High risk investment
important information

Risk warnings

You should not rely on the information or opinions set out here before making an investment or other decision but should obtain appropriate and specific professional advice of your own.

Nothing contained in this notice constitutes or should be construed to constitute investment, legal, tax or other advice.

The information supplied is not and in no way should be construed to constitute a recommendation with respect to the purchase or sale of any investment.

Whilst the contents of this notice are provided in good faith for information purposes only, no representation or warranty, express or implied is given by Gresham House Asset Management Limited or by any of its directors, members, or employees as to its accuracy or completeness or that it is up to date, and it should not be relied on as such.

To the fullest extent allowed by law and the rules and regulations of the Financial Conduct Authority, Gresham House Asset Management Limited and its directors, members and employees shall not be liable, whether in contract, tort (including negligence) or otherwise howsoever, for any losses, damages, costs or expenses of whatever nature (including (without limitation) any consequential, indirect or unforeseeable loss or loss of bargain, opportunity or profit) incurred or suffered by you or any third party arising out of or in connection with the use of the contents of this notice.

For a full list of risks, please see the Information Memorandum.

Gresham House Private Equity Release Strategy

Prior to subscribing for Limited Partnership Interests, prospective Limited Partners should carefully consider all the information set out in this Memorandum and in particular should evaluate the risk factors and potential conflicts of interest outlined below which, individually or collectively, could have a material adverse effect on the Partnership and its portfolio investments. If that were to occur, the value of the Limited Partnership Interests in the Partnership could decline significantly, and Limited Partners could lose the entirety of their Commitment. Prospective Limited Partners must rely on their own examination and detailed review of the Partnership and the terms of the offering and consider the merits and the potential risks of making a commitment to the Partnership.

This summary is not an exhaustive list of all relevant risk factors. There may be additional material risks that the Partnership and the Portfolio Manager do not currently consider to be material or in respect of which the Partnership and the Portfolio Manager are not aware. Prospective Limited Partners subscribing for a Limited Partnership Interests will be deemed to have acknowledged that the risk-factors set out below are non-exhaustive and to have waived any claim resulting from such factors’ individual or combined effect on the Partnership.

Any figures set out in this document are prepared on the assumptions stated. These are for illustrative purposes only and do not constitute forecasts.

Geographic concentration in the United Kingdom

The Partnership intends to invest a majority of its assets in the UK and so its investments are likely to be concentrated there. This gives rise to a risk of geographic concentration whereby changes in economic conditions in the UK or any part of it (for example, interest rates and rates of inflation, industry conditions, competition, political and diplomatic events, the outbreak of war which impacts the UK and other factors) could substantially and adversely affect the return on the Partnership’s investments and the value of Limited Partnership Interests.

Law and Regulation

Changes in tax legislation and practice

The General Partner, the Portfolio Manager and their associates do not provide tax advice and Limited Partners should be aware that the taxation treatment of the Partnership and/or of its assets could change in the future. Information regarding taxation is based upon current UK and Ireland taxation legislation and practices. Tax law and any other rules and/or customary practice in relation to tax, or their interpretation and application is, of course, subject to change during the life of the Partnership. Any changes in the level and basis of taxation, in tax reliefs or in HM Revenue and Customs (HMRC) or the Irish Revenue Commissioners practices, may affect the value of Limited Partnership Interests in the Partnership and returns to Limited Partners.

Risks Relating to Tax Generally

The tax consequences of making an investment in the Partnership may be complex and will vary from investor to investor. There can be no assurance that the Partnership’s structure or any of the Partnership’s investments will be tax-efficient to any Limited Partners. In addition, existing or anticipated tax benefits derived from an income tax treaty or related structure could be challenged with the consequence that the related investment will be subject to withholding tax or other taxes or penalties, which would adversely affect the performance of the Partnership. In certain circumstances, Limited Partners could be required to recognise taxable income in a taxable year, even though the Partnership had either no net profits in such year or had an amount of net profits in such year that is less than such amount of taxable income and without regard to whether any distribution from the Partnership has been or will be received. In addition, there can be no assurance that the Partnership will distribute sufficient cash to cover the full tax liabilities of a particular Limited Partner’s pro rata share of the taxable income of the Partnership.

Prospective investors should review the section titled “Certain Tax Considerations” and consult their own tax advisers with reference to their specific tax situations before making a decision to invest in the Partnership.

