Risk of Capital Loss and No Assurance of Investment Return
This investment is speculative and long-term with no certainty of return. This investment involves a significant risk of capital loss and should only be made if an investor can afford the loss of its entire investment. There are no guarantees or assurances regarding the achievement of investment objectives or performance. In considering any investment performance information contained in this Presentation, recipients should bear in mind that past performance does not predict future returns. The performance information given in this Presentation, if any, relates only to the past activities of Vengrove Group Limited, each of it's respective successors or assigns and any of their respective subsidiary undertakings (as that term is defined in section 1162 and Schedule 7 of the United Kingdom Companies Act 2006) (“Vengrove”), and/or funds or accounts managed by Vengrove, not to Vengrove Evergreen Property Partners Limited (or any of its compartments, as the context requires, the “Company”). The past performance of Vengrove and any funds or accounts managed or advised by Vengrove provides no assurance of future returns or results of the investments. The Company cannot provide assurance that it will be able to choose, make and realise investments in any particular opportunity. There is no assurance that the Company will be able to generate returns for its investors or that the returns will be commensurate with the risks of investing in the type of investments described herein. Furthermore, the Company’s performance over a particular period may not necessarily be indicative of the results that may be expected in future periods.
Limited Operating History: Relation to Prior Investment Results
The Company has recently commenced operations and therefore has no operating history upon which prospective investors may evaluate its performance. As a result of the Company’s highly customised investment program and investment limitations, there is no assurance that the Company will receive sufficient investment opportunities to deploy all of its capital, even in a circumstance where other funds or accounts managed or advised by Vengrove are fully or nearly fully deployed.
Difficulty and Cost of Locating Suitable Investments
There is no guarantee that suitable deal flow will be available so that the Company will be able to invest in investments or that any such investments will be successful. The success of the Company depends on the ability of Vengrove to identify, select, effect and realise appropriate investments. Accordingly, the Company may only make a limited number of investments. Since these investments may involve a high degree of risk, poor performance by a few could significantly affect the return to investors. To the extent that any of the available capital is not invested, the Company’s potential for return may be diminished. The investment industry in which the Company will be engaged is highly competitive. The activity of identifying, completing and realising on attractive investments that fall within the Company’s objective is highly competitive and involves a high degree of uncertainty and will be subject to market conditions. The Company expects to encounter competition from other entities having similar investment objectives. There can be no certainty that Vengrove will identify a sufficient number of attractive investment opportunities to enable the full amount of capital committed to, or otherwise available to, the Company to be invested effectively or at all. No assurances can therefore be given that the target returns of the Company or any investment will be achieved.
Legal, Tax and Regulatory Risks
Legal, tax and regulatory changes could occur during the term of the Company that may adversely affect the Company. The regulatory environment for private investment companies is evolving, and changes in the regulation of private investment companies may adversely affect the value of investments held by the Company and the ability of the Company to effectively employ its investment and trading strategies. Increased scrutiny and newly proposed legislation applicable to private investment companies and their sponsors may also impose significant administrative burdens on Vengrove and may divert time and attention from portfolio management activities. An investment in the Company may be subject to increasing regulation and governmental oversight and there can be no assurance that such rules will not require various investor disclosures to, among others, domestic and foreign governmental or self-regulatory authorities. The effect of any future regulatory change on the Company could be substantial and adverse. In addition, the futures markets, debt markets, and other financial and capital markets are subject to comprehensive statutes, regulations and margin requirements. Prospective investors should note that the tax treatment of each investor, and of any investor, and of any investment, depends on individual circumstances and may be subject to change in the future.
Broad Investment Mandate
Except as set forth in the governing documentation of the Company, the Company shall not be limited or restricted in the real estate sectors, geographies, transaction types, structures, instruments, obligations or assets in which it may invest or the specific investment strategies and techniques that may be employed by it. It will be permitted to invest (and may actually invest) in investments of any number of real estate assets or operating activities utilising a wide variety of structuring techniques. Its portfolio may be concentrated at various points in time, including, for example, with respect to the number of investments included in the portfolio (which may be particularly limited when it commences its investing activities), the nature of such investments and the geographies represented by the issuers in which the Company invests.
