AIFMD Article 23 Supplemental Disclosure

Transcription

1 AIFMD Article 23 Supplemental Disclosure Alternative Investment Fund Managers Directive The EU Alternative Investment Fund Managers Directive (Directive 2011/61/EU) (the "AIFMD") entered into force on 21 July 2011 and member states, including the United Kingdom, were required to transpose this into national law by 22 July The AIFMD has been implemented in the United Kingdom by a combination of HM Treasury Regulations and FCA Handbook rules. As SVG Capital plc (the Company or AIF ) and its alternative investment fund manager, Aberdeen SVG Private Equity Managers Limited (the AIFM or ASVG ), are each domiciled in the United Kingdom, the FCA Handbook rules require that, among other things, the AIFM make available to investors certain information, set forth in Rule 3.2 of the, prior to such investors investment in the Company. In addition to these disclosures required prior to an investment, Rule 3.2 also requires that the AIFM disclose certain information on a periodic or regular basis. In cases where the AIFM has determined that the requisite information is already set forth in the Annual Report or in any other source document which investors have access to or may request, this supplement contains information with respect to the relevant source materials. In cases where the AIFM has determined that the requisite information has not been provided to investors, this supplement contains additional disclosure items. 1. Investment Strategy and Objectives of AIF, Types of Assets AIF may invest in, Investment Techniques, Associated Risks and Investment Restrictions (1) (a) a description of the investment strategy and objectives of the AIF; (b) if the AIF is a feeder AIF, information on where the master AIF is established; (c) if the AIF is a fund of funds, information on where the underlying funds are established; (d) a description of the types of assets in which the AIF may invest; (e) the investment techniques that the AIF, or the AIFM on behalf of the AIF, may employ and all associated risks; and (f) any applicable investment restrictions For information about the Company s investment strategy and objective, the types of assets in which the Company may invest, the investment techniques, associated risks and any investment restrictions, investors are directed to the disclosures contained under the headings Investment Objective, Investment Policy, Our Strategy, Our business model, of the Corporate Summary on pages 1-5 of the Company s Annual Report and Accounts for the year ended 31 December 2013 (the Annual Report ). Borrowings are described within the Financial Review on page 17 of the Annual Report. Principal Risks, Risk Management and Risk Oversight are described on pages 28 and 29 with further information on risks being disclosed on page 39 under Internal control/risk treatment. (1) (a) a description of the investment strategy and objectives of the AIF The investment objective of the Company, approved by Shareholders at the General Meeting held on 20 th March 2012, is to achieve capital appreciation by investing in a portfolio of private equity and private equity related assets. 1

2 The Company s policy is to invest in private equity and private equity related assets which provide it with exposure to a portfolio of companies that are diversified by vintage year, size, geography, manager and industry sector. The Company will seek to operate with a view to ensuring that no single underlying portfolio investment represents more than 15.0% of the Company s investment portfolio by value at the time of acquisition. The Company has a desired maximum average level of gearing of approximately 20.0% of gross assets over time and has an absolute maximum limit on borrowings of two times its adjusted capital and reserves, as set out in the Articles of Association of the Company. The Shareholders must approve any changes to the investment objective and the investment policy of the Company. Day to day management of the Company s assets has been delegated to the AIFM. (1) (b) if the AIF is a feeder AIF, information on where the master AIF is established Not Applicable. (1) (c) if the AIF is a fund of funds, information on where the underlying funds are established Underlying funds are generally structured as limited partnerships and are formed in various jurisdictions including Delaware, Guernsey, England and Scotland. (1) (d) a description of the types of assets in which the AIF may invest The Company invests in private equity and private equity related assets. The majority of the Company s investments are in private equity funds which are typically structured as limited partnerships. Investments directly into underlying companies may also be made. (1) (e) the investment techniques that the AIF, or the AIFM on behalf of the AIF, may employ and all associated risks Investment Techniques The Company invests in private equity and private equity related assets which provide it with exposure to a portfolio of companies that are diversified by vintage year, size, geography, manager and industry sector. While there are no fixed limits on geographical diversification, the Company investment team spends a considerable amount of time mapping the private equity markets to ensure that SVG Capital commits to what the AIFM believes are the best private equity managers over the coming years. Associated Risks Following the sale of 50.1% of Aberdeen SVG Private Equity Managers to Aberdeen Asset Management PLC, the Company now outsources all investment advice and associated services to a non-group company. As such, the Company does not have the same level of control over its investment manager as it had prior to such sale. Risk Treatment: the Company has a number of rights and protections under the terms of a shareholders agreement in respect of its holding in ASVG and has two appointees to the board of ASVG. The Company is a key client of ASVG. If the Company is dissatisfied with the performance of ASVG it can terminate the AIFM agreement. Concentration risk may result in the performance of the Company being unduly affected by the performance of one or a small group of underlying investee companies. At 31 March

