FORESIGHT RENEWABLE ENERGY INCOME FUND · 4 Foresight Renewable Energy Income Fund Important Notice...

FORESIGHT RENEWABLE ENERGY INCOME FUND

Targeting a sustainable income from renewable energy projects.

AUGUST 2019

INFORMATION MEMORANDUM

Foresight Renewable Energy Income Fund2 Foresight Renewable Energy Income Fund2

Targeting a sustainable income from renewable energy projects.

FORESIGHT RENEWABLE ENERGY INCOME FUND

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Contents

Important Notice and Disclaimer 4

Welcome 6

Introduction 8

Investment Opportunity 12

Infrastructure Debt 12

Australian Renewable Energy 18

The Small-scale Project Opportunity 21

Our Offer 22

Reasons to Invest 24

How to Invest 25

Investment Objective and Strategy 26

Investment Process 28

Target Returns & Portfolio Composition 29

Investment Pipeline 30

Climate Bonds Initiative Certification 31

Fund Structure 32

Key Risk Summary 33

Fees and Costs 34

About Foresight Group 36

A Foresight Case Study 39

The Risks in Detail 40

About the Manager 43

Fund Details 44

Definitions 52

Other Service Providers 55

Foresight Renewable Energy Income Fund4

Important Notice and Disclaimer

This Information Memorandum dated 30 August 2019 (as amended and supplemented by supplements issued from time to time (each a "Supplement") (together, the "Information Memorandum") is issued and made available by One Funds Management Limited (ABN 28 117 797 403) ("Trustee") in relation to the offer by the Trustee of units ("Units") in the Foresight Renewable Energy Income Fund ("FREIF" or "the Fund").

The Trustee has appointed Foresight Group Australia Pty Ltd (ABN 76 611 110 617) ("Manager") as the investment manager to the Fund. The Manager is a subsidiary of Foresight Group LLP ("Foresight Group" or "Foresight"). Foresight Group is a foreign financial services provider registered and regulated by the Financial Conduct Authority of the United Kingdom. It does not hold an Australian financial services licence ("AFSL"). Pursuant to ASIC Class Order CO 03/1099, Foresight Group is exempt from the requirement to hold an AFSL under the Corporations Act 2001 (Cth) ("Corporations Act") in respect of the provision of financial services. The Manager is an authorised corporate representative of Foresight Group.

Whilst this Information Memorandum is issued by the Trustee, this document is presented from the perspective of Foresight Group as investment managers of the Fund, and any reference to ‘our’ or ‘we’ throughout this Information Memorandum refers to Foresight Group. The Trustee is the issuer of this Information Memorandum and has prepared it using information provided to it by the Foresight Group. While the Trustee has no reason to believe that the information is inaccurate, it has relied on the Foresight Group for the truth or accuracy of the information in this Information Memorandum.

Investments in the Fund will be by invitation only. This Information Memorandum and the offer to which this Information Memorandum relates is only available if you are, and by accepting this Information Memorandum you are representing that you are, a wholesale client (as defined in section 761G of the Corporations Act). This Information Memorandum is not a prospectus or product disclosure document under the Corporations Act and is not required to be and has not been lodged with the Australian Securities

and Investments Commission ("ASIC") under the Corporations Act. This Information Memorandum does not constitute an offer or invitation in any place or to any person in or outside of Australia where it would be unlawful to make such an offer or invitation. The offer is not available in the United States ("US") or to US persons (as defined in Rule 902 of Regulation S of the United States Securities Act of 1933 (as amended)) unless otherwise approved by the Trustee. No public offer of Units will be made.

Holders of Units (each an "Unit Holder") are not entitled to cooling off rights under the Corporations Act or any other legislation. Please contact the Manager if you have any queries in relation to cooling off rights. Neither the Trustee nor the Manager is obliged to accept subscription applications and reserves absolute discretion in limiting or refusing any subscription application.

This Information Memorandum contains a non-exhaustive summary of certain proposed key features of the Fund.

No person guarantees the performance of, or the rate of return from, the Fund nor the repayment of capital from the Fund. An investment in the Fund is not a deposit with, nor a liability of, the Trustee or the Manager or any of their related bodies corporate, associates, directors, officers and employees, nor any other person. Investment in the Fund is subject to investment risks, including possible delays in repayment and loss of income and capital invested and is suitable only for potential investors who do not require immediate liquidity for their investments. Prospective investors should only consider investing if they fully understand and are willing to assume the risks involved in the Fund's investment program. Please see the sections headed "Key Risk Summary" and "The Risks in Detail" for further details on the key risks of investing in the Fund.

To the maximum extent permitted by law and subject to the Application Form ("Application Form") and trust deed of the Fund ("Trust Deed"), none of the Trustee, the Manager and any related party, officer, director, adviser or associate of the respective entities provides any representations or warranties in relation to this Information Memorandum or the Fund and each such person disclaims

all responsibility in relation to the Information Memorandum and the Fund. Neither the Trustee nor the Manager makes any representation or warranty as to the accuracy of the contents of this Information Memorandum.

This Information Memorandum supersedes all previous representations (including presentations, brochures and information memoranda) in relation to the Fund and the offer in this Information Memorandum. The Trustee and the Manager reserve the right to modify, withdraw, reject or cancel any offering made pursuant to this Information Memorandum at any time prior to accepting any subscription. This includes the right to close the offer at any time, accept late subscription applications, increase or decrease the size or timing of the offer in its sole discretion.

Any information or representations not contained in this Information Memorandum may not be relied upon as having been authorised by the Trustee or the Manager and should be disregarded.

Any forward-looking statements in this Information Memorandum (including statements of intention, projections and expectations of investment opportunities and rates of return) are made only at the date of this Information Memorandum based on current expectations and beliefs but involve risks, contingencies, uncertainties and other factors beyond the control of the Trustee and the Manager which may cause actual outcomes to be materially different. Assumptions underlying such statements involve judgements which may be difficult to accurately predict. Therefore, such forward-looking statements included in this Information Memorandum may prove to be inaccurate and should not be relied upon as indicative of future matters.

This Information Memorandum is not intended to be a recommendation by the Trustee, the Manager or any other person to invest in the Fund. Recipients should read this Information Memorandum in its entirety and seek advice from their financial, tax and other professional advisers before applying to subscribe for Units.

The information provided in this Information Memorandum is general information only and does not take


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into account the personal objectives, financial situation or needs of any persons. Prospective investors should read this Information Memorandum carefully and conduct and rely on their own investigation of the Fund and consider whether investing in the Fund is suitable to their individual circumstances before making an investment decision based on this Information Memorandum. Potential investors are not to construe the contents of this Information Memorandum as legal, immigration, financial or tax advice.

The Trust Deed (which is available on request from the Manager) should be considered in conjunction with this Information Memorandum. To the extent of any inconsistency between this Information Memorandum and the Trust Deed, the Trust Deed will prevail.

Australian Goods & Sales Tax (GST)

Unless otherwise stated, fees and costs disclosed in this Information Memorandum are exclusive of Australian GST.

Australian dollars

All amounts in this Information Memorandum are given in Australian dollars unless specified otherwise.

Updated information

Information in this Information Memorandum, as well as the terms and conditions of the offer or the Fund, may be changed from time to time. This Information Memorandum is current as at the date of issue and none of the Trustee and the Manager has any obligation to update the contents of this Information Memorandum.

Capitalised terms are used throughout this Information Memorandum. Please see the section headed "Definitions” for the glossary of defined terms.

Selling restrictions

This Information Memorandum does not constitute an offer or invitation in any place or to any person in or outside of Australia where it would be unlawful to make such an offer or invitation. No public offer of Units will be made in any country.

This document may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution in whole or part is unauthorised. Failure to comply with this directive may result in violation of laws of other jurisdictions.

None of the Trustee, the Manager nor any of their respective directors, officers, employees, representatives, advisers or affiliates, accepts any liability or responsibility whatsoever for any loss howsoever arising from use of this Information Memorandum or its contents or otherwise arising in connection therewith.

This Information Memorandum is issued by One Investment Group as the Trustee of Foresight Renewable Energy Income Fund on behalf of Foresight Group Australia Pty Ltd.se Aus entity]Whilst this Information Memorandum is issued by the

Trustee, this document is presented to you from the

perspective of Foresight Group as portfolio managers of

the Fund, and any reference to ‘our’ or ‘we’ throughout

this Information Memorandum refers to Foresight Group.

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A warm welcome from Foresight Group, one of the world’s leading renewable energy investment managers.

At Foresight, we understand that investors are seeking returns that deliver an attractive income whilst also bringing positive changes to the world in which we live.

Investing for a smarter future is a principle that underpins everything we do. We have been a leader in investing in the energy transition across Europe and Australia. We are bringing our extensive experience in the sector to offer the same attractive returns from renewable energy projects for investors in the Australian wholesale market as we currently do for major institutions. We are the trusted manager for institutional, wholesale and retail investors, and are currently managing more than 190 renewable energy projects globally.


Dear Investor,

Foresight is delighted to launch the Foresight Renewable Energy Income Fund (“FREIF” or the “Fund”) – a private infrastructure debt fund targeting predictable and sustainable income from renewable energy infrastructure.

As the outlook for traditional sources of income, like property and bonds, becomes less attractive and reliable for investors, infrastructure debt presents a strong case for an alternative source of income. Infrastructure debt has stable and resilient cashflows that can provide a higher return than is expected for corporate bonds generally in prevailing market conditions. Until now, infrastructure debt has been available almost exclusively to institutional investors. However, we believe that the benefits of this asset class will have strong appeal to the wholesale investor community in Australia. It is our view that we can provide enhanced portfolio diversification and performance to the wholesale investor community by exploiting the benefits and rewards that infrastructure debt can offer.

