Western Canadian SME Private Equity. Investing in one of the largest generational transfers of wealth in Canadian history

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1 Western Canadian SME Private Equity Investing in one of the largest generational transfers of wealth in Canadian history

2 Disclaimer This presentation is confidential and for informational purposes. Neither this presentation nor the contents hereof are to be reproduced, in whole or in part, stored in a database or distributed in any manner whatsoever to any person. This presentation is confidential and for internal distribution and use only. The information contained herein is current as of January 1, 2013 and is not guaranteed as to accuracy or completeness. This presentation is for information purposes only and does not constitute an offer to sell or a solicitation to buy the securities referred to herein. The securities referred to herein may only be sold to prospective investors who meet certain eligibility criteria. Prospective investors should consult with their own legal, regulatory, tax, business, investment, financial, accounting or other advisors as deemed necessary, and make their own decision based upon their own judgment and upon any advice from any such advisors. The securities referred to herein will only be offered and sold in such provinces of Canada where they may be lawfully offered for sale therein and only by persons permitted to sell such securities. Such securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "US Securities Act") or the securities laws of any state, and may not be offered, sold or delivered within the United States or to US persons (as defined by Regulation S under the US Securities Act). No securities regulatory authority has assessed the merits of, or expressed an opinion about, these securities. This presentation may contain certain information or statements that are forward looking and, by its nature, such forward-looking information is subject to important risks and uncertainties. The words "anticipate", "expect", "may", "should", "estimate", "project", "outlook", "forecast" or other similar words are used to identify such forward looking information. Those forward-looking, if any, are given as of the date noted on this presentation and reflect beliefs and assumptions based on information available at the time (including, without limitation, that (i) the demand for commodities will continue to grow at a pace that is unlikely to be matched by growth in production, and (ii) investment demand for tangible assets will continue to increase for the foreseeable future). Actual results or events may differ from those anticipated or predicted in these forward-looking statements, and the differences may be material. Factors which could cause actual results or events to differ materially from current expectations include, among other things: risks associated with the ownership and operation of businesses, including fluctuations in interest rates, rental rates; general economic conditions; local real estate markets; supply and demand for commodities; competition for available businesses; weather; the price of commodities; changes in legislation and the regulatory environment; and international trade and global political conditions. Although it is believed that the expectations conveyed by any forward-looking statements made (if any) are reasonable based on information available at the date such statements were made, no assurance can be given as to future results or events and so prospective investors are cautioned not to place undue reliance on any forward-looking statements made (if any). All forward-looking information, whether written or oral, are expressly qualified in their entirety by these cautionary statements. No obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise is undertaken. 2

3 Introduction to Equicapita: SME Private Equity Who is Equicapita? Equicapita is a private equity buyout fund that focuses on western Canadian small/medium enterprises (SMEs) our strategy is to build a diversified portfolio of independent, wholly owned, small to medium sized businesses What is an SME? A small medium enterprise is a company with less than 100 employees, enterprise value in the range of $2 to $20 million ( SME ) Why invest in western Canadian SMEs? Economy - western Canada has consistently achieved growth rates higher than Canadian averages Supply - SME baby boomer owners are starting to retire and need to sell businesses Demand - Private equity funding shortage for SMEs is referred to as the Nano Gap Why should your clients invest in Equicapita? Income Simple custodial model which streams out businesses cash flow to investors Growth - Zero Cost equity position Stability Proven ability for western Canadian SME investments to generate cash flow Access - SME investments are difficult for retail investors to make directly, Equicapita provides simple access Sources: Canadian Venture Capital Association CVCA, Deloitte 3

