Foresight Technology VCT plc
FWT Shares
Securities Note
6 September 2023
Important Notice
This document constitutes a securities note (the "Securities Note") dated 6 September 2023 issued by Foresight Technology VCT plc (the "Company"), prepared in accordance with the Prospectus Regulation (EU) 2017/1129 as it forms part of domestic UK law by virtue of the European Union (Withdrawal) Act 2018 (the "Prospectus Regulation").
Additional information relating to the Company is contained in a registration document (the "Registration Document") issued by the Company of even date herewith. A brief summary written in non-technical language and conveying the essential characteristics and risks associated with the Company and the FWT Shares of 1p each in the capital of the Company (the "FWT Shares") which are being offered for subscription (the "Offer") is contained in a summary issued by the Company of even date herewith (the "Summary").
The Summary, the Securities Note and the Registration Document together comprise a prospectus (the "Prospectus") and you are advised to read the Prospectus in full.
This Prospectus has been approved by the FCA, as competent authority under the Prospectus Regulation. The FCA only approves this Prospectus as meeting the standards of completeness, comprehensibility and consistency imposed by the Prospectus Regulation. Such approval should not
be considered an endorsement of the Company or of the quality of the securities that are the subject of this Prospectus and Investors should make their own assessment as to the suitability of investing in the securities.
The Company and the Directors (whose names are set out on page 73) accept responsibility for the information contained in the Prospectus. To the best of the knowledge of the Company and the Directors, the Prospectus is in accordance with the facts and makes no omission likely to affect its import.
Application has been made to the FCA for the FWT Shares offered for subscription pursuant to this Prospectus to be admitted to the Official List of the Financial Conduct Authority (the "FCA"). Application will also be made to the London Stock Exchange for such FWT Shares to be admitted to trading on its market for listed securities. It is expected that Admission will become effective and that trading in the FWT Shares will commence three Business Days following allotment.
Offer for Subscription to raise in aggregate up to £15 million (with an over-allotment facility of up to an additional £10 million) by issues of FWT Shares of 1p each.
Sponsored by BDO LLP
In connection with the Offer, BDO LLP ("BDO") is acting as sponsor for the Company and for no-one else and will not be responsible (subject to the responsibilities and liabilities imposed by the Financial Services and Markets Act 2000 ("FSMA") or the regulatory regime established thereunder) to anyone other than the Company for providing the protections afforded to customers of BDO nor for providing advice in relation to the Offer. BDO is authorised and regulated in the UK by the FCA.
In connection with the Offer, Foresight Group Promoter LLP (the "Promoter"), Foresight Group CI Limited (the "Adviser") and Foresight Group LLP (the "Manager"), the promoter of the Offer, investment adviser and investment manager and administration service provider to the Company respectively, are acting for the Company and no-one else and will not
be responsible (subject to the responsibilities and liabilities imposed by FSMA or the regulatory regime established thereunder) to anyone other than the Company for providing the protections afforded to customers of Foresight or the Promoter nor for providing advice in relation to the Offer.
The Manager is authorised and regulated in the UK by the FCA (with reference number 198020), and the Promoter is its appointed representative (with reference number 806061). The Adviser is licensed by the Guernsey Financial Services Commission (with reference number 2006518).
Copies of this document, the Registration Document and the Summary are available (and any supplementary prospectus published by the Company will be available) free of charge from the offices of the Manager at The Shard, 32 London Bridge Street, London SE1 9SG; from the Foresight website at https://www.foresightgroup.eu/products/foresight- technology-vct-plc-fwt-shares.
The procedure for, and the terms and conditions of, application under this Offer are set out at the end of this document. Completed Application Forms must be posted or delivered by hand to the Receiving Agent, Woodside Corporate Services. The Offer opens on 6 September 2023 and will close for new applications on 30 April 2024 or earlier at the absolute discretion of the Directors.
Your attention is drawn to the risk factors on pages 2 to 4.