Introduction

Sustainable income from renewable energy

infrastructure

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Australia’s Energy Transition OpportunityRenewable energy currently accounts for approximately 21% of Australia’s total energy generation and is a key component of future infrastructure that will underpin the economy. Australia’s transition to a renewable energy-powered nation has begun to accelerate and will create a fundamental shift in the makeup of Australia’s energy production. State-level renewable energy targets are expected to fuel this transition, with a significant proportion of the growth coming from small-scale renewable energy projects.

These projects have distinct advantages over larger-scale projects. For example, they are often located closer to energy demand centres which means that less output is lost in power transmission. They also tend to have a simpler and faster registration time with the Australian Energy Market Operator (“AEMO”) than their large-scale counterparts. Despite these advantages, small-scale projects have historically struggled to attract interest from commercial bank lenders, limiting their ability to raise sufficient capital to complete construction.

With this Fund, we aim to address the funding gap for small-scale renewable energy projects while providing investors with a diversified portfolio of renewable energy infrastructure loans.

Foresight Renewable Energy Income FundFREIF is a renewable energy infrastructure debt fund, with the objective of providing investors an attractive, reliable and predictable income from senior secured debt in renewable energy projects that provide an attractive risk-adjusted return.

Through the Fund, we are able to offer investors exposure to the forecast growth in the Australian renewable energy market with a target yield of 4.0-4.5% margin over the Reserve Bank of Australia (“RBA”) Cash Rate per annum (net of all fees and expenses). The Fund will provide debt finance to construction and operational stage small-scale renewable energy projects with target gearing ratios that are in line with, or moderately greater than, those typical for large-scale projects. Due to the lack of debt provider availability for small-scale projects, we anticipate that we can provide such debt finance at a premium interest rate.

We believe that there are five reasons

why investors will find this an attractive

investment opportunity:

Access to illiquidity premium

FREIF provides wholesale investors with a rare access point to capture the illiquidity premium from the loans to small-scale renewable energy projects.

2

Secured against real assets

The debt portfolio of FREIF will have senior ranking security over the underlying renewable energy projects, which offers protections to reduce the risk and impact of underperformance.

3

A true diversifier

FREIF targets a diversified portfolio in the small-scale renewable energy infrastructure asset class, which has a low correlation with more traditional sources of income, such as equities, real estate and high yield debt instruments.

4

Climate Bonds Initiative certified

FREIF will be governed by a sustainability framework certified by Climate Bonds Initiative ("CBI"), aligning with investors’ sustainable and ethical investment objectives.

5

Attractive risk adjusted income

FREIF targets a materially higher income than cash, government bonds and corporate bonds, with lower volatility than equities, real estate and high yield debt instruments.

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Introduction

We are excited to offer Australian wholesale investors an opportunity to directly participate in Australia’s renewable energy transition. Our experience covers technical, construction delivery, asset, commercial, legal and financial management - all driven towards successful performance for our clients.

I very much hope that you find this Information Memorandum clear and easy to understand.

Kind regards,

Kim Nguyen Head of Foresight Group Australia

If we can help you in any other way or if you require more details at any time, please call us on

+61 (0)2 8046 3905

?

The Manager of the Fund is a subsidiary of Foresight Group. Foresight is a leading infrastructure investment manager with a strong track record of delivering attractive risk-adjusted returns and extensive experience in the renewable energy infrastructure market in the UK, Europe and Australia.

We are not authorised to provide tax or financial advice, and we recommend that you should seek financial advice before you make your mind up whether to invest in this Fund.

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Australia is poised for incredible growth in the renewables market and Foresight Renewable

Energy Income Fund is well-positioned to capture these growth opportunities on behalf of its investors. Our team holds unparalleled knowledge and experience in this sector, covering all aspects of asset management, from debt structuring to renewable energy optimisation.Nigel Aitchison Head of Infrastructure, Foresight Group

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What Is Infrastructure Debt?

Infrastructure assets provide essential services that allow the global economy to function. They include assets such as airports, roads, hospitals and energy generation. They are generally physical assets and a source of long-term revenues, as they provide essential services which are less sensitive to changing market conditions. Broadly, infrastructure assets can be categorised into five types:

I N V E ST M E N T O P P O RT U N I T Y

Infrastructure Debt

Care

Water

Natural Gas

Nuclear

Hydro

Bioenergy

Coal

C

omm

unications

Min

ingAirp

orts

Rail

Roads

Schools

Hospitals

Win

d

So

larO

ther

SOCIAL

RENEWABLE ENERGY

ENER

GY

UTILITIES

TR

AN

SPORT

The infrastructure sector has proven itself as an attractive asset class by providing diversification

and strong returns.1

Source: 1) UBS – The Infrastructure Equity Cycle.

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Infrastructure is characterised by stable and predictable demand, high barriers to entry, and, typically, long-term highly predictable revenue streams.

Due to the long-term nature of the revenue streams, infrastructure projects are generally able to support debt that is secured by real assets.

Debt providers to infrastructure projects receive a scheduled profile of interest and principal repayments in priority to equity investors. As a result, debt providers enjoy lower risk since the equity investors take any first loss arising from unexpected cost increases or revenue deterioration. The low volatility of infrastructure assets’ revenue streams means that a relatively high level of borrowing can be safely sustained.

Characteristics of Infrastructure Debt

Private infrastructure debt has attractive and unique characteristics, that until now, have been rarely available directly to sophisticated investors.

Long Duration

Infrastructure debt invests in long term assets that typically benefit from long dated, predictable and relatively stable cash flows.

Higher Return

While private infrastructure debt is typically less liquid than listed corporate bonds, this facet gives investors the opportunity to capture an ‘illiquidity premium’ and consequently realise higher returns.

Diversification

Infrastructure debt offers important diversification benefits within a balanced portfolio as returns are less sensitive to changing market conditions than equities or corporate bonds.

Lower Risk

Infrastructure debt experiences low historical losses compared with corporate bonds and is backed by real assets which increases the ability to recover funds in the unlikely event of default.



Infrastructure Debt

SECTION 1Infrastructure Debt for Income

Institutional investors have long recognised the attractive characteristics of infrastructure debt. It has become the income asset class of choice for pension funds and insurance companies. However, the asset class is rarely available to wholesale investors.

The outlook for traditional income generating asset classes has prompted these wholesale investors to look further afield to find a suitably attractive and reliable income.

Government Bonds and Corporate Bonds

Government bonds and investment grade corporate bonds are often considered among the safest investment options. They can act as a useful diversifier as they have low correlation to equities, but the expected returns are low and might not meet many investors’ income requirements.

High Yield Fixed Income

High yield fixed income consists mostly of sub-investment grade corporate and government bonds, expected to deliver a reasonably attractive return. However, high yield fixed income is subject to higher volatility than government or corporate bonds and generally is not predominantly backed by real assets.

Property

Historically, property has been an attractive alternative income generating asset class for investors, but Australian property prices have experienced a downwards correction.

Australian and Global Equity Markets

Both Australian equities and global equities are forecast to deliver reasonably high single-digit annual returns over the coming five years. But these returns come at the price of significantly higher volatility.

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Income Asset Class Risk / Return Outlook1,11

Expected 5 Year Annual Volatility (%)

Equities

Fixed Income

Private Markets

10

9

8

7

6

5

4

3

2

1

0

0 5 10 15

Direct Lending10

Infrastructure Equity9

Australian Equities7

High Yield Fixed Income5

Real Estate6

Australia Government Bonds4

Listed Corporate Bonds3

Cash2

Lower risk

Higher yielding

Global Equities8

INF

RAST R U C T U R E DE

BT

Sources: 1) Blackrock Investment Institute – April 2019. 2) 3-month cash of Australian government bond quality. 3) BofA Merrill Lynch Australia Corporate Index. 4) Bloomberg Barclays Australia Government Inflation-Linked Bond Index. 5) Bloomberg Barclays Global High Yield Index. 6) BlackRock Proxy. 7) MSCI Australia Index. 8) MSCI World ex Australia Index. 9) BlackRock Proxy. 10) BlackRock Proxy. 11) Non exhaustive. 12) Nuveen – Infrastructure: Opportunity for yield and diversification, Summer 2018.

Expe

cted

5 Y

ear

Ann

ual R

etur

n (%

)

Key

Moody’s found that infrastructure debt had substantially lower default and loss rates, compared to non financial

corporate (NFC) issuers.12

Infrastructure debt offers a materially higher income than cash, government bonds and corporate bonds with lower volatility than equities, real estate and high yield fixed income.

Investor appetite for a sufficiently attractive and reliable income



Infrastructure Debt

Reserve Accounts

The project is required to hold enough cash to cover upcoming interest and principal repayments. This cash must be in a separate account. If the project cannot meet a repayment, the Fund can withdraw cash from this account to make up the difference.

Default and Enforcement Triggers

If a project significantly underperforms and the borrower is unable to make scheduled repayments, the Fund will have the right to or may appoint another party to take control of the project and maximise recovery value.

Equipment Warranties

Renewable energy assets are long dated assets which generally have a design life of around 20 to 35 years and have manufacturer’s equipment performance warranties which guarantees the amount of electricity output over the long term, such as 25 years for solar and 30 years for wind.

Financial Covenants

In the event of underperformance of a project, financial covenants ensure that debts are repaid before any equity shareholders can recoup their investment and returns.

Drawdown Profile

FREIF will seek to manage the drawdown profile to align it to the value of the underlying project, such that in an event of default or construction not being completed, the loss is minimised or nil.

SECTION 1Infrastructure Debt for Capital Preservation

Security

FREIF will have a fixed charge over a project's land shares, rights to distributions and bank accounts and a floating charge over the borrower's general business undertaking. This means that if the borrower continuously fails to make scheduled repayments, FREIF can exercise these rights and take control of the borrower’s assets.

FREIF will target gearing ratios that are in line with or moderately above those typical for large-scale projects.

Infrastructure debt often has senior security over the assets of the project. There are special provisions which are market standard in the loan agreement with the borrower which provide additional capital preservation characteristics.