Non-Controlling Investments and/or Investments with Third Parties in Joint Ventures and Other Entities
It is expected that the Company will hold non-controlling interests in most investments and, therefore, may have no right to appoint a director and to influence management. Similarly, the Company may co-invest with third parties through joint ventures, other entities or similar arrangements, thereby acquiring non-controlling interests in certain investments. In such cases, the Company will be significantly reliant on the existing management, board of directors and other shareholders of such companies, which may include representation of other financial investors with whom the Company is not affiliated and whose interests may conflict with the interests of the Company. Moreover, in the case where the Company co-invests alongside other persons (including other funds or accounts managed or advised by Vengrove), such investments may involve risks not present in investments where a third party is not involved, including the possibility that a third party partner or co-venturer may have financial difficulties resulting in a negative impact on such investment, may have economic or business interests or goals which are inconsistent with those of the Company, may be in a position to take (or block) action in a manner contrary to the Company’s investment objectives, or the increased possibility of default, diminished liquidity or insolvency by the third party partner or co-venturer due to a sustained or general economic downturn.
Lack of Liquidity
Interests in the Company currently are or will be highly illiquid. Vengrove have implemented a periodic redemption program with respect to interests in the Company post a 3-year lock-in, but there is no guarantee Vengrove will be able to make any redemptions, either at the time or at all. Any redemptions are subject to available liquidity and other significant restrictions. To the extent that we are able to make redemptions, only a limited number of Interests will be eligible for redemption.
Use of Borrowings/Leverage
The Company intends to employ leverage in order to finance the operations of the Company and its investments. Such leverage will increase the exposure of an investment to adverse economic factors such as rising interest rates, downturns in the economy or deteriorations in the condition of the investment. Borrowings by the Company (or by an affiliate thereof) have the potential to enhance the Company’s returns, however, they will further diminish returns (or increase losses on capital) to the extent overall returns are less than the Company’s cost of funds. As a general matter, the presence of leverage can accelerate losses. There can be no assurance that the Company will have sufficient cash flow to meet its debt service obligations. This leverage may also subject the Company’s investments to restrictive financial and operating covenants, which may limit flexibility in responding to changing business and economic conditions. For example, leveraged entities may be subject to restrictions on making interest payments and other distributions. Leverage at an investment may impair such investment’s ability to finance its future operations and capital needs. Moreover, any rise in interest rates may significantly increase an investment’s interest expense, causing losses and/or the inability to service its debt obligations. If an investment cannot generate adequate cash flow to meet debt obligations, the Company may suffer a partial or total loss of capital invested in such investment. In addition, the Company may have to make exceptions to, modify or suspend, in whole or in part, the redemption programme of any sub-fund further to the occurrence of an event of default or similar event under a financing arrangement. Furthermore, the amount of leverage used to finance an investment may fluctuate over the life of an investment.
Reliance on Key Management Personnel
The success of the Company will depend, in large part, upon the skill and expertise of certain Vengrove professionals. In the event of the death, disability or departure of any key Vengrove professionals, the business and the performance of the Company may be therefore adversely affected. Some Vengrove professionals may have other responsibilities, including senior management responsibilities, throughout Vengrove and, therefore, conflicts are expected to arise in the allocation of such personnel’s time (including as a result of such personnel deriving financial benefit from these other activities, including fees and performance-based compensation).
Valuations
The valuation methodologies used to value certain of the Company’s investment may change over time and have subjective elements. Valuations are subject to determinations, judgements, opinions, and will, in certain circumstances, not be accurate, and other third parties or investors may disagree with such valuations. Valuation methodologies will also involve assumptions and opinions about future events, which may or may not turn out to be correct. Valuation methodologies may permit reliance on a prior period valuation of particular Investments. Ultimate realisation of the value of an investment depends to a great extent on economic, market and other conditions beyond Vengrove’s control. Accordingly, the carrying value of an investment may not reflect the price at which such investment could be sold in the market, and the difference between carrying value and the ultimate sales price could be material. There will be no retroactive adjustment in the valuation of such assets, the net asset value per share, the price that the Company paid to redeem the shares, NAV-based fees, fees it paid, directly or indirectly, to Vengrove or amounts allocated to Vengrove to the extent such valuations prove to not accurately reflect the realisable value of the Company’s investments or the value as set out in financial statements issued subsequent to such valuation. While Vengrove believes that the NAV calculation methodologies are consistent with standard industry practices, there are other methodologies available to calculate NAV of the Company (and its constituent entities).