Legal and regulatory changes

Changes in legal, tax and regulatory regimes of jurisdictions in which the Partnership’s portfolio investments operate as well as those jurisdictions relevant to the business and operations of the Portfolio Manager, the General Partner and the Partnership may occur during the life of the Partnership. Such changes may impact the performance of the Partnership’s portfolio investments and/or may require the Partnership to be restructured, or for other changes to be made to it, the General Partner or the Portfolio Manager, in order to comply with additional requirements. This may lead to additional costs for the Partnership.

European General Data Protection Regulation

The EU General Data Protection Regulation (the “GDPR”) has effect in all EU Member States (including the UK, where it was implemented prior to Brexit) and also applies where a data controller’s processing activities relate to the provision of services to individuals in the EU. The GDPR introduced significant new obligations on data controllers, including requirements around accountability and transparency, formalising the data processing operations of their delegates, responding to additional data subjects’ rights requests within shorter timelines, reporting of data breaches to data protection authorities or data subjects, consideration of data protection as any new services are developed and limitation of the amount of personal data collected, processed and stored. The GDPR also introduced a substantially more comprehensive regulatory regime, of which one of the main features is that administrative fines for breaches of the GDPR can reach as high as €20m or 4% of an undertaking’s annual turnover (whichever is greater). In the event of failure to comply with the requirements of the GDPR, the Partnership could face significant administrative and monetary sanctions as well as reputational damage which may have a material adverse effect on its operations, financial condition and prospects.

General risks associated with the current economic environment

Economic conditions

The Partnership’s portfolio investments will be subject to normal market fluctuations and the risks inherent in the purchase, holding or selling of securities and there can be no assurance that appreciation in the value of those portfolio investments will occur.

Changes in general economic and market conditions in the United Kingdom and elsewhere including, for example, interest rates, rates of inflation, industry conditions, competition, political events and trends, changes in the law (including, for example, in relation to taxation, land use, planning restrictions and environmental safety and protection) national and international conflicts, and other factors could substantially and adversely affect the Partnership’s prospects.

Climate Change

Climate-related risks and opportunities are identified as part of the Portfolio Manager’s pre-investment due diligence.

Where climate-related risks are deemed too great, the Partnership will not invest. However, the Partnership may be exposed to climate change-related risks, including physical risks, such as extreme weather events or changing climatic conditions impacting the operations of the Partnership’s portfolio investments.

Cybersecurity Risk

The Portfolio Manager and the service providers appointed in respect of the Partnership and other market participants increasingly depend on complex information technology and communications systems to conduct business functions.

These systems are subject to a number of different threats or risks that could adversely affect the Portfolio Manager, the Partnership and Limited Partners, despite the efforts of the Portfolio Manager and its service providers to adopt technologies, processes and practices intended to mitigate these risks and protect the security of their computer systems, software, networks and other technology assets, as well as the confidentiality, integrity and availability of investors’ information. For example, unauthorised third parties may attempt to improperly access, modify, disrupt the operations of, or prevent access to these systems of the Portfolio Manager, the Administrator, the Depositary or other service providers, counterparties, or data within these systems. Third parties may also attempt to fraudulently induce employees, customers, third-party service providers or other users of these systems to disclose sensitive information in order to gain access to investor/service provider data. A successful penetration or circumvention of the security of these systems could result in the loss or theft of a Limited Partner’s data or funds, the inability to access electronic systems, loss or theft of proprietary information or corporate data, physical damage to a computer or network system or costs associated with system repairs. Such incidents could cause the Partnership to incur regulatory penalties, reputational damage, additional compliance costs or financial loss.

Similar types of operational and technology risks are also present for counterparties with which the Partnership engages in transactions and various other parties, which may also give rise to material adverse consequences for the Partnership including a decrease in the value of its investments.

COVID-19

Recent events (including government stay-at-home orders) occurring as a result of the novel coronavirus (SARSCoV-2) and related respiratory disease (coronavirus disease (COVID-19)) that has spread throughout the world, including the United Kingdom and Ireland, have caused significant dislocations, illiquidity, and volatility in the global financial markets. These events have led (and may continue to lead) to disruptions in the global economy and relevantly to the UK economy and Ireland (including restrictions preventing individuals from leaving the home for non-essential purposes). In addition, this outbreak and any future outbreaks could have a further adverse impact on the global economy in general, including volatility in or disruption of the financial markets – all or any of which may adversely affect the performance of the Partnership.

