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Placement Memorandum
July 2012
IMPORTANT INFORMATION
The Agriland Fund S.C.A., SICAV-FIS (the Company) is a socit en commandite par actions
incorporated under the laws of the Grand Duchy of Luxembourg as a socit dinvestissement
capital variable fonds dinvestissement spcialis. The Company is subject to the law of
February 13, 2007 relating to specialized investment funds, as amended or supplemented from
time to time (the 2007 Law).
The Company is managed by Agriland Management S.A. (the General Partner). The General
Partner is offering shares (the Shares) of one or several separate sub-funds (individually a
Sub-Fund and collectively the Sub-Funds) on the basis of the information contained in this
placement memorandum (the Placement Memorandum), its appendices (individually an
Appendix and collectively the Appendices) and in the documents referred to herein which
are deemed to be an integral part of this Placement Memorandum. The specific details of each
Sub-Fund are set forth in the relevant Appendix. Any reference to an Appendix pertains to the
relevant Sub-Fund.
No person is authorized to give any information or to make any representations concerning the
Company other than as contained in this Placement Memorandum, the Appendices and in the
documents referred to herein, and any purchase made by any person on the basis of statements
or representations not contained in or inconsistent with the information and representations
contained in this Placement Memorandum shall be solely at the risk of the Investor.
The Company is established for an unlimited duration. However, the General Partner may
establish Sub-Funds for a limited duration, which shall be specified in the relevant Appendix.
The distribution of this Placement Memorandum is not authorized unless it is accompanied by the
most recent financial statements (if any) of the Company. Such financial statements are deemed
to be an integral part of this Placement Memorandum.
Shares of the Company may be issued in one or several separate Sub-Funds of the Company.
For each Sub-Fund, a separate portfolio of investments and assets will be maintained and
invested in accordance with the investment objective and policy applicable to the relevant SubFund, as described in the relevant Appendix. As a result, the Company is an "umbrella fund",
reserved to institutional investors, professional investors and well-informed investors within the
meaning of the 2007 Law, enabling investors to choose between one or more investment
objectives by investing in one or more Sub-Funds.
The Company is a single legal entity. However with regard to third parties and in particular
towards the Company's creditors, each Sub-Fund shall be exclusively responsible for all
liabilities attributable to it. The Company shall maintain for each Sub-Fund a separate
portfolio of assets. As between Shareholders, each portfolio of assets shall be invested for
the exclusive benefit of the relevant Sub-Fund.
Furthermore, in accordance with the articles of the Company (the Articles), the General Partner
may issue Participating Shares and different classes of Investors Shares (individually a Class
and collectively the Classes) in each Sub-Fund, subject to the terms and conditions of the SubFund as set forth in the relevant Appendix. Participating Shares entitle the holders thereof to
receive a Special Return (as described in the relevant Appendix).
Investors Shares of the different Classes, if any, within the different Sub-Funds may be issued at
prices computed on the basis of the net asset value (the Net Asset Value) per Shares within
the relevant Sub-Fund, as defined in the Articles and described in the relevant Appendix.
The General Partner may, at any time, create additional Classes of Shares whose features may
differ from the existing Classes and additional Sub-Funds whose investment objectives or other
features may differ from those of the Sub-Funds then existing. Upon creation of new Sub-Funds
or Classes, this Placement Memorandum and its Appendices will be updated or supplemented
accordingly.
Distribution of this Placement Memorandum and the offering of the Shares may be
restricted in certain jurisdictions. This Placement Memorandum does not constitute an
offer or solicitation in a jurisdiction where to do so is unlawful or where the person making
the offer or solicitation is not qualified to do so or where a person receiving the offer or
solicitation may not lawfully do so. It is the responsibility of any person in possession of
this Placement Memorandum and of any person wishing to apply for Shares to inform
themselves of and to observe all applicable laws and regulations of relevant jurisdictions.
The Articles give powers to the General Partner (the General Partner") to impose such
restrictions as it may think necessary for the purpose of ensuring that no Shares are acquired or
held by any person in breach of the law or the requirements of any country or governmental
authority or by any person in circumstances which in the sole opinion of the General Partner
might result in the Company incurring any liability or taxation or suffering any other disadvantage
which the Company may not otherwise have incurred or suffered. The General Partner may
prohibit the acquisition by, the transfer to, or compulsorily redeem all Shares held by any such
persons.
The value of the Shares may fall as well as rise and an Investor may not get back the amount
initially invested. Income from the Shares will fluctuate in money terms and changes in rates of
exchange will, among other things, cause the value of Shares to go up or down. The levels and
bases of, and relief from, taxation may change.
The Company does not allow any practices associated to market timing (as defined in the CSSF
Circular 04/146 dated 17 June 2004 concerning the protection of undertakings for collective
investment and their investors against Late Trading and Market Timing practices, as amended
from time to time, as an arbitrage method through which an investor systematically subscribes,
redeems or converts units or shares of the same undertaking for collective investment within a
short time period, by taking advantage of time differences and/or imperfections or deficiencies in
the method of determination of the net asset value of the undertaking for collective investment).
The Company hereby expressly maintains its rights to reject orders for subscription and
conversion of an Investor suspected by the Company to employ such practices and may take, if
needed, all the necessary measures in order to protect the other Investors of the Company
against such practices.
Investors should inform themselves and should take appropriate advice on the legal requirements
as to possible tax consequences, foreign exchange restrictions, investment requirements or
exchange control requirements which they might encounter under the laws of the countries of
their citizenship, residence, or domicile and which might be relevant to the subscription,
purchase, holding or disposal of the Shares. All disputes in relation to the Company and any SubFund, the General Partner, their respective managers or officers and the Shareholders are
subject to Luxembourg law and the jurisdiction of the Courts of Luxembourg, Grand Duchy of
Luxembourg.
All references in this Placement Memorandum to euro or EUR are to the legal currency
respectively of the Grand Duchy of Luxembourg and to the legal currency of the countries
participating in the Economic and Monetary Union. All references in this Placement Memorandum
to US Dollar or USD are to the legal currency of the United States of America.
The Company has obtained the authorization of the Luxembourg Supervisory Commission of the
Financial Sector (the CSSF). This authorization should in no way be interpreted as approval by
the CSSF of either the content of this Placement Memorandum or the features of the Shares, or
of the quality of the investments held by the Company or any Sub-Fund. Any statement to the
contrary is unauthorised and unlawful.
Investment Advisor
Auditors
Administration Agent
PricewaterhouseCoopers S. r.l
400, route dEsch . BP 1443
L-1014 Luxembourg
Grand-Duchy of Luxembourg
TABLE OF CONTENT
B.
C.
58
DEFINITIONS
The following definitions shall apply throughout this Placement Memorandum unless the context
otherwise requires:
2007 Law
Actualization Interest
Administration Agent
Advisory Committee
Aggregate Commitment
Appendix
Articles
Board
Business Day
Class
Closing
Commitment
Company
capital
variable
fonds
dinvestissement spcialis and governed by the 2007
Law.
CSSF
Default Interest
Defaulted Shares
Shares that are still partly paid and that are registered in
the name of a Defaulting Investor.
Defaulting Investor
Depositary
EDC
Eleven Cherry
Eligible Investor
EU
Euro or EUR
Financial Year
First Closing
Funded Commitment
General Partner
Initiators
Institutional Investor
Investment Committee(s)
Investors
Investors Shares A
Investment Advisor
Investment Period
Investors Shares
Last Closing
Management Fee
Management Period
Mmorial
Participating Shares
Placement Memorandum
Portfolio Company
Portfolio Investment
Preferred Return
or
10
Reference Currency
Regulated Market
Share or Shares
Shareholder
Special Return
Sub-Fund or Sub-Funds
Subsidiary
Suspension Period
Valuation Day
11
Well-informed Investor
YCAP
12
A. General Information
YCAP, a European asset management company and Eleven Cherry, a Luxembourg management
company, are together the Initiators of an unlimited open-ended investment Company with a
target size of EUR 400 million.
Edifice Capital SAS, a French company, regulated by the Autorit des Marchs Financiers (the
AMF), is the Investment Advisor of the Company; Edifice Capital SAS is specialized in the
structuring and management of investment funds, both in France, Europe, emerging and
developing countries and other countries, in the economic and social infrastructure sector and the
agriculture sector.
The Company was incorporated under the name of Agriland Fund S.C.A., SICAV-FIS on
30 March 2012, as a socit en commandite par actions qualifying as a socit dinvestissement
capital variable - fonds dinvestissement spcialis, under the 2007 Law.
The Articles have been published in the Mmorial on 6 June 2012. The Company is registered
with the Registre de Commerce et des Socits, Luxembourg under number B-168088.
The Company is an umbrella fund and as such provides Investors with the choice of investment
in a range of several separate Sub-Funds, each of which relates to a separate portfolio of assets
permitted by law with specific investment objectives, as described in the relevant Appendix.
The Company is an open-ended collective investment scheme (i.e., Shares may be redeemed at
the request of a Shareholder) with variable capital. Shareholders should however check any
limitations or restrictions that may apply to their right ask for redemption of their Shares as set out
in the relevant Appendix.
The Company was created for an unlimited duration. The duration of the Sub-Funds shall be
specified in the relevant Appendix.
As a socit en commandite par actions, the Company has two different types of Shareholders:
- the associ grant commandit or unlimited Shareholder (the General Partner), who is
the equivalent of the general partner of a limited partnership. The General Partner is
responsible for the management of the Company and is jointly and severally liable for all
liabilities which cannot be paid out of the assets of the Company. The General Partner may
only be removed by an amendment of the Articles approved at an extraordinary general
meeting of Shareholders. The General Partner will hold the one General Partner Share in
the Company. The General Partner Share was issued upon incorporation of the Company.
No further General Partner Shares will be issued.
- the associs commanditaires, or limited Shareholders whose liability is limited to the
amount of their investment in the Company. The Company may have an unlimited number
of limited Shareholders. The interests of the limited Shareholders of the Company will be
represented by Investors Shares of different Classes and Participating Shares, as the case
may be, with respect to each Sub-Fund.
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The General Partner is Agriland Management S.A., a company organised under the laws of
Luxembourg on [30 March 2012] with a share capital of thirty one thousand Euros
(EUR 31,000.-). The articles of incorporation of the General Partner have been published in the
Mmorial on 16 May 2012. The General Partner is registered with the Registre de Commerce et
des Socits, Luxembourg, under number B-168087.
The capital of the Company is represented by one (1) General Partner Share (which has been
subscribed by the General Partner), and by Investors Shares, and, as the case, may be
Participating Shares, of each Sub-Fund.
Within each Sub-Fund, Shares may, as the General Partner shall determine, be of one or more
different series differentiated by their respective issue date.
Each Share (General Partner Share, Participating Share or Investors Share) grants the right to
one vote at every general meeting of Shareholders. No measure affecting the interests of the
Company vis--vis third parties may validly be taken without the affirmative vote of the holder of
the General Partner Share.
The capital of the Company shall at all times be equal to the total net asset value of the
Company.
The Company was incorporated with a subscribed Share capital of thirty one thousand Euros
(EUR 31,000.-) divided into one General Partner Share of no nominal value with an initial par
value of EUR 1,000.- and thirty (30) Investors Shares of no nominal value with an initial par value
of EUR 1,000.- each. Upon incorporation, the General Partner Share and each Investors Shares
were fully paid-up.
The minimum subscribed capital of the Company, as prescribed by law, is one million two
hundred fifty thousand Euros (EUR 1,250,000.-). This minimum must be reached within a period
of twelve (12) months following the authorization of the Company as a SICAV-FIS under the 2007
Law.
B. Investment Choice
For the time being, the Company offers Investors Shares in those Sub-Funds as further described
individually in the relevant Appendix.
Upon creation of new Sub-Funds or Class(es), this Placement Memorandum shall be updated or
supplemented accordingly.
C. Share Classes
All Sub-Funds may offer more than one Class of Investors Shares. Each Class of Investors
Shares within a Sub-Fund may have different features or rights or may be offered to different
types of Eligible Investors to comply with various country legislations and will participate solely in
the assets of that Sub-Fund.
Details in relation to the different Classes of Shares as well as the rights in relation thereto and
issue conditions are set out for each Sub-Fund in the relevant Appendix.
14
Agona S. r.l. is the personal holding company of Edifice Capital Group founding members, that
owns, on their behalf, their participation in the group companies, including Edifice Capital SAS
(EDC).
EDC is an independent French company, regulated by the AMF. It is specialized in the structuring
and management of investment funds, both in France, Europe, emerging and developing
countries and other countries, in the economic and social infrastructure sector as well as the
agriculture sector. EDC is also developing an activity of investment advisor.
Cadogan C1 S. r.l. is a Luxembourg private limited company (socit responsabilit limite)
which has as main purpose the holding of participations, in any form whatsoever, in Luxembourg
and foreign companies and any other form of investment, the acquisition by purchase,
subscription or in any other manner as well as the transfer by sale, exchange or otherwise of
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securities of any kind and the administration, control and development of its portfolio. Its
additional purpose is the acquisition and sale of real estate properties, for its own account, either
in the Grand-Duchy of Luxembourg or abroad as well as all operations relating to real estate
properties, including the direct or indirect holding of participation in Luxembourg or foreign
companies, the principal object of which is the acquisition, development, promotion, sale,
management and/or lease of real estate properties.
Some of the specific benefits each Initiator will bring to the Company are listed below:
YCAP:
Expertise and know-how of the African market and its different sectors;
Expertise on different sectors, such Credit, Infrastructure, Real Estate and Hedge
Fund;
Strong relationships with industrial players, with High Net Worth Individuals and
sophisticated institutional investors.
EDC:
Expertise and know-how of the African market and its different sectors;
Strong relationships with (i) the industrial players in the infrastructures sector:
conception, building, operating, maintenance, etc., (ii) the financial and banking
actors, (iii) the technical, legal, tax and financial advisors, etc.;
Specific team dedicated to Africa with a huge track record for the management of
investment structure;
EDC has launched a FCPR (Fonds Commun de Placement Risques procedure
allge) on the euro zone and dedicated to Public Private Partnership Infrastructures
(Contrat de Partenariats/ Private Finance Initiative);
Edifice Capital performs investment advisory services for Edifice Infra Maroc, a
Moroccan infrastructure investment fund part of the Edifice Capital group. This
Marrocan fund was launched in April 2010.
16
F. Structure Overview
AgonaSARL
(Lux)
CadoganC1
(Lux)
YCAP(Lux)
ElevenCherry
(Lux)
GeneralPartner
Investors
Depositary
(limitedshareholders
commanditaires)
Advisory
Committee
Investment
Committee
(Luxemburg)
Auditors
AGRILANDFUND(SICAV SCA)
Registrar&Transfer
Agent
SubFund#1
AdministrativeAgent
Investment
Advisor
Project
SPV
Project
SPV
Project
SPV
EdificeCapitalSAS
(France)
17
The Company will also seek to invest in projects consistent with the general principles of Socially
Responsible Investments1. To do so, the Company will rely on the services of specialized SRI
advisory companies. At the time of its incorporation, the Company chooses to rely on the services
of BeCitizen. However, the General Partner may, at its sole discretion, decide to rely on another
SRI advisory company.