Investors Have No Management Rights
Investors in the Company will have no control over the Company’s or any Company’s day-to-day operations and investment decisions, and the investors of such Company must rely on the Company and/or, to the extent appropriate, Vengrove to conduct and manage the affairs of such Company.
Currency and Exchange Rate Risk
A substantial portion of the Company’s assets may be denominated in a currency that differs from the functional currency of the Company or an investor’s functional currency. Consequently, the return realised on any investment by such investor may be adversely affected by movements in currency exchange rates over the holding period of such investment and the life of the Company generally, costs of conversion and exchange control regulations, in addition to the performance of the investment itself. The value of an investment may fall substantially as a result of fluctuations in the currency of the country in which the investment is made compared to the functional currency of the Company and/or the investor’s functional currency. Vengrove may (but is not obliged to) endeavour to manage currency exposures in countries that do not use the functional currency of the Company as their primary currency, using appropriate hedging techniques where available and appropriate, however there are not assurances that such hedging techniques will be utilised or, if used, will be successful and/or will benefit any investor. Additionally, costs related to currency hedging arrangements will be borne by the Company. There can be no assurance that adequate hedging arrangements will be available on an economically viable basis.
Conflicts of Interest; Allocation of Investment Opportunities
The Company is subject to certain conflicts of interest arising out of its relationships, including as a result of the fact that Vengrove provides investment management, advisory and sub-advisory services to the Company as well as other funds, vehicles and separately managed accounts. There is no guarantee that the applicable policies and/or agreements can adequately address or mitigate these conflicts of interest, or that Vengrove will identify or resolve all conflicts of interest in a manner that is favourable to the Company.
Warehoused Investments
All decisions to make any investments in investments that have been warehoused by members of Vengrove and/or funds or accounts managed or advised by Vengrove and/or to make investments acquired with Vengrove seed capital will be in the discretion of Vengrove, and shareholders will not have an opportunity to evaluate or approve such investments or their terms. In addition, Vengrove will determine, in their discretion, when to transfer such warehoused investments, directly or indirectly, to a Company and/or cause a Company to use the capital contributed by the shareholders to, directly or indirectly, redeem such Vengrove seed investment, which will affect the amount that will be paid to Vengrove and/or funds or accounts managed or advised by Vengrove (as applicable) upon such transfer and/or redemption. Conflicts of interest will arise in connection with the foregoing transactions.
Risk of Certain Events Related to Vengrove
A bankruptcy, change of control, restructuring or other significant event relating to Vengrove could cause Vengrove and/or the Company to have difficulty retaining personnel or may otherwise adversely affect Vengrove and/or the Company and the Company’s ability to achieve its investment objective.
Broad and Wide-Ranging Activities
As a pan-European investment manager, Vengrove engages and is authorised to engage in a broad spectrum of activities, including financial advisory and/or management services, investment management, sponsoring and managing private investment funds, separately managed accounts, co-investment vehicles, other private funds, and other activities. In the ordinary course of its business, Vengrove engages in activities where its interests or the interests of its clients may conflict with the interests of the Company and its Investors. Vengrove may enter into one or more strategic relationships in certain regions or with respect to certain types of investments that, although may be intended to provide greater opportunities for Vengrove, may require Vengrove to share such opportunities or otherwise limit the amount of an opportunity Vengrove can otherwise take. Conflicts of interest that arise between the Company, on the one hand, and any member of Vengrove, any existing or future affiliated fund or any other fund or account managed or advised by Vengrove, on the other hand, generally will be considered on a case-by-case basis by senior management of Vengrove and representatives of the Company and Vengrove, who will in many circumstances be the same individuals. Any such discussions will take into consideration the interests of the relevant parties and the circumstances giving rise to the conflict. The board of managers of the Company will have the power to resolve, or consent to the resolution of, conflicts of interest on behalf of, and such resolution will be binding on, the Company. Investors should be aware that conflicts will not necessarily be resolved in favour of the Company and the investors.