United Kingdom’s exit from the European Union

The United Kingdom withdrew from and ceased to be a Member State of the EU and the EEA at 11:00 p.m. GMT on 31 January 2020, and the withdrawal agreement that was negotiated between the UK and the EU in October 2019 (the Withdrawal Agreement) came into effect. The Withdrawal Agreement sets out the terms of the UK’s exit from the EU and a political declaration on the framework for the future relationship between the UK and the EU. The UK and the EU have entered into a trade and cooperation agreement that came into force on 1 January 2021.

The withdrawal of the UK from the EU and uncertainty with regards to the UK’s future trading arrangements with the EU, notwithstanding the trade and cooperation agreement, continue to create significant political, social, and macroeconomic uncertainty. This could adversely impact economic conditions on the value of the Partnership’s investments.

Lack of suitable Investments

There can be no guarantee that the Portfolio Manager will find sufficient portfolio investments at suitable prices. The value of the Limited Partnership Interests may go down as well as up and Limited Partners may not get back the full value of their investment.

Limited Partnership Interests

Liquidity

A subscription for Limited Partnership Interests will generally be illiquid. It is not anticipated that a public market for Limited Partnership Interests will develop. A Limited Partner may not be able to sell their Limited Partnership Interest at an acceptable price, or at all. In addition, it may be difficult for a Limited Partner to obtain reliable information about the value of a Limited Partnership Interest or the extent of the risks to which such a Limited Partnership Interest is exposed. There is no guarantee that the valuations given on periodic statements will accurately reflect the realisation proceeds that may be obtained. As with all valuations, the valuations are based only on the valuer’s professional opinion on a stated date.

Prospective Limited Partners should have the financial ability and willingness to accept the risks and lack of liquidity associated with investment in an unregulated collective investment scheme of this type.

Limited transferability of Limited Partnership Interests

There will be no public market for the Limited Partnership Interests, and none is expected to develop. There will be substantial restrictions upon the transferability of Limited Partnership Interests under the Limited Partnership Agreement and applicable laws or regulations (including, without limitation, any anti-money laundering, or securities laws). In general, withdrawals of Limited Partnership Interests are not permitted. In addition, Limited Partnership Interests are not redeemable.

Transactions with Limited Partners

Circumstances may arise where it is proposed that the Partnership acquires assets from, or purchases services from, one or more Limited Partners. Conversely, it may be proposed that the Partnership disposes of assets or provides services to one or more Limited Partners.

Such scenarios may give rise to potential for conflict between the interests of the particular Limited Partner with whom it is proposed to transact and the interests of the Partnership (and/or the other Limited Partners). It is anticipated that Limited Partners will be expected to permanently waive any conflicts of interests arising from certain of these transactions under the terms of the Limited Partnership Agreement so that such transactions can be effected.

Distributions

The level of any planned distribution may vary or may not be paid at all, and Limited Partners may not get back the amount of capital subscribed.

No right to control the Partnership’s operations or receive detailed information

To protect the limited liability status of the Limited Partners as Limited Partners in the Partnership, Limited Partners are excluded from making certain decisions and will have no right or power to control or participate in the day-to-day management of the Partnership or of any of its assets, including any acquisition and disposal decisions. While the AIFM and the Directors retain overall supervision and control, the AIFM has exclusively delegated to the Portfolio Manager all power and authority to invest the assets of the Partnership as described in this Memorandum. The directors or employees of the Portfolio Manager who are responsible for portfolio management and risk management decision making and strategy may change from time to time.

Limited Partners will not be entitled to receive the detailed information relating to actual or prospective portfolio investments received by the General Partner. Furthermore, the General Partner will exercise any voting rights held by the Partnership in respect of a body corporate, association, partnership or other collective investment scheme in respect of which the Partnership has invested or will invest in.

Limited Partners will not be permitted to evaluate prospective investments, or relevant economic, financial, business or other information used by the General Partner or Portfolio Manager in making its investment decisions. The General Partner will have the exclusive right and power to manage the business of the Partnership. Accordingly, no prospective Limited Partner should subscribe for Limited Partnership Interests unless it is willing to entrust all aspects of the operation and the management of the Partnership to the General Partner.

Long-term investment

The opportunity described in this Memorandum may not be suitable for all recipients. The Partnership is designed to be a long-term opportunity. It is not designed as a short-term opportunity. Any prospective Limited Partner who has any doubt about the suitability of the Partnership should consult an independent financial adviser regarding all aspects of the Partnership, including taxation matters, prior to committing to subscribe for Limited Partnership Interests in the Partnership.