3 2014 the Company s largest individual underlying company holding represents 24.6% of total assets and the top 10 largest underlying holdings represents 62.4% of total assets. This risk was assessed as stable. While there remains a high proportion of the investment portfolio represented by the top 10 investments, new commitments have been made to underlying funds during 2013, along with partial realisations of some of the larger investments and we expect the portfolio to become more diversified over the next months. The Board considers the performance of its largest portfolio companies in detail periodically and, in extremis, can dispose of fund commitments. The Company has changed its Investment Objective to evolve from a concentrated, single manager investor to one that is more diversified. Currency risk may impact returns received by the Company as the majority of its assets are denominated in foreign currency. Many investee companies are international and therefore exposed to multiple currencies. The majority of assets are denominated in euros while the Company reports in sterling. The Company continually monitors foreign exchange risk and takes this into account in determining how much cash is held in foreign currency compared to foreign currency commitments. The Company also has the ability to draw down on its loan facility to finance its foreign currency commitments The Company has the ability to hedge against foreign currency movements, but has decided not to hedge the currency risk on its investment portfolio. The Company s excess liquidity is invested in bank accounts and money market funds until the capital is required to fund new investments, fund share buy backs or other returns of capital, deleverage or for general corporate costs. The safety and soundness of the investments made with these funds represents a risk. The Company has a rigorous process to select and oversee where it invests surplus funds. This includes detailed analysis of the credit worthiness and historical track record of the financial institutions being considered, or in use, and ongoing monitoring of diversification and of national and international developments that have potential to undermine the safety and soundness of those institutions. There is a risk that the private equity sector globally falls out of favour with investors leading to a reduction in demand for the Company s shares. However, private equity has outperformed public markets over the long-term and it has proved to be an attractive asset class through various cycles. Raising awareness of private equity and attracting new investors mitigates this risk. The Company invests in funds managed by private equity managers, who in turn select and oversee underlying investee companies. The expertise, due diligence, risk management skills and integrity of the staff that select private equity managers and the private equity managers selected by the Company is key to the success of the Company. Investment recommendations continue to be made by ASVG. ASVG is no longer controlled by the Company, but the same team performs this function at ASVG as did prior to the sale of 50.1% of ASVG to AAM. ASVG performs extensive due-diligence on the private equity managers that it invests with, which includes assessing the adequacy of the risk management frameworks they use, and monitoring their performance. Financing risk and the inability to match funding to the timing of commitments to private equity funds. Investments by underlying fund managers are not sold, or sold for less than expected, or suffer a reduction in value and those managers continue to call for new investments leading to higher drawdowns on the loan facility and an increased risk of being unable to meet commitments as they fall due. Cash flow models are maintained on a live basis and forecasts are produced

4 for each Board meeting that contain appropriate stress testing. The Company can dispose of assets, raise debt or equity, or renegotiate the terms of borrowing or investments. New investments are subject to commitment tests. Personnel Risk: AAM has a robust HR and professional development programme in place to ensure high quality personnel are attracted, retained and developed. (1) (f) any applicable investment restrictions The Company has a desired maximum average level of gearing of approximately 20.0% of gross assets over time and has an absolute maximum limit on borrowings of two times its adjusted capital and reserves, as set out in the Articles of Association of the Company. Capital is allocated with the over-riding objective of maximising long term value for shareholders. New investment opportunities must pass two hurdles. The first is a level of predicted return that enables SVG Capital to achieve its long term objective of 5.0% net outperformance of public markets. The second is to be sufficiently attractive given the associated risk, relative to alternative uses of capital including deleveraging or returning capital to shareholders. The Company invests in private equity and private equity related assets which provide it with exposure to a portfolio of companies that are diversified by vintage year, size, geography, manager and industry sector. The Company will seek to operate with a view to ensuring that no single underlying portfolio investment represents more than 15.0% of the Company s investment portfolio by value at the time of acquisition. 2. Leverage (1) (g) the circumstances in which the AIF may use leverage; (h) the types and sources of leverage permitted and the associated risks; (i) any restrictions on the use of leverage and any collateral and asset reuse arrangements; and (j) the maximum level of leverage which the AIFM is entitled to employ on behalf of the AIF. For information about the circumstances in which the Company may use leverage, the types and sources permitted and the associated risks and any restrictions on the use of leverage and any collateral and asset reuse arrangements, investors are directed to the disclosures contained under the heading Investment Policy on page one and Principal Risks, Risk Management and Risk Oversight on pages of the Annual Report. Leverage is defined in Article 4(1)(v) of the AIFMD as any method by which the AIFM increases the exposure of an AIF it manages whether through borrowing of cash or securities, or leverage embedded in derivative positions or by any other means.

