Information Memorandum - Foresight Group

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