Founded in 2000, BeCitizen (www.becitizen.com) is a strategy and finance consultancy firm (part
of Edmond de Rothschild Group) which delivers to its clients radically innovative products and
business models. BeCitizen acts, through its interventions, as a driving force behind the Positive
EconomyTM* concept: a growth model that generates economic opportunities by restoring the
environment. BeCitizen relies on 25 consultants, experts on environmental issues.
The Positive EconomyTM approach is an analytical framework and ranking methodology
developed by BeCitizen to
The Company through the General Partner will employ the Investment Advisor to identify and
prepare bids for projects, either through participation in a public tender alongside partners
Cf. the United Nations Principles for Responsible Investments would be used as general guidelines
(http://www.unpri.org/).
18
(industrial or financial) or direct shares acquisition in targets companies. Both greenfield and
brownfield projects will be targeted.
The Company intends to be an active developer of projects in the agricultural sector within Africa,
participating in tendering process and/or acquiring stakes in companies to contribute to the
financing of such projects.
Once the investment is done, the Company will actively manage its participation in the project
and will ensure that the Investment Advisor is carefully monitoring the project and the rights
granted to the Company.
More specifically, the Company aims at offering to its Investors an exposure to a sector which
shows particular potential for development and growth over the coming decade. The Company
will seek to achieve this objective by investing gradually all of its committed capital, net of
necessary reserves and expenses, in such projects.
The Company will target opportunities that best meet its sectional focus and return expectations.
The Company may invest in such target assets through tax-efficient vehicles and will be entitled
to any and all distributions made by such vehicles. It is contemplated that depending on the size
of and risks associated with certain investments, such investments may be made alongside other
institutional investors, such as public and private pension funds, banks, asset management
companies, insurance companies, foundations, endowments, and other institutional investors.
Prior to expending the capital contributions made by the Investors, and pending distributions or
other uses of available cash, the Company may invest cash balances in various types of shortterm market investments (Temporary Investments). These Temporary Investments may
include money market instruments and securities and/or tailor-made structured products issued
by taxable or tax-exempt top-tier financial institutions.
Both greenfield and brownfield projects will be targeted, with the objective to mitigate the J curve
effect.
Greenfield projects initially have a negative impact on the Net Asset Value of the investment
vehicle: generally, the construction period requires high capital drawdowns and there is no
disposable cash flow for Investors (J curve).
19
A mix of greenfield and brownfield projects improves the risk / return ratio of the Company.
For each project, the Company will implement financial structures that offer the best ratio
between risk mitigation and costs of the guarantees and/or insurances to ensure the projects
bankability and the protection of Investors. Political and / or commercial risks may be covered on
a case by case basis through insurance or guarantees provided by multilateral, bilateral or credit
export agencies.
Targeted Markets: the African agricultural market
The Initiators believe that investing in the agro-industrial sector in developing and emerging
countries is one of the priorities for the 21th century for several reasons:
Food security is one of the main challenges for the new century: in 2011, more than
1 billion people suffer from hunger worldwide;
There is nearly any chance to reach the millennium objective: to halve the proportion of
people who suffer from hunger by 2015;
20
Price volatility of agricultural commodities has a negative impact on the cereal import bill
of many developing countries for several years;
To feed 9 billion people in 2050, the world agriculture production has to be raised of 70%
and the access of people to food to be improved.
Demand for agriculture products and high-value products from Africa should raise from
50 to 100 billions between 2020 and 2030, according to the African Union Commission;
Rapid urbanization and sustained demographic growth in African countries will generate
a growing demand of agro-industrial products in the following years;
Increasing the local production would contribute to secure the supply side, the prices, the
job creation as well as the familial and local agriculture production;
Cumulated investments in agriculture, agro-industrial sectors and the linked services
sectors are estimated to $ 940 billions between 2006 and 2050. 66% will be dedicated to
the agro-industrial and agro-business sector.
The investment strategy of each Sub-Fund is individually set out in the relevant Appendix.
B. Investment Approach
The Investment Advisor will implement an investment approach and process which, when
combined with its sourcing capabilities, is expected to assist the General Partner in achieving
value creation for the Company. The key elements of such approach are:
creative structuring: using creative and sophisticated structuring to optimize returns and
mitigate downside risks (e.g. through the use of contractual terms, payment regimes and
corporate structures; appropriate bank and capital markets leverage and financial
structuring designed to mitigate interest rate, credit, refinancing and currency risks;
appropriate risk mitigation instruments to cover political and / or commercial risks);
Source : Food and Agriculture Organization of the United Nations, African Agribusiness and Agro-industries
Development
Initiative
(3ADI)
(http://www.fao.org/ag/portal/agarchive/detail/en/item/43187/icode/?no_cache=1)
21
disciplined decision making: presenting to the General Partner for each potential
transaction a detailed memorandum which may include (i) a description of the opportunity
and investment rationale, (ii) the business plan and major assumptions in the plan, (iii) a
simplified financial model including amongst others a valuation of the asset, the expected
IRR, financial ratios, SWOT Analysis, (iv) for each operating partner, its reputation and
prior experience, and the terms under which the investment is undertaken with the
operating partner, (v) market supply and demand dynamics, including existing and
projected supply, (vi) market rents and prices, including comparable information, (vii)
deal economics and sensitivity analyses, (viii) all due diligence undertaken and by whom
with a view to give reassurance as the in-depth analysis and the independence of such
due diligence, (ix) final financing terms and acquisition structure, and (x) exit strategies.
All investment and divestment recommendations will be made by the Investment Advisor
to the General Partner. The board of the General Partner by a vote at a simple majority
will, in its absolute discretion, determine whether to proceed with the investment or
divestment. A member of the board of the General Partner will be precluded from
participating in votes for projects involving a potential conflict of interest;
Due diligence and risk analysis: The Investment Advisor will undertake appropriate due
diligence as soon as possible after attractive investment opportunities have been
identified and accessed. The nature of the due diligence exercise will largely depend on
the stage of the investment being considered. A mature asset may carry less risk but
offer less potential upside to a new operator. A key element of the due diligence will be to
conduct a comprehensive analysis of different scenarios to obtain a realistic assessment
of future value. This will permit the General Partner to put together sound valuation
proposals and ensure that they do not overpay for assets. In considering whether a target
asset is of good quality, the Investment Advisor will also be entitled to rely on appropriate
advice and reports from external professional advisers regarding, amongst others, the
following issues:
Regulatory framework;
Business plan and long term financial projections;
Macro-economic reports;
Financing and other contracts;
Contractual counterparties including sub-contractors;
Insurance;
Environmental compliance;
Any available technical, market, legal and financial due diligence reports
already available;
Construction;
Physical condition of existing assets;
Anti Money Laundering principles;
Accounting information; and
Tax.
strong asset management: The General Partner will seek board representation in
company/ assets it invests in. After an investment is made, the General Partner will
attempt to implement the business plan and focus on creating value through active
management and by working closely with operating partners, which are strongly
motivated to achieve objectives to implement value-creation strategies, while also
leveraging relationships with agents, contractors and other service providers to ensure
successful execution;
monitoring: The Company will retain a financial model for every investee company. This
financial model will be issued as a means to monitor and analyze the performance of
each investment. The General Partner will seek to obtain monthly reports from its
investee companies, covering financial and operational performance; and
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exit strategies: seeking investments that offer multiple exit opportunities, by managing the
investment with a view to achieve the most likely exit plan and being able to consider and
pursue a broad spectrum of exit possibilities, including single asset sales, portfolio sales,
mergers and public market placements.
C. Reporting to Investors
The General Partner will present all the relevant strategic, market, technical, operational and
financial information regarding the Company to ensure Investors are duly informed of investments
and the rationale for each of them on a regular basis. In particular, Investors will receive an
annual report including audited accounts.
Such information will cover both operating and financial performance as customary for the type of
transactions in question.
The first report shall be an annual reporting of the financial year closed on 31 December 2012.
The General Partner will calculate the Net Asset Value of the Company in accordance with the
International Private Equity and Venture Capital Valuation Guidelines published by the European
Venture Capital Association (EVCA), AFIC and BVCA (as amended from time to time).
D. Borrowing policy
The Company, with respect to each Sub-Fund, may incur indebtedness whether secured or
unsecured, as further described in the relevant Appendix.
The Company, with respect to each Sub-Fund, may leverage its assets by way of borrowing up to
an amount equal to twenty-five per cent (25%) of the Aggregate Commitment.
Unless otherwise stated in the relevant Appendix, borrowings may be utilized for investment
purpose as well as to bridge financing and expense disbursements when liquid funds are not
readily available.
Investments of each Sub-Fund may include target companies or entities whose capital structures
may include significant leverage. Leverage incurred at the level of such targeted investments will
as a rule not be consolidated for the purpose of assessing external borrowings limits of each SubFund referred to herein.
E. Investment restrictions
In compliance with the provisions of the 2007 Law, the investment strategy of each Sub-Fund will
be based on the principle of risk diversification.
As a rule, and unless otherwise stated in the relevant Appendix, each Sub-Fund shall comply with
the following investment limits and restrictions:
1. A Sub-Fund may not invest more than thirty percent (30%) of its assets (or commit to
subscribe to securities) or, as applicable its Aggregate Commitments, in the same type of
securities issued by the same issuer. This restriction does not apply to:
-
23
investments in target undertakings for collective investment that are subject to riskspreading requirements at least comparable to those applicable to specialised investment
funds. For the purpose of the application of this restriction, every sub-fund of a target
umbrella undertaking for collective investment is to be considered as a separate issuer,
provided that the principle of segregation of liabilities among the various sub-funds vis-vis third parties is ensured.
Moreover, this thirty per cent (30%) risk diversification rule is to be assessed in the light of
specificities of each Sub-Fund contained in the relevant Appendix, as regards amongst other
elements, the basis applicable to such risk diversification rule (i.e. assets vs Aggregate
Commitments) and/or the portfolio build-up rules foreseen at the level of the relevant SubFund.
2. Short sales may not in principle result in a Sub-Fund holding a short position in securities of
the same type, and issued by the same issuer and representing more than thirty percent
(30%) of the Sub-Funds assets or, as applicable, its Aggregate Commitments.
3. When using financial derivative instruments, a Sub-Fund must ensure, via appropriate
diversification of the underlying assets, a similar level of risk-spreading. Similarly, the
counterparty risk in an over-the-counter transaction must, where applicable, be limited having
regard to the quality and qualification of the counterparty.
Each Sub-Fund may have additional specific investment restrictions and risk diversification
requirements specified in the relevant Appendix(ces) to this Placement Memorandum.
Ethics will be a key value of the Company and non ethical assets will be excluded by all means to
the extent of the Companys knowledge and best practice / endeavours. Stringent corporate
rules, reputable and knowledgeable Investment Advisor Team and General Partner acting
according to the best international practices should ensure this key goal is met and related risks
mitigated.
24
must be dealt on an organised market or contracted by private agreement with first class
institutions specialised in this type of transaction.
In addition, the Company may participate in securities lending and borrowing transactions, as well
as sale transactions with right of repurchase and repurchase transactions, as follows:
F.1. Securities lending and borrowing
The Company may enter into securities lending transactions provided that they comply with the
following rules:
(i)
The Company may only lend or borrow securities through a standardised system
organised by a recognised clearing institution or through a first class financial
institution specialised in this type of transactions.
(ii)
transferable securities and money market instruments that are the object of the
highest rating attributed by a first class rating agency (i) quoted or negotiated on
a Regulated Market or (ii) negotiated on any other market of a Member State of
the European Union (Member State), that is regulated, functioning regularly,
recognised and open to the public and that are blocked for the benefit of the
relevant Sub-Fund until the expiry date of the loan contract(s); and/or
Such a guarantee shall not be required if the securities lending is made through
recognised clearing institutions or through any other organization assuring to the
lender a reimbursement of the value of the securities lent by way of a guarantee or
otherwise.
(iii)
Securities lending and borrowing transactions may not extend beyond a period of
thirty (30) days nor exceed fifty percent (50%) of the total valuation of the securities
portfolio of each Sub-Fund. These limitations do not apply where the Company is
entitled at all times to terminate the contract at any time with the immediate
restitution of the securities lent provided that the terms of the relevant securities
lending agreement do not render such cancellation and restitution costly.
(iii)
The securities borrowed by the Company may not be disposed of during the time
they are held by the Company, unless they are covered by sufficient financial
instruments which enable the Company to reinstate the borrowed securities at the
close of the transaction.
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(iv)
The Company may borrow securities under the following circumstances in connection
with the settlement of a sale transaction: (a) during a period when the securities have
been sent out for re-registration; (b) when the securities have been lent and not
returned in time; (c) to avoid a failed settlement when the custodian fails to make
delivery and (d) in order to comply with an obligation to deliver the securities that are
the object of repurchase agreements when the counterparty exercises his right to
redeem the securities, to the extent that these securities have previously been
redeemed by the Company.
(v)
The counterparty risk deriving from securities lending transactions shall never exceed
thirty percent (30%) of the Aggregate Commitments or NAV of the relevant SubFund, as applicable.
Pursuant to the Articles, as holder of the General Partner Share, the General Partner has
responsibility for managing the Company in accordance with the Placement Memorandum and
26
the Articles, Luxembourg law and other relevant legal requirements. The General Partner is jointly
and severally liable for all liabilities which cannot be paid out of the assets of the Company. The
General Partner may only be removed by an amendment of the Articles approved at an
extraordinary general meeting of Shareholders. The General Partner will hold the one General
Partner Share in the Company. The General Partner Share has been issued upon incorporation
of the Company. No further General Partner Share will be issued.
The General Partner is responsible for implementing the investment policy of the Company and
its Sub-Funds, subject to the risk diversification rules and investment restrictions set out in this
Placement Memorandum.
The General Partner is also responsible for selecting the Depositary, the Administration Agent,
the Registrar and Transfer Agent and other such agents as are appropriate.
Yariv Elbaz started his career as equity portfolio manager at BNP Paribas. After three years, he
started-up Keren Finance where he managed an equity fund, K-Invest France, which was
numerously awarded when it was under his management. In 2003, Yariv started-up Cogef in
Geneva (multi-family office). With Cogef, he launched a range of products, in long-only
(CogeFunds), in Private Equity (Cogef Luxembourg), and in alternative asset management
(BlueStar and OneSeven in New York). When he sold Cogef in 2009, the assets under his
management exceeded $2.5 billion. Yariv founded YCAP in 2010 to create value from tailor-made
solutions and ensure close relationship with clients and transparency. Yariv has got a Master
Degree Diploma in Finance from the Ecole Suprieure de Commerce de Paris, a leading
European business school.
Geoffroy tSerstevens is the general counsel of Aerium group since February 2008. He is
currently responsible for all legal aspects of the activity of the Aerium group, including structuring
the investments and acquisitions, financing, management and disposal of assets. He is also
member of the investment committee of Aeriance FCP-SIF, a Luxembourg based specialized
investment fund. Prior to joining the Aerium group, he was an associate at Arendt & Medernach,
a Luxembourg leading law firm in the department of regulated investment funds since 2004. He
gained a degree in law from the Universit Catholique de Louvain (Belgium).
Nicolas Boudeville is President of Edifice Capital. Before joining Edifice Capital, Nicolas has
been Deputy CEO of Natixis Environnement & Infrastructures, managing company specialized in
the infrastructures and renewable energies, and Director of the PPP Greenfield Platform. He has
been the former Director of FIDEPPP (Caisses dEpargne Investment Fund in PPP in France) for
3 years. He has been also Partner at PricewaterhouseCoopers (France) in charge of Public
policies and Public Private Partnership and he is a founding member of the PPP Club
MedAfrique. Nicolas has a background of lawyer in France and Belgium and has two Masters in
Environment Law and European Law. Nicolas is Chevalier de lOrdre National du Mrite (France).