5 (1) (g) the circumstances in which the AIF may use leverage The Board is responsible for determining the gearing strategy for the Company within the limits set out in the Articles of Association. The Company has a desired maximum average level of gearing of approximately 20.0% of gross assets over time and has an absolute maximum limit on borrowings of two times its adjusted capital and reserves, as set out in the Articles of Association of the Company. (1) (h) the types and sources of leverage permitted and the associated risks Types and sources of leverage The Company may from time to time employ different types and sources of leverage. These generally include bank borrowings or indebtedness incurred through the issue of debt securities (which may or may not convert into equity). An analysis of the current leverage used by the Company can be found on page 17 of the Annual Report. Underlying funds may employ leverage and it is standard practice for underlying investments made by these funds to employ leverage. The Company makes commitments to funds without necessarily having the cash available to meet those commitments in full at that time. Those commitments are drawn down over the life of the underlying fund (generally ten years). The Company will be partially reliant on receiving distributions from earlier fund commitments to meet calls for new investments from more recent fund commitments. Risks Gearing All gearing used by the Company must be in accordance with its investment policy. Whilst the use of gearing should enhance the total return on the ordinary shares where the return on the Company s underlying assets is rising and exceeds the costs associated with the gearing, it will have the opposite effect where the underlying return is less than the cost of borrowing, further reducing the total return on the Ordinary shares. The use of borrowings by the Company may increase the volatility of the NAV and market price of the securities issued by the Company. Further details on the risks of leverage are set out on page 92 of the Annual Report. (1) (i) any restrictions on the use of leverage and any collateral and asset reuse arrangements The Company has a desired maximum average level of gearing of approximately 20.0% of gross assets over time and has an absolute maximum limit on borrowings of two times its adjusted capital and reserves, as set out in the Articles of Association of the Company. See the Notes to Accounts section of the Annual Report for a description of how this method is calculated. The Company does not have in place any collateral and asset reuse arrangements. (1) (j) the maximum level of leverage which the AIFM is entitled to employ on behalf of the AIF. Maximum leverage 200% (Commitment Method) and 200% (Gross Method) 3. Modification of Investment Strategy

6 an announcement to inform the Shareholders and the public of relevant changes to its investment strategy or policy. 4. Contractual Relationship between the Fund and Investors (3) a description of the main legal implications of the contractual relationship entered into for the purpose of investment, including information on jurisdiction, the applicable law and the existence or absence of any legal instruments providing for the recognition and enforcement of judgments in the territory where the AIF is established SVG Capital plc is a private equity investor listed on the London Stock Exchange. T h e C o m p a n y i s incorporated under the laws of England and Wales. The constitutional document of the Company is its articles of association ( Articles ) which may only be amended by way of a special resolution. Upon the purchase and subsequent issue of shares, an investor becomes a shareholder of the Company. A shareholder's liability to the Company will be limited to the amount uncalled on their shares. The Company has one class of shares, namely ordinary shares, with standard rights as to voting, dividends and payment on winding-up and no special rights and obligations attaching to them. Transfers to US persons are restricted but otherwise, there are no material restrictions on transfers of shares. No redemption rights attach to shares in the Company. As the Company is incorporated under the laws of England and Wales, it may not be possible for an investor located outside that jurisdiction to effect service of process within the local jurisdiction in which that investor resides upon the Company. All or a substantial portion of the assets of the Company may be located outside of the local jurisdiction in which an investor resides and, as a result, it may not be possible to satisfy a judgment against the Company in such local jurisdiction or to enforce a judgment obtained in the local jurisdiction s courts against the Company. 5. AIFM, Depositary and Service Providers (4) the identity of the AIFM, the AIF s depositary, the auditor and any other service providers and a description of their duties and the investors rights (1) An AIFM must inform investors before they invest in the AIF of any arrangement made by the depositary to contractually discharge itself of liability in accordance with regulation 30 of the AIFMD UK Regulation (2) The AIFM must also inform investors without delay of any changes with respect to depositary liability. AIFM The Company is managed by Aberdeen SVG Private Equity Fund Managers Limited (the AIFM ), which is a company limited by shares, incorporated in England and Wales. The AIFM is owned, as to 50.1%, by Aberdeen Asset Management PLC and, as to 49.9%, by SVG Capital plc. The AIFM is