FREIF’s debt investments will have a series of additional protections that are specifically designed to give the Fund protection against projects that do not perform well. These protections include:

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SECTION 1Infrastructure Debt Within a Wholesale Portfolio

It is widely acknowledged that private infrastructure has a low correlation to traditional asset classes. Within a wholesale portfolio with a long-term time horizon, an allocation to private infrastructure debt can provide investors with a regular yield, as well as provide protection against volatility. FREIF provides wholesale investors an opportunity to access the illiquidity and complexity premium of private infrastructure debt that is not readily available elsewhere.

Typically, the underlying assets are not impacted by broad economic events in the same way as equities or corporate bonds are since, by their nature, they provide essential services which are not easily sacrificed in economic downturns.

These characteristics mean that, when added to a portfolio, infrastructure debt can provide an improvement to risk-return ratios. This portfolio diversification can prove beneficial in negative market events such as the Global Financial Crisis, when the Australian all ordinaries price index fell by 44% from November 2007 to December 2008.

Sources: 1) ASX Historical Data



Australian Renewable Energy

Increasing innovation, improving economics and positive shifts in global attitudes towards combating climate change have all contributed to the global rise of renewable energy as a viable alternative to non-renewable sources.

Global decarbonisation agenda

driven by domestic and international policy agreements

Decreases in capital costshave made renewable energy competitive versus conventional generation

The future energy landscaperequires significant investment in low-carbon generation with supporting flexible grid infrastructure

The transition will require a flexible, dynamic but disciplined investment approach to capture the opportunity presented by the evolving energy market.

Retirement of existing fossil fuel plantsdrives transition to build out new generation capacity from renewable energy

Australia has consistently been assessed as one of the most attractive countries for renewable energy and infrastructure investment.

AEMO anticipates the lowest cost replacement for the retiring coal capacity will be a mixture of solar, wind and battery storage. AEMO forecasts over 55GW of new renewable energy capacity is required to be installed.

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Retiring fossil fuel generation, improving economics and positive shifts in attitudes towards combating climate change have all contributed to the global rise of renewable energy as a lower cost alternative to non-renewable sources.

Technologies that capture energy from renewable sources, like from the sun’s irradiation, are well established. Renewables have been part of Australia's electricity production for decades; hydropower has existed in Tasmania since the 1880s and commercial scale wind and solar started in Australia in 1987 and 2012 respectively.

Australia’s transition to a renewable energy-powered nation has started, with approximately 21% of Australia’s current electricity generated from renewable sources. The existing coal power plant fleet is ageing and plants are

beginning to be decommissioned as they reach the end of their operational lives.

As this decommissioning happens, new generation capacity will need to come online to meet Australia’s energy demand.Building new renewable energy is now becoming cheaper than building new coal plants in most developed countries, including in Australia due to its world class solar, wind and hydro resources.

Australia's abundant natural renewable resources, as well as the forecast of growth in capacity over the coming decade, explains why Australia has consistently been ranked as one of the most attractive countries for renewable energy and infrastructure investment.

Sources: 1) MinterEllison – Australian Renewable Energy Investment Trends and Outlook 2) EY RECAI Report May 2019 3) Clean Energy Council – Clean Energy Australia Report 2019 4) Australian National University – 100% Renewable Electricity Futures 2019 5) BNEF

Notes: 6) Measured on an installed capacity basis

21%O F A U S T R A L I A ' S

T O T A L E N E R G YG E N E R A T I O N

R E N E W A B L EE N E R G Y

c u r re n t l y a cco u n t s fo r

Australia has more solar potential than any other developed nation on earth1

Australia is ranked 5th in EY's global Renewable Energy Country Attractiveness Index May 20192

There was enough Australian renewable energy generation in 2018 to power the equivalent of 10.5 million homes3

Australia is installing solar PV & wind 5X faster per capita than China, Japan, the EU & US4

AUD $25.4 billion has been invested into 92 renewable energy projects currently under construction in Australia3

470% forecast growth in Australian small-scale solar PV over the next 11 years5,6



Australian Renewable Energy

State-level renewable energy targets are expected to accelerate this transition and continue to support the growth of renewable energy generation, regardless of Federal policy. Much of the growth is anticipated to come from small-scale renewable energy projects.

State-Level Renewable Energy Targets2

ACT NSW QLD SA TAS VIC WA

% Current Renewable Energy 77.0% 15.0% 9.5% 53% 95.9% 20.6% 16.2%

Renewable Energy Target

100% by 2020 n/a 50%

by 2030 n/a 100% by 2022

40% by 2025 n/a

Net Zero Emissions Target

Net Zero by 2045

Net Zero by 2050

Net Zero by 2050

Net Zero by 2050

Net Zero by 2050

Net Zero by 2050 n/a

Forecast Australian Cumulative Installed Capacity1

Source: 1) Bloomberg New Energy Finance 2) Clean Energy Council – Clean Energy Australia Report 2019

200

150

100

50

02019 2030 2040

GW

Solar

Wind

Other/renewables

Fossil/fuels

2050

21


The Small-Scale Project Opportunity

Small-scale projects have several advantages:

• It is easier for smaller-scale projects to be located close to areas with high electricity demand. Because the energy is transmitted over a shorter distance, transmission losses can be markedly lower leading to a lower cost base.

• Small-scale projects may have lower grid connection costs and a simpler and faster grid registration process. This can lead to shorter construction times.

• Once construction is complete, the project begins to generate revenues, resulting in reduced risk and offering investors a potential uplift on exit.

Despite this, small-scale projects struggle to attract commercial bank debt due to their size. Even when they manage to secure bank debt, the level of gearing offered tends to be materially lower than that available for their large-scale counterparts. This makes it difficult for the projects to commence construction. The gap left in this marketplace presents the significant opportunity which this Fund is looking to exploit.

Inefficiencies in the Australian debt markets have left small-scale renewable energy projects underserved.

Financing of Australian Solar and Wind Assets1,2,3

% of projects that secure any commerical bank debt

Debt of Australian Solar and Wind Assets1,2,3

% debt of projects that secure commerical bank debt

Source: 1) Foresight analysis of Bloomberg New Energy Finance, 2017

Notes: 2) Small-scale relates to projects that are 30MW or less in capacity 3) Large-scale relates to projects that have more than 30MW capacity

0

Large-Scale Projects

Small-Scale Projects

59%

19%

20 40 60 80 100

0

Large-Scale Projects

Small-Scale Projects

79%

38%

20 40 60 80 100


Our Offer

Foresight Renewable Energy Income Fund is a renewable energy infrastructure debt fund, available to wholesale investors seeking an attractive and sustainable income.

The Fund offers investors direct exposure to debt in

Australian renewable energy projects and targets a yield of

4.0%-4.5% margin over the RBA Cash Rate per annum (net of

all fees and expenses).

Target yield figures are based on the projected investments

to be made upon the first closing. The final return and yield

for each individual investor may vary depending on when the

investor invests in the Fund.

Fund Summary

Fund Name Foresight Renewable Energy Income Fund.

StructureUnregistered closed-end managed investment scheme in the form of an Australian unit trust.

Manager Foresight Group Australia Pty Ltd.

Trustee One Funds Management Limited.

Target Fund Size $150 million.

Currency of the Fund Australian dollar (AUD).

Fund Term5-years from the First Closing Date, which may be extended by up to 2 years at the Trustee’s discretion and with the Manager’s consent.

First Closing DateThe date on which the Fund will close for investment of Units in relation to the first tranche of subscriptions. The exact date will be notified to prospective investors.

Subsequent Closing Dates

Subsequent Closing Dates will be determined by the Trustee with the Manager’s consent.

It is expected that subsequent closings will occur at 4-6 month intervals.

It is expected that there will be three closings in total.

Please enquire with the Manager for the latest information on anticipated Closing Dates.

Payment of Investment Amount The entire Investment Amount is payable upon the subscription of Units.

Target Yield4.0-4.5% margin over the RBA Cash Rate per annum over the Fund Term (net of all fees and expenses).

Taxation Investors in FREIF should seek independent taxation advice as appropriate and required.

Investment Instruments Amortising, senior ranking secured debt.

2323

Transfers and Redemptions

Unit Holders may only transfer Units with the consent of the Trustee and the Manager. Please refer to the Trust Deed for further information on Unit Transfers.

Redemption from the Fund before the end of the Fund Term is not permitted.

Distributions

Net income of the Fund will be distributed to investors on a quarterly basis, subject to available liquidity and short-term cash requirements of the Fund.

Sources of distribution include arrangement and commitment fees, interest income and principal repayments and any gains from disposal of investments.

Interests and principal repayments from the investments of the Fund may be distributed during the Investment Period.

Investment Sector

Renewable energy generation and associated infrastructure projects that are sustainable infrastructure assets physically located in Australia. These projects will demonstrate a net reduction in carbon dioxide (CO2) emissions, including solar, wind, hydro, bioenergy, energy efficiency and energy storage.

These projects may be in construction or operational stage.

Fees

Management Fee

During the Investment Period: 0.85% p.a., calculated on the amount of Deployed Capital.

Thereafter, 0.85% p.a., calculated on the Fund’s NAV.

Performance Fee

At the end of the Fund Term, 17.5% of returns in excess of the hurdle rate of 6.0% IRR (net of all fees and expenses but before performance fee) (calculated based on the Invested Capital).

Please see the “Fees and Costs” section for additional detail.

Total Expense Ratio

0.97% (estimated).

The estimated Total Expense Ratio includes other Fund expenses of 0.19%.

Please see the “Fees and Costs” section for additional detail.

Investor Type Australian "wholesale clients" as defined in section 761G of the Corporations Act.

Minimum Investment Amount

$100,000 (or such other amount as determined by the Trustee in its absolute discretion).

Key Risks

The key risks include Performance, Liquidity, Diversification, Security Interests, Debt and Renewable Energy Industry risks.

Please refer to page 33 for a summary of key risks to the Fund and page 40 for detailed risks.

Prospective investors should seek independent financial, tax and other professional advice before applying to subscribe for Units.


Reasons to Invest

Attractive risk-adjusted income

FREIF targets a materially higher income than cash, government bonds and corporate bonds, with lower volatility than equities, real estate and high yield debt instruments.

