High risk investment
important information

Risk warnings

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

1. You could lose all the money you invest

If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.

2. You are unlikely to be protected if something goes wrong

Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance.

Try the FSCS investment protection checker here: https://www.fscs.org.uk/check/investment-protection-checker/

Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it.

Learn more about FOS protection here: https://www.financial-ombudsman.org.uk/consumers

3. You won’t get your money back quickly

• Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early
• The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange, these events are not common
• If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these

4. Don’t put all your eggs in one basket

• Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well
• A good rule of thumb is not to invest more than 10% of your money in high-risk investments

Read more here: https://www.fca.org.uk/investsmart/5-questions-ask-you-invest

5. The value of your investment can be reduced

• The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares
• These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment

If you are interested in learning more about how to protect yourself, visit the FCA’s website here: https://www.fca.org.uk/investsmart

Specific risks pertaining to shares in wind and solar renewable energy investments

The risks referred to below are the risks which are considered to be material but are not the only risks relating to shares in collective investment schemes investing in solar and wind renewable energy assets. There may be additional material risks that are not currently considered to be material or of which Gresham House Asset Management Limited (the “Manager” or “Gresham House”) are not currently aware. Potential investors should review this document carefully, and in its entirety, and consult with their professional advisers before acquiring any interests in such investments.

The material risks list is non exhaustive and should be considered alongside the risk section of any offering documentation for a high risk investment as relevant.

• Gresham House does not provide tax advice and Shareholders should be aware that the taxation treatment (including Inheritance Tax) of their investments could change in the future. Information regarding taxation is based upon current UK taxation legislation and published HM Revenue and Customs (HMRC) practices. Tax law and practice is subject to change. Any changes in the level and basis of taxation, in tax reliefs or in HMRC practices, may affect the value of any shares held in high risk investments and returns to Shareholders. Shareholders should seek their own advice on the taxation consequences of any investment
• Although the Company will insure the assets against standard insurable risks, damage or loss could be caused by events outside the cover, which could affect the value of any investment portfolio, or the profits/losses from the underlying assets
• There is no guarantee that electricity prices or demand will increase to the extent expected, or the industry forecast used by the Manager may prove to be inaccurate, reducing the return to Shareholders below the target. There is thus no certainty that any target IRR will be achieved
• Power production may fall below the forecast levels due to events such as equipment failure, grid constraint or adverse weather conditions. These events could impact on any target IRR being achieved
• Whilst projects that have been accredited under the Renewables Obligation (RO) prior to the scheme’s closure continue to receive support through ROCs, the Government could decide to change its policy and apply adverse retrospective changes to the levels of support for RO accredited projects in which any investment has (or acquires) a financial interest. This would negatively impact on achievement of any target IRR
• Ofgem’s review of the current charging framework is ongoing. Although embedded benefit revenue has not been included by the Manager in forecasts or valuations, other changes proposed by Ofgem could result in renewable generators having to pay out more in charges. This has the potential to impact on the target IRR.
• Increased tariffs as a result of Brexit and the removal of the UK from the single market could affect the import of wind turbines and equipment from Europe making potential repairs and any future repowering of existing projects more expensive
• There is no guarantee that extended power generation beyond the initial term of the existing projects can be achieved as this depends on extensions to the existing leases and planning permissions being granted
• Ofgem or other regulators may seek to change the methodology for charging for grid services, such that embedded benefits or any other benefits may change or be removed altogether
• The macroeconomic effect of Brexit on the value of the underlying investments in the energy sector is unknown. Brexit could also have an impact on power prices, which form part of the assumptions for revenue streams
• Due to the nature of wind and solar renewable energy assets, there is a variability in the supply of energy they produce throughout the lifecycle of any long term investment. The energy production has been built into model assumptions of any target IRR for such a high risk investment and as such, any target IRR is not guaranteed