27
Nathaniel Amsellem started his career as a strategy consultant at Gemini Consulting (19972000). Later, he joined successful start-up companies in the Telecommunications industry where
he handled business development, fund raising and M&A from 2000 to 2006. In 2006, he started
Smart Equity, a M&A and Private Equity advisory firm mostly involved in Telecoms-MediaTechnology, Infrastructures, and Financial Services. Finally, he co-founded YCAP in 2010 where
he is responsible for Corporate Development and Operations Management (Finance, IT, Legal).
Nathaniel graduated from ESSEC (MBA program) - a leading European business school - and
was additionally trained (executive education) at INSEAD and AFIC (French Private Equity
Association).
Marie-Odile Schaad is Chief Executive Officer of Edifice Capital. Previously, she was Business
Manager during 4 years of the third party asset management department within the Corporate
and Investment Bank of Natixis, in charge of the regulatory, compliance, legal and tax aspects
and of the coordination of the services of the department. Marie-Odile was also in charge of a
portfolio of management companies approved by the AMF. Previously, she spent 10 years within
various Inspection General specialized on capital markets and asset management. Marie-Odile
holds a Master in Banking and Finance of Paris I (Pantheon-Sorbonne).
Management fees
Management fees will be paid by the Company to the General Partner as specified in the relevant
Appendix.
Key Persons
Some persons may be identified as responsible key persons (the Key Persons), who shall
respectively devote such amount of time as shall be sufficient to ensure the success of the
investment activities of the relevant Sub-Fund of the Company.
The names of the Key Persons, as well as their appointment procedure, are specified for each
Sub-Fund in the relevant Appendix.
the Key Persons identified for the activities of one or several Sub-Fund(s) or certain
determined Key Persons (as further specified in the relevant Appendix) cease to devote
such amount of time as shall be sufficient to ensure the success of the investment activities
of the relevant Sub-Fund of the Company (a Key Persons Event) or,
2)
the General Partner ceases to be directly or indirectly owned and controlled by Cadogan
C1 and/or Agona SARL and/or YCAP and/or one of their respective affiliates (a Change
of Control Event),
then the relevant Sub-Fund(s), as the case may be, automatically enters into a Suspension
Period (as specified in the Appendix of the relevant Sub-Fund).
28
C. Investment Committee
In order to obtain an independent view on possible investments, the General Partner may, at its
full discretion, establish one or several Investment Committee(s) concerning one or several SubFunds (the Investment Committee(s)), for the purpose and without limitation, of (i) evaluating
and recommending to the Board the investment proposals, (ii) reviewing commitments related to
the relevant Sub-Funds assets and (iii) advising on the selection and eventual sale of the
relevant Sub-Funds investments.
Investment Committee(s), when established, shall receive information on all investment and
divestment perspectives and decisions, it being understood that investment and divestment
decisions shall always lie with the management of the General Partner.
The members of the Investment Committee shall be appointed by the management of the
General Partner and will be composed of the following representatives:
29
Each Sub-Fund will bear the actual expenses of the meetings of the relevant Investment
Committee. With the exception of the two (2) independent members invited by the General
Partner who shall receive remuneration for their services, the members of the Investment
Committee shall not receive any remuneration but shall be reimbursed by the Company for their
reasonable expenses incurred in connection with attending meetings.
Investors of the relevant Sub-Fund shall be informed by all appropriate means as to the creation
of any Investment Committee and its initial composition.
D. Investment Advisor
The General Partner will appoint the Investment Advisor to provide investment advisory and
management support services in relation to the management of the investments of the Company.
The Investment Advisor shall assist the General Partner for the preparation and optimization of all
investment decisions to be made by the General Partner on behalf of the Company and as well
monitor the investments made by the Company.
The Investment Advisor shall present investment opportunities to the General Partner consistent
with the implementation of the investment policy of the Company.
The Investment Advisor is in charge of the Middle Office and Back Office.
The Investment Advisor shall also determine, under the supervision of the General Partner, from
time to time what investments/divestments should/could be made by the General Partner. Such
recommendations are of a purely advisory and non-binding nature.
In consideration of the services rendered by the Investment Advisor for the benefit of the
Company, the Investment Advisor is entitled to receive a remuneration of such amount as agreed
in the investment advisory and management support services agreement. If any such fees are
paid to the Investment Advisor directly by the Sub-fund, such fees shall be deducted from the
General Partners Management Fee. The Investment Advisors fees together with the General
Partners Management Fee, will not in aggregate exceed the maximum Management Fee set out
in the relevant Appendix.
The Investment Advisor Team is composed by expert managers with strong experience in several
sectors linked to agricultural, with management and finances background as well as having a
deep local knowledge of the African market.
E. Advisory Committee
In order to assist the management of the General Partner with the general corporate governance
issues that may arise in the context of the management of the affairs of the Company, and,
without limitation regarding any potential or actual conflict of interest that could affect any SubFund, the General Partner may, at its full discretion, establish one or several Advisory
Committee(s) concerning one or several Sub-Funds (the Advisory Committee(s)), for the
purposes, without limitation, of (i) obtaining guidance or comfort as to the organization of the
governance of the relevant Sub-Fund, (ii) obtaining a recommendation as to manner to resolve
any conflict fairly within reasonable time frames and in the interest of the Company and the
relevant Sub-Fund, and (iii) reviewing and modifying the investment strategy if needed.
30
As further described in the relevant Appendix, the members of the relevant Advisory Committee
for each Sub-Fund shall be appointed by the management of the General Partner and will be
composed of representative(s) of the Investors who have committed to subscribe to or have
subscribed to substantial portions of the capital of the relevant Sub-Fund, who wish to be
represented on the relevant Advisory Committee, and others independent experts whom the
General Partner may invite. The relevant Advisory Committee is not involved in the investment
decision-making process otherwise than as described in this Placement Memorandum and shall
in any case not participate in the management of the affairs of any Sub-Fund vis--vis third
parties. For the avoidance of doubt, each member of the Advisory Committee may act in the
interest of the Shareholder(s) that it represents.
Written notice of any meeting of an Advisory Committee shall be given to all members no less
than ten (10) Business Days prior to the date on which such meeting is to be held, except in
circumstances of emergency, in which case the nature of and reasons for this emergency shall be
stated in the convening notice of the meeting. This notice may be waived by the unanimous
consent in writing. Any member may arrange to be represented at meetings by appointing in
writing another member to act as a proxy.
An Advisory Committee may as a rule only validly deliberate provided that at least the majority of
the total value of the Shares issued to the Investors represented by members of such Advisory
Committee is represented at the meeting. If this fifty percent (50%) quorum is not satisfied,
another meeting shall be convened.
Notwithstanding the foregoing, a resolution of the members of an Advisory Committee may also
be passed in writing, which may consist of one or several documents containing the resolutions
and signed by each and every member.
Each Sub-Fund will bear the actual expenses of the meetings of the relevant Advisory
Committee. The members of an Advisory Committee shall be entitled to be reimbursed for all
reasonable travel, hotel and other out of pocket expenses incurred in relation to or in connection
with attending meetings of the relevant Advisory Committee, subject to the limitations and
restrictions agreed with the General Partner.
Investors of the relevant Sub-Fund shall be informed by all appropriate means as to the creation
of any Advisory Committee and its initial composition.
A. General Considerations
Shares may only be issued to and held by Eligible Investors as defined by the 2007 Law.
However, the General Partner, its directors or other persons who are involved in the management
of the Company do not need to qualify as Institutional Investors, Professional Investors or Wellinformed Investors.
The General Partner Share was issued to the General Partner upon incorporation of the
Company. No further General Partner Shares will be issued.
Shares may be issued in one or more Classes in each Sub-Fund by the General Partner; each
Class having different features, currencies or rights or being offered to different types of
Investors, as more fully disclosed in the relevant Appendix to the Placement Memorandum for
each Sub-Fund individually.
31
The General Partner shall maintain for each Sub-Fund a separate portfolio of assets for each
Sub-Fund. As between Shareholders, each portfolio of assets shall be invested for the exclusive
benefit of the relevant Sub-Fund. With regard to third parties, in particular towards the
Company's creditors, each Sub-Fund shall be exclusively responsible for all liabilities
attributable to it.
Shares of any Class in any Sub-Fund will be issued in registered form only.
The inscription of the Shareholder's name in the register of Shares evidences his or her right of
ownership of such registered Shares. A holder of registered Shares shall receive upon request a
written confirmation of his or her shareholding.
Each Share will have one vote at the general meeting of Shareholders of the Company or at a
Class meeting. Any resolution of a general meeting of Shareholders creating rights or obligations
of the Company vis--vis third parties must be approved by the General Partner.
Any resolution of a general meeting of Shareholders to the effect of amending the Articles must
be passed with (i) a presence quorum of fifty (50) percent of the Shares issued by the Company
at the first call and, if not achieved, with no quorum requirement for the second call; (ii) the
approval of a majority of at least two-thirds (2/3) of the votes validly cast by the Shareholders
present or represented at the meeting and (iii) the consent of the General Partner.
Fractional Shares may be issued up to three decimals of a Share. Such fractional Shares of each
Class have no nominal value and, within each Class, shall be entitled to an equal participation in
the net results and in the proceeds of liquidation of the relevant Sub-Fund on a pro rata basis.
B. Subscription for and Issue of Shares of the Company, Minimum Investment and Holding
The General Partner is authorized, without limitation, to issue an unlimited number of Investors
Shares within each Sub-Fund at any time without reserving to the existing Shareholders a
preferential right to subscribe for the Investors Shares to be issued, except for the limitations
applicable with respect to the Participating Shares.
The General Partner may impose restrictions on the frequency at which Shares shall be issued in
any Class and/or in any Sub-Fund; the General Partner may, in particular, decide that Shares of
any Class and/or of any Sub-Fund shall only be offered for subscription (i) in the context of one or
several Closings or (ii) continuously at a specified periodicity, as indicated in the relevant
Appendix.
The minimum investment and holding requirement per Investor is described for each Sub-Fund in
the relevant Appendix.
C. Contributions in Kind
Unless otherwise stipulated in the relevant Appendix for a given Sub-Fund, the General Partner
may agree to issue Shares as consideration for a contribution in kind of assets, provided that
such assets comply with the investment objectives, policies and restrictions of the relevant SubFund and in accordance with the conditions set forth by Luxembourg law, in particular the
obligation to deliver a report from the auditor of the Company (rviseur dentreprises agr)
which shall be available for inspection. Unless otherwise stipulated in the relevant Appendix for a
given Sub-Fund, any costs incurred in connection with a contribution in kind of assets shall be
borne by the relevant Investor.
32
after expiry of the forty (40) Business Days notice period referred to above, the General
Partner shall deliver notice, sent by internationally recognized courier and by telefax,
or as a scanned document attached to an e-mail with in each case confirmation of
transmission to the addressee, of such default to the Investors of the relevant SubFund(s) who are not in default under their Commitment Agreement (each a NonDefaulting Shareholder), and each Non-Defaulting Shareholder shall then confirm in
writing, by courier and facsimile, to the Defaulting Investor and to the General Partner,
within fourteen (14) Business Days following the date of the notification from the General
Partner, their acceptance, or that they decline, to purchase such number of Shares as
indicated in its acceptance confirmation;
(ii)
the sale shall be completed, and reflected as such by the General Partner in the register
of Shareholders of the relevant Sub-Fund(s), in proportion to the number of Investors
Shares held by each of the Non-Defaulting Shareholders confirming their acceptance to
33
purchase the Shares from the Defaulting Investor, it being agreed and understood that
by not confirming its acceptance of the purchase, a Non-Defaulting Shareholder
increases the other Non Defaulting Shareholders rights for the amount of Investors
Shares which will not be acquired by such Non-Defaulting Shareholder;
(iii) the Investors agreed that their acceptance to purchase such number of Shares as
indicated in the acceptance confirmation shall necessarily imply that the relevant parties
or assignee thereof automatically and irrevocably fully and completely assume the
proportion of the Commitments of the Defaulting Investor that remains outstanding
towards the relevant Sub-Fund(s) on the Shares transfer date.
(2) Compulsory redemption of the Shares of Defaulting Investors
Subject to item (3) below, as an alternative, or in addition, to the purchase mechanism foreseen
above, all Shares registered in the name of such Defaulting Investor that are fully paid may, in
case of such default, be subject to a compulsory redemption by the Company in accordance with
the following rules and procedure:
(i)
the General Partner shall send a notice (hereinafter called the Redemption Notice) to
the Defaulting Investor possessing the Defaulted Redeemable Shares; the Redemption
Notice shall specify the Defaulted Redeemable Shares to be redeemed, the price to be
paid, and the place where this price shall be payable. The Redemption Notice may be
sent to the Defaulting Investor by recorded delivery letter to his last known address. The
Defaulting Investor in question shall be obliged without delay to deliver to the Company
the certificate or certificates, if there are any, representing the Defaulted Redeemable
Shares specified in the Redemption Notice. From the close of business of that day
specified in the redemption notice, the Defaulting Investor shall cease to be the owner of
the Defaulted Redeemable Shares specified in the Redemption Notice and the
certificates representing these Shares shall be rendered null and void in the financial
and legal records of the Company;
(ii)
in such compulsory redemption, the redemption price per Share will be equal to the
lesser of (i) seventy percent (70%) of the subscription price paid at the time by the
redeeming Defaulting Investor increased by the equalization payment/interest paid (if
any) per Share upon subscription by the redeeming Defaulting Investor, less Default
Interest due on the unpaid part of the subscription amounts due, as well as
administration and miscellaneous costs and expenses borne by the Company in respect
of such default, and (ii) seventy percent (70%) of the Net Asset Value of such Defaulted
Redeemable Shares on the relevant redemption date, less Default Interest on the
unpaid part of the subscription amounts due, as well as administration and
miscellaneous costs and expenses borne by the Company in respect of such default].
The above-mentioned redemption price will be payable only at the close of the
liquidation of the relevant Sub-Fund(s).
34
V. Depositary
Under a depositary, domiciliary and paying agency agreement effective as of 30 March 2012,
Caceis Bank Luxembourg (in such capacity, the Depositary) has undertaken to provide
depositary bank and custody services for the Companys assets.
Caceis Bank Luxembourg, with registered office at 5, Alle Scheffer L-2520 Luxembourg, created
under Luxembourg law is licensed to carry out banking activities under the terms of the
Luxembourg act of 5 April 1993 on the financial sector, as amended and specialises in custody,
fund administration and related services.
The Depositarys general duty of supervision is a two-fold duty:
-
the Depositary must know at all times how the assets of the Company have been invested
and where they are maintained;
the Depositary must supervise any third parties with which the assets of the Company have
been deposited.
The Depositary's liability in relation to its supervisory functions shall not be affected by the fact
that it has entrusted all or some of the assets in its custody to a third party.
The Bank shall, in compliance with SIF Law and pursuant to the Depositary Agreement, be liable
to the Company and the Shareholders for any loss suffered by them as a result of its failure to
perform its obligations or its wrongful or improper performance thereof.