Access to an illiquidity premium

FREIF provides wholesale investors with a rare access point to capture the illiquidity premium from the loans

to small-scale renewable energy projects.

Secured against real assets

The debt portfolio of the Fund will have senior ranking security over the underlying renewable energy projects, which offer protections to reduce the risk and impact of underperformance.

A true diversifier

FREIF targets a diversified portfolio in the small-scale renewable energy infrastructure asset class, which has a low correlation with more traditional sources of income, such as equities, real estate and high yield debt instruments.

Climate Bonds Initiative certified

FREIF will be governed by a sustainability framework certified by Climate Bonds Initiative, aligning with investors’ sustainable and ethical investment objectives.

We believe that there are five reasons why investors will find this an attractive investment opportunity:

For more more information on how to invest, or to register your interest please do not hesitate to get in touch using the details below.

+61 (0)2 8046 3905 [email protected]

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8. Final distribution

Following the end of the Fund Term, investors will receive a final distribution which will include any additional sale proceeds of the Fund portfolio after fees and expenses have been deducted.

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1. Subscription

Investor completes the physical or online Application Form and provides the necessary anti-money laundering and know your customer documentation (such as identification documents) to the Registrar.

2. Confirmation of investor commitment

One to two business days after the document checks are complete, investors receive an email confirming that their documents have been approved. They will also be instructed to transfer their money. Investors receive a notice from the Registrar that will provide instructions on when and how to make the subscription payment. If the Registrar needs more information on the documents, this process could take longer.

3. Subscription of application money

On the date provided in the notice, investors must pay the investment amount. Investors will receive an email notification within one to two business days confirming receipt of their money.

4. Closing date

On a Closing Date, investors will be issued Units at a price equal to the relevant Net Asset Value per Unit, subject to adjustments required under the Trust Deed (except in the case of the First Closing Date, at the initial price of $1.00 per Unit). Investors will receive an email notification from the Registrar on the Closing Date confirming the number of Units issued to them.

5. Distributions

Investors will receive quarterly distributions allocated based on the number of Units they hold in accordance with the Trust Deed. Investors will receive a distribution statement via email and will receive the distribution payment one to two business days later.

6. Ongoing communication

There will be quarterly reports on the Fund’s portfolio. These reports will include the performance of the Fund, the sustainability impacts, and an update on portfolio holdings. Every year there will be an annual audited report and an annual income distribution statement, including an annual tax statement. Investors will be able to access a holding statement via the investor online portal.

7. Site visits

Investors may be invited to visit a renewable energy site managed by the Manager at some point during the life of the Fund.

Steps to Investing

How to Invest


Investment Objective and Strategy

Investment ObjectiveFREIF will aim to deliver a yield of 4.0%-4.5% margin above the RBA Cash Rate per annum (net of all fees and expenses). It is intended that investors will receive quarterly distributions of net current income (from interest income and commitment and arrangement fees received from the underlying projects). Investors may also receive a special "exit distribution" in the final quarter of the Fund Term from gains the Manager aims to achieve on the final disposal of the Fund's investments.

In addition to the cash yield, quarterly repayments of principal will be paid by operational projects.

Please note: The returns stated above are target returns, and investors should note that the Fund may achieve higher or lower returns throughout the life of the Fund.

Investment StrategyThrough FREIF, we are looking to exploit inefficiencies in the renewable energy debt market by focusing on small-scale projects which have not historically been able to secure sufficient debt finance from the Australian commercial banks.

We will invest in senior secured debt of small to medium scale renewable energy and associated sustainable infrastructure projects in Australia. All projects are anticipated to be below approximately 50MW in generation capacity. The portfolio will be focused on small utility scale solar and wind projects but will also consider rooftop solar, hydropower, bioenergy, energy storage and energy efficiency. All investments will be reviewed by the Investment Committee to ensure that they offer an appropriate risk return balance and suitable downside protections for this Fund. The Fund

will invest in both operating and construction-ready projects, however the Fund will not finance development costs or projects that are at the development stage.

Based on the current pipeline, it is expected that each loan will range from c. $5 – 30 million in size.

Our investment decisions may vary from the guidelines from time to time. These decisions will draw on Foresight Group’s extensive experience in the sector and in managing other similar funds.

Investors should note that whilst FREIF seeks to make investments in accordance with its investment objectives and investment strategy, they are guidelines only and are not restrictively binding on the Fund.

Exit StrategyWe will prepare and implement an exit strategy which aims to maximise the exit distribution for the investors of the Fund. The exit may involve, without limitation,

(i) the sale of the debt portfolio on to purchasers with strong appetite for infrastructure debt, or

(ii) the listing through an initial public offering of a vehicle holding the debt portfolio

The secondary sale of the debt portfolio may also be effected through sales of the individual loans, or a single sale of the entire debt portfolio. In choosing the exit option, we will consider the risks, timeline and costs of the disposal process as well as the likelihood for maximising the returns to the investors of the Fund. A special exit distribution will be made to investors if the Fund’s debt portfolio is sold at a premium to its book value.

The underlying projects utilise proven technology;

Senior ranking debt with security over the assets of the borrower (including the projects);

Non-discretionary and non-deferrable interest payments;

Amortising repayment profile over the life of the underlying project;

We aim to make 8 to 15 investments with the following characteristics:

Long tenor facility; and

that the underlying projects should satisfy Foresight’s Sustainability Framework.

27

FREIF aims to provide investors with an

attractive annual income of 4.0-4.5% above the Reserve Bank of Australia Cash Rate.


The Manager will follow a multi-stage review process during investment acquisition, asset management and value realisation.

Investment Process

1. Loan Opportunity Sourcing

Loan Sourcing and Screening

The Investment Management Team, including commercial, legal, risk and technical expertise, will conduct an initial screening process to identify the suitable projects that fit within the investment objectives and investment strategy of the Fund. The Investment Management Team is made up of members from Foresight Australia and Foresight UK, coupling on-the-ground local expertise with international support from the broader Foresight Group.

Due Diligence

The Investment Management Team will conduct a comprehensive review process for each project, using their experience and third-party advisers where required, to understand and mitigate the risks of the project. This usually includes technical, legal, market, financial and insurance due diligence. There will be financial modelling and sensitivity analysis of key value drivers, such as, power forecasts, loss factors, grid connections and other relevant commercial considerations tailored for the type of the underlying project. The Investment Management Team will also conduct sustainability due diligence to confirm that the borrower complies with the Fund’s sustainability framework.

There will also be a ‘know your counterparty’ due diligence to confirm that the borrower and its shareholders comply with applicable anti money laundering requirements.

Contract Negotiation

The Investment Management Team will negotiate the terms of the loan agreement with the potential borrower. External lawyers will document the loan agreement and related security documents.

Investment Approval and Execution

The Fund will have an Investment Committee. The Committee Members may be comprised of independent and non-independent members. Committee Members will be responsible for the credit approval of each loan to be advanced by the Fund.

The Investment Management Team will submit a credit approval paper to the Investment Committee. The Investment Committee will review the credit recommendation in accordance with the Fund’s investment strategy and will either approve the loan, reject the loan or make recommendations to amend the loan terms.

2. Loan Management

Once finance and security agreements have been executed between the Fund and the borrower, the debt investments will be monitored on an ongoing basis and this will be reported to investors. The Investment Management Team will also monitor the projects’ construction and operational milestones.

3. Realisation and Exit Strategy

We will prepare an exit strategy in advance of the end of the Fund Term and will implement such exit as described in the section headed "Investment Objective and Strategy".

Risk Management and Environmental, Social and Governance Considerations

1 Investment Acquisition

3 Realisation

Loan opportunitysourcing

Due diligence

Contract negotiation

Facility agreement

2 Asset Management

Ongoing performance analysis

Investor reporting

Loan book portfolio sale

Initial Public Offering

Potential exit opportunities

29

Target Returns

This Fund is targeting a yield of 4.0%-4.5% margin above the RBA Cash Rate per annum (net of all fees and expenses).

Target yield figures are based on the projected investments to be made shortly following the first closing. The return is made up of a blend of arrangement fees, commitment fees, and interest paid to the Fund by the projects. Returns are also expected to include a special exit distribution comprised of any gains on the final disposal of the debt portfolio. Each of these elements are not constant and so the final return and yield for each individual investor may vary depending on the point in time they invested in the Fund.

When we agree to provide debt finance to a project, the borrower will pay an arrangement fee to Foresight. 75% of this will be paid to FREIF and Foresight will keep the remaining 25% as a fee. During the construction stage, where applicable, the Fund will receive commitment fees and construction interest payments from the borrower. Once the construction is complete, the Fund will receive interest and principal repayments from the borrower.

Target Portfolio Composition

FREIF will invest in the debt of a number of different projects both operating and in construction stage. This portfolio diversification provides protection to the Fund and its returns and income through exposure to different asset types, stages and geographic location across Australia.

This Fund will target a final portfolio composition of:

• 40% to 80% of NAV in solar projects;

• Up to 40% of NAV in wind projects; and

• Up to 40% of NAV in other renewable energy projects, including bioenergy, hydropower, energy efficiency and energy storage.

The actual portfolio asset allocation breakdown is subject to market conditions at the time of investment.

Target Returns and Portfolio Composition

Since 2009, Foresight Group has deployed over $3bn of capital into 192 infrastructure

assets and delivered a 10.0% IRR on exited funds and a 10.2% gross IRR on unrealised investments.

29


The Australian renewable energy market has been expanding rapidly in recent years.

Investment Pipeline

Foresight has moved quickly to exploit this opportunity, establishing a leading presence in Australia as one of the largest international managers in Australian solar power generation. Given our extensive network of developers, advisers and contractors, we have information on, and often access to, most of the potential primary and secondary renewable energy transactions in the Australian market. We are constantly monitoring and engaging with the market to develop a pipeline for the Fund. To date, the Manager has identified more than 1.6GW of potential projects for the Fund.

