9

12 Potential Conflicts of Interest How We Manage Them In the course of our business, there will be occasions when the interests of one group of investors may potentially conflict with those of another, or, when Triple Point s interests may conflict with those of investors. How We Manage Conflicts We take our responsibility to manage conflicts very seriously, in particular to ensure that all investors are treated fairly. We have in place procedures to identify, manage, and mitigate conflicts which include independent consideration of the interests of all parties. Our policy sets out the organisational and administrative arrangements that Triple Point maintains to manage such conflicts. A copy of our conflicts policy is available on request. All staff receive training about conflicts, and conflicts are considered by Triple Point s Conflicts Committee. Information is provided below on the types of conflicts that may arise. It is worth remembering that whilst conflicts must be checked and managed when they arise, the circumstances that give rise to potential conflicts can often result from arrangements that also present advantages to investors. Co-investment In some cases opportunities arise which either can, or sometimes require, the blending of capital from different sources. This could result in a conflict between Triple Point s responsibilities to EIS investors, and its responsibilities to other investors and it is further possible that there could be conflicts between one group of investors and another. Co-investment widens the pool of opportunities available to EIS investors and we seek to ensure that all interests are properly and fairly represented on an arms length basis. Services Provision In some circumstances services provided to the EIS companies can be provided by other members of the Triple Point Group. Examples are administrative support services. Such services may be provided by third parties or by a Triple Point Group related provider, where there are cost and quality benefits which justify the appointment. 4 Triple Point EIS Service 10 Triple Point EIS Service

13 Triple Point Stakes and Wider Business Relationships Triple Point and its partners and staff have developed, or acquired, interests in some of the trading platforms and other businesses that transact with, and provide support services to, the companies into which investments are arranged through the EIS Service. Whilst Triple Point s support or affiliation with such counterparties can help to grow business opportunities for the EIS Service, or provide operational benefits, such interactions can also give rise to potential conflicts of interest. Ongoing Business Management In performing its role in overseeing the trading companies in which investments are arranged through the EIS Service, Triple Point makes recommendations on matters such as where to deploy capital between underlying trading businesses. Whilst the investment strategy provides guidelines there remains the possibility of conflicts of interest where choosing between different options. Triple Point adopts an approach designed to promote the long term interests of those investing through the EIS Service, whilst at its core ensuring that decisions are fair to all investors. Identify Manage Mitigate Triple Point EIS Service 11

14 Our Team Combining Diverse Experience Our Investment Management Team includes individuals with significant experience in private equity, stock market investment, asset finance, infrastructure finance, leasing, public sector financing, and business management. Claire Ainsworth Ben Beaton Ian McLennan Bryan Curel Managing Partner, Chief Investment Officer Managing Partner, Chief Investment Officer, and Chairman of the Investment Committee Eight years venture capital investment experience 31 years industry experience, including 16 years in structured finance at Deutsche Bank where she was Managing Director and involved in transactions totalling 10 billion Partner, Head of Investment Eight years venture capital investment experience Four years hydro-electric power investment experience and led the sourcing and negotiating of a broad spectrum of investments including 80m in the cinema digitisation sector BSc in Biological Sciences from the University of Edinburgh Partner Eight years venture capital investment experience 27 years investment industry experience with global players such as UBS AG & Brevan Howard Led the sourcing and negotiating of over 75m in the renewable energy sector First class Accountancy degree from the University of Glasgow and CFA Charterholder since 1991 Partner and Legal Counsel 26 years asset finance experience Nine years experience as Founding Partner of CBY Solicitors Nine years experience as the Head of the Technology Finance legal team and a Director at Kleinwort Benson (later Dresdner Kleinwort Wasserstein) BA in Law from the University of Oxford 12 Triple Point EIS Service