In performing its obligations under the depositary bank agreement, the Depositary shall observe
and comply with (i) Luxembourg law and any other applicable laws and regulations for the time
being in force, (ii) the depositary bank agreement (including any operating procedures agreed to
from time to time between the Depositary and the Company), and (iii) the terms of this Issuing
Document. Furthermore, in carrying out its role as depositary, the Depositary must act solely in
the interest of the Shareholders.
The Company may entrust, under the supervision and with the prior approval of the Depositary,
the administration, asset servicing or custody of certain assets of the Company directly to one or
more third party custodian(s) or prime broker(s) appointed in relation to the relevant Sub-Fund(s).
Each third party custodian or prime broker may itself use its network of correspondents and/or
securities intermediaries. Any third party custodian or prime broker shall only be chosen by the
Company amongst highly rated financial institutions and shall be reputable and competent, with
sufficient financial resources, and shall also be subject to the control of a recognized supervisory
authority. The Depositary will carry out on a regular basis a due diligence process in order to
ensure that the above conditions are complied with by the third party custodian or prime broker.
In relation to its supervisory duties regarding the assets of the Company held through the third
party custodian or prime broker, the Depositary shall exclusively rely upon the information
provided by the latter. The Depositary shall exercise reasonable care in the approval and
supervision of the third party custodian or prime broker selected by the Company. Except for
negligence on its part, the Depositary shall not be liable for acts or omissions of the third party
custodian(s) or prime broker(s). The Depositary shall not be liable for losses resulting from the
bankruptcy or insolvency of the third party custodian or prime broker if the Depositary has not
been negligent in the approval of the selection and supervision of the latter.
The Depositary is not involved, directly or indirectly, with the business affairs, organisation,
sponsorship or management of the Company and is not responsible for the preparation of this
document and accepts no responsibility for any information contained in this document other than
the above description. The Depositary shall not have any investment decision-making role in
relation to the Company. Decisions in respect of the purchase and sale of assets for the
Company, the selection of underlying managers and the negotiation of commission rates are
made by the General Partner. Shareholders should ask for the possibility to consult the
35
depositary agreement at the registered office of the Company should they wish to obtain
additional information as regards the precise contractual obligations and limitations of liability of
the Depositary.
The depositary bank agreement may be terminated by either the Company or the Depositary
upon thirty (30) calendar days prior written notice.
In any case the Depositary will have to be replaced within two (2) months from its voluntary
withdrawal or from its removal by the Company. The Depositary shall continue its activities in the
meantime until the Company's assets have been transferred to the new depositary bank.
The fees and charges of the Depositary are borne by the Company in accordance with common
practice in Luxembourg.
A. Administration Agent
The Administration Agent is responsible for the administration of the Company, the maintenance
of records and other general administrative functions. The Administration Agent shall assist the
General Partner to determine the Net Asset Value, the attention of Investors being drawn to the
fact that, for the avoidance of doubt, the General Partner and the Company shall provide, with the
assistance of specialised and reputable service providers, or cause third party specialised and
reputable service providers to provide, the Administration Agent with the pricing/valuation of the
Portfolio Investments with respect to which no market price or fair value is made available to the
general public or to the whole community of professionals of the financial sector, together with
appropriate supporting data or evidence regarding the accuracy of such pricing/valuation, in
accordance with the rules laid down in the Articles and this Placement Memorandum. The
General partner and the Company shall remain ultimately responsible for the pricing/valuation of
such Portfolio Investments.
The Administration Agent will also assist the Company in the preparation of the financial reports
of the Company.
The Administrative Agent will not be liable for the Company's investment decisions nor the
consequences of the Company's investment decisions on its performances and the
Administrative Agent is not responsible for the monitoring of the compliance of the Companys
investments with the rules contained in its and/or this Placement Memorandum and/or in any
investment mandates(s) or instructions given to authorised officers or agents of the Company.
The fees and charges of the Administration Agent are borne by the Company in accordance with
common practice in Luxembourg.
This service agreement may be terminated by either the Company or the Administration Agent
upon thirty (30) days prior written notice.
36
An investment in a Sub-Fund involves certain risks relating to the particular Sub-Funds structure
and investment objectives which Investors should evaluate before making a decision to invest in
such Sub-Fund.
The investments within each Sub-Fund are subject to market fluctuations and to the risks inherent
in all investments; accordingly, no assurance can be given that the investment objectives of the
relevant Sub-Fund will be achieved.
Investors should make their own independent evaluation of the financial, market, legal,
regulatory, credit, tax and accounting risks and consequences involved in investment in a SubFund and its suitability for their own purposes. In evaluating the merits and suitability of an
investment in a Sub-Fund, careful consideration should be given to all of the risks attached to
investing in a Sub-Fund.
The following is a brief description of certain factors which should be considered along with other
matters discussed elsewhere in this Placement Memorandum. The following however, does not
purport to be a comprehensive summary of all the risks associated with investments in any SubFund.
An investment in Shares of any Sub-Fund carries substantial risk and is suitable only for
Investors who accept the risks, can assume the risk of losing their entire investment and
who understand that there is no recourse other than to the assets of the relevant SubFund.
A.
Macroeconomic risks
Changes in applicable law: The General Partner must comply with various regulatory and legal
requirements, including securities laws and tax laws as imposed by the jurisdictions under which
it operates. Should any of those laws change over the life of the Company, the regulatory and
legal requirements to which the Company and its Shareholders may be subject could differ
materially from current requirements.
Emerging Market risks: The Company may invest in countries that are considered emerging
market countries at the time of purchase, especially in Africa. The Company's investments in
emerging markets are subject to the following risks:
37
there may be less publicly available information about Infrastructure and Agriculture Issuers or
markets due to less rigorous disclosure or accounting standards or regulatory practices;
securities markets are smaller, may be less liquid and more volatile than the E.U. major
securities markets;
fluctuations in currency exchange rates and the existence or possible imposition of exchange
controls may adversely affect the value of the Company's investments;
the economies of such countries may grow at slower rates than expected or may experience a
downturn or recession even during periods in which other E.U. economies perform well;
economic, political, regulatory, social or diplomatic events may negatively affect the
Company's investments;
certain investment controls imposed by the governments of such countries may limit
investments; these investment controls may include (a) requiring governmental approval prior
to investment by foreign persons; (b) limiting the amount of investment by foreign persons in a
particular country; (c) limiting investments by foreign persons to only a specific class of
securities of an Infrastructure Issuer that may have less advantageous terras than the classes
available for purchase by residents of the countries; or (d) imposing additional taxes on foreign
investors;
Such investments have additional heightened risks due to a lack of established legal, political,
business and social frameworks to support securities markets; the securities markets of
emerging markets countries are substantially smaller, less developed, less liquid and more
volatile than the securities markets of the more developed countries; extreme short-term price
volatility in these markets is not unusual; markets that are generally considered to be liquid
may become illiquid for short or extended periods; disclosure and regulatory standards in
many respects are less stringent than in other major markets; there also may be a lower level
of monitoring and regulation of emerging markets and the activities of investors in such
markets and enforcement of what limited regulations there are may be extremely limited; many
emerging market countries have experienced high rates of inflation for many years, which has
had and may continue to have very negative effects on the economies and securities markets
of those countries;
Some additional significant risks include:
o Political and social uncertainty (for example, riots, regional conflicts and war);
o Currency exchange rate volatility;
o Pervasiveness of corruption and crime;
o Delays in settling purchases and sales of securities;
o Risk of loss arising out of failure in systems of share registration and custody;
o Less government supervision and regulation of business and industry practices,
stock exchanges, broker and listed companies than in major developed countries;
o Currency and capital controls;
o Greater sensitivity to interest rate changes.
Any of these factors make the value of assets in emerging markets generally more volatile than assets
value in developed markets, and increase the risk of loss to the Company.
Foreign exchange/Currency risk: The General Partner may invest in assets denominated in a
wide range of currencies. The Net Asset Value expressed in its respective unit currency will
fluctuate in accordance with the changes in foreign exchange rate between the Reference
Currency of the relevant Sub-Fund or Classes of Shares and the currencies in which the relevant
Sub-Fund's investments are denominated. In the event that any Sub-Fund utilises derivatives to
hedge against currency fluctuations, there can be no assurance that such hedging transactions
will be effective or beneficial.
Foreign investments: The returns achieved on an investment in the Company are likely to be
affected by the economic climate in the countries in which the Company invests (particularly the
inflation risk). The value of the Companys assets may be directly affected by changes in
government policies, taxation, restrictions on investments and on foreign currency convertibility
and repatriation, and other developments in the legal, regulatory and political climate that may
occur without advance notice. If expropriation, confiscatory taxation, nationalisation, political,
38
economical or social instability or other developments occur, this could adversely affect the
assets held by the Company.
Government/political risks: A government or a governmental agency in a country in which the
Company invests in a PPP project may amend, repeal, enact or promulgate a new law or
regulation, or a court or a government authority may issue a new interpretation of existing law or
regulation, which in each case may substantially affect the implementation of such project or
could cause its nationalism. Depending on where the Company invests, there may exist the risk
of political or social instability and adverse political developments, including nationalization,
confiscation without fair compensation or war, illiquidity, price volatility, market manipulation and
different bankruptcy laws and practices.
Inflation: Inflation and rapid fluctuations in inflation rates may have in the future a negative effect
on the economy of the countries in which the Company has invested.
Interest rate: Investors must be aware that an investment in the Shares may be exposed to
interest rate risks. These risks occur when there are fluctuations in the interest rates of the main
currencies to which the investments of the Company are exposed.
Tax considerations: Tax charges and withholding taxes in various jurisdictions in which the
Company will invest will affect the level of distributions made to it and accordingly to
Shareholders. No assurance can be given as to the level of taxation suffered by the Company or
its investments.
B.
Commodities risk: Investments in commodities may subject the Company to greater volatility.
The value of commodities may be affected by changes in overall market movements, supply and
demand, commodity index volatility, forward selling by the various commodities producers,
purchases made by the commodities producers to unwind their hedge positions, changes in
interest rates, or factors affecting a particular industry or commodity, such as drought, floods,
weather, livestock disease, embargoes, tariffs and international economic, political and regulatory
developments.
Customer risk: Some agriculture assets/products could have a narrow customer base. Should
these customers or counterparties cease to need the services delivered by an Agriculture Asset
or fail to pay their contractual obligations, significant revenues could cease and not be
replaceable. This would affect the profitability of the Assets and the value of any securities or
other instruments it has issued.
Deal flow of projects: There may be a lack of investment opportunities offering financial returns in
line with the Company's objectives such that the Company fails to invest the Outstanding
Commitments. It is however unlikely in view of the number of agriculture projects and needs in Africa.
Environment: environmental regulations are becoming more constraining in most of the
countries targeted by the Company for its investments in agriculture assets, there is therefore a
risk that additional costs will be incurred for the operation of the agriculture assets and the
income earned by the Company may be adversely affected.
Force majeure risk: Force majeure is the term generally used to refer to an event beyond the
control of a party claiming that the event has occurred, including acts of God, fire, flood,
earthquakes, war and strikes. Some force majeure risks are uninsurable and to the extent that
such events occur there may be adverse effects on the Companys investments.
Geographical location: some agriculture assets (lands, processing plants and infrastructures)
are not moveable; should an event that somehow impairs the performance of the agriculture
39
assets occur in the geographic location where the assets are operated, the performance of the
agriculture assets may be adversely affected.
Infrastructure Sector specific risks: Infrastructure Issuers, including utilities and companies
involved in infrastructure projects, may be subject to a variety of factors that may adversely affect
their business or operations, including high interest costs in connection with capital construction
programs, high leverage, costs associated with environmental and other regulations, the effects
of economic slowdown, surplus capacity, increased competition from other providers of services,
uncertainties concerning energy costs (among other things), the effects of energy conservation
policies and other factors. Infrastructure Issuers may also be affected by or subject to:
regulation by various government authorities;
government regulation of rates charged to customers;
service interruption due to environmental, operational or other mishaps;
the imposition of special tariffs and changes in tax laws, regulatory policies and
accounting standards; and
general changes in market sentiment towards Infrastructure Assets.
Infrastructure Assets specific risks:
Through-put Risk: The revenue of many Infrastructure Issuers may be impacted by the
number of users who purchase the products or services produced by the Infrastructure Issuers.
Any change in the number of users may negatively impact the profitability of the Infrastructure
Issuer.
Income of the Infrastructure Issuer Risk: The income earned by the Company from an
Infrastructure Issuer is made primarily of dividends, interest and capital gains which can vary
widely over the short and long term. Notably, the Infrastructure Issuer's income may be affected
adversely when prevailing short-terni interest rates increase and the Infrastructure Issuer is
utilizing floating rate leverage.
Operating Risk: The long-term profitability of an Infrastructure Issuer is partly dependent on the
efficient operation and maintenance of its Infrastructure Assets. Should an Infrastructure Issuer
fail to efficiently maintain and operate its assets, the Infrastructure Issuer's ability to maintain
payments of dividends or interest to investors may be impaired. The destruction or loss of an
Infrastructure Asset may have a major impact on the Infrastructure Issuer. Failure by the
Infrastructure Issuer to carry adequate insurance or to operate the asset appropriately could
lead to significant losses.
Change in Law Risk: Infrastructure Issuers and Infrastructure Assets are generally subject to a
highly regulated environment, particularly when they are of a strategic nature, have an impact
on the environment, are accessible by the general public, have access to public subsidies or
advantageous tax regimes, or are in a situation of monopoly. Although, Infrastructure Issuers
generally protect their assets against changes in applicable laws and regulations, particularly
where such changes would be discriminatory, cash flows and investor returns may be materially
affected in such case.
Leverage Risk at the Infrastructure Issuer Level: Infrastructure Issuers are likely to utilize
leverage through the issuance of Leverage Instruments for the financing of Infrastructure
Assets. Leverage involves risks and special considerations for the Company, including:
o
o
40
Strategic Assets: Strategic assets are assets that have a national or regional profile, and may
have monopolistic characteristics, especially in the agriculture sector; the very nature of these
assets could generate additional risk not common in other industry sectors. Given the national
or regional profile and/or their irreplaceable nature, strategic assets may constitute a higher risk
target for political actions.
Distribution Risk for Equity Income Securities: In selecting equity securities in which the
Company will invest, the Manager may consider the Infrastructure Issuer's history of making
regular periodic distributions (e.g., dividends) to its equity holders. An issuer's history of
paying distributions, however, does not guarantee that the issuer will continue to pay
dividends in the future. The income distribution associated with equity income securities
generally is not guaranteed and will be subordinated to payment obligations of the issuer
on its debt and other liabilities. Accordingly, in the event the issuer does not realize
sufficient income in a particular period both to service its liabilities and to pay dividends
on its equity securities, it may forgo paying dividends on its equity securities. In addition,
because in most instances issuers are not obligated to make periodic distributions to the
holders of their equity securities, such distributions or dividends generally may be
discontinued at the issuer's discretion. In addition, a component of distributions will
represent capital gains. These may be subject not only to the issuer's underlying
fundamentals but also to general market conditions.