Significant adverse consequences for default

The Limited Partnership Agreement provides for significant adverse consequences in the event a Limited Partner defaults on its Commitment or any other payment obligation. In addition to losing its right to potential distributions from the Partnership, a defaulting Limited Partner may be forced to transfer its Limited Partnership Interest for an amount that is less than the fair market value of such Limited Partnership Interest. Any default by a Limited Partner in non-compliance with a drawdown notice could also have an adverse impact on the Partnership’s ability to complete a transaction and/or could increase the relative exposure of the other Limited Partners in such transactions.

Contingent liabilities

In connection with the disposition of any investment the Partnership may be required to make certain representations, and provide guarantees, warranties, covenants, or other undertakings in relation to the business and affairs of the investment. In addition, the Partnership may be required to indemnify the purchasers of such investment to the extent that any such representation turns out to be incorrect, inaccurate, or misleading. This may result in contingent liabilities, which might ultimately have to be funded by the Limited Partners.

Risks associated with the investments

Due Diligence

The Partnership will complete a reasonable and appropriate financial, commercial, and legal due diligence prior to completing any investment and the due diligence process may at times be required to rely on limited or incomplete information. However, the due diligence process involves subjective analysis and so there can be no assurance that all material issues will be uncovered. Any failure by the Portfolio Manager to identify relevant facts through the due diligence process may lead to inappropriate investment decisions, which could have a material adverse effect on the value of Limited Partnership Interests.

Concentration

The Partnership may take significant positions in a limited number of assets, a potential consequence of which could be that returns could be adversely affected by the poor performance of any one of these large investments or any one or more of the sectors in which they operate.

Illiquidity

A subscription for Limited Partnership Interests should be viewed as illiquid. It is uncertain as to when profits, if any, will be realised. Losses on unsuccessful investments may be realised before gains on successful investments are realised.

The return of capital and the realisation of gains, if any, generally will occur only upon the partial or complete disposition of an investment. While an investment may be sold at any time, it is generally expected that this will not occur for a number of years after the initial investment is made. Before such time, there may be no current return on the investment. If the Partnership was ever required to liquidate its interest in an investment at short notice, either in whole or in part, the realised value may be significantly less than the asset value of the investment. Furthermore, the expenses of operating the Partnership may exceed its income thereby requiring that the difference be paid from the Partnership’s capital including, without limitation, unfunded Commitments.

Past performance

Past performance of similar investments is not necessarily a guide to future performance of the Partnership’s investments.

Market price of investments

The fair value of investments held in the Partnership’s portfolio fluctuates with changes in market prices. Prices are themselves affected by movements in currencies and interest rates and by other financial issues including the market perception of future risks. The value of Limited Partnership Interests and any income derived from them can go down as well as up and Limited Partners may not get back the full amount committed. In particular, no guarantees are made as to investment performance, in respect of either income or capital gains either expressly or by implication.

Valuations

All investments owned (directly or indirectly) by the Partnership will be subject to a semi-annual internal valuation carried out by the Portfolio Manager in accordance with the IPEV Guidelines or such other methodology that the Portfolio Manager determines reasonable.

Calculations will be prepared by the Portfolio Manager and relevant professional advisers and will be in accordance with the valuation methodology described above.

Valuations of the assets of the Partnership as a whole may also reflect accruals for expected or contingent liabilities, the amount or incidence of which is inevitably uncertain. A valuation is only an estimate of value and is not a precise measure of realisable value. Ultimate realisation of the market value of an asset depends to a great extent on economic and other conditions beyond the control of the Portfolio Manager, and valuations do not necessarily represent the price at which an asset can be sold. Prospective Limited Partners should bear in mind that the actual valuations may as time progresses be materially different from these semi-annual valuations.

Unquoted companies

The Partnership may invest in unquoted companies, which are smaller, more vulnerable to changes in markets and technology and dependent on the skills of a small management team. Operating results in such companies will be difficult to predict. Such investments, by their nature, involve a higher degree of valuation and performance uncertainties and liquidity risks than investments in listed and quoted securities and they may be more difficult to realise. There can therefore be no guarantee of the ability to realise an unquoted investment or that any such realisation will be on a basis which necessarily reflects the company’s valuation of that investment.

