Old Burlington Investments Renewable Energy Fund. Trusted Alternatives

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1 Old Burlington Investments Renewable Energy Fund Trusted Alternatives March

2 Why Old Burlington Investments? Old Burlington Investments is a new alternative investment boutique Led by Brett Williams, former Chief Executive of Cofunds, Selestia and Skandia UK Old Burlington Investments aims to work with leading investment specialists to give advisers and their clients access to high quality alternative investment opportunities With total clarity and transparency of fees 2

3 Old Burlington Investment Renewable Energy Fund The Old Burlington Investments Renewable Energy Fund offers investors the potential to generate returns from a portfolio of renewable energy and energy efficiency investments This is combined with the benefits of EIS investment - income tax relief, capital gains tax deferral and inheritance tax relief Conservative investment strategy seeking medium-term growth prospects combined with the benefits of government tax incentives Targeting a c. 6% yield compared to only 3.1% from 20 year UK index linked gilt yield 3

4 Fund structure Unapproved investment fund Discretionary managed fund service NOT a UCIS 4

5 Core fund strategy Working with sector specialist advisers and reputable counterparties to identify and manage investment opportunities Focus on stable and proven technologies including solar photovoltaic, hydro electric, landfill gas, biomass, anaerobic digestion and energy efficiency Our first sector specialist partner: Bluefield LLP (solar PV) 5

6 Bluefield our solar PV partner Leading UK specialist solar PV asset manager institutional and private client funds Team members have engaged in financing of over 17 billion infrastructure and energy transactions, including 225 million of solar Focus on large-scale ground based solar PV with 20 year government backed ROCs Advises on: funds deployment, optimisation during lifetime of investment, maximising divestment value Clearly established deal pipeline, working with some of the major solar PV contractors in the market 6

7 Bluefield Executives William Doughty, Head of Investment Committee (Aged 44) Former founding CEO of Semperian Group (previously Land Securities Trillium, now Telereal Trillium), the largest social infrastructure business in Europe managing c. GBP1.4 billion in assets. James Armstrong, Director, Operations (Aged 40) Former Foresight Group - European Solar Fund and Sustainable UK Fund. A specialist in solar and renewable energy fund management since 2006; 5 years European solar experience. Mike Rand, Director, Investment (Aged 34) Former Foresight Group - European Solar Fund, EBRD Energy Group and Actis Capital LLP. An energy transaction specialist with over 13 years private equity and banking experience including over 7 years in renewable energy. Giovanni Terranova, Director, Asset Management (Aged 39) Former Foresight Group - European Solar Fund and Fortis Global Energy Group. An energy project finance specialist in banking and advisory for 13 years, including 7 years European solar experience. Bluefield Advisers and Non-Executives Lord Currie of Marylebone Former director of Ofgem, former chairman of Ofcom, former NED of Abbey National. Jon Moulton, Non Executive Chairman of Better Capital and former founding Managing Director and Chairman of Alchemy Partners. Dr. Anthony Williams, chair of Bluefield Partners Former partner and head of two global units of Goldman Sachs & Co., and formerly chair of its global risk committee for the Fixed Income, Currencies and Commodities division. Bluefield Investment Committee: William Doughty (Chair), Mike Rand, Giovanni Terranova, Dr. Anthony Williams & James Armstrong 7

8 Fund structure Investors Old Burlington Investments 1 : Investment Adviser t Custodian/Nominee Fund Management Thompson Taraz Fund Manager Investee Co. Investee Co. Investee Co. Investee Co. Asset Management Bluefield LLP: Asset Manager 1 Old Burlington Investments is the trading name of Old Burlington Ventures LLP (OBV). OBV is an appointed representative of Sturgeon Ventures LLP which is authorised and regulated by the Financial Conduct Authority (FCA). 8

9 Typical 4MW solar PV buy and operate 1 EIS Solar PV Company ( m) Gross Investment 2 5,000, Capital Expenditure (4,675,383) Funding costs (248,027) Revenue 440, , , ,728 Operating Costs (226,981) (239,886) (243,483) (247,054) Taxation - - (2,798) (12,447) Net movement 289, , , ,197 Opening cash balance - 289, , ,668 Closing cash balance 289, , ,668 1,331,865 Operating Asset Value 5,228,696 1 This table is furnished for illustrative purposes only and does not represent a definitive forecast. Operating Asset Value is based on the PV of future cash flows discounted at 8%. 2 Excluding any charges paid by investor to Financial Adviser. Total Realisable Value 6,560,561 Less: Carried Interest (546,196) Net proceeds to investors 6,014,365 9

10 Illustrative returns 1 Target Gross Return 4 Target Net Return 5 (less Performance Fee) ( ) ( ) Investment Subscription 2 100, ,000 Less Income Tax Relief at 30% (30,000) (30,000) Net Cost of Subscription 70,000 70,000 Target Return (before tax relief) 131, ,287 Target Return per 100p invested (before tax relief) 131p 120p Target Annual Rate of Return on Net Investment (of 70p) 15.4% 13.1% Target Gross Equivalent Annual Rate of Return % 21.6% 1. Based upon a single investment of 100,000 and current bank interest rates and tax rates. The illustration assumes a realisation of the investment in each Investee Company four years after investment and that income tax relief is claimed against the 2012/13 tax year at a rate of 30% 2. Amount invested excludes any commission paid by investor to their Financial Adviser 3. The Target Gross Equivalent Annual Rate of Return is the rate of return that a 45% income tax rate investor would need to achieve from an equivalent investment in order to match the return as provided by the Fund 4. The Target Gross Return is the expected return on the asset before deduction of the Performance Fee 5. The Target Net Return is the return to investors after deduction of the Performance Fee 6. The illustration above is furnished for illustrative purposes only and does not represent a definitive forecast 10