Construction Risk: Where the Company invests in Infrastructure Assets which involve a
significant, though not predominant, part of new construction, it is likely to retain some
residual risk that part of the project will not be completed within budget, within the agreed
time frame or to the agreed specifications. Such realization of a construction risk is likely
to have an adverse impact on the income of the Infrastructure Issuer, and therefore on
the income of the Company.During the construction phase the major risks include:
a delay in the projected completion of the project and a resultant delay in the
commencement of cash flow and, potentially, sanctions payable by the Infrastructure
Issuer;
an increase in the capital needed to complete construction; and
the insolvency of the head contractor, a major subcontractor and/or a key equipment
supplier
o
o
Construction costs may exceed estimates for various reasons, including inaccurate
engineering and planning, labour and building material costs in excess of expectations
and unanticipated problems with project start-up. Such unexpected cost increases may
result in increased debt services costs and insufficient funds to complete construction.
Such increases may result in the inability of project owners to meet the higher interest
and principal repayments arising from the additional debt requirement. Delays in project
completion can result in an increase in total project construction costs through higher
capitalized interest charges and additional labour and material expenses and
consequently, an increase in debt service costs. It may also affect the scheduled flow of
project revenues necessary to cover the scheduled operations phase debt service costs,
operations and maintenance expenses and damage payments for late delivery. However,
the Infrastructure Assets in which Company will invest and which will involve construction
are likely to present lower risks than stand alone construction projects due to the fact that
such Infrastructure Assets will already be partly in operation and generate cash flows. In
addition, construction risks are usually substantially transferred through contracts to
contractors, or to public authorities and insurance companies.
41
C.
Customer Risk: Infrastructure Issuers can have a narrow customer base. Should these
customers or counterparties cease to need the services delivered by an Infrastructure
Asset or fail to pay their contractual obligations to the Infrastructure Issuer, significant
revenues could cease and not be replaceable. This would affect the profitability of the
Infrastructure Issuer and the value of any securities or other instruments it has issued.
Market risk: This risk is of a general nature, affecting all types of investment. The trend
in the prices of securities is determined mainly by the trend in the financial markets and
by the economic development of the issuers, who are themselves affected both by the
overall situation of the global economy and by the economic and political conditions
prevailing in each country.
PPP risks: A project developed under a PPP scheme is generally divided into two
different risk phases: the construction phase and the operation & maintenance phase.
Payment by the public authority normally occur during the operation phase and only after
due completion of the project. Complex contractual arrangements are put in place
between the public entity and the special purpose vehicle (SPV) with major tasks and
risks passed down by the SPV to sub-contractors (on a back to back basis). But residual
risks may remain at the SPV level (financing, default of a sub-contractor). Construction
risks (cost overrun, technology risk or delay) or non acceptance by the public entity of the
equipment/infrastructure built shall be considered as well.
Technology: a change could occur in the way a service or product is delivered rendering
the existing technology obsolete. While the risk could be considered low in the
infrastructure sector given the massive fixed costs involved in constructing assets and the
fact that many infrastructure technologies are well established, any technology change
that occurs over the medium term could threaten the profitability of an Infrastructure
Issuer; if such a change were to occur, these assets would have very few alternative
uses should they become obsolete.
Aborted transactions: The General Partner together with the Investment Advisor will seek to
participate to PPP tenders through the selection of a robust consortium for each project. Tenders
under PPP scheme may be lengthy and generally require substantial development costs to be
borne by the bidder. The Company may not be successful in any tender which it participates. In
such case, the costs spent will not be recoverable.
Competition: Given the attractiveness of the African market, competition is expected to increase
over time. This situation may lead to a reduced number of possible investments and to a reduced
profitability in the Portfolio companies.
Counterparty risk: When contracts on OTC derivative instruments are entered into, the
Company may find itself exposed to risks arising from the creditworthiness of its counterparties
and from their capacity to respect the conditions of these contracts. The Company may thus enter
into futures, option and exchange rate contracts, or again use other derivative techniques, each
42
of which involves a risk for the Company of the counterparty failing to respect its obligations
under the terms of each contract.
Credit risk: Shareholders must be fully aware that such an investment may involve credit risks.
Bonds or debt instruments involve an issuer-related credit risk, which can be calculated using the
issuer solvency rating. Bonds or debt instruments issued by entities that have a low rating are, as
a general rule, considered to be instruments that are at a higher credit risk, with a probability of
the issuer defaulting, than those of issuers with a higher rating. When the issuer of bonds or debt
instruments finds itself in financial or economic difficulty, the value of the bonds or debt
instruments (which may fall to zero) and the payments made for these bonds or debt instruments
(which may fall to zero) may be affected.
Indebtedness: When a Sub-Fund is subject to the risks associated with debt financing, it is
subject to the risks that available funds will be insufficient to meet required payments and the risk
that existing indebtedness will not be refinanced or that the terms of such refinancing will not be
as favourable as the terms of existing indebtedness.
Lack of diversity: The Company is not subject to specific legal or regulatory risk diversification
requirements, other than those specified herein and the relevant Appendix. Therefore, the
Company is in principle authorised to make a limited number of investments and, as a
consequence, the aggregate returns realised by the Shareholders in any Sub-Fund may be
substantially adversely affected by the unfavourable performance of even one investment. In
addition, the Companys assets may be concentrated in certain industries and segments of
activity. A lack of diversification in the Companys portfolio may result in the Companys
performance being vulnerable to business or economic conditions and other factors affecting
particular companies or particular industries, which may adversely affect the return to
Shareholders.
Lack of liquidity of underlying investments: The investments to be made by some Sub-Funds
of the Company may be highly illiquid. The eventual liquidity of all investments will depend on the
success of the realisation strategy proposed for each investment. Such strategy could be
adversely affected by a variety of factors. There is a risk that the Company may be unable to
realise its investment objectives by sale or other disposition at attractive prices or at the
appropriate times or in response to changing market conditions, or will otherwise be unable to
complete a favourable exit strategy. Losses may be realised before gains on dispositions. The
return of capital and the realisation of gains, if any, will generally occur only upon the partial or
complete disposition of an investment. Prospective Investors should therefore be aware that they
may be required to bear the financial risk of their investment for an undetermined period of time.
Long-Term Investments: The Company is only expected to deliver capital and eventual
realization of gains, if the investments are successful, after a number of years. Given this time
frame and the typical non-liquidity of these investments, the exit strategy may take a considerable
amount of time and occur under unfavourable conditions.
Minority stake: the Company may make investments in which it is a minority investor, and in
such circumstances may not be in a position to protect its interests.
Portfolio valuation risks: Prospective Investors should acknowledge that the portfolio of the
Sub-Funds will be composed of assets of different natures in terms of inter alia sectors,
geographies, financial statements formats, reference currencies, accounting principles, types and
liquidity of securities, coherence and comprehensiveness of data. As a result, the valuation of the
relevant portfolio and the production of the NAV calculation will be a complex process which
might in certain circumstances require the General Partner to make certain assumptions in order
to make the necessary calculations. The lack of an active public market for securities and debt
instruments will make it more difficult and subjective to value investments of the Sub-Funds for
the purposes of determining the NAV.
43
Portfolio Turnover: the Company cannot accurately predict its annual portfolio turnover rate; there
are no limits on the rate of portfolio turnover, and investments may be sold without regard to
length of time held when a Sub-Fund's investment strategy so dictates; a higher portfolio turnover
rate results in correspondingly greater brokerage commissions and other transactional expenses
that are borne by the Company; high portfolio turnover may result in the realization of net shortterm capital gains by the Company which, when distributed to Shareholders, will be taxable as
ordinary income, subject to and in accordance with the tax treatment applicable to each
Shareholder.
Risk of investments: The investments contemplated by the Company are subject to several
risks, including the completion of the exit strategy, the possibility of not realising gains for its
equity interests, the risk that the value of the Portfolio Companies may not appreciate in value,
changes in the economic conditions, political conditions and fiscal policies, among others.
Additionally, investments in privately held companies entail a risk of lack of available information
and a greater vulnerability to economical downturns. Finally, by establishing joint ventures or by
having minority stakes in certain companies, the Company will have a reduced control over
operational, financial and strategic decisions.
Risk of default: In parallel to the general trends prevailing on the financial markets, the particular
changes in the circumstances of each issuer may have an effect on the price of an investment.
Even a careful selection of securities cannot exclude the risk of losses generated by the
depreciation of the issuers assets.
Risks linked to investments in other undertakings for collective investment (UCI): The
investment by a Sub-Fund in target UCI may result in a duplication of some costs and expenses
which will be charged to the Sub-Fund, i.e. setting up, filing and domiciliation costs, subscription,
redemption or conversion fees, management fees, depositary bank fees, auditing and other
related costs. For Shareholders of the said Sub-Fund, the accumulation of these costs may cause
higher costs and expenses than the costs and expenses that would have been charged to the
said Sub-Fund if the latter had invested directly.
Security over uncalled Commitments: When appropriate, the Company may incur, with respect
to any Sub-Fund, indebtedness by borrowing against the uncalled commitments/unfunded
subscriptions of the Shareholders. Shareholders may, as a result, be required, as a condition of
their subscription, to consent to the granting of a security interest up to the total amount of the
unpaid portion of their respective Commitment.
Temporary Defensive Strategies Risk: When unusual market or other conditions are
anticipated, the Company or any of the Sub-Funds may temporarily depart from its principal
investment strategies as a defensive measure; to the extent that the Company or any of the SubFunds invests defensively, it likely will not achieve its investment objective.
D.
Management risks
Removal of the General Partner: Investors should pay attention to the corporate governance
features of the Company. The rules governing the removal of the General Partner follow those
applicable to the amendments of the Articles. Any resolution of a meeting of shareholders to the
effect of amending the Articles or to replace the General Partner must be passed with (i) a
presence quorum of fifty percent (50%) of the shares issued by the Company at the first call and,
if not achieved, with no quorum requirement for the second call and, (ii) the approval of a majority
of at least two-thirds (2/3) of the votes validly cast by the shareholders present or represented at
the meeting and (iii) the consent of the General Partner. As a result, investors attention is drawn
to the fact that the General Partner can only be removed / replaced with its own consent.
44
Early termination: In the event of the early termination of a Sub-Fund, the General Partner
would have to distribute to the Shareholders their pro-rata interest in the assets of such SubFund. The Company's investments would have to be sold or distributed in specie to the
Shareholders. It is possible that at the time of such sale certain investments held by the relevant
Sub-Fund may be worth less than the initial cost of the investment, resulting in a loss to the SubFund and to its Shareholders. Moreover, in the event a Sub-Fund terminates prior to the complete
amortization of organisational expenses, any unamortised portion of such expenses will be
accelerated and will be debited from (and thereby reduce) amounts otherwise available for
distribution to Shareholders. The General Partner may also propose to the extraordinary general
meeting of Shareholders to liquidate the Company thus triggering the early termination of the
Sub-Funds.
New company: The Company has no operating history and an indeterminate amount of time
may be required to achieve operating efficiency and profitable operations. No assurance can be
given that the Company will achieve its investment objectives and thus investment in the
Company entails a certain degree of risk.
No day-to-day management by shareholders: Shareholders will have no opportunity to control
the day-to-day operations of the Company or decisions regarding the acquisition, development or
disposal of investments but will have access to reporting.
Performance remuneration: The variable component of the compensation linked to the
performance results could encourage the General Partner to select more risky and volatile
placements than if such fees were not applicable.
Reliance on management: The Company depends significantly on the efforts and abilities of the
Board of the General Partner, or relevant investment advisor(s) (or key persons). The loss of
these persons services could have a materially adverse effect on the Company, and on the
performance of the Sub-Funds; the Company is a newly organized, non-diversified, closed-end
management investment company and has no previous operating or trading history upon which a
potential investor can evaluate the Company's performance.
Structure of the Fund: The Company and the Manager are set up in Luxembourg because of
the commercial, legal, regulatory, accounting and tax advantages offered by this country that can
not be matched in any other country in the EU. The structuring and incorporation of the Company,
of the Luxembourg Wholly Owned Subsidiaries and of the Manager is subject to risks if these
advantages disappear.
Non-exhaustive risks description: The above list of risk factors ought not to be taken as an
exhaustive list of the risks faced by the Company. The above factors, and other risks not
specifically referred to above, may in the future materially affect the financial performance of the
Company and the value of the interests offered under this Placement Memorandum.
Attention should be drawn to the fact that the Net Asset Value per Share can go down as
well as up. An Investor may not get back the amount he has invested. Changes in foreign
exchange rates may also cause the Net Asset Value per Share in the Investors base
currency to go up or down. No guarantee as to future performance or future return from
the Company or any Sub-Fund can be given.
In addition to the above mentioned general risks which are inherent in all investments, the
investment in the Company entails risks specific to the investment objectives and strategy
of each Sub-Fund. The specific risks related to the particular investments are described in
the relevant Appendix.
45
The Company and the General Partner shall at all times comply with the obligations imposed by
Luxembourg applicable laws, rules and regulations with respect to anti-money laundering and, in
particular, with:
1. the law dated 12 November 2004 as amended by:
a) the law of 17 July 2008 implementing (i) Directive 2005/60/EC on the prevention of
the use of the financial system for the purpose of money laundering and terrorist
financing and (ii) Directive 2006/70/EC laying down implementing measures for
Directive 2005/60/EC of the European Parliament and of the Council as regards the
definition of politically exposed person and the technical criteria for simplified
customer due diligence procedures and for exemption on grounds of a financial
activity conducted on an occasional or very limited basis;
b) the law dated 17 July 2008 concerning the combating of money laundering and
terrorist financing; as well as
c) the law of 27 October 2010 enhancing the anti-money laundering and counter
terrorist financing legal framework;
2. CSSF Circular 08/387 concerning the combating of money laundering and terrorist
financing and the prevention of the use of the financial sector for the purpose of money
laundering and terrorist financing, as they may be amended or revised from time to time,
as amended by CSSF Circular 10/476 and CSSF Circular 10/495 concerning the fight
against money laundering and terrorist financing.
decline to issue any Shares when it appears that such issue might or may have as a
result the allocation of ownership of the Shares to a person who is not authorized to
hold Shares in the Company; and/or
(ii)
proceed with the compulsory redemption of all the relevant Shares if it appears that a
person who is not authorized to hold such Shares in the Company, either alone or
together with other persons, is the owner of Shares in the Company, or proceed with
the compulsory redemption of any or a part of the Shares, if it appears to the
Company that one (1) or several persons is or are an owner or owners of a
proportion of the Shares in the Company in such a manner that this may be
detrimental to the Company. The procedure applicable to the redemption of
Defaulted Redeemable Shares described under the section VIII General Description
of the Shares of the Company, sub-section Commitments and Defaulting Investors
shall be applied. The price at which the Shares specified in the redemption notice
shall be redeemed (the redemption price) shall in such instances be equal to the
46
Net Asset Value per Share. Payment of the redemption price will be made to the
owner of such Shares in the reference currency of the relevant Class, except during
periods of exchange restrictions, and will be deposited by the Company, within a
period of time customary to the industry with a bank in Luxembourg or elsewhere (as
specified in the purchase notice) for payment to such owner upon surrender of the
Share certificate or certificates, if issued, representing the Shares specified in such
notice. Upon deposit of such redemption price as aforesaid, no person interested in
the Shares specified in such purchase notice shall have any further interest in such
Shares or any of them, or any claim against the Company or its assets in respect
thereof, except the right of the Shareholders appearing as the owner thereof to
receive the price so deposited (without interest) from such bank upon effective
surrender of the Share certificate or certificates, if issued, as aforesaid. The exercise
by the Company of this power shall not be questioned or invalidated in any case, on
the grounds that there was insufficient evidence of ownership of Shares by any
person or that the true ownership of any Shares was otherwise than appeared to the
Company at the date of any purchase notice, provided that in such case the said
powers were exercised by the Company in good faith.