Traded securities

The Partnership may invest in securities admitted to trading on an exchange. Access to material non-public information may restrict the ability of the Portfolio Manager to take action with respect to some investments. The Portfolio Manager has established policies and procedures reasonably designed to prevent the misuse by the Portfolio Manager and its personnel of material information regarding particular issuers that has not been publicly disseminated (“material non-public information”) in accordance with applicable legal and regulatory requirements. In general, under such policies and procedures and applicable law, when the Portfolio Manager is in possession of material non- public information related to a publicly traded security or the issuer of such security, whether acquired unintentionally or otherwise, neither the Portfolio Manager nor its personnel are permitted to render investment advice as to, or otherwise trade or recommend a trade in, the securities of such issuer until such time as the information that the Portfolio Manager has is no longer deemed to be material non-public information.

The Portfolio Manager has procedures that outline the process by which it will determine whether to elect to receive material non-public information, or whether it will determine not to receive material non-public information, in any given case. This determination will be made on an issuer-by-issuer basis using objective criteria established by the Portfolio Manager. It should be noted that the Portfolio Manager’s determination regarding whether or not to receive material non-public information regarding a specific issuer may have implications for the services the Portfolio Manager is able to provide to certain clients in certain situations, including the Partnership. For example, if the Portfolio Manager were prohibited from dealing in a Portfolio Company’s shares as a result of being an “insider”, this could have an adverse effect on the ability of the Partnership to pursue its investment strategy, and may adversely affect the Partnership’s business, financial condition, results of operations, and the value of Limited Partnership Interests. In such event, the investment returns of the Partnership may be materially affected.

No assurance of Investment Objective

No representation is or can be made as to the future performance of the Partnership, and there is no assurance that the Partnership will realise its Investment Objective. Achieving the target return cannot be guaranteed. The value of the Partnership assets and the income returns may fluctuate. Limited Partners may not get back, in full or in part, the money that they commit.

Need for follow-on investments

Following its initial investment in a given Portfolio Company, the Partnership may decide to provide additional funds to such Portfolio Company or may have the opportunity to increase its investment in a successful Portfolio Company.

There is no assurance that the Partnership will make follow on investments or that the Partnership will have sufficient funds to make all or any of such investments. Any decision by the Partnership not to make follow on investments or its inability to make such investments may have a substantial negative effect on a Portfolio Company in need of such an investment. Additionally, failure to make such investments may result in a lost opportunity for the Partnership to increase its participation in a successful Portfolio Company or the dilution of the Partnership ownership in a Portfolio Company if a third party invests in such Portfolio Company.

Dependence on the General Partner, the AIFM and the Portfolio Manager

Operation of the Partnership will be dependent on the General Partner and the AIFM. The ability of the Partnership to achieve its Investment Objective depends to a high degree on the Portfolio Manager and more generally, on the ability of the Portfolio Manager and its group to attract and retain suitable staff. The loss or reduction of service of the Portfolio Manager could have an adverse effect on the operations and performance of the Partnership and its ability to realise its investment objective. In addition, certain changes in the General Partner or circumstance relating to the General Partner may have an adverse effect on the Partnership or one or more of its Portfolio Companies including potential acceleration of debt facilities.

Multiple capacities

It is possible that conflicts of interest may arise in connection with the performance by GHAM or its associates of its or their role and functions in one capacity (in relation to the VCT Funds) and the performance or its role and functions in another capacity (as Portfolio Manager). For example, the VCT Funds may hold securities of a different class to those of the Partnership in a Portfolio Company, meaning that an exit opportunity may be more beneficial to the VCT Funds than the Partnership. This is a not an exhaustive list of possible conflicts of interest that may arise.

For every new investment opportunity all potential conflicts along with proposed mitigating action will be documented and discussed with the Gresham House Conflicts Committee to formally approve. New investment opportunities will then be discussed with Investment Committee where approval can only be granted by the majority voting in favour which must include the Independent Partnership Representatives.

Extension of term

The Limited Partners may be asked to sanction up to three one-year extensions of the term of the Partnership to provide for an orderly realisation of the Partnership’s investments. If an extension is not passed in accordance with the Limited Partnership Agreement, the Partnership will terminate at the end of the term, or the extended term as the case may be. There can be no guarantee or assurance that the full value of the Partnership’s investments will be realised on a liquidation, and a Limited Partner may not receive back, in full or in part, the amount invested.

Lack of history

The Partnership is a newly established entity and has no operating results and will not commence operations until it has raised capital through the First Closing.