11 Value creation strategy Minimum three year investment expect four years Asset management by Bluefield Construction or purchase of Solar PV asset through reliable EPC Asset with stable cash flows with many value creation opportunities Asset Value Proposition Contracted index linked revenue for 20 years Government linked revenue Stable cash flows Highly cash generative c. 6% yield compared only 3.1% 20 year UK index-linked gilt yield Companies to which asset would be attractive: Electricity companies Pension and insurance funds Solar aggregators Infrastructure funds Management buyouts Refinancing Market 11

12 Selected key risks and mitigation Risk Mitigation Retroactive regulatory changes Retroactive changes seen as remote risk, robust legal framework Retroactive moves explicitly referenced by the Appeal Court as unlawful and backed by Supreme Court Operational risk Assets constructed by reputable counterparties, some equipment performance guarantees over years Outsourced maintenance typically contracted with performance based linkage EIS Legislation Manager will seek advanced assurance from HMRC prior to investment Impact of inflation ROC value linked by buyout price, set by government and adjusted annually in line with RPI Sunlight UK solar irradiation intermittency is significantly lower than other renewable sources such as wind Long-term nature of projects further reduces total return uncertainty derived from irradiation 12

13 Fees and charges At Old Burlington Investments we are fully transparent with all charges. Initial fee 3.5% Adviser charges Annual Investment Adviser fee Annual Custodian/Nominee fee Annual Fund Management fee Performance fee Subject to express instructions from investor. Please see IM for relevant arrangements. 1.95%, wholly deferred other than in Year 1 and recoverable on disposal of investee shares 0.25% 0.20% 25% of gains over 120p for each 100p invested per investee company. No additional arrangement, service, exit or monitoring fees No investment without Advance Assurance from HMRC 13

14 Who could invest? Old Burlington Investments Renewable Energy Fund is suitable for UK taxpaying individuals and trusts seeking secure asset-backed returns. More specifically: Investors seeking portfolio diversification through EIS Investors that can make full use of EIS tax reliefs available Individuals impacted by reductions in pensions allowances UK resident non doms can bring offshore fund onshore and if invested in 45 days can generate EIS tax reliefs on other UK earnings Investors seeking an investment with a holding period of three to five years 14

15 The offer Minimum fund size: 2 million Maximum fund size: 10 million Launch date: 1 January 2013 Closing date: 1pm on 28 June 2013 Minimum individual investment: 5,000 15

16 Appendix 16

17 EIS benefits Investors in EIS qualifying companies can, depending on their individual circumstances, enjoy some or all of the following benefits: Up to 30% income tax relief, reducing the cost of investment to 70p per 1 invested Exemption from capital gain tax (CGT) on gains made from the disposal of EIS shares after three years Unlimited deferral of capital gains realised in the three years prior to, or up to 12 months after, investments made by the fund Income tax or CGT relief for a loss made on the disposal of EIS shares Inheritance tax relief if shares are held for more than two years and there is no limit on the amount of the investment qualifying for this relief 17

18 Important information The Old Burlington Investments Renewable Energy Fund is not an unregulated collective investment scheme for the purposes of United Kingdom legislation. Such schemes may only be promoted in the United Kingdom to certain categories of persons as set out in the Financial Services and Markets Act 2000 (Collective Investment Schemes) (Exemptions) Order The content of this promotion has not been approved by an authorised person within the meaning of the Financial Services and Markets Act Reliance on this promotion for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. You should not view the information relating to this fund unless you are a person to whom unregulated collective investment schemes may be promoted. You should be aware that past performance is no guarantee of future performance. The price of investments and the income from them can fall as well as rise and may be affected by exchange rate movements between currencies. An investor may not get back the amount invested, unlike savings accounts in banks or building societies where the capital is guaranteed. The price of the shares in investment trusts is determined by the supply and demand, and is not therefore necessarily the same as the value of the underlying assets. Rates of tax, tax benefits and allowances are based on current legislation and HM Revenue and Customs practice. These may change from time to time and are not guaranteed. Changes in legislation in respect of EIS funds in general, and qualifying investments and qualifying trades in particular, may restrict or adversely affect the ability of the fund to meet its objectives and/or reduce the level of returns which would otherwise have been achievable. Nothing in this presentation should be regarded as investment advice. Although reasonable care has been takes to ensure that the information set out herein is accurate, no representation or warranty, express or implied, is made as to its accuracy or completeness. In particular, no representation or warranty is given as to the accuracy or completeness of information supplied by third parties. Old Burlington Investments accepts no liability for any errors or omissions herein whether by itself or its affiliates or by any third party. Information on this presentation may be changed without prior notice. These disclaimers do not restrict or exclude any duties or liabilities which may exist under the Financial Services and Markets Act 2000 or applicable UK regulations. Old Burlington Ventures LLP, trading as Old Burlington Investments, is the Appointed Representative of Sturgeon Ventures LLP, which is authorised and regulated by the Financial Conduct Authority (FCA). 18