The Manager has been speaking with over 40 project owners and advisers and has identified over 700MW of projects which could fit within the mandate of the Fund. These projects are all seeking debt finance within the Investment Period. This potential pipeline provides more than four times coverage of potential investments for the Fund (with target size of $150m).

Indicative pipeline projects that fit within the Fund mandate (in MW)

as at the time of Fund launch (August 2019)

P R O J E C T S I D E N T I F I E D

1,830

IN IT IAL D ISCUSS IONS PROGRESSED

POTENT IAL F IRST CLOSE PROJECTS

729

303

In 2018 alone 7.1%of energy generation in Australia came from wind - the equivalent of powering 3.5 million households for the year.1

Source: 1) Australian National University – 100% Renewable Electricity Futures 2019

31

Climate Bonds Initiative Certification

Climate Bonds Initiative Certified

Debt Investments

It is anticipated that an indicative portfolio would save approximately 5.7 million tonnes of CO2 emissions over the life of the underlying assets compared to the equivalent coal generation. This is the equivalent of driving a car around the world 747,000 times. These projects would generate enough clean energy to power 1.6 million Australian homes for one year.

FREIF's environmental objective is to lend to sustainable infrastructure projects that combat climate change and contribute to the global decarbonisation agenda. To achieve this, the Fund’s loans will be subject to a rigorous sustainability framework that is certified by the CBI.

Foresight is a leader in sustainable investment management with a decade's worth of experience, having been an early proponent in the United Kingdom and Southern Europe. We also comply with the United Nation’s Sustainable Development Goals and Principles for Responsible Investment, and are a member of the Responsible Investment Association Australasia.

FREIF’s loans will either:

• Comply with the CBI’s Climate Bonds Standards (“CBS”), where standards have been developed1; or

• Meet the guidelines set out by the International Capital Market Association ("ICMA") in their Green Bond Principles ("GBP")2.

Foresight’s proprietary sustainable evaluation criteria will be used to confirm whether FREIF's loans meet relevant requirements relating to:

• Contribution to sustainable development and clean energy generation;

• Local social impact; and

• Appropriate corporate governance.

This assessment and confirmation of compliance with either CBI’s CBS or ICMA’s GBP, will be reviewed and verified by an independent third party. For further information on how the Fund complies with the CBI’s CBS and ICMA’s GBP please refer to FREIF’s sustainability framework at:

foresightgroupau.com

Notes 1) Please refer to version 2.1 2) Please refer to June 2018 version


Fund Structure


Australian wholesale investors will invest into FREIF. FREIF will wholly own a subsidiary trust which will issue loans to the underlying projects.

$

AUSTRALIAN WHOLESALE INVESTORS

Units & DistributionsInvest

Interest & Principal RepaymentsLoans1

Project Co. 1 Project Co. 5Project Co. 2 Project Co. 3 Project Co. 4 Project Co. 6

Interest &PrincipalRepayments

Senior Ranking Security

FREIF

33

It is important that potential investors understand the possible risks that can affect their investment. All investments are subject to risk and therefore may impact contributed capital or targeted returns.

It is important that you read and carefully consider all of the risks involved with an investment in the Fund to decide whether it is right for you. You should not commit to invest any more than you can afford to lose.

Neither Foresight nor the Trustee guarantee any level of returns on this investment; you may lose some or all of your invested capital.

Investment into FREIF may not be suitable for all investors and it is recommended that anyone considering making an investment into the Fund seeks independent tax and financial advice.

We believe that broadly speaking there are six key risks that apply to an investment in the Fund.

Key Risk Summary

PerformanceThe value of an investment or the underlying assets within the Fund may fall as well as rise and you may lose some or all of your investment. Past performance is not a guide to future performance and there is no guarantee that a return will be achieved.

LiquidityThe investment should be considered a long-term investment. No full or partial redemption may be made until the end of the Fund Term, which is five years and may be extended by up to two years. The Manager’s ability to realise the portfolio at the end of the Fund Term will depend on prevailing market conditions. The Manager will act in the best interests of all investors collectively and may consider a delay to be beneficial to realising better value on exit.

DiversificationYour investment in the Fund, at times, may only have exposure to a limited number of loans whose activity is focused on limited sectors and, accordingly, the diversification of your portfolio may be restricted.

DebtThe Fund provides investors with debt exposure to Australian renewable energy generation assets. The Fund is subject to various risks including, without limitation, the borrower's default in payment and breach of covenants. The Fund is also subject to interest rate risk and the general market conditions, which may adversely affect the Fund's performance and its ability to realise its investments.

Renewable Energy IndustryExposure to renewable energy infrastructures or assets involves various risks, including, without limitation, higher than anticipated operating and maintenance costs, loss of sale and supply contracts, decrease in demand for renewable energy, increase in loss factors, inflation of power prices, change in regulations and government policies and increase in competition from other sources of energy. These risks may be exacerbated for small-scale renewable energy asset projects.

Security InterestsThe value of the security provided by underlying projects to secure their loans may be less than the outstanding amount of the debt held by the Fund for various reasons. It may be difficult for the Fund to realise, sell or dispose of such security at an attractive price or at the appropriate time.

1

2

3

4

5

6

Further details of these and other risks are set out in pages 40 to 43.


Summary of Fees and other Costs

At Foresight, we value the trust and respect of our investors, which is why we are fully transparent when it comes to fees and costs. This section shows the fees and other costs that investors will bear. These fees and costs may be in addition to their investment or deducted from their investment, from the returns on their investment or from the assets of the Fund.

Fees and Costs

Type of fee* Amount** How and when paid

Management fee 0.85% p.a.

During the Investment Period the management fee will be calculated based on the amount of Deployed Capital.

Thereafter, the management fee will be calculated on the NAV of the Fund.

The management fee is calculated quarterly and paid to the Manager quarterly in arrears out of the Fund and this will be reflected in the Unit price.

Performance fee

17.5% of returns in excess of the hurdle rate of 6.0% IRR

(net of all fees and expenses but before performance fee) (calculated based on the Invested Capital)

Calculated and paid if the hurdle rate is achieved at the end of the Fund Term subject to the terms of the Trust Deed.

For the purpose of calculating the performance fee, the Fund return is calculated based on the Invested Capital, after the management fee and all other fees and expenses but before the deduction of the performance fee.

Trustee fees

0.06% of the total asset value of the Fund per annum payable by monthly instalments, subject to a minimum monthly fee of $5,000 (indexed to the higher of 3% or CPI on 1 July each year).

The Trustee fee is calculated monthly and paid to the Trustee monthly in arrears out of the Fund and this will be reflected in the Unit price.

This fee is included as part of the Fund Expenses in the Total Expense Ratio.

* Other fees or costs such as transaction costs may also apply to the investors' investment in the Fund. See "Additional information of fees and costs" in this section for further information.

**All fees and costs in this section are exclusive of Australian GST.

This table below sets out the fees and costs applicable to the Fund:

Tax considerations are set out in the “Taxation Disclosures” section on page 49.

Investors should read and carefully consider all the information about the fees and costs.

Total Expense RatioThe anticipated Total Expense Ratio is 0.97% per annum on Invested Capital based on the target fund size of $150 million.

35

Additional information of fees and costs

Establishment costs

The costs and expenses incurred in establishing the Fund are estimated to be $100,000. These establishment costs will be paid for out of the Fund and the costs will be amortised over a period of approximately 12 months from the commencement of the Fund.

Transaction costs

The Fund may incur costs and expenses in relation to the acquisition and disposal of the assets of the Fund, including transaction costs, settlement costs, due diligence costs, legal fees, taxes and stamp duty, and other costs and expenses.

Expenses recovery

The Trust Deed permits certain expenses to be recovered directly from Fund property. Normal expenses may include, but are not limited to, the Administrator’s fees, registry costs, audit, accounting fees, tax consulting fees, CBI fees, adviser fees, postage and printing costs. Unless otherwise stated above, these normal expenses are not paid out of the management fee and performance fee, and if they arise, the Trustee reserves the right to deduct these expenses from the Fund.

The Trustee is also entitled to be reimbursed from the Fund for abnormal expenses, such as the cost of Unit Holder meetings, defending legal proceedings, special valuation of assets and the costs of terminating the Fund. These abnormal expenses are not generally incurred during the day-to-day operation of the Fund and may not be incurred in any year. However, these abnormal expenses are not paid out of the management fee and performance fee, and if they arise, the Trustee reserves the right to deduct these expenses from the Fund.

Fees waiver and deferral

The Trustee and/or Manager may elect to defer its receipt of any fees from time to time. Any such deferral will in no way affect the right of the relevant recipient to receive any fees payable. The Fund may also rebate or waive all or part of any fees applicable to Units for some or all Unit Holders and/or pay all or part of such fees to third parties for services related to the issue of Units.

Trustee fees and other remuneration

The Trustee is entitled to the above mentioned trustee fee in relation to the provision of trustee services. The Trustee is also entitled to receive further remunerations in relation the provision of other additional services including fund administration, registry services, and tax services to FREIF

and its wholly owned sub-trust. These fees will be paid for out of the Fund’s assets and will be included in the Total Expense Ratio. The estimated Total Expense Ratio of 0.97% provided above includes these fees. Please refer to the About the Trustee section for information on fees due in the case of early termination.

Sub-entities

For avoidance of any doubt, the value of the Fund’s assets includes the value of assets held through any sub-entities into which the Fund has invested (adjusted, if relevant, based on the Fund’s proportionate interest in the sub-entity). The above fee calculations will include the value of these assets.

Any sub-entities which are sub-trusts will incur an additional fee of $8,000 per annum (indexed to the higher of 3% or CPI on 1 July each year, and payable monthly in arrears from either the assets of the Fund or the relevant sub-trust, as appropriate.

Fee changes

The Trust Deed allows for additional or other fees to be charged. Investors will be provided with at least 30 days’ written notice of any such fee imposition.