X. Redemption of Shares
Prospective Investors should refer to the relevant Appendix as regards applicable restrictions or
limitations that may apply to the redemption of the relevant Shares.
The Company shall not redeem any Shares if the net assets of the Company would fall below the
minimum capital required in the 2007 Law as a result of such redemption.
The Company shall have the right, if the General Partner so determines, to satisfy payment of the
redemption price to any Shareholder who agrees, in specie by allocating to the Shareholder
investments from the portfolio of assets of the Company equal to the value of the Shares to be
redeemed. The nature and type of assets to be transferred in such case shall be determined on a
fair and reasonable basis and without prejudicing the interests of the other Shareholders and the
valuation used shall be confirmed by a special report of the independent auditor of the Company
(rviseur dentreprises agr). The costs of any such transfers shall be borne by the transferee.
Shareholders are authorized to convert Shares from one (1) Sub-Fund into another Sub-Fund or
from one (1) Class into another within the same Sub-Fund only to the extent it is expressly
contemplated in the relevant Sub-Fund(s) Appendix.
The Net Asset Value of the Shares of each Sub-Fund is expressed in the Reference Currency.
The General Partner sets the Valuation Days, and the methods whereby the Net Asset Value is
made public, in compliance with the legislation in force.
47
all bills and promissory notes and accounts receivable, including outstanding proceeds of
any sale of securities;
all securities, shares, bonds, time notes, debenture stocks, options or subscription rights,
warrants, money market instruments, and all other investments and transferable
securities belonging to the relevant Sub-Fund;
all dividends and distributions payable to the Sub-Fund either in cash or in the form of
stocks and shares (the Company may, however, make adjustments to account for any
fluctuations in the market value of transferable securities resulting from practices such as
ex-dividend or ex-claim negotiations);
all outstanding accrued interest on any interest-bearing securities belonging to the SubFund, unless this interest is included in the principal amount of such securities;
the Company's or relevant Sub-Funds preliminary expenses, to the extent that such
expenses have not already been written-off;
the Companys or relevant Sub-Funds other fixed assets, including office buildings,
equipment and fixtures; and
all other assets whatever their nature, including the proceeds of swap transactions and
advance payments.
all known liabilities, whether or not already due, including all contractual obligations that
have reached their term, involving payments made either in cash or in the form of assets,
including the amount of any dividends declared by the Company regarding the Sub-Fund
but not yet paid;
a provision for capital tax and income tax accrued on the Valuation Day and any other
provisions authorised or approved by the General Partner; and
all other liabilities of the Company of any kind with respect to the Sub-Fund, except
liabilities represented by Shares. In determining the amount of such liabilities, the
Company shall take into account all expenses payable by the Company including, but not
limited to:
-
start-up costs,
expenses in connection with and fees payable to, its investment manager(s),
advisors(s), accountants, custodian and correspondents, registrar, transfer
agents, paying agents, brokers, distributors, permanent representatives in places
of registration and auditors,
administration, domiciliary, services, promotion, printing, reporting, publishing
(including advertising or preparing and printing of issuing documents of the
Company, explanatory memoranda, registration statements, financial reports)
and other operating expenses,
the cost of buying and selling assets (transaction costs),
48
The Company may calculate administrative and other expenses of a regular or recurring
nature on an estimated basis annually or for other periods in advance and may accrue the
same in equal proportions over any such period.
the value of any cash in hand or on deposit, discount notes, bills and demand notes and
accounts receivable, prepaid expenses, cash dividends and interest declared or accrued
as aforesaid and not yet received, shall be equal to the entire amount thereof, unless the
same is unlikely to be paid or received in full, in which case the value thereof shall be
determined after making such discount as the General Partner may consider appropriate
in such case to reflect the true value thereof;
the value of all portfolio securities and money market instruments or derivatives that are
listed on an official stock exchange or traded on any other Regulated Market will be
based on the last available price on the principal market on which such securities, money
market instruments or derivatives are traded, as supplied by a recognized pricing service
approved by the General Partner. If such prices are not representative of the fair value,
such securities, money market instruments or derivatives as well as other permitted
assets may be appraised at a fair value at which it is expected that they may be resold,
as determined in good faith under the direction of the General Partner;
the value of securities and money market instruments which are not quoted or traded on
a Regulated Market will be valued at a fair value at which it is expected that they may be
resold, as determined in good faith under the direction of the General Partner;
investments in private equity securities will be appraised at a fair value under the
direction of the General Partner in accordance with appropriate professional standards,
such as, for example, and without limitation, the International Private Equity and Venture
Capital Valuation Guidelines published by the EVCA, AFIC and BVCA;
investments in real estate assets shall be valued with the assistance of one or several
independent valuer(s) designated by the General Partner for the purpose of appraising,
where relevant, the fair value of a property investment in accordance with its/their
applicable standards, such as, for example, and without limitation, the edition of the
Appraisal and Valuations Standards published by the Royal Institution of Chartered
Surveyors (RICS);
the amortized cost method of valuation for short-term transferable debt securities in
certain Sub-Funds of the Company may be used. This method involves valuing a security
at its cost and thereafter assuming a constant amortization to maturity of any discount or
premium regardless of the impact of fluctuating interest rates on the market value of the
security. While this method provides certainty in valuation, it may result during certain
periods in values which are higher or lower than the price which the Sub-Fund would
receive if it sold the securities prior to maturity. For certain short term transferable debt
securities, the yield to a Shareholder may differ somewhat from that which could be
obtained from a similar sub-fund which marks its portfolio securities to market on a daily
basis;
the value of the participations in investment funds shall be based on the last available
valuation. Generally, participations in investment funds will be valued in accordance with
the methods provided by the instruments governing such investment funds. These
valuations shall normally be provided by the fund administrator or valuation agent of an
49
investment fund. To ensure consistency within the valuation of each Sub-Fund, if the time
at which the valuation of an investment fund was calculated does not coincide with the
valuation time of any Sub-Fund, and such valuation is determined to have changed
materially since it was calculated, then the Net Asset Value may be adjusted to reflect the
change as determined in good faith under the direction of the General Partner;
the valuation of swaps will be based on their market value, which itself depends on
various factors (e.g. level and volatility of the underlying asset, market interest rates,
residual term of the swap). Any adjustments required as a result of issues and
redemptions are carried out by means of an increase or decrease in the nominal of the
swaps, traded at their market value;
the value of other assets will be determined prudently and in good faith under the
direction of the General Partner in accordance with generally accepted valuation
principles and procedures.
The General Partner, at its discretion, may authorize the use of other methods of valuation if it
considers that such methods would enable the fair value of any asset of the Company to be
determined more accurately.
Where necessary, the fair value of an asset is determined by the General Partner, or by a
committee appointed by the General Partner, or by a designee of the General Partner.
All valuation regulations and determinations shall be interpreted and made in accordance with
Luxembourg generally accepted accounting principles (Lux GAAP).
For each Sub-Fund, adequate provisions will be made for expenses incurred and due account will
be taken of any off-balance sheet liabilities in accordance with fair and prudent criteria.
For each Sub-Fund and for each Class, the Net Asset Value per Share shall be calculated in the
relevant Reference Currency on each Valuation Day by dividing the net assets attributable to
such Sub-Fund and to such Class (which shall be equal to the assets minus the liabilities
attributable to such Sub-Fund and to such Class) by the number of Shares issued and in
circulation in such Sub-Fund and to such Class. Assets and liabilities expressed in foreign
currencies shall be converted into the relevant Reference Currency, based on the relevant
exchange rates.
The Company's net assets shall be equal to the sum of the net assets of all its Sub-Funds.
In the absence of bad faith, wilful default, gross negligence or manifest error, every decision to
determine the Net Asset Value taken by the General Partner or by any bank, company or other
organization which the General Partner may appoint for such purpose, shall be final and binding
on the Company and present, past or future Shareholders.
The Company may suspend the determination of the Net Asset Value and/or, where applicable,
the subscription, redemption and/or conversion of Shares, for one or more Sub-Funds, in the
following cases:
50
when the stock exchange(s) or market(s) that supplies/supply prices for a significant part
of the assets of one or more Sub-Funds, is/are closed, or in the event that transactions
on such a market are suspended, or are subject to restrictions, or are impossible to
execute in volumes allowing the determination of fair prices;
when the information or calculation sources normally used to determine the value of a
Sub-Fund's assets are unavailable, or if the value of a Sub-Fund's investment cannot be
determined with the required speed and accuracy for any reason whatsoever;
when, for any other reason, the prices of any significant investments owned by a SubFund cannot be promptly or accurately ascertained;
when the Company or any of the Sub-Funds is/are in the process of establishing
exchange parities in the context of a merger, a contribution of assets, an asset or share
split or any other restructuring transaction; and
In addition, in order to prevent market timing opportunities arising when a net asset value is
calculated on the basis of market prices which are no longer up to date, the General Partner is
authorised to suspend temporarily issues, redemptions and conversions of Shares of one or
several Sub-Fund(s) when the stock exchange(s) or market(s) that supplies/supply prices for a
significant part of the assets of one or several Sub-Fund(s) are closed, if and when applicable.
In the event of exceptional circumstances that may adversely affect the interests of the
Shareholders or insufficient market liquidity, the General Partner reserves its right to determine
the Net Asset Value of the Shares in a Sub-Fund only after it shall have completed the necessary
purchases and sales of securities, financial instruments or other assets on the Sub-Fund's behalf.
When Shareholders are entitled to request the redemption or conversion of their Shares, if any
application for redemption or conversion is received in respect of any relevant Valuation Day (the
First Valuation Day) which either alone or when aggregated with other applications so
received, is above the liquidity threshold determined by the General Partner for any one SubFund, the General Partner reserves the right in its sole and absolute discretion (and in the best
interests of the remaining Shareholders) to scale down pro rata each application with respect to
such First Valuation Day so that not more than the corresponding amounts be redeemed or
converted with respect to such First Valuation Day. To the extent that any application is not given
full effect with respect to such First Valuation Day by virtue of the exercise of the power to prorate applications, it shall be treated with respect to the unsatisfied balance thereof as if a further
request had been made by the Shareholder in respect of the next following Valuation Day and, if
necessary, subsequent Valuation Days, until such application shall have been satisfied in full.
With respect to any application received in respect of the First Valuation Day, to the extent that
subsequent applications shall be received in respect of following Valuation Days, such later
51
applications shall be postponed in priority to the satisfaction of applications relating to the First
Valuation Day, but subject thereto shall be dealt with as set out in the preceding sentence.
The suspension of the calculation of the Net Asset Value and/or, where applicable, of the
subscription, redemption and/or conversion of Shares, shall be notified to the relevant persons
through all means reasonably available to the Company, unless the General Partner is of the
opinion that a publication is not necessary considering the short period of the suspension.
Such a suspension decision shall be notified to any Shareholders requesting redemption or
conversion of their Shares.
Within each Sub-Fund, Shares may be issued as capitalisation Shares and/or as distribution
Shares. The features of the Shares available within each Sub-Fund are set out in of the relevant
Appendix.
The Company may declare annual or other interim distributions payable from the investment
income gains and realized capital gains and, if considered necessary to maintain a reasonable
level of dividends, out of any other funds available for distribution.
The Company shall not proceed to distributions, either by way of distribution of dividends or
redemption of Shares, in the event that the net assets of the Company would fall below the
equivalent in the Reference Currency of the Company of one million two hundred fifty thousand
euros (EUR 1,250,000.-).
52
C. Establishment Costs
The General Partner shall be entitled to seek the reimbursement of the structuring costs of the
Company and each Sub-Fund, together with the payment of a structuring compensation, equal to
the highest of (i) 0.6% of the Aggregate Commitments or (ii) a fee of EUR 450,000.00 (VAT
excluded), payable by each Sub-Fund.
office space, furniture, fixtures, equipment, facilities, supplies, and utility charges related
to the daily operations of the Investment Advisor;
wages, salaries and other compensation, costs and expenses related to the employees,
officers and directors of the Investment Advisor (including any costs and expenses
incurred in connection with promotion / placement of the Shares of the relevant SubFund);
membership dues for professional and trade associations of which the Investment
Advisor is or becomes a member;
income tax and other taxes and levies payable by the Investment Advisor and all
expenses incurred by the Investment Advisor in connection with any tax audit,
investigation, settlement or review of the Management Agreement; and
legal, tax, auditing and other professional fees and disbursements in respect of (a) advice
provided to the Investment Advisor in relation to matters not directly relating to its duties
or obligations to the Company, or (b) advice related to the services to be provided by the
Investment Advisor but which ought reasonably to be considered services within its field
of expertise.
XVI. Taxation
The following is of a general nature only and is based on the Companys understanding of,
and advice received on, certain aspects of the law and practice currently in force in
Luxembourg as of the date of the Placement Memorandum. It does not purport to be a
complete analysis of all possible tax considerations that may be relevant to an investment
decision. It is included herein solely for preliminary information purposes. It is not
intended to be, nor should it be construed to be, legal or tax advice. It is a description of
the essential material Luxembourg tax consequences with respect to the Shares and may
not include tax considerations that arise from rules of general application or that are
generally assumed to be known to Shareholders. This summary is based upon the
Luxembourg law and regulations as in effect and as interpreted by the Luxembourg tax
authorities on the date of this Placement Memorandum and is subject to any amendments
in law (or in interpretation) later introduced, whether or not on a retroactive basis.
Prospective investors should consult their own professional advisors with respect to
particular circumstances, the effects of state, local or foreign laws to which they may be
subject and as to their tax position.
53
Please be aware that the residence concept used under the respective headings below applies
for Luxembourg income tax assessment purposes only. Any reference in the present section to a
tax, duty, levy, impost or other charge or withholding of a similar nature refers to Luxembourg tax
law and/or concepts only. Also, please note that a reference to Luxembourg income tax
encompasses corporate income tax (impt sur le revenu des collectivits), municipal business tax
(impt commercial communal), a solidarity surcharge (contribution au fonds pour lemploi) as well
as personal income tax (impt sur le revenu).generally. Investors may further be subject to net
worth tax (impt sur la fortune) as well as other duties, levies or taxes. Corporate income tax,
municipal business tax, as well as the solidarity surcharge invariably applies to most corporate
taxpayers resident of Luxembourg for tax purposes. Individual taxpayers are generally subject to
personal income tax and the solidarity surcharge. Under certain circumstances, where an
individual taxpayer acts in the course of the management of a professional or business
undertaking, municipal business tax may apply as well.
A. The Company
Subscription tax
The Company is as a rule subject to an annual subscription tax (taxe d'abonnement) levied at the
rate of 0.01% p.a. on the Companys Net Asset Value that is calculated on the last Valuation Day
of each quarter and payable in quarterly installments. The subscription tax is a cost for the
Company.
The following exemptions from subscription tax apply:
a) the value of the assets represented by units held in other undertakings for collective
investment, to the extent such units have already been subject to the subscription tax
provided by the amended 2007 Law or by the 2010 Law;
b) specialised investment funds, as well as individual compartments of specialised
investment funds with multiple compartments:
(i)
(ii)
(iii)
c) specialised investment funds, the securities of which are reserved for (i) institutions for
occupational retirement provision, or similar investment vehicles, set up on one or several
employers initiative for the benefit of their employees and (ii) companies of one or
several employers investing the funds they own, in order to provide their employees with
retirement benefits;
d) specialized investment funds the investment policy of which provides for an investment of
at least fifty percent (50%) of their assets into microfinance institutions or which have
been granted the LuxFLAG label.