7 authorised and regulated by the Financial Conduct Authority in the UK. Pursuant to the management agreement between the Company and the AIFM (the AIFM Agreement ), the AIFM is required to provide investment management services, risk management services, communications and general administrative services. The AIFM is also responsible for the portfolio management of the Company and has not delegated this function. The AIFM is responsible for the proper valuation of the Company s assets and the calculation and publication of the net asset value (the Net Asset Value or NAV ) of the Company. The duties of the AIFM include the following: to perform the portfolio management function to the Company on an ongoing basis; to ensure that appropriate and consistent procedures are established so that a proper and independent valuation of the assets of the Company can be performed; to implement a risk management system to identify, measure and manage appropriately all risks relevant to the Company s investment strategies and to review this system on an annual basis; to ensure that a single depositary is appointed to ensure, among other things, the proper monitoring of the Company s cash flows and the safe-keeping of the Company s assets that can be held in custody; to employ an appropriate liquidity management system; to adopt procedures enabling it to monitor the liquidity risk of the Company and ensure that the liquidity profile of the Company s investments complies with its underlying obligations; to use adequate and appropriate human and technical resources necessary for the proper management of the Company; and to make available an annual report for the Company no later than six months following the end of its annual accounting period. Depositary The Company has appointed State Street Trustees Limited to act as its depositary. Pursuant to the depositary agreement among the Company, AIFM and State Street Trustees Limited (the Depositary Agreement ), the Depositary is required to provide cash monitoring, safekeeping and oversight duties. The Depositary has been entrusted with the safe-keeping of the Company s assets and the proper monitoring of the Company s cash flows. In addition, the duties of the Depositary under the Depositary Agreement are: to oversee: o the conflicts of interest policy and compliance by the AIFM with procedures; o the organisational requirements of the AIFM (controls, systems, infrastructure etc.); o the risk management framework, policy and procedures and AIFMD compliance; o the AIFM s systems, controls, infrastructure, reporting and arrangements in relation to any delegates; to ensure: o the value of the shares of the Company is calculated in accordance with applicable law and the relevant valuation procedures; o the sale, issue, repurchase, redemption and cancellation of shares are carried out within usual time limits; o income distributions take place in accordance with the Company s constitutional documentation; o all cash is booked in accounts opened with approved banks; o custody assets are physically held in safe-keeping; to implement: o effective and proper procedures to reconcile all cash flow movements; o appropriate procedures to identify significant cash flows particularly those which would be inconsistent with the Company s operations; to monitor compliance with investment limits and leverage requirements.