1 Foresight Technology VCT plc FWT Shares Securities Note 6 September 2023
Contents
Part One: Investment Opportunity and Strategy | Part Five: The Company |
Part Seven. Taxation Considerations for Investors
Risk Factors
Expected Timetable, Statistics and Costs Letter from the Chair
Investment Opportunity and Strategy Case Studies
Performance and Impact of the FWT Funds' Portfolio
Part Two: Technology Adviser and Fund Manager
- WAE Technologies Limited
- Foresight Group
- Investment Committees
- The Investment Team
Part Three: Fund Structure and Details
Part Four: Details of the Offer
- FWT Shares
- Costs of the Offer
- Pricing Formula
- Tax Benefits for Investors
- Share Certificates, CREST and Nominees
2 1. The Directors
- 2. Investment Policy
- 3. Co-investment Policy
- 4. Valuation Policy
- 5. Share Buyback Policy
-
6. Dividend Policy
7. Fees and Expenses
49 Part Six. Additional Information
54 1. Use of Proceeds
59 2. The Offer for Subscription
61 3. Minimum and Maximum Investment
4. Claiming Income Tax Relief
64 5. Launch Costs
6. Category of Potential Investors
- 7. Investor Communications
- 8. Reporting Dates
- 9. Working Capital
- 10. Net Assets
71 11. Capitalisation and Indebtedness
- Notifiable Interests
- Intermediary Consent
73 | 1. | Tax Reliefs | 81 |
74 | 2. | Illustration of Effect of Tax Relief for Investors | 82 |
74 | 3. | Obtaining Tax Reliefs | 82 |
75 | 4. | Investors Not Resident in the UK | 82 |
75 | Part Eight: Conditions to be met by | ||
75 | |||
Venture Capital Trusts | |||
75 | |||
1. | Qualification as a VCT | 84 | |
2. | Qualifying Investments | 85 | |
77 | 3. | Qualifying Companies | 86 |
77 | 4. | Approval as a VCT | 86 |
77 | 5. | Definition of "Knowledge Intensive" Company | 86 |
77 | Part Nine: Definitions | 87 | |
77 | |||
78 Part Ten: Applications for FWT Shares
78 | Terms and Conditions of Application | 92 |
78 | Lodging of Application Forms and Dealing Arrangements | 96 |
78 | Application Procedure | 97 |
78 | ||
78 | Corporate Information | 100 |
79 | ||
79 |
2 Foresight Technology VCT plc FWT Shares Securities Note 6 September 2023
Risk Factors
Although the tax benefits available to investors in FWT Shares are significant, there are a number of risks which investors should consider carefully in addition to the other information presented in the Prospectus as a whole. The risks related to the Company, as opposed specifically to the FWT Shares, are set out in the Registration Document.
If any of the risks described below were to occur, it could have a material effect on the Company's business, financial condition or results of operations. The risks and uncertainties described below are not the only ones the Company, the Board or investors in the FWT Shares will face. Additional risks not currently known to the Company or the Board, or that the Company or the Board currently believe are not material, may also adversely affect the Company's business, financial condition and results of operations. The value of FWT Shares could decline due to any of these risk factors, and investors could lose part or all of their investment. Investors who are in doubt should consult their independent financial adviser authorised under FSMA.
General Investment Risks
- The net asset value of the FWT Shares and the return received by investors will be dependent on the values and performance of the underlying investments in the FWT Shares fund portfolio. The value of the investments and income derived from them can rise and fall and an investor may not receive back the full amount invested.
-
It should be noted that the Company has particular exposure to the technology sector which has seen significantly falling valuations since early 2022.
While this can afford opportunities for investors such as the Company to make new investments at attractive valuations, there is also the risk that, in the event this trend continues, the Company's own portfolio may fall in value.
- The past performance of the Company and other Foresight Funds is not a reliable indication of the future performance of the FWT Shares class.
- The Investee Companies will be small, unquoted companies. Realisation of investments in unquoted companies can be difficult and may take considerable time. Proper information for determining their value or the risks to which they are exposed may also not be available. Investment in such companies by its nature is illiquid and uncertain and consequently involves a higher degree of risk than a portfolio of quoted shares.
- The level of returns from investments may be less than expected if there is delay in the investment programme, such that all or part of the net proceeds of the Offer are held in cash or near cash investments for longer than expected, or if the returns obtained on investments are less than planned, or if investments cannot be realised at the expected time and values. There can be no guarantee that suitable investment opportunities will be identified in order to meet the Company's objectives.
-
The performance of the FWT Shares class is dependent on the ability of the Manager to identify appropriate Investee Companies and on the ability of the Investee
Companies to perform in line with their respective business plans. Early-stage businesses will be dependent on the skills of a small group of individuals, the loss of any of which may be particularly detrimental to those companies. Moreover, products and technologies developed by Investee Companies may prove not to be commercially or technically successful. While investments in these companies may present greater opportunities for growth, such investments may also entail greater risks than are customarily associated with investments in large companies. Commensurate with the nature of venture capital investing it should be expected that some companies, and the investments in those companies, may fail.