Income tax
The Company is not liable to any Luxembourg income tax in Luxembourg.
54
B. The Shareholders
General
It is expected that Shareholders in the Company will be resident for tax purposes in many
different countries. Consequently, except as set-out below, no attempt is made in this Placement
Memorandum to summarize the tax consequences for each Investor subscribing, converting,
holding or redeeming or otherwise acquiring or disposing of Shares of the Company. These
consequences will vary in accordance with the law and practice currently in force in a
Shareholders country of citizenship, residence, domicile or incorporation and with his personal
circumstances. Shareholders resident in or citizens of certain countries which have anti-offshore
fund legislation may have a current liability to tax on the undistributed income and gains of the
Company.
The General Partner, the Company and each of the Companys agents shall have no liability in
respect of the individual tax affairs of Shareholders.
Investors should consult their own professional advisors on the possible tax or other
consequences of buying, holding, transferring or selling the Companys Shares under the laws of
their countries of citizenship, residence or domicile.
55
Withholding tax
Under current Luxembourg tax law, there is no withholding tax on any distribution, redemption or
payment made by the Company to its Shareholders under the Shares. There is also no
withholding tax on the distribution of liquidation proceeds to the Shareholders.
Non-resident Shareholders should however note that under the Council Directive 2003/48/EC on
taxation of savings income in the form of interest payments (EU Savings Directive), interest
payments made by the Company or its Luxembourg paying agent to individuals and residual
entities (i.e. entities (i) without legal personality (except for (a) a Finnish avoin yhti and
kommandiittiyhti / ppet bolag and kommanditbolag and (b) a Swedish handelsbolag and
kommanditbolag) and (ii) whose profits are not taxed under the general arrangements for the
business taxation and (iii) that are not, or have not opted to be considered as, UCITS recognized
in accordance with Council Directive 2009/65/EC a Residual Entity) resident or established in
another EU Member State as Luxembourg or in certain associated or dependent territories of the
European Union (Aruba, British Virgin Islands, Guernsey, Isle of Man, Jersey, Montserrat as well
as the former Netherlands Antilles, i.e. Bonaire, Curaao, Saba, Sint Eustatius and Sint Maarten
collectively the Associated Territories), are subject to a withholding tax in Luxembourg
unless the beneficiary elects for an exchange of information whereby the tax authorities of the
state of residence are informed of the payment thereof. The withholding tax rate is currently thirty
five percent (35%) since 1 July 2011. Under the current revision drafts of the EU Savings
Directive, interest may include in the future (i) distributions of profits by the Company derived
from interest payments (unless the Companys investment in debt claims does not exceed fifteen
percent (15%)) and (ii) income realised upon the sale, refund or redemption of the Shares if the
Company invests directly or indirectly more than twenty five percent (25%) of its net assets in
debt claims and to the extent such income corresponds to gains directly or indirectly derived from
interest payments. The current revision draft also extends the provisions of the EU Savings
Directive to interest payments made under certain innovative financial products. Shareholders
should inform themselves of, and where appropriate take advice on, the impact of the EU Savings
Directive, once amended, on their investment.
Luxembourg tax residency of the Shareholders
A Shareholder will not become resident, nor be deemed to be resident, in Luxembourg, by reason
only of the holding of the Shares, or the execution, performance, delivery and/or enforcement of
its right and obligations under the Shares.
Taxation of the Shareholders
Income taxation of the Shareholders
Luxembourg non-residents
Shareholders, who are non-residents of Luxembourg and who have neither a permanent
establishment nor a permanent representative in Luxembourg to which or whom the Shares are
attributable, are not liable to any Luxembourg income tax on income received and capital gains
realized upon the sale, disposal or redemption of the Shares.
Non-resident corporate Shareholders which have a permanent establishment or a permanent
representative in Luxembourg, to which the Shares are attributable, must include any income
received, as well as any gain realized on the sale, disposal or redemption of Shares, in their
taxable income for Luxembourg tax assessment purposes. The same inclusion applies to
individuals, acting in the course of the management of a professional or business undertaking,
who have a permanent establishment or a permanent representative in Luxembourg, to which the
Shares are attributable. Taxable gains are determined as being the difference between the sale,
56
repurchase or redemption price and the lower of the cost or book value of the Shares sold or
redeemed.
Luxembourg residents
Luxembourg resident individuals
Any dividends and other payments derived from the Shares by resident individual Shareholders,
who act in the course of either their private wealth or their professional / business activity, are
subject to income tax at the progressive ordinary rates.
A gain realized upon the sale, disposal or redemption of Shares by resident individual
Shareholders, acting in the course of the management of their private wealth, is not subject to
Luxembourg income tax, provided this sale, disposal or redemption took place more than 6
months after the Shares were acquired and provided the Shares do not represent a substantial
shareholding. A shareholding is considered as substantial shareholding in limited cases, in
particular if (a) the Shareholder has held, either alone or together with his spouse or partner
and/or his minor children, either directly or indirectly, at any time within the 5 years preceding the
realization of the gain, more than 10% of the share capital of the Company or (b) the taxpayer
acquired free of charge, within the 5 years preceding the transfer, a participation that was
constituting a substantial participation in the hands of the alienator (or the alienators in case of
successive transfers free of charge within the same 5-year period). Capital gains realised on a
substantial participation more than 6 months after the acquisition thereof are subject to income
tax according to the half-global rate method, (i.e. the average rate applicable to the total income
is calculated according to progressive income tax rates and half of the average rate is applied to
the capital gains realised on the substantial participation). A disposal may include a sale, an
exchange, a contribution or any other kind of alienation of the shareholding.
Capital gains realized on the disposal of the Shares by a resident individual Shareholder, who
acts in the course of the management of his/her professional/business activity, are subject to
income tax at ordinary rates. Taxable gains are determined as being the difference between the
price for which the Shares have been disposed of and the lower of their cost or book value.
Luxembourg resident companies
Luxembourg resident corporate (socits de capitaux) Shareholders must include any income
received, as well as any gain realised on the sale, disposal or redemption of Shares, in their
taxable income for Luxembourg income tax assessment purposes. Taxable gains are determined
as being the difference between the sale, repurchase or redemption price and the lower of the
cost or book value of the Shares sold or redeemed.
Luxembourg resident companies benefiting from a special tax regime
Luxembourg resident corporate Shareholders which are companies benefiting from a special tax
regime (such as (i) undertakings for collective investment subject to the 2010 Law (ii) specialized
investment funds subject to the amended 2007 Law, (iii) family wealth management companies
governed by the law of 11 May 2007) are tax exempt entities in Luxembourg, and are thus not
subject to any Luxembourg income tax.
Net worth tax
Luxembourg resident Shareholders and non-resident Shareholders who have a permanent
establishment or a permanent representative in Luxembourg to which the Shares are attributable,
are subject to Luxembourg net worth tax on such Shares, except if the Shareholder is (i) a
resident or non-resident individual taxpayer, (ii) an undertaking for collective investment subject to
57
the 2010 Law, (iii) a securitization company governed by the amended law of 22 March 2004 on
securitization, (iv) a company governed by the amended law of 15 June 2004 on venture capital
vehicles, (v) a specialized investment fund governed by the amended 2007 Law or (vi) a family
wealth management company governed by the law of 11 May 2007.
Other taxes
No estate or inheritance tax is levied on the transfer of the Shares upon death of a Shareholder in
cases where the deceased was not a resident of Luxembourg for inheritance tax purposes.
Luxembourg gift tax may be levied on a gift or donation of the Shares if embodied in a
Luxembourg deed or registered in Luxembourg.
XVII. Financial year, general meetings of shareholders and documents available for
inspection
A. Financial Year
The Financial Year shall start on 1 January and end on 31 December. The first Financial Year
shall end on 31 December 2012.
Audited annual reports will be available at the registered office of the Company. The first report of
the Company will be made available with the audited financial statements as of 31 December
2012.
B. General meetings
The annual general meeting of the Shareholders of the Company will be held at the registered
office of the Company in Luxembourg on the second Tuesday of the month of June each year at
11.00 a.m. (Luxembourg time) (or, if such day is not a Business Day, on the next following
Business Day).
Notices of a general meeting and other notices will be given in accordance with Luxembourg law.
Notices will specify the place and time of the meetings, the conditions of admission, the agenda,
the quorum and the voting requirements and will be given at least eight (8) days prior to the
meetings. The requirements as to attendance, quorum and majorities at all general meetings will
be those laid down in the Articles of the Company and in the Luxembourg law of 10 August 1915
on commercial companies, as amended. All Shareholders may attend the annual general
meetings, any general meetings and meetings of the Sub-Funds in which they hold Shares and
may vote either in person or by proxy.
58
at the registered office of the Company. As a rule, Shareholders shall however not be entitled to
request the delivery of a copy of these documents, nor consult other contractual or corporate
documents pertaining to management of the activities of the Company.
(ii)
with respect to any closed-ended Sub-Fund or in the event that the cost-free
redemption is not possible because the assets of the relevant Sub-Fund are
illiquid, the Shareholders shall not have a right to request cost-free redemption of
their Shares and the General Partner shall seek a prior approval of such
amendments by a decision of the general meeting of Shareholders passed with
59
(a) at least two thirds (2/3) of the votes attached to all Shares issued by the
Company (or where applicable, in the relevant Sub-Fund or Class) and validly
cast by those present or represented at the meeting; and (b) a presence quorum
requirement of at least fifty percent (50%) of the capital of the Company (or
where applicable, of the relevant Sub-Fund or Class), at the first call and, if not
achieved, with no quorum requirement for the second call.
In the event of dissolution of the Company, the liquidation shall be carried out by one or more
liquidators (which can be the General Partner) appointed by the general meeting as liquidator,
pursuant to the 2007 Law and the Articles. Amounts which have not been claimed by
Shareholders at the close of the liquidation process will be deposited in escrow with the caisse
de consignation in Luxembourg. Should such amounts not be claimed within the prescription
period, then they may be forfeited.
The General Partner, the Investment Advisor and, where applicable specialised investment
advisors or managers involved in the management of the assets of any Sub-Fund, the
Depositary, the Administration Agent and their respective affiliates, directors, officers and
shareholders (collectively the Parties) are or may be involved in other financial, investment and
professional activities which may cause conflict of interest with the management and
administration of the Company. These include the management of other collective investment
schemes, purchase and sale of securities, brokerage services, custody and safekeeping services
and serving as directors, officers, advisors, distributors or agents of other collective investment
schemes or other companies, including companies and investment funds in which the Company
may invest. The General Partner and/or the Investment Advisor and/or, where applicable,
specialised investment advisors or managers involved in the management of the assets of any
Sub-Fund or certain affiliate companies of these services providers, may be remunerated by
portfolio managers, distributors or sponsors of investment funds, in which the Sub-Funds invest,
for the access by such portfolio managers, distributors or sponsors of investment funds to the
infrastructure and networks established by the General Partner and/or Investment Advisor and/or,
where applicable, specialised investment advisors or managers involved in the management of
the assets of any Sub-Fund or certain affiliate companies of these services providers. The
Shareholders should be aware that the terms of the placing arrangements with such trading
portfolio managers may provide, in pertinent part, for the payment of fees up to a significant
portion of an investment manager's total management and performance-based fees or of a
portion of the brokerage commissions generated by the underlying investment funds, calculated
by reference to the amounts invested in such underlying investment funds through the General
Partner and/or Investment Advisor and/or, where applicable, specialised investment advisors or
managers involved in the management of the assets of any Sub-Fund or affiliate companies of
these services providers. Although such arrangements, when they exist, may create potential
conflicts of interest for the General partner and/or the Investment Advisor and/or, where
applicable, specialised investment advisors or managers involved in the management of the
assets of any Sub-Fund between their duties to select portfolio managers based solely on their
merits and its interest in assuring revenue in the context of the placing arrangements if this issue
is not properly dealt with, the Shareholders of the Company should note that the General partner
and/or the Investment Advisor and/or, where applicable, specialised investment advisors or
managers involved in the management of the assets of any Sub-Fund shall at all time (i) act in
the best interest of the Company in the due diligence process carried out prior to the selection of
60
any relevant target investment and (ii) ensure that all investment/disinvestment recommendations
in the management of the assets of the Company are never influenced or affected by any of the
terms of such placing arrangements. Each of the Parties will respectively ensure that the
performance of their respective duties will not be impaired by any such involvement that they
might have. In the event that a conflict of interest does arise, the managers of the General
Partner and the relevant Parties shall endeavour to ensure that it is resolved fairly within
reasonable time and in the interest of the Shareholders of the Company.
The Company collects stores and processes by electronic or other means the data supplied by
Shareholders at the time of their subscription for the purpose of fulfilling the services required by
Shareholders and complying with its legal obligations.
The data processed include the name, the address, the Commitment and/or invested amount of
each Shareholder (the personal data).
Shareholders may, at their discretion, refuse to communicate the personal data to the Company.
In this event however the Company may reject its request for subscription for Shares in the
Company.
In particular, the personal data supplied by Shareholders are processed for the purpose of (i)
maintaining the register of Shareholders; (ii) processing subscriptions, redemptions and
conversions of Shares and payments of dividends or interests to Shareholders; (iii) complying
with applicable anti-money laundering rules and other legal obligations, such as maintaining
controls in respect of late trading and market timing practices.
Each Shareholder is entitled to access its personal data and may ask for a rectification thereof in
cases where such personal data are inaccurate and/or incomplete. Shareholders may contact the
Administration Agent and the General Partner in this regard.
Personal data shall not be retained for periods longer than those required for the purpose of their
processing subject to any limitation periods imposed by law.
61
62
A.
EXECUTIVE SUMMARY
Initiators:
Company Structure:
Target Size:
Minimum Commitment:
EUR 10 million.
Term:
12 years.
Investment opportunity:
Investment type:
Investment Period:
Last Closing:
Management Fees:
Special Return:
63
1.1. Objectives
The objective of the Sub-Fund is to target investments on the whole African continent, including
Mauritius and Madagascar.
The General Partner believes that underlying trends in project developed in the agricultural sector
in Africa, provide a favorable environment for generating attractive risk-adjusted returns from wellstructured investments in such assets.
The General Partner expects to invest primarily in the equity/quasi-equity of special purpose
vehicles (SPVs) incorporated by sponsors (Greenfield projects) or of existing companies
(Brownfield projects), and may also invest in preferred stock, convertible debt, debt securities,
and any other securities, interests, or obligations. The General Partner will utilize a flexible
origination model, investing directly or indirectly in assets, including investments through
controlling and non-controlling positions in operating companies, joint ventures, and other entities
that acquire or hold infrastructure assets, either individually or as part of a consortium, located in
Africa or abroad, providing the final beneficiary of the investment is the African asset considered.
In the framework of its investments in SPV or companies, the Sub-Fund may provide for deposits
or guarantees as shareholders of these SPV or companies, in particular to the banking partners
of these SPV or companies.
The Sub-Fund will examine both developed or brownfield assets and greenfield projects. The
General Partner believes that properly structured, selective greenfield projects provide attractive
long-term growth opportunities to the Sub-Fund. Agriculture assets may therefore include
greenfield projects that the General Partner reasonably expects will, when fully operational,
generate long-term, stable cash flows.