8 The Depositary is liable to the Company or the Shareholders for the loss of a financial instrument held in custody by the Depositary or a sub-custodian. The Depositary is also liable to the Company or the Shareholders for all other losses suffered by them as a result of the Depositary s negligent or intentional failure to properly fulfil its duties. However, where the event which led to the loss of a financial instrument is not the result of the Depositary s own act or omission (or that of its subcustodian), the Depositary is discharged of its liability for the loss of a financial instrument where the Depositary can prove that the Depositary could not have reasonably prevented the occurrence of the event which led to the loss despite adopting all precautions incumbent on a diligent depositary as reflected in common industry practice and despite rigorous and comprehensive due diligence. The Company and the AIFM (acting jointly) and the Depositary may terminate the Depositary Agreement by giving 90 business days notice in writing. The agreement has a minimum term of 6 months. Other termination rights with shorter notice periods are available in certain circumstances (such as unremedied material breach) Company Secretary Stuart Ballard, the Company Secretary, is required to provide company secretarial services including convening meetings of Directors, keeping the statutory books and records of the Company, maintaining the Company register, convening general meetings of the Company, preparing and delivering company announcements and other company secretarial duties properly or reasonably performed by the secretary of a company or as the AIFM may reasonably require. Registrars The registrar of the Company is Equiniti Limited (the Registrar ). The register of Shareholders may be inspected at their office at Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, during normal business hours. The Company has delegated certain investor record-keeping and administration duties to the Registrar, together with associated data processing tasks in respect of the Company and products under contract between the parties. In line with the regulations that govern such operational outsourcing, the Company retains full responsibility for all work performed on its behalf and investors rights are not affected by this delegation. Stockbrokers Espirito Santo Investment Bank, Numis Securities and J.P. Morgan Cazenove have been appointed as the Company s stockbrokers (the Stockbrokers ). Certain of the Stockbrokers provide the Company with corporate broking and associated financial advisory services. Administrator Certain administrative services are provided to the Company by the AIFM. Auditor Ernst & Young LLP has been appointed as the Company auditor (the Auditor ). The Auditor is responsible for auditing the annual financial statements that have been prepared by the AIFM in accordance with auditing standards and, as appropriate, regulations, and for providing its report to shareholders in the annual report and financial statements. In addition, applicable law and regulation may require other reports to be prepared for the Company and, as the appointed auditor of the Company, the Auditor will undertake such work under the auditor service agreement between the Company and the Auditor. Bankers The Royal Bank of Scotland plc, Lloyds TSB Bank plc and State Street Bank and Trust Company have been appointed as the Company s bankers. Solicitors Slaughter and May has been appointed as the Company s solicitors.

9 Professional Liability Risks (5) a description of how the AIFM complies with the requirements referred to in IPRU-INV G (Professional negligence) or GENPRU G (Requirements relevant to collective portfolio management investment firms) relating to professional liability risk The AIFM has effective internal operational risk management policies and procedures in order to appropriately identify measure, manage and monitor operational risks, including professional liability risks, to which it is or could reasonably be exposed to. The management of operational risk, through the risk and control self-assessment process, is aimed at identifying risks in existing processes and improving existing controls to reduce their likelihood of failure and the impact of losses. All risks and events are facilitated via the internal risk management system, which provides a platform to facilitate the convergence of governance, risk and compliance. The AIFM is required to cover professional liability risks, such as the risk of loss of documents evidencing title of assets to the Company, and complies with such requirement by benefiting from the professional indemnity insurance policy, which is managed on behalf of Aberdeen Asset Management PLC, and maintaining an amount of its own funds to cover any defined excess and exclusions to that policy. 6. Delegation Arrangements (6) a description of: (a) any AIFM management function delegated by the AIFM; (b) any safe-keeping function delegated by the depositary; (c) the identity of each delegate appointed in accordance with FUND 3.10 (Delegation); and (d) any conflicts of interest that may arise from such delegations AIFM Delegation From time to time, the AIFM may sub-delegate certain management functions (as referred to in Annex I of the AIFMD) for its funds and accounts to its affiliated subsidiaries, or third parties. As at today s date, the AIFM has not delegated any such management function. Depositary Delegation From time to time, the Depositary may sub-delegate certain safekeeping functions entrusted to it in accordance with the Depository Agreement and the AIFMD. Conflicts of Interest The AIFM is committed to treating Shareholders fairly and has implemented procedures and processes to ensure that this is the case. In particular, the AIFM has approved and adopted the conflicts of interest policy (the Conflicts of Interest Policy ) of the Aberdeen Asset Management group ( Aberdeen ).