Participation in the Company by Vengrove
Vengrove may agree to one or more Vengrove entities, and/or its current and/or former senior advisors, officers, directors and personnel or its affiliates, charitable programs, endowment funds and related entities established by or associated with any of the foregoing and/or any other persons related to Vengrove (each, a “Vengrove Related Person”), purchasing shares or units of the Company or its relevant holding entities or otherwise making amounts available for the benefit of the Company (directly or indirectly), including (without limitation) for the purposes of: (i) providing a source of liquidity to the Company, (ii) providing seed capital for prospective investments, and (iii) enabling such Vengrove Entities and/or Vengrove Related Persons to participate in respect of any matter in which shareholder or unitholder may cast votes. Such participation may be made on economic terms preferential to other shareholders or unitholders (and such other terms Vengrove considers reasonable having regard to the circumstances). In addition, by virtue of the Vengrove Related Persons’ affiliation with Vengrove, such Vengrove Related Persons may have more information about the Company and its investments than other shareholders or unitholders and will have access to information (including, but not limited to, valuation reports) in advance of communication to other shareholders or unitholders. As a result, such Vengrove Related Persons may be able to take actions on the basis of such information which, in the absence of such information, other shareholders or unitholders do not take. Such participation by one or more Vengrove Entity and/or Vengrove Related Persons or its/their affiliates, and their interests as investors in the Company, may conflict with the interests of the Company and its other investors.
Costs
The Issuing Document sets out information on costs that may be borne by the Company. Any information on costs provided in this Presentation does not purport to be comprehensive.
Portfolio Company Relationships
Companies in which Vengrove funds other than the Company invest in (each, an “Other Project Company”) can be expected to be counterparties or participants in agreements, transactions or other arrangements with investments of the Company. For example, an investment by the Company may retain another Project Company to provide services to such investment (or vice versa) or such Other Project Company may acquire an asset from the Company (or vice versa).
Vengrove or its personnel may receive fees, commissions, servicing payments, revenue shares, rebates, discounts and/or other benefits in connection with any such agreement, transaction or other arrangement (each, a “Benefit”). For example, Vengrove may encourage or direct portfolio companies and Other Project Companies to participate in, or engage a specific vendor (which could itself be an Other Project Company, an investor in a Vengrove fund (or an affiliate thereof) or otherwise has a relationship with Vengrove or its personnel) as part of, a program or arrangement (such as a group procurement organisation) designed to help such companies obtain volume-based (or similar) discounts or other benefits in connection with goods and services they purchase from, through or with the assistance of such vendor, program or arrangement pursuant to which Vengrove is entitled to receive (including from the vendor) a Benefit. Vengrove may also participate in such programs and arrangements or engages the same vendor, and potentially realises better pricing or discounts as a result of the participation of, or the engagement of that vendor by portfolio companies. Under any such program or arrangement, one particular Vengrove Entity or Other Project Company could benefit to a greater extent than other participants in such program or arrangement (despite paying an amount no higher than that paid by such other participants) and, in the latter case, the Vengrove fund that is invested in such Other Project Company will receive a greater relative benefit from the program or arrangement than other Vengrove funds (including the Company) that do not own an interest in such Other Project Company.
There can be no assurance that the terms of any such agreement, transaction or other arrangement, or the quality of any goods or services provided pursuant thereto, will be as favourable to the relevant portfolio company as those that would be offered by a comparable, alternative vendor that were engaged outside of such program or arrangement, or if the program or arrangement in place did not involve Vengrove or its personnel receiving a Benefit in connection therewith. Moreover, Vengrove could allocate the costs of any such program or arrangement among the Vengrove funds (including the Company) that benefit from such program or arrangement (either directly or through their respective portfolio companies). Conflicts exist in the allocation of those costs and benefits of any such program or arrangement and investors are required to rely on Vengrove to handle such conflicts in its sole discretion.
Any Benefit provided to Vengrove or any Other Project Company pursuant to or in connection with any of the aforementioned agreements, transactions, programs or arrangements will not be subject to management fee offsets or otherwise shared with the Company or its project companies and will not require approval from, or notice to, the investors.
Please refer to the Issuing Document for further information with respect to these and other relevant risks of investing in the Company.