3 Foresight Technology VCT plc FWT Shares Securities Note 6 September 2023
Risk Factors continued
General Investment Risks continued | Where an investment has been sourced from or |
ș The returns from profitable exits will be paid to investors | introduced by WAE Technologies Limited ("WAE") , the |
Foresight WAE Technology EIS Fund and the FWT Shares | |
in the form of tax -free dividends at a targeted average | |
class will always have priority over any other Foresight | |
rate of 5% per annum of the NAV of the FWT Shares. | |
Fund. Implementation of this policy will also be subject | |
Investors should note that this is an estimated average | |
to the availability of monies in each Foresight Fund to | |
target over a number of years and in any given year | |
make the investment and other portfolio considerations | |
the 5% target may not be met (or may be exceeded). | |
such as portfolio diversity and regulatory or legislative | |
Due to the nature and returns profile of the underlying | |
requirements with respect to the Company's portfolio | |
investments, the Board anticipates irregular dividends, | |
of qualifying Companies. This might mean that the FWT | |
paid as and when exits occur, to be a significant factor in | |
Shares class could receive a greater or lesser allocation, | |
the Company's ability to achieve or exceed the average | |
for instance when co-investing with the Foresight WAE | |
5% annual target. | |
Technology EIS Fund, than would otherwise be the case. | |
ș In addition, where VCT legislation would mean that the | |
payment of Distributions would have an adverse effect | ș Economic and global political uncertainty continues in |
on the Company's maintenance of VCT status, then such | the UK stemming from unprecedented energy prices, the |
Distributions may not be made. | continuing impact of Brexit, the COVID-19 pandemic and, |
ș Although it is anticipated that the FWT Shares will be | most recently, the war in Ukraine. These macro-economic |
admitted to the Official List of the FCA and traded on the | factors continue to present significant challenges and are |
London Stock Exchange's main market for listed securities, | adversely affecting, and will continue to adversely affect, |
it is likely that there will not be a liquid market as there is | the performance of companies in which the Company |
a limited secondary market for VCT shares, due in part to | has invested or may invest, which in turn may adversely |
the holding period required to maintain up-front income | affect the performance of the Company. This may also |
tax reliefs, and investors may find it difficult to realise | negatively impact the number or quality of investment |
their investments therefore any prospective investors | opportunities available to the Company. It is possible |
should consider this a long-term commitment. | that currently unknown and unanticipated events, either |
ș Where more than one Foresight Fund wishes to participate | domestic or international, may occur and have a negative |
effect on economic activity and adversely affect the | |
in an investment opportunity, allocations will be made in | |
future viability of the Company and/or the performance | |
accordance with Foresight's allocation policy, typically in | |
of companies in which the Company has invested or may | |
proportion to the net cash available to each such fund, | |
invest which in turn may adversely affect the performance | |
other than where investments are proposed to be made | |
of the Company. | |
in a company where one or more Foresight Fund has a | |
pre-existing investment where the incumbent investor will | |
have priority. |
VCT and Taxation Risks
- If an investor who subscribes for FWT Shares disposes of those FWT Shares within five years, the investor is likely to be subject to clawback by HM Revenue & Customs of any income tax relief originally obtained on subscription.
- Changes to the VCT Rules in respect of investments made on or after 15 March 2018 have meant that VCTs may only invest in companies which pass a "risk to capital" gateway test requiring the investee company to have long term growth and development objectives and for the investment to carry a significant risk that invested capital will be lost over and above the net return to the Company irrespective of whether the return takes the form of income, capital growth, fees, other payments or anything else. This new test inherently increases the risk profile of companies in which the Company can invest going forward and stands in contrast to those in which the Company has historically invested, many of which may not have passed this gateway test due to their ownership of significant assets or their enjoyment of secured income streams.
-
The VCT Rules also prohibit the making of secured loans by VCTs. Future loan capital held by the Company will therefore be unsecured and will rank behind secured creditors of the investee company in question. As loan capital investments by a VCT are separately restricted to a maximum of 30% of any new investment, and Investee Companies which meet the above noted "risk to capital" test tend not to be able to provide significant assets against which to secure loans in any case, the Board
do not consider that this restriction further materially increases the risk profile of new investments made by the Company.
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Foresight Solar & Infrastructure VCT plc published this content on 06 September 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 September 2023 16:45:02 UTC.