15 Oliver Scutt Max Shenkman Alexandra Tucker Charlie Von Schmieder In House Solicitor Investment Manager Investment Manager Investment Director Joined Triple Point in 2011 Six years experience as a qualified solicitor with a particular focus on the venture capital and private equity sectors. Trained at and has private practice experience with Pinsent Masons LLP. A member of our in-house legal team. Has a GDL and LPC in Law from BPP and is an English Literature graduate from the University of Durham. Joined Triple Point in 2011 Has worked on investments across our product range. Has nine years combined experience in corporate finance, consultancy and venture capital Was previously a corporate finance associate at Lazard. Graduated from the University of Edinburgh. Joined Triple Point in 2008 and is a member of the investment team. Has worked on a range of investments including hydroelectric power, landfill gas and anaerobic digestion. Has an MA in Business Studies from the University of Edinburgh and the University of British Colombia. Joined Triple Point in 2014 and is a member of the energy team with a focus on the sector. Graduated from Trinity College Dublin with a BA in Science of Materials Holds an MBA with distinction from INSEAD. Triple Point EIS Service 13

16 Making an Investment Applications should be submitted through an authorised financial adviser. We will send you a letter confirming we have received your application once it has been accepted. Applications will only be accepted on the basis of the Information Memorandum and Investor Agreement and Application Form, where more information about the Service is available. Portfolio Construction The Triple Point EIS Service aims to build individual portfolios and allot shares in EIS qualifying companies within six months of investors joining the Service. Funds may be invested in only one company and it is likely that portfolios will have a high degree of concentration. Claiming 30% Income Tax Relief Investments must trade for four months before an application can be made to HMRC for the EIS3 certificate, which allows investors to claim 30% income tax relief. Investors will receive one EIS3 form for each company in which their money is invested. Ongoing Investor Support The EIS Service publishes reports every six months. These are as at 30 June and 31 December and a sent to investors in February and August each year. Our dedicated Investor Support Team is always available to answer your questions. Investment Amounts Triple Point EIS Status A managed service. Minimum Investment Maximum investment in any one tax year eligible for EIS tax relief Alternative Investment Fund for the purposes of the Alternative Investment Fund Managers Directive. Triple Point Investment Management LLP is the Alternative Investment Fund Manager. It is not an HMRC approved EIS Fund. Financial Advice We can facilitate adviser charging. Ongoing adviser fees cannot be facilitated. 25,000 1m We will write to you to confirm when your money has been invested and when you can expect to receive the EIS3 form which will allow you to claim Income Tax Relief. As a Managed Service, your shares will be registered in the name of TP Nominees Limited, as your custodian and nominee. This means you will not receive a share certificate. Fees and Charges Initial charge Annual charge Each EIS qualifying company also incurs annual administration costs estimated at approximately 10,000 each year. This includes fees for the independent directors of the EIS company and accountancy services. There are other annual administration costs incurred by each EIS qualifying company estimated to be approximately 10,000 per annum. 2.5% 2.25% of NAV 14 Triple Point EIS Service

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18 About Triple Point Simple Investment in Real Assets 29 EIS companies funded 500M Funds raised by Triple Point 100M+ EIS fundraising 10 + Years experience We focus on relationships Investment Led Private Investment Specialists Investment Philosophy Honest relationship to risk, focused on capital preservation and growth while maintaining liquidity Investment Opportunities Diverse experience from high grade counterparties to UK SMEs Efficient Administration Triple Point s in-house team 16 Triple Point EIS Service

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20 18 St. Swithin s Lane London EC4N 8AD Adviser and Investor Enquiries advisers@triplepoint.co.uk Triple Point is the trading name for the Triple Point Group which includes the following companies and associated entities: Triple Point Investment Management LLP registered in England & Wales no. OC321250, authorised and regulated by the Financial Conduct Authority no , Triple Point Administration LLP registered in England & Wales no. OC and authorised and regulated by the Financial Conduct Authority no , and TP Nominees Limited registered in England & Wales no , all of 18 St. Swithin s Lane, London, EC4N 8AD, UK