4 Summary Terms Income: Class A Preferred Trust Units - 10% priority return on first 10% of distributable income, paid quarterly Growth: Zero Cost Common A LP Units equity upside, excess distributions and/or capital gains Term: Eligibility: Offering: 5 years from date of investment in Class A Preferred Trust Units Class A Preferred Trust Units Registered plans (RRSP, TFSA, RESP, RRIF or cash) Common A LP Units Cash only Tied security composed of Class A Preferred Trust Units + Class A Common LP Units Tranches: As the risk profile of Equicapita declines over time, the investor equity kicker (the allocation of zero-cost Common A LP Units) is reduced. The following table sets out the expected investor allocation of Common A LP Units by tranche in the ongoing $30 million raise assumes a $10,000 investment in 10,000 Class A Preferred Trust Units: Tranche (millions raised) 0 to 7 (closed) 7 to 14 (current) Preferred Units (number) 10,000 10,000 Common Units (number) 6,000 5,000 Common Units (total cost in $) $6 $5 4

5 Summary Terms (cont) DRIP: Class A Preferred Units are eligible for a DRIP that will be launched in October 2013 Leverage: Mgmt Fees: Equicapita will be able to leverage for acquisitions and redemptions however the maximum will be 25% None Commission: 10% commission, 1% admin fee, 1% trailer fee annually starting on the 6 year anniversary of investment Deal Finder Fees: Advisor network of business owners clients is a potential source of Equicapita deal flow. There is opportunity to earn up to 2% of transaction value as a Deal Finder Fee 5

6 Structure: Income PLUS Growth INCOME GROWTH A Preferred Trust Units + A Common LP Units Equicapita Income Trust 10% Preferred LP Units A Common LP Units Equicapita Income LP SMEs 6

7 Analyst Coverage Projected Investor Returns Rating: IRR Ideal Case: IRR Optimistic Case: IRR Base Case: IRR Pessimistic Case: IRR Unsatisfactory Case: 81/ % 17.17% 14.30% 11.66% 8.69% 3 (Good) 17.40% 14.50% 10.90% 14.3% IRR represents an approximate doubling of investment value in 5 years $100,000 invested would be worth $195,000 at a 14.3% IRR Equals $100,000 Preferred Unit invested with annual 10% distribution, plus $30,000 value for common units 7

8 Disclaimer Legal Rights: If you purchase any securities of Equicapita Income Trust or associated entities (such securities herein referred to as the "Securities") you will have certain rights in the event of a misrepresentation. Reference should be made to the full text of the applicable provisions of the securities legislation in the Province in which you reside or consultation should be undertaken with professional advisors. If you are subject to the laws of Ontario or Saskatchewan those laws provide, in part, that if there is a misrepresentation in this document, which was a misrepresentation at the time that you subscribed for Securities, then you will be deemed to have relied upon the misrepresentation and will, as provided below, have a right of action against the issuer of the Securities (and, in certain instances, other persons) in respect of the Securities purchased by you for damages or, alternatively, while still the owner of any of the Securities purchased, for rescission, in which case, if you elect to exercise the right of rescission, you will have no right of action for damages against the issuer of the Securities, provided that: (1) no person or company will be liable if it proves that you purchased the Securities with knowledge of the misrepresentation; (2) in the case of an action for damages, the defendant will not be liable for all or any portion of the damages that it proves do not represent the depreciation in value of the Securities as a result of the misrepresentation; and (3) in no case will the amount recoverable in any action exceed the price at which the Securities were purchased by you. In the case of an action for rescission, no action may be commenced more than 180 days after the date of the transaction that gave rise to the cause of action. In the case of any action other than an action for rescission, (A) in Ontario no action may be commenced later than the earlier of (i) 180 days after you first had knowledge of the facts giving rise to the cause of action, or (ii) three years after the date of the transaction that gave rise to the cause of action, and (B) in Saskatchewan no action may be commenced later than the earlier of (i) one year after you first had knowledge of the facts giving rise to the cause of action; or (ii) six years after the date of the transaction that gave rise to the cause of action. The rights of action described herein are in addition to, and without derogation from, any other right or remedy that you may have at law. There are similar rights provided for in the securities legislation of the Provinces of British Columbia, Alberta and Manitoba and reference should be made to the full text of the applicable provisions of the securities legislation in those Province or consultation should be undertaken with professional advisors. If you subscribe for Securities you have the right to cancel your agreement to purchase the Securities, but to do so you must send a notice to the issuer of the Securities before midnight on the second business day after you sign the subscription agreement to purchase the Securities. 8