As the Partnership lacks an operating history, Limited Partners have no basis on which to evaluate the Partnership’s ability to achieve its investment objective and provide a satisfactory investment return.

The Partnership’s returns will depend on many factors, including the performance of its investments and the availability and liquidity of investment opportunities within the scope of the Partnership’s investment objective and investment policy. There can be no assurance that the Partnership’s investment objective will be successful.

Investment holding vehicles

Investments made by the Partnership may be made through intermediate holding vehicles for structural reasons. For example, in order to provide any necessary security arrangements to secure the Partnership’s debt, provide flexibility in relation to exit, or for regulatory or securities reasons with the intention of achieving the Partnership’s Investment Objectives. No assurance is given that any particular structure will be suitable for all prospective Limited Partners, and, in certain circumstances, such structures may lead to additional costs or reporting obligations for some or all of the Limited Partners in the Partnership.

Reliance on information

The Portfolio Manager will depend on third parties for information concerning its portfolio. The Portfolio Manager generally will have no means of independently verifying the information supplied to it by third parties. There can be no assurance that such information will be accurate. Limited Partners themselves will have no direct dealings or contractual relationships with any of the assets in the portfolio or any underlying fund manager or administrator.

Environmental Social and Governance

The Portfolio Manager makes use of its proprietary ESG Tool to assist in evaluating the ESG impact of proposed investments as part of its due diligence process and to support the determination of the ESG KPIs as part of the initial investment process, which feeds into the ongoing monitoring of the Partnership’s incorporation of ESG considerations in its investment strategy and the reporting on these to the Limited Partners. As part this strategy, the Portfolio Manager conducts a detailed analysis of positive and negative factors affecting the investment, including any ESG event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment

(“ESG Risk”). ESG Risks may include, but are not limited to:

• Environmental – environmental risks and associated costs, policy or management related to factors such as availability and quality of natural resources (water, soil, air), threats posed by disease or other pests, sustainability of use of natural resources, waste management, water or air pollution, climate change, protected environments protecting water supplies, greenhouse gas emissions.
• Social – social factors such as human rights, discriminatory policies, community consent or impacts on communities, worker health and safety, public health issues, relations with unions and employees, managing product safety issues, child and forced labour, protection of consumer rights, competitive wages and benefits, incidents of bribery or corruption.
• Governance – governance issues such as the composition and independence of the board of directors of a Portfolio Company, adherence to and oversight of sustainability related certifications and commitments, determination of executive compensation, shareholder rights, audit and accounting quality and controls, conflicts of interest.

The potential impact of ESG Risks on the performance of the Partnership will depend on the exposure of the investment to, and the materiality of, such ESG Risks and the extent to which such risks have been mitigated by the Portfolio Manager approach to integrating and monitoring of ESG Risks in its investment strategy. However, there is no guarantee that these measures will mitigate or prevent ESG risks arising in respect of the Partnership.

The potential impact on the value of Limited Partnership Interests from an actual or potential material decline in the value of the investment due to an ESG Risk or condition will vary and depend on several factors including, but not limited to, the type, extent, complexity, and duration of the relevant ESG event or condition, prevailing market conditions and the existence of any mitigating factors.

The assessment of the ESG Risks is conducted by the Portfolio Manager using a number of different methodologies, with the relevant data deriving from a variety of sources and the Portfolio Manager’s own research, including the use of the ESG tool. The use of varying methodologies and the subjective nature of non-financial criteria means a wide variety of outcomes are possible and the data and information relied on may not adequately address material sustainability factors, nor identify the relevant ESG Risks. The analysis is also dependent on the disclosure of accurate relevant data and the availability of such data can be limited and so there can be no assurance that all material issues will be uncovered. Any failure by the Portfolio Manager to identify relevant ESG Risks through the analysis process may lead to inappropriate investment decisions, which could have a material adverse effect on the value of Limited Partnership Interests.

Finance

Exchange rate and interest rate hedging

The Partnership may be exposed to exchange and interest rate risk, which may require the Partnership to incur borrowing and/or enter into security arrangements and/or full or partial foreign exchange or interest rate hedging arrangements. The effect of such borrowing, security or hedging arrangements may be unfavourable as well as favourable on the gain or loss otherwise experienced on the investments.

Availability of debt finance

The Partnership may arrange debt financing from a variety of sources including banks or other lenders. The Partnership may also use debt instruments in its investment holding structures to assist, inter alia, tax efficient investment. Portfolio Companies may borrow where commercially justified, in order to enhance Partnership returns on a risk-adjusted basis.