About Foresight Group

Foresight Group is a global infrastructure and renewable energy investment manager with $7.1bn Assets Under Management.We manage funds for some of the toughest institutional investors, family offices, and 28,000 private and high net-worth individuals. We have expanded rapidly in recent years with staff numbers now exceeding 230.

Our investment strategies are underpinned by a strong Environmental, Social & Governance (“ESG”) focus, which increasingly meets the demands of today’s investors.

As the migration from carbon intensive, centralised energy networks to low carbon, decentralised, smart systems continues, we have become a leading investor in renewable energy infrastructure including solar, wind, bioenergy, battery storage, reserve power, and smart meters.

We aim to continue to offer investors attractive and sustainable risk-adjusted returns while having a positive impact on society’s environmental footprint.

That to us is a smarter future.

Notes: 1) £4.1 billion converted to AUD 30/06/2019 at a rate of 1.8055.


190I N F R A S T R U C T U R E

A N D R E N E W A B L E

A S S E T S

I N V E S T E D

I N O V E R

35 year investment track record

28institutional and retail funds

$7.1bnassets under management

offset 916Ktons of CO2 emissions in 2018

2.0GWportfolio capacity of clean energy

72investment professionals

40 engineers & accountants

dedicated asset management team

1 0 O F F I C E S

2 3 7 S T A F F

G L O B A L L Y

providing clean energy to power Melbourne's tram network from our Bannerton Solar Farm

37

The Shard, London, UK

Head Office with offices in Cambridge, Edinburgh, Guernsey, Manchester, Nottingham, Leicester and Milton Keynes

South Korea, Seoul We have a key institutional investor base in Seoul and opened our office in early 2018 to support this function.

Foresight Group is a leading renewable energy investor with a strong track record of delivering attractive risk-adjusted returns.

37

Italy, Rome We were early investors in the Southern European solar market. We began investing in Italy, Spain and Portugal in 2006 and have launched the largest Green Bond Fund in Italy.

Australia, Sydney Since opening our Sydney office in 2016 we have become one of the largest international investors in solar in Australia.

Spain, Madrid We were an early investor in Spanish solar and are expanding our share of subsidy free solar assets across the Iberian Peninsula.


About Foresight Group

Solar We manage the $2 billion+ Foresight Solar Fund Limited (FSFL), the largest UK-listed solar fund1.

We are the second largest owner and manager of solar assets in Europe.

We issued one of the first and largest listed UK solar bonds.

Our Achievements

Foresight Group has a proven ability to construct portfolios meeting investor needs, whilst delivering attractive risk adjusted returns.

Energy from Waste

We are one of the largest private sector investors into the UK’s energy from waste sector, having mobilised more than $1.5 billion of capital into the sector.

Flexible Generation

We have acquired and developed 150MW+ of reserve power assets.

Battery Storage We are the largest fund owner of grid connected batteries in the UK, with 45MW under management.

Wind

We have 330MW of wind assets under management in the UK France and Germany.


Sectors

Notes: 1) On a gross assets basis.

Foresight's Bannerton Solar Farm

Energy Efficiency

We have implemented energy efficiency solutions for the industrial and leisure sectors.

Smart Metering

We have a fast expanding portfolio of more than 330,000 Smart Meters in commercial and retail properties.

Hydro

We manage hydro generation assets as well as water treatment plants.

Waste Management

We have acquired and manage waste treatment and recycling plants, processing more than half a million tonnes of waste per annum.

39

A Foresight Case Study

AUSTRAL IA

Key

Foresight Solar Assets

Foresight Sydney Office

Name: Barcaldine Remote Community Solar Farm

Capacity: 25MW

Date: February 2017

Name: LongreachCapacity: 17MW

Date: October 2017

Name: Oakey 1Capacity: 30MW

Date: October 2017

Name: Oakey 2Capacity: 70MW

Date: October 2017

Name: BannertonCapacity: 110MW

Date: September 2017

Bannerton Solar Farm

We have been operating in Australia for three years and are a leading renewable energy investment manager, having invested in five solar projects to date with a combined capacity of more than 250MW.

We invested into Bannerton Solar Farm (“Bannerton”) in 2016 and have managed this solar farm since. Bannerton Solar Farm obtained financing and started construction in 2017 and is now fully operational. We remain involved as the asset manager. When it first started operating, Bannerton was the largest solar farm in Victoria.

Bannerton Solar Farm demonstrates that energy generation can be co-located with agriculture. The project’s landlord is a family-owned almond farm near Mildura, Victoria and it leases portions of land that the landlord found to be low-grade soil and not suitable for growing almond trees. These unused fields now have been put to use by Bannerton, without taking land away from the almond growing business or disrupting the farm's four billion pollination bees that live there. Additionally, Bannerton Solar Farm has made positive

impacts to other parts of this rural community, like targeting the local people for the construction and operational workforce and sponsoring $20,000 of grants a year to local causes.

Bannerton was successful in a competitive tender with the Victorian Government to provide clean power to Melbourne’s tram network, supporting Victoria’s state level target of 40% renewables by 2025. The solar farm delivers over 200,000 MWh of renewable energy generation a year, which is equivalent to powering c. 47,000 Australian households, and reduces CO2 emissions from electricity generation by over 215,000 tonnes per annum.

39


All investments are subject to risk and therefore may impact contributed capital or targeted returns. Neither of the Trustee, the Manager nor any of their respective affiliates, guarantees any level of return to Unit Holders or gives an assurance that the Fund will achieve its return objectives in a timely manner.

The Fund might not be suitable for all investors and we recommend that anyone considering making an investment seeks independent legal, tax and financial advice before they commit. The Trustee and the Manager are not able to provide advice about whether this investment opportunity is suitable for you.

It is important that you read and carefully consider all of the risks involved with an investment in the Fund to decide whether it is right for you. You should not commit to invest any more than you can afford to lose.

I. FUND RISKS

Absence of Operating History• The Fund is being established in

connection with this offering and has no prior operating history upon which a prospective investor can review to evaluate the likely performance of the Fund.

Administrative Risk• The performance of the Fund

is reliant on the Trustee and the Manager. An investment in the Fund is subject to the risk of loss arising from the organisational systems and processes, technology, people, external circumstances, regulatory and compliance frameworks and all other potential matters which directly and indirectly impact operations of the Trustee and the Manager.

Concentration Risk• Your investment may only have

exposure to a limited number of borrowers, projects and sectors, and, accordingly, the diversification of your portfolio may be restricted.

Conflicts of Interest• The Fund may lend to borrowers that

deal with funds managed by or which are connected with the Foresight Group and therefore the outcome of investment decisions may, on occasion, be more beneficial to one or more of these borrowers than others.

Demand and User Risk• The revenue generated by the

underlying projects may be impacted by the demand of users or the number of users for the products or services provided by such assets. Whilst over the long-term electricity consumption has been increasing, energy efficiency and behind the meter installation of solar and batteries they may reduce the demand for grid-supported electricity. A reduction in this demand and/or the number of users may negatively impact the profitability of the underlying projects, and therefore the ability of the borrowers to repay the loans held by the Fund.

• There is a risk that changes in demand will result in power price changes, which may negatively impact the profitability of the underlying projects, and therefore the ability of the borrowers to repay the loans advanced by the Fund.

Due Diligence Risk• Part of the Fund's strategy is to

invest in loans advanced to small-scale renewable energy projects. There is a risk that the due diligence process fails to identify risks associated with investing in these assets and there is no assurance that any such diligence will be thorough or conclusive and that all material risks in potential investments will be identified.

Economic and Market Risk• The success of the Fund will be

affected by general economic and market conditions, such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws and national and international political circumstances. Economic risk may impact on the value of investments held and the ability of the Fund to realise your investment. Investment returns are therefore influenced by the performance of the market and of the general economy.

Fund Performance Risk• The repayment of capital from the Fund

is not guaranteed. The value of an investment may fall as well as rise and therefore investors may lose some or all of their investment.

• Past performance of Foresight is not a guide to future performance and there is no guarantee a return will be generated.

Indemnity Risk• The Fund will indemnify the Trustee

against claims, liabilities, costs and expenses incurred by it by reason of its activities on behalf of the Fund or the Unit Holders, save in respect of any matter resulting from the Trustee's fraud, negligence, wilful or gross misconduct, dishonesty or breach of trust in relation to the Fund.

• The Trustee will also indemnify, out of the assets of the Fund, service providers and transaction counterparties in accordance with the relevant agreements.

Interest Rate Risk• There is a risk that a material increase

in interest rates during the Fund Term could materially and adversely affect its ability to exit its investments or reduce the value of the portfolio at exit if there are fixed interest rate loans in the Fund.

• Further, in low interest rate environments, such assets can experience reduced nominal returns based on those market conditions.

The Risks in Detail

4141

Liquidity and Exit Risk• An investment in the Fund should be

considered a long-term investment. No redemption may be made until the end of the Fund Term, which is five years and may be extended by up to two years. In the event of a redemption, it may be difficult or impossible for the Manager to realise your investment in whole or part.

Manager Risk• There is no guarantee that the Fund

will achieve its performance objectives, produce returns that are positive, or compare favourably against its peers. Foresight after consultation with the Trustee may change its investment strategies over time, and there is no guarantee that such changes would produce favourable outcomes. If Foresight is wound up, becomes insolvent or is otherwise unable to meet its obligations under the Investment Management Agreement, the performance of an investment in the Fund may be negatively impacted.

• The success of the Fund depends in substantial part upon the skill and expertise of the investment professionals who will be providing investment advice with respect to the Fund. There can be no assurance that these key investment professionals will continue to be employed by or associated with the Manager or Foresight Group throughout the life of the Fund. The loss of key personnel could have a material adverse effect on the Fund’s performance.

• There If there is early termination of the Investment Management Agreement, the Manager may be entitled to termination fees.

• The Manager’s liability is subject to a cap limited to the total fees paid to the Manager.