10 The objective of the Conflicts of Interest Policy is to ensure the fair treatment of shareholders in cases of conflicts of interest or potential conflicts of interest which may arise in the course of providing management, advisory or administrative services to the Company. To achieve this objective, the Conflicts of Interest Policy seeks to ensure that the Company and the AIFM have adequate organisational and structural measures in place: to identify circumstances which constitute or may give rise to a conflict of interest entailing a material risk of damage to the interests of the Company or its shareholders; to provide procedures, mechanisms and systems to manage or resolve any such conflicts of interest; where such conflict cannot otherwise be avoided, ensuring that the Company and the AIFM always act in the best interests of shareholders; and to maintain a proper record of any such conflict or potential conflict and to ensure proper reporting to affected shareholders. The following circumstances have been identified as constituting or potentially giving rise to conflicts of interest: Directors of the AIFM are currently senior executives of the Company and of Aberdeen. The AIFM is an affiliated entity of the Company. The AIFM Agreement has not been negotiated on an arm s length basis but the key terms are similar to those which might be agreed between independent third parties and have been reviewed by external lawyers. The affiliations and relationships mentioned above may affect independent and unbiased judgements. The AIFM acts as investment manager to funds that invest in the same or similar assets that the Company invests in. The Company may invest in funds to which the AIFM acts as investment manager. In order to ensure that actual and potential conflicts of interest are appropriately identified, managed and monitored, Aberdeen has established a formal committee (the Conflicts of Interest Committee ) which meets regularly to maintain oversight of the Conflicts of Interest Policy and the management of live conflicts situations. Aberdeen and ASVGM maintain a documented matrix of known or inherent conflicts of interest, as well as a documented register of live actual or potential conflicts of interest arising in the carrying on of its business operations. The Conflicts of Interest Committee operates under documented terms of reference. 7. Valuation Procedure (7) a description of the AIF s valuation procedure and of the pricing methodology for valuing assets, including the methods used in valuing any hard-to-value assets in accordance with FUND 3.9 (Valuation) For a description of the Company s valuation procedure and of the pricing methodology for valuing assets, investors are directed to the disclosures in Note 14 to Financial Statements on page 73 of the Annual Report. The AIFM is responsible for the proper valuation of the Company s assets, the calculation of the Net Asset Value of the Company and the publication of such Net Asset Values. The AIFM has established the Aberdeen SVG Pricing Committee (the Committee ) to ensure that a proper and independent valuation of the assets of the Company can be performed. The Committee s responsibilities include:

11 To review and approve as appropriate the relevant valuation policies which describe the operational responsibilities for pricing and outlines pricing sources and validation processes. To oversee the pricing of investments such that they are priced fairly and in adherence with the relevant valuation policy and within a control environment that is sound, effective and suitable to client and regulatory expectations. To review and approve as appropriate all prices of the investment vehicles that are not valued at the NAV produced by the underlying investment vehicles service providers. To review and approve as appropriate pricing changes as and when necessary. To be consulted on an ad hoc basis where there are issues with valuing specific assets, for example, in the event of an unusual corporate action event. To review and approve as appropriate any other valuation matter that may arise. The valuation of the Company s assets is reviewed by the Company s own Audit committee. The Audit committee meets at least four times each year. The members of the Audit Committee consider that they have the requisite skills and experience to fulfil the responsibilities of the Committee. The Committee s responsibilities include reviewing the methodologies used in valuing the Company s investments by underlying fund managers, monitoring changes in accounting practices and policies and reviewing decisions with a significant element of judgement. In addition, the Audit Committee is responsible for ensuring the Company s risk monitoring programme, internal audit processes and regulatory compliance arrangements are appropriate. The Audit Committee has responsibility for the oversight of the external audit function. At the request of the Board, the Audit Committee provides confirmation to the Board as to how it has discharged its responsibilities so that the Board can be satisfied that information presented in the Accounts is fair, balanced and understandable. The Depositary, State Street Trustees Limited, is also responsible for ensuring that the net asset value of the Company is calculated in accordance with applicable law and the valuation procedures. 8. Liquidity Risk Management and Redemption Rights (8) a description of the AIF s liquidity risk management, including the redemption rights of investors both in normal and exceptional circumstances, and the existing redemption arrangements with investors For information about the Company s liquidity risk management, investors are directed to the disclosures contained on page 29 of the Annual Report, under the headings Going Concern of the Statement of Corporate Governance on page 35 and Note 9 to Financial Statements on page 88 of the Annual Report. The AIFM has a liquidity risk management policy in place. Shareholders have no right of redemption. Therefore liquidity risk management focuses on the ability to meet calls on unfunded liabilities to underlying funds. The AIFM uses various risk assessment methods and sophisticated portfolio modelling to measure the risk profile of assets held by the Company and the risk of there being portfolio illiquidity related to the assets. This measurement enables the provision of management information to the Company and the AIFM to enable those risks to be monitored and managed.