Constraints on the availability of debt financing and its pricing as a result of prevailing market conditions may affect the ability of the Partnership to raise or to refinance debt. The resultant lack of available credit and/or higher financing costs and/or more onerous terms may impact of the performance of the Investments.

Borrowing

The Partnership may utilise borrowings and interest rate movements may therefore affect the performance of the Partnership. The use of borrowing increases the Partnership’s exposure to adverse economic factors, such as severe economic downturns and interest rate rises. If the proceeds of investments are unable to meet principal and interest payment obligations on debt facilities, then the value of the Limited Partnership Interests may be reduced or eliminated.

Security and guarantees

The Partnership may have to offer security over its underlying assets or deliver its assets as collateral, in order to secure indebtedness. Any failure by the Partnership to fulfil obligations under any related financing documents (including repayment) may permit a lender to demand repayment of the related loan and to realise its security. In the event that such security involves the lender taking control (whether by possession or transfer of ownership) of the Partnership’s underlying assets, the Partnership’s returns may be adversely impacted.

Bridge financing

The Partnership may finance investments by borrowing under a bridge facility and will refinance those borrowings by drawing down Commitments from Limited Partners. If a Limited Partner fails to pay the amount requested when due, the Partnership may be obliged to repay part or all of any such borrowings itself. To recover any amounts so repaid, the Partnership may need to commence proceedings against any Limited Partner which failed to pay the amount requested from it. The lenders under any bridge facility will be the creditors of the Partnership and will rank ahead of the Limited Partners on an insolvency of the Partnership.

Banking arrangements

The Partnership’s cash will be held in its own bank accounts with certain clearing banks from time to time. The Portfolio Manager accepts no liability for the loss of assets in the event of any relevant bank defaulting.

General

AIFM status

The AIFM is authorised and regulated as an alternative investment fund manager by the CBI. As the AIFM of the Partnership, the AIFM is required to comply with ongoing capital, reporting and transparency obligations and a range of organisational requirements and conduct of business rules, and to adopt a range of policies and procedures addressing areas such as risk management, liquidity management, conflicts of interest, valuations, compliance, internal audit and remuneration. If the AIFM fails to comply with the legal and regulatory requirements applicable to an authorised AIFM or otherwise ceases to hold authorisation as an AIFM, the AIFM would not be permitted to continue to manage the Partnership (or market Limited Partnership Interests in the Partnership) and a successor alternative investment fund manager duly authorised would need to be appointed to perform these functions.

Litigation

In the ordinary course of its business, the Partnership may be subject to litigation from time to time. The outcome of such proceedings may materially adversely affect the value of the Partnership and may continue without resolution for long periods of time. Any litigation may consume substantial amounts of time and attention, and that time and the devotion of these resources to litigation may, at times, be disproportionate to the amounts at stake in the litigation.

Compensation risk

As the subscription for Limited Partnership Interests in, and the performance of the Partnership will not be covered by the Financial Services Compensation Scheme or by any other compensation scheme, if the value of the Limited Partnership Interests in the Partnership falls, the loss suffered by the Limited Partners (which may be the whole of the investment) will not be recoverable under any compensation scheme.

Recourse risk

The Partnership is limited to Qualifying Investors or Knowledgeable Investors who are sufficiently sophisticated to understand the risks attaching to an investment in a qualifying investor alternative investment fund and accept that they will have recourse only to the Partnership’s assets as these will exist at any time.

The Partnership’s assets are the only assets available to satisfy any liabilities or other obligations of the Partnership. If the Partnership’s assets become subject to a liability, parties seeking to have the liability satisfied may have recourse to the Partnership’s assets generally and may not be limited to any particular asset, such as the asset representing the investment giving rise to the liability.

Service providers

The AIFM, the Portfolio Manager or the General Partner may from time to time appoint service providers to the Partnership including (i) a depositary to provide depositary services, (ii) an administrator to provide administration services, (iii) an auditor to provide audit services and (iv) other professional advisers including legal and tax advisers.

In general, the duties under the relevant agreements with such service providers shall be to the Partnership and not directly to Limited Partners, whether individually or in groups. Under the Limited Partnership Agreement only the General Partner, the AIFM or the Portfolio Manager is entitled to conduct the business of the Partnership, including bringing actions or making claims against service providers.