Regulatory Risk

• There may be changes in laws, regulations, government policies, taxation laws, generally accepted accounting policies or changes in their interpretation. These changes

may adversely impact the Fund, the Manager, Unit Holders or investments of the Fund. The Trustee and Manager reserve the right, where considered necessary, to take steps to limit or prevent any adverse effects of such changes, including altering its investments or, if possible, restructuring the Fund.

Risk relating to Unidentified Investments• Not all of Fund's investments have

been identified at the inception of the Fund. The Manager may not be able to generate sufficient deal flow and may not be able to promptly deploy the available Invested Capital.

• The Fund may be subject to intensive competition in making investments; this competition presents a risk to the acquisition of profitable investments

Tax Risk

• Australia is a relatively high tax jurisdiction with complex tax laws. An investment in the Fund may give rise to a variety of complex tax issues for Unit Holders, some of which may relate to special rules applicable to certain types of investors. Prospective investors are urged to consult their own tax advisers with specific reference to their own situations concerning an investment in the Fund.

• Please refer to "Taxation Disclosure" in the section headed "Additional Information" for additional information.

Trustee Risk• The Units are issued by the Trustee

and the return of an investment in the Fund is dependent on the performance of the Trustee and its ability to meet its obligations under the Trust Deed. If the Trustee is wound up, becomes insolvent or is otherwise unable to meet its obligations under the Trust Deed, the performance of an investment in the Fund may be negatively impacted.

Valuation Risk• There is no assurance that the

calculation of the return of the Units will reflect the actual realised value of

assets of the Fund. For example, illiquid investments may not be readily or accurately valued or may be valued

based on estimates which may be inaccurate. In certain circumstances, valuations may be suspended where assets cannot be valued or would yield a valuation which would, in the opinion of the Trustee, be to the detriment of Unit Holders.

• Subscription applications, redemptions, distributions and fees payable are based on these valuations.


The Risks in Detail

2. ASSET RISKS

Construction and Operation Risk• There is a risk that construction may be

delayed and/or the cost to complete construction may be higher than originally anticipated.

• This may impact the borrower’s ability to make scheduled interest and capital repayments.

• It is possible that this may result in non-completion of the project.

Covenant Breach Risk• There is a risk that any of the agreed

covenants may be breached and may not be remedied by the borrower. This could materially and adversely affect the ability of underlying assets to service their debt and put the borrower into default.

Default Risk• There is a risk that the borrower fails

to generate sufficient revenues or cashflow and fails to pay interest or principal repayment. In a default scenario the security may not cover the full outstanding principal and the Fund may suffer a loss. Full return of capital and the realisation of gains, if any, will generally occur only upon the partial or complete disposal of an investment. Additionally, income from some investments of the Fund will not be realised until a number of years after they are made.

Interest Rate and Inflation Risk• There is a risk that a material increase

in interest or inflation rates during the Fund Term could materially and adversely affect the ability of underlying assets to service their debt and could put the borrower into default.

Lack of Liquidity of Infrastructure Assets Risk• Majority of the assets of the Fund are

expected to be illiquid and as a result, it may be difficult from time to time for the Fund to realise, sell or dispose of an

investment at an attractive price or at the appropriate time or in response to changing market or political conditions or the Fund may otherwise be unable to complete a favourable exit strategy.

• Losses on unsuccessful investments may be realised before gains on successful investments are realised. Although some assets of the Funds may generate operating income, the full return of capital and the realisation of gains, if any, will generally occur only upon the partial or complete disposal of an investment. Additionally, income from some investments of the Fund will not be realised until a number of years after they are made.

Renewable Energy Industry Risk• The operation of energy-related

infrastructure or facilities involves many risks, including weather patterns, higher than anticipated operating and maintenance costs, loss of sale and supply contracts, bankruptcy of key customers or suppliers, the breakdown or failure of pipelines, transmission lines, power generation equipment or other equipment or processes and performance below expected levels of output or efficiency.

• The cash flows of the underlying assets will be influenced by technology employed by energy-related infrastructure and/or facilities; demand/pricing considerations; a change of government or a change in economic, fiscal, monetary, state or energy policy affecting the energy industry and competition from other energy generation or storage plants that may have lower production costs and operating and maintenance costs.

• Further, the applicability of these risks to the Fund may be exacerbated as the Fund will be lending to small-scale renewable energy projects.

Revenue Forecasting Risk• There is a risk that the actual revenues

generated are less than the forecast revenues due to power price forecast inaccuracies, curtailment loss factors or lower generation. This could materially

and adversely affect the ability of underlying assets to service their debt and put the borrower into default.

Security Interest Risk• The value of the security provided by

underlying projects to secure their loans may be less than the outstanding amount of the loan held by the Fund for various reasons. It may be difficult for the Fund to realise, sell or dispose of such security at an attractive price or at the appropriate time.

Technology Risk • There is a risk that the underlying

technology suffers from technological failure or may fail to perform according to design specifications that might impact the borrower's ability to make interest and capital repayments to the Fund.

43

About the Manager

The Manager, Foresight Group Australia Pty Ltd, will be appointed by the Trustee to provide day-to-day management services pursuant to the Investment Management Agreement.

The Manager is a subsidiary of Foresight Group LLP. Foresight Group LLP is a foreign financial service provider registered and regulated by the Financial Conduct Authority of the United Kingdom. It does not hold an AFSL. Pursuant to ASIC Class Order CO 03/1099, Foresight Group is exempt from the requirement to hold an AFSL under the Corporations Act in respect of the provision of financial services. The Manager is an authorised corporate representative of Foresight Group.

The Manager's role will include:

• implementing the investment strategy; and

• day-to-day administration, supervision and management of the portfolio of the Fund.

The Manager may retire by agreement of the Trustee and the Manager or by notice from the Trustee if, among other things, (i) the Manager materially breaches the Investment Management Agreement (which will materially and adversely affects the rights of the Unit Holders) and fails to rectify the breach within a reasonable period specified by the Trustee, (ii) ceases to be authorised under the relevant law to operate as an investment manager, or (iii) the Trustee is required to do so at any time or considers it reasonably necessary to do so in order to ensure compliance with its duties and obligations under the relevant law.

The Manager may terminate the Investment Management Agreement if, among other things, there occurs any event referred to above in respect of the Trustee.

In accordance with the Investment Management Agreement, if the Manager is removed, in certain circumstances during the Fund Term, the Manager will be entitled to receive (i) the performance fee as if it is crystallised on the termination date, and (ii) a break fee in an amount equal to five years of the management fee (which will be gradually reduced to one year of the management fee if the termination occurs in later years of the Fund Term).

The Manager is subject to a liability cap limited to the aggregate amount of management fees paid to the Manager.

The Investment Management Agreement contains further information on the terms of appointment of the Manager and Trustee.

Arrangement revenues

With respect to the arrangement revenues generated from origination of the Fund’s debt investments in the projects, fees will be paid by the underlying borrowers to the Manager. The Manager will pay 75% of such arrangement fees to the Fund and will retain the remaining 25%.


Fund Details

Structure of the Fund

FREIF is structured as an unregistered closed-end managed investment scheme in the form of an Australian unit trust. The Trustee is the trustee of the Fund and has appointed Foresight to conduct day-to-day management of the Fund in accordance to the Investment Management Agreement. FREIF is not required to be registered with ASIC under Chapter 5C of the Corporations Act as it will only accept investments from "wholesale clients" (as defined in section 761G of the Corporations Act).

When an investor makes an investment in the Fund, the investor will be issued Units. A Unit in the Fund gives a Unitholder a beneficial interest in the Fund's assets as a whole, but not an entitlement to, or an interest in, any one particular asset of the Fund.

The Trustee will hold the Fund's investments through a wholly owned subsidiary trust and, if necessary or desirable, the Trustee may establish additional holding vehicles.

Fund Size

The target size of the Fund is $150 million in Invested Capital.

Fund TermThe Fund Term commences from the First Closing Date to the fifth anniversary of that date, provided that the Manager may at its absolute discretion extend the Fund Term by not more than two years.

Offer ChangesThe Trustee and the Manager reserve the right to cancel the offer in relation to the Fund and return subscription monies (without interest) for whatever reason, as well as to update or change the terms of the offer.

Subscription Price On a Closing Date, Units will be issued at the following price:

a) $1.00 per Unit for Units issued on applications accepted by the First Closing Date.

b) Units issued on applications accepted after the First Closing Date, will be issued at a price determined by reference to the most recent quarterly Net Asset Value per Unit.

In each case, these will be issued in accordance with the Trust Deed

Application Form & Applications Investors should carefully read and understand the terms of the Application Form.

To invest in the Fund, an investor must complete the Application Form (which sets out the investor's Invested Capital) and pay the full amount of their Invested Capital by the prescribed subscription date.

The Trustee is not obliged to accept any subscription application and may at its discretion accept or reject any subscription application without giving reasons.

When the Trustee has accepted the investor's subscription application and has received the full amount of the Invested Capital on cleared funds, the Trustee will issue fully paid Units to the investor in accordance with the Trust Deed. Subscription monies must be denominated in Australian dollars only. All interest accrued on subscription monies will be retained by the Trustee for its own benefit.

ValuationsThe Fund will have a Net Asset Value (“NAV”) determined in accordance with Australian Accounting Standards as stated by the Australia Accounting Standards Board. The reference currency of the Fund is the Australian Dollar.

The NAV of the Fund and its Units will be calculated in good faith in Australia at the last calendar day of each Australian Financial Year by the Fund’s Administrator and on such other additional date as may be decided discretionarily (each, a valuation day). An estimated NAV will be calculated by the Administrator with the assistance of the Manager on a quarterly basis and will be included in the Quarterly Fact Sheet.

4545

It is anticipated that FREIF's portfolio will

save c. 5.7 million tonnes of CO2 emissions over its life compared to the equivalent coal generation - this would be enough to power 1.6 million Australian homes.