12 9. Fees, Charges and Expenses SVG CAPITAL PLC (9) a description of all fees, charges and expenses and of the maximum amounts directly or indirectly borne by investors The AIFM charges an annual fee of 0.5% calculated on the gross assets of the Company. The Company also incurs fees, charges and expenses in connection with depository fees, custodian fees, bank fees and charges, marketing, auditors fees and lawyers fees. In addition, underlying funds will be subject to management fees and carried interest (typically 20% of profits generated by underlying funds) and other fees. Given the nature of carried interest payments, it is not possible to provide a maximum fee payable. 10. Fair Treatment/ Preferential Treatment of Investors (10) a description of how the AIFM ensures a fair treatment of investors; (11) whenever an investor obtains preferential treatment or the right to obtain preferential treatment, a description of: (a) that preferential treatment; (b) the type of investors who obtain such preferential treatment; and (c) where relevant, their legal or economic links with the AIF or AIFM. The AIFM has adopted a documented policy regarding treating customers fairly (the TCF Policy ), the operation of which is overseen by a formal committee (the Risk Committee ) comprised of the CEO together with senior managers from its legal, compliance and risk divisions. An element of the role of the Risk Committee, which meets regularly and operates under documented terms of reference, is to ensure that the TCF Policy is implemented and maintained and to consider any actual or potential TCF issues arising in connection with Aberdeen carrying on its business operations. General awareness training on TCF and what it means to the Aberdeen and its customers is delivered to all Aberdeen staff. No investor in the Company currently obtains preferential treatment of the right to obtain preferential treatment. Substantial shareholders subscribing for shares as part of an equity raising may be granted the right to appoint a director. 11. AIF s latest annual report (14) the latest annual report made available in line with FUND 3.3 (Annual report of an AIF) The Company s latest annual report is available on the Company s website (

13 12. Issue and Sale of Shares SVG CAPITAL PLC (12) the procedure and conditions for the issue and sale of units or shares Investors can buy and sell shares in the Company directly through a stockbroker or indirectly through a lawyer, accountant or other professional adviser. 13. Latest NAV (13) the latest net asset value of the AIF or the latest market price of the unit or share of the AIF, in line with FUND 3.9 (Valuation) The Company s latest NAV is available on the Company s website ( The Company s share price appears in the Financial Times and other national newspapers. For internet users, detailed data on the Company, including price, performance information and a monthly factsheet, is available on the Company s website ( 14. AIF s historical performance (where available) (15) where available, the historical performance of the AIF The Company s historical performance is available on the Company s website ( The Company s historical performance is also contained in the Company s previous annual reports. The Company s annual reports are available on the Company s website ( Prime Brokerage (16) (a) the identity of the prime brokerage firm (b) a description of any material arrangements of the AIF with its prime brokerage firm and the way any conflicts of interest are managed; (c) the provision in the contract with the depositary on the possibility of transfer and reuse of AIF assets; and (d) information about any transfer of liability to the prime brokerage firm that may exist

14 The Company has not appointed a prime broker. 15. Periodic Disclosure (17) a description of how and when the information required under FUND 3.2.5R and FUND 3.2.6R will be disclosed An AIFM must, for each UK AIF and EEA AIF that it manages, and each AIF it markets in the EEA, disclose to investors periodically: (1) the percentage of the AIF s assets that are subject to special arrangements arising from their illiquid nature; (2) any new arrangements for managing the liquidity of the AIF; and (3) the current risk profile of the AIF and the risk management systems employed by the AIFM to managed those risks An AIFM that manages a UK AIF or an EEA AIF or markets an AIF in the EEA must, for each AIF that employs leverage, disclose on a regular basis: (1) any changes to: (a) the maximum level of leverage that the AIFM may employ on behalf of the AIF; and (b) any right of reuse of collateral or any guarantee granted under the leveraging arrangements; and (2) the total amount of leverage employed by that AIF. The AIFM will, at the same time as the annual report is made available to shareholders, make the following information available to shareholders: any changes to (i) the maximum level of leverage that the AIFM may employ on behalf of the Company and (ii) any right of reuse of collateral or any guarantee granted under any leveraging arrangement; the total amount of leverage employed by the Company; the percentage of the Company s investments which are subject to special arrangements resulting from their illiquid nature; the current risk profile of the Company outlining (i) measures to assess the sensitivity of the Company to the most relevant risks to which the Company is or could be exposed and (ii) if risk limits set by the AIFM have been or are likely to be exceeded and where these risk limits have been exceeded, a description of the circumstances and, the remedial measures taken; the risk management systems employed by the AIFM outlining the main features of the risk management systems employed by the AIFM to manage the risks to which the Company is or may be exposed. In the case of a change, information relating to the change and its anticipated impact on the Company and the shareholders will be made available. The AIFM will inform shareholders as soon as practicable after making any material changes to its liquidity management system and procedures. The AIFM will also inform shareholders of any suspension in dealings without delay. In each case, the information described above will be provided to shareholders by way of a notice online at