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1.4. Co-Investments
The Sub-Fund may also co-invest in Portfolio Companies with other investors, including private
equity investment funds. In such cases, the Sub-Fund may invest through companies jointlyowned by the Sub-Fund and one or more co-investor(s) in accordance with a co-investment
agreement where such investment is the only way for the Sub-Fund to invest in a Portfolio
Company or the most appropriate way to enable the Sub-Fund to optimize its investment from a
taxation, securities law, management, exit or other point of view. In this case, the General Partner
will seek, to the extent permitted, to make the necessary arrangements to control investments
made by the jointly-owned company.
The General Partner will enter into co-investment agreements on behalf of the Sub-Fund only
when deemed to be in the best interest of the Sub-Fund, and the General Partner will make all
decisions relating to the purchase or sale of any such co-investment solely in the best interests of
the Sub-Fund. Participating Investors will generally agree upon one of the following methods
enabling the Sub-Fund to realize its investments: stipulation that either party may be able to
cause the liquidation of the investment, provision of a right for each party to sell its participation
subject to a right of first refusal in favour of the other party, or a right for each party to trigger a
buy-sell procedure (i.e., one party specifying the terms upon which it is prepared to purchase the
other partys participation in the investment and the non-initiating party having the option of either
buying the initiating partys participation or selling its participation in the investment on the
specified terms).
When a possibility to co-invest in a Portfolio Company with any third parties exist, the General
Partner shall make its best efforts to be in a position to offer such co-investment opportunities to
the Shareholders of the Sub-Fund first, pro rata based on the size of their respective
Commitments, unless the General Partner determines that offering such opportunity to a strategic
Investor is in the best interests of the Sub-Fund.
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1.
The Sub-Fund may use financial derivative instruments to hedge all or part of its assets
against currency risk. However, it does not intend to hedge all the assets of the Sub-Fund,
except under exceptional market circumstances.
2.
The Sub-Fund intends to hold its liquid assets in euro or US Dollar, unless otherwise
decided by the General Partner, subject to the condition of the markets. Under normal
circumstances, the Sub-Fund will aim to be fully invested. For defensive purposes or
pending (re)investment in Portfolio Companies, the Sub-Fund may invest its assets in
government and corporate debt securities. Such investments may include, but are not
limited to: commercial paper, certificates of deposit, variable or floating rate notes, bankers
acceptances, time deposits and government securities.
2. Borrowing Policy
The Sub-Fund shall not use leverage and borrowings shall never be utilised for investment
purposes.
The Sub-Fund may borrow money only under exceptional circumstances, and for a limited duration
to bridge finance and pay expense disbursements when liquid funds are not readily available.
Such borrowing shall not exceed ten percent (10%) of the undrawn Commitments and/or remain
outstanding for more than three hundred and sixty five (365) calendar days.
The Company shall not give any guarantees or pledge any assets of the Sub-Fund to secure the
potential indebtedness of the Sub-Fund that is referred to above that would cover an amount in
excess of twenty percent (20%) of the amounts actually borrowed. For the avoidance of doubt, the
Company shall never be authorised to use assets of another sub-fund as guarantee or collateral to
cover the potential indebtedness or obligations of this Sub-Fund.
Asset: The Sub-Fund will not invest more than 20% of its Aggregate Commitments in any
single investment.
Geography: The Sub-Fund will not invest more than 30% of its Aggregate Commitments
in any single country.
Sector: The Sub-Fund will not invest more than 30% of its Aggregate Commitments in
any single sector as described in the investment objective (above).
Counterpart: The Sub-Fund will not invest more than 30% of its Aggregate Commitments
on projects developed with one single industrial partner.
Other Funds: The Sub-Fund will not invest more than 20% of its Aggregate Commitments
in other private equity agricultural funds in aggregate.
During the first thirty-six (36) months following its launch that corresponds to the portfolio build-up
phase, the Sub-Fund may derogate from the above investment limits and restrictions, while
aiming at ensuring the observance of the principle of risk spreading in accordance with the 2007
Law as foreseen in section II Investment Objectives, Strategy and Restrictions, sub-section E.
66
4. Share Classes
6. Capital Funding
67
the notification of the drawdown notice pertaining to the First Closing to Initial Investors, following
which Investors Shares A are to be issued fully paid-up corresponding to the Funded
Commitment. Such Investors Shares A shall be issued at a price of one thousand Euros
(EUR 1,000.-) each (the Initial Subscription Price).
the Subsequent Closing Investor shall participate in investments made and fees and
expenses (including the Management Fee) incurred by the Sub-Fund prior to its
admission and will contribute an amount (at least) equal to the capital contributions that
would have been drawn down had it been Shareholder of the Sub-Fund with respect to
the First Closing, at the Initial Subscription Price;
(b)
plus the Subsequent Closing Investor shall pay, if the relevant Subsequent Closing
Investor has not subscribed and paid for its Investors Shares A in accordance with subclause (a) above prior to the end of the sixth (6th) month following the First Closing date,
an additional amount equal to three per cent (3%) over EURIBOR six months, as
published at 11:00 a.m. (London time) on the First Closing by Reuters, calculated from the
date on which the First Closing Investors have contributed and paid in their first
subscriptions relating to the First Closing up to the date of the capital contributions
actually made with respect to the Subsequent Closing in question, and such amount shall
be payable to the Sub-Fund (the Actualization Interest);
Investors Shares A subscribed in relation to Subsequent Closings will be issued fully paid-up at a
price of EUR 1,000.- per Share.
However, if the General Partner determines that the Net Asset Value of the Sub-Fund has
increased or decreased materially since the First Closing, then the General Partner may change
the subscription price for Investors Shares A offered at any Subsequent Closing to a price based
on the Net Asset Value of such Shares on the relevant Subsequent Closing; in which case all
such Investors Shares A issued on the same Closing shall constitute a separate class of shares.
In this case, no Actualisation Interest will be due and the Net Asset Value will be prepared with
the involvement of an independent appraiser, appointed by the General Partner, and will be
subject to a report issued by the auditors of the Company, in accordance with the International
Private Equity and Venture Capital Valuation Guidelines (as amended from time to time). The
valuation shall be final and binding on the Company and the Investors.
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After the Last Closing, the General Partner shall not receive any additional Commitments.
6.3. Drawdown
After the First Closing or any Subsequent Closing, once individual investments need to be funded
or fees and expenses have to be paid, additional drawdowns of the Commitments of
Shareholders will be made in successive installments as determined by the General Partner
within the Management Period.
The General Partner will give a drawdown notice to each Shareholder thirty (30) days prior each
drawdown.
Investors Shares A issued in relation to each drawdown made after the First Closing shall be
issued fully paid-up at a subscription price equal, at the General Partners discretion, either to
EUR 1,000.- plus, if applicable, the Actualisation Interest or to the Net Asset Value of such
Shares on such drawdown date.
If Shares are issued at a price based on the Net Asset Value per Share, no Actualisation Interest
will be due.
The subscription price of Investors Shares A issued after the First Closing must be paid within
the time limit specified in the relevant drawdown notice.
the date when the Aggregate Commitments have been drawn down and paid to the SubFund, or
the third anniversary of the Last Closing with a possibility to extend it for one (1) more
year by decision of the Board.
The General Partner will use its reasonable endeavours to complete the investment program of
the Sub-Fund within three years as from the Last Closing.
Management Period: at the end of the Investment Period, all Commitments not drawn down will
be released from any further obligation to the Company with respect to the Sub-Fund for new
investments, except in the following circumstances:
unfunded Commitments may be further drawn to finalize for the Sub-Funds operating
expenses and for that purpose Investors will be required, at an extraordinary meeting of
the Shareholders of the Company, to provide for the appropriate authorization to the
General Partner to so drawdown Commitments during the remaining term of the SubFund.
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if any Investor that has made a Commitment to the Company fails at any time to pay the relevant
amounts due for value on the relevant payment date, the General Partner may decide to apply
the Default Interest, without further notice, at a rate equal to EURIBOR 6 months, as published as
at 11h00 a.m. (London time) on the relevant drawdown date by Reuters, plus five percent (5%)
per annum, until the date of full payment. The Default Interest shall be calculated on the basis of
the actual number of days elapsed between the relevant payment date (inclusive) and the actual
date the relevant payment is received by the Company (exclusive). The General Partner may also
take further actions against the Defaulting Investor as further described under section VIII.
General Description of the Shares of the Company sub-section Commitments and Defaulting
Investors of the first part of this Placement Memorandum.
7. Minimum Commitment
The minimum Commitment per Investor will be ten million Euros (EUR 10,000,000.-) subject
however to the General Partners right to reject any offer from Investors for any reason or to
accept subscriptions in lesser amounts.
8. Investment liquidity, free transferability of fully paid Investors Shares A and pre-emption
rights
8.1. Free transferability of fully paid Investors Shares A and pre-emption rights
In order to offer investment liquidity to the Shareholders of the Sub-Fund, and to the extent the
Sub-Fund shall only issue fully-paid-up Investors Shares A upon receipt of subscription proceeds,
Investors Shares A in the Sub-Fund shall be freely transferrable to Eligible Investors, i.e. without
any prior consent of the General Partner, subject, however, to the pre-emption rights granted to
the other Investors in the Sub-Fund. Transferors / sellers of Investors Shares A shall not
automatically be released from their outstanding obligations under their subscription
documentation by the mere transfer of such Investors Shares A to another Eligible Investor,
unless the Company has expressly released the relevant transferor / seller from its obligations
under its subscription agreement, in particular with respect to the payment of the outstanding
portion of its Commitment, as the case may be.
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after the deadline will take effect with respect to the next following Valuation Day.
Investors Shares A shall be redeemed and redemption proceeds shall be paid in Euro (EUR)
within four (4) months after the applicable Valuation Day (the effective transaction date being
referred as the Dealing Day).
However, in case of significant redemption applications or in case of a lack of liquidity of a
significant portion of the assets of the Sub-Fund, the General Partner shall reserve the right to
finalise the Net Asset Value of the Investors Shares A only after carrying out the sales of assets
required, on behalf of the Sub-Fund. In that case, the redeeming shareholder may receive a
partial payment of its redemption proceeds, to be considered as an advance on the final
redemption amount that will be determined once the relevant sales of assets have been finalised.
In addition to the above, the General Partner may refuse to proceed with the redemption of
Investors Shares A, when, at its sole discretion, such redemption may be detrimental to the
interests of the Sub-Fund and of the remaining shareholders, including when the Sub-Fund
experiences liquidity constraints.
In order to cover the transaction costs incurred by the Fund, the redemption price in relation to
any redemption request relating to Investors Shares A made in compliance with the timing
requirements foreseen above shall be computed as follows:
Net Asset Value
per Investor
Share
(on the relevant
Valuation Day)
Number of
Investors Shares A
0.92
= redemption
price
(for which
redemption is
requested)
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- From the First Closing Date until the end of the Investment Period, the following
management fee will be payable and equal to the highest of the following amount: (i) 1,8% of
Funded Commitments and (ii) a flat fee, as follows:
A/ Amount of Funded
Commitments
B/ Flat fee
EUR 3 million
EUR 4 million
- Following the end of the Investment Period and during the Management Period, the
management fee will be payable and equal to the highest of the following amounts:
(i) 1,5% (A B)
where A = aggregate Funded Commitments, and
where B = aggregate amount of proceeds received from the disposal of investments; and
(ii) EUR 1,5 million.
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expenses related to claims, litigation or other extraordinary liabilities related to the SubFund or any of its business, assets, operations or affairs,
costs and expenses related to borrowings and hedging,
expenses related to the dissolution and liquidation of the Sub-Fund,
income tax and other taxes and levies (including charges and fees payable to regulatory
agencies) payable by the Company and all expenses incurred by or for the Company in
connection with any tax audit, investigation, settlement or review of the Company,
all costs and expenses related to intermediate holding vehicles,
the Management Fee,
all extraordinary expenses which, by their very nature, at the relevant time, (i) are not
typical of the Sub-Funds usual business, operations or affairs, (ii) are not expected to
arise regularly over a certain number of years, and (iii) all are not recurring elements
considered in valuing the Sub-Funds usual operations.
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Actively Participate has the following meaning, with respect to each of the following Key
Persons:
Edifice Capital SAS (or any duly approved successor Key Person) acts as Investment Advisor of
the Company with respect to the investment activities of the Sub-Fund and participate in
substantially all of the decisions regarding the making or disposition of investments;
Mr. Nicolas Boudeville (or any duly approved successor Key Person) shall (A) devote not less
than thirty percent (30%) of his business time and attention to the management of the Sub-Fund,
(B) at all times be a member of the Board, and (C) participate in substantially all of the decisions
regarding the making or disposition of investments;
Pierre Bordenave (or any duly approved successor Key Person) shall (A) devote not less than
seventy percent (70%) of his business time and attention to the management of the Sub-Fund,
and (B) participate in substantially all of the decisions regarding the making or disposition of
investments;
provided, however, that any Key Person shall without limitation be deemed to have ceased to
Actively Participate in the management of the Sub-Fund if he or she is dead; mentally and
physically incapacitated, rendering them unable to work; adjudicated incompetent or insane;
subject to bankruptcy; charged with a felony or other crime punishable by imprisonment; started
voluntary liquidation or otherwise voluntarily or involuntarily withdraws from active participation in
the management of the assets of the Sub-Fund.
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If the Suspension Period is not terminated within ten (10) months of the relevant Key Person
Event or Change of Control Event, then the Investment Period shall automatically terminate with
immediate effect and the Sub-Fund shall immediately enter into liquidation.
firstly, before any distribution being made to the holders of Participating Shares, the
holders of Investors Shares A will receive one hundred percent (100%) of all distributions
until they have received, in respect of Funded Commitments, aggregate distributions
equal to (i) ninety percent 90% of the amount of their aggregate Funded Commitments at
the date of such payments and (ii) a preferred return of eight (8%) per annum,
compounded annually, on ninety percent (90%) of their aggregate Funded Commitments
to the date of such payment;
secondly, the holders of Participating Shares will receive one hundred percent (100%) of
all further distributions until the holders of Participating Shares have received an amount
equal to the subscription price of the Participating Shares;
thirdly, the holders of Investors Shares A shall be entitled to eighty percent (80%) of
further distributions, the remaining twenty percent (20%) being distributed to the holders
of Participating Shares.
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distribution dates or (ii) the date when Investors Shares A have received one hundred percent
(100%) of their aggregate Funded Commitments and the Preferred Return. Until then, the
beneficiaries of the distribution(s) of Special Return kept in escrow shall be entitled to receive an
annual payout of up to twenty percent (20%) of the amounts kept in escrow (together with the
interest accrued), at the discretion of the General Partner, the claw-back obligations described
below being duly taken into consideration.
Claw-back. If, at the term of the Sub-Fund, (i) the distribution amounts received by the holders of
Investors A Shares are not sufficient to provide such Shareholders with a return equal to a eight
percent (8%) compounded annually on their aggregate Funded Commitments in addition to the
reimbursement of such Funded Commitments, or (ii) the aggregate amount received by the
holders of Participating Shares is greater than twenty percent (20%) of the cumulative net profit of
the Sub-Fund, the holders of Participating Shares shall contribute to the holders of Investors A
Shares the excess amount received.
48880 / 6082126v22
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