About the Trustee

The Trustee, One Funds Management Limited, holds an AFSL (AFSL No. 300 337). The Trustee is responsible for management of the operations and custody of the assets of the Fund. While it delegates investment management and advisory, services to other entities, it retains ultimate responsibility for these functions. As such, the Trust Deed of the Fund will contain comprehensive indemnity provisions covering the Trustee for losses and liabilities incurred in connection with the operation of the Fund. The Trustee may retire by providing notice to Unit Holders or it may be required to retire by a Super Majority Resolution of Unit Holders or if it commits an act of fraud, negligence wilful or gross misconduct or, dishonesty by a Special Resolution of Unit Holders.

The Trustee is a subsidiary of the One Investment Group (OIG). OIG is a leading independent Australian funds management business specialising in responsible entity, trustee, corporate trustee and custody services, as well as fund administration, registry and corporate secretarial services.

Trustee Removal FeesThe Trustee is entitled to be paid a removal fee if:

• the Trustee is removed as trustee of the Fund within four years of the issue of the first Unit of the Fund, other than for gross negligence or for a breach of a fiduciary duty to investors which causes them substantial loss; or

• the Trustee retires as trustee of the Fund within four years of the issue of the first Unit of the Fund at the request of the Manager in accordance with the Investment Management Agreement.

The amount of this fee is the amount of Trustee fees that the Trustee would have received if it had remained the trustee of the Fund for four years from the issue of the first Unit in the Fund under this IM. It is determined based on the total value of the Fund's assets at the time that the Trustee is removed or retired.

Administrator Removal FeeThe Administrator, an associated company of the Trustee has been appointed to provide fund accounting and taxation services to the Fund. lf its appointment in relation to the Fund is terminated within four years of the commencement of its engagement then the Administrator is entitled to be paid a removal fee.

The amount of the removal fee will depend upon on how long the Administrator has been appointed for as at the time of termination:

• lf one year or less, an amount equal to eight times the fees for the month prior to termination.

• lf more than one year but less than two years, an amount equal to six times the fees for the month prior to termination.

• lf more than two years but less than three years, an amount equal to four times the fees for the month prior to termination.

• lf more than three years but less than four years, an amount equal to two times the fees for the month prior to termination.

• lf the Administrator removal fee becomes payable, then it will be an expense of the Fund and must be paid for out of the Fund's assets.

Complaints HandlingThe Trustee has a system for dealing with any complaints you may have as an investor. If you have a complaint, then please contact the Trustee at:

Telephone: (02) 8277 0000

Email: [email protected]

Complaints Officer One Investment Group

Post: PO Box R1471, Royal Exchange, NSW 1225

Complaints will be acknowledged as soon as possible and will be dealt with within 45 days.

Fund Details

47

Side LettersThe Trustee may enter into side letters and other agreements and arrangements ("Side Letters") with certain investors in accordance with the Trust Deed. This may include terms with respect to fee arrangements, funding, Unit subscriptions, Unit transfers, regulatory and reporting requirements. Any such Side Letter may supplement the terms of the Trust Deed with respect to that investor. The Trustee is not required to disclose the contents of any Side Letter or make the terms of any Side Letter available to any other person.

Further InformationFor further information about the Fund, or to request a copy of the Trust Deed, please contact the Manager or the Trustee.

Conflicts of InterestThe Trustee or any of its associates may from time to time:

a) hold Units;

b) represent or act for, or contract with, their affiliates and associates or individual Unit Holders;

c) deal in any capacity with the Trustee (in whatever capacity) or with any related body corporate or associate of the Trustee or with any trust;

d) invest in and deal in any capacity, with the same investments as that of the Fund, on similar or different terms;

e) act in various capacities in relation to, or be otherwise involved in (such as by way of investment), other business activities that may be in competition with the interests of Unit Holders;

f) recommend that investments be purchased or sold, on behalf of the Fund, regardless of whether at the same time it may buy, sell or recommend, in the same or in a contrary manner, the purchase or sale of identical investments in relation to itself or other clients;

g) deal in any investment regardless of whether that dealing is inconsistent with the dealing of the Fund;

h) act in any capacity in relation to any other trusts, including subscribing for units in other trusts on behalf of Unit Holders;

i) arrange, advise, consult, manage or act in any other capacity including as trustee of another trust or in connection with investment management arrangements, investment or advisory mandates and/or other similar

arrangements (including, without limitation, where such capacities, arrangements or mandates involve activities similar to the Fund);

j) appoint any agents and use brokers, custodians and clearing houses and other persons, including related parties, for the purposes of it meeting its obligations and responsibilities in respect of the Fund;

k) acquire or dispose of trust property to associates of the Trustee at the price and in the manner contemplated by this Information Memorandum or the Trust Deed; or

l) receive and retain profits or benefits of any nature, in connection with the Fund, including buying or selling trust property from or to itself in another capacity,

and may do so without being liable to account to the Fund, the Trustee or Unit Holders.

Conflicting Investor InterestsInvestors may have conflicting investment tax, and other interests with respect to their investments in the Fund, including conflicts relating to the structuring of acquisitions and disposals of the Fund’s assets. Conflicts may arise in connection with decisions made by the Trustee or the Manager regarding an investment that may be more beneficial to one investor than another, especially with respect to tax matters. In structuring, acquiring and disposing of investments the Trustee and the Manager will consider the investment and tax objectives of the Fund and its Unit Holders as a whole, not the investment, tax, or other objectives of any investor individually.


Related Party Transactions In the managing the Fund, the Trustee or the Manager may enter into other agreements with related parties. All related party transactions are conducted on arm’s length terms. Any conflict of interest or potential conflict of interest is managed fairly and equitably in accordance with the Trustee's or the Manager's internal conflict of interest policy.

Foresight Group will apply its internal conflicts policy to protect the interests of investors participating in the Fund. Where necessary, external third party valuation will be sought.

The Trustee may from time to time face conflicts between its duties to the Fund as trustee, its duties to other funds that it manages and its own interests. The Trustee will manage any conflicts in accordance with its conflicts of interest policy, the Trust Deed, ASIC policy and the law.

The Manager is not a related party of the Trustee. The contractual arrangements between the Trustee and the Manager are negotiated at arm’s length between the parties.

The Trustee may from time to time enter into transactions with related entities. All transactions will be concluded at market rates or below. The Trustee has appointed the Administrator, an associated company, to provide fund accounting and taxation services to the Fund pursuant to an administration agreement under which the Administrator provides administration services for day-to-day operations of the Fund. These services include fund accounting, Unit pricing, reporting and preparation of statutory accounts. The Trustee has appointed the Registrar, a related party, for unit registry services in respect of the Fund. The Trustee has appointed these parties in consultation with, and with agreement from, the Manager.

Anti-Money LaunderingThe Trustee and the Manager are required to comply with the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth) ("AML/CTF Law"). This means that the Trustee or the Manager will require each investor to provide their personal information and documentation in relation to their identity when the investor invests in the Fund. The Trustee or the Manager may need to obtain additional information and documentation from the investor to process its subscription application or subsequent transactions or at other times during its investment.

The Trustee or the Manager may need to identify:

a) a Unit Holder prior to issuing Units – the Trustee will not issue Units until all relevant information has been received and the investor's identity has been satisfactorily verified;

b) the investor's estate – if an investor passes away while he or she is the owner of Units, the Trustee or the Manager may need to identify his or her legal personal representative prior to redeeming Units or transferring ownership; and

c) anyone acting on the investor's behalf, including through a power of attorney.

In some circumstances, the Trustee or the Manager may need to re-verify this information.

By applying to invest in the Fund, each investor also acknowledges that the Trustee or the Manager may decide to delay or refuse any request or transaction (including payment of distributions), including by suspending the issue or withdrawal of Units, if it is concerned that the request or transaction may breach any obligation of, or cause the Trustee or the Manager to commit or participate in an offence under, any AML/CTF Law, and the Trustee or the Manager will incur no liability to the investor if it does so. In order to comply with AML/CTF Law, the Trustee or the Manager may be required to disclose information that the Trustee or the Manager holds about investors or any beneficial owner of investments to third parties, including their related bodies corporate or relevant regulators of AML/CTF Law.

PrivacyThe Application Form accompanying this Information Memorandum requires investors to provide personal information. The Trustee, the Manager and service providers to the Trustee or the Manager may collect, hold and use an investor's personal information in order to assess his or her subscription application, service his or her needs as a Unit Holder, provide facilities and services to the investor, the Trustee, the Manager or the Fund and for other purposes permitted under the Privacy Act 1998 (Cth).

Tax and company law may also require some of the information to be collected in connection with an investor's subscription application. If the investor does not provide the information requested, or provide incomplete or inaccurate information, their subscription application may not be processed efficiently, or at all. The investor's information may also be disclosed to his or her financial adviser (if any) and to the Trustee's or the Manager's agents and their service providers on the basis that they deal with such information in accordance with the Trustee's or the Manager's privacy policy respectively.

An investor's personal information may also be used to monitor and evaluate products and services or to inform the investor about other investment opportunities. Please contact the Manager if an investor does not want his or her personal

Fund Details

49

information to be used for this purpose or have any concerns about the completeness or accuracy of the information the investor has provided. An investor may also request a copy of his or her personal information held by the Trustee or the Manager.

Taxation DisclosuresThe tax information in this Information Memorandum is of a general nature and is current as at the date of this Information Memorandum. The information provided is a general overview of the tax implications for Australian resident investors who hold their Units on capital account. However, the application of these laws depends on each investor's individual circumstances.

The following comments should not be regarded as tax advice and it is recommended that an investor seeks independent professional tax advice about its specific circumstances. This guide applies to Australian resident investors unless otherwise specified.

Taxation of the Fund The Fund will generally not be subject to Australian tax. An elective taxation regime is available to certain eligible management investment trusts, known as ‘Attribution Managed Investment Trusts’ (“AMITs”). The existing tax rules for the managed Fund apply unless an election to enter the AMIT regime is made.

If eligible, the Trustee intends to make an irrevocable election for the Fund to enter the AMIT regime from inception, on the basis that entry into the AMIT regime is in the best interest of Unit Holders.

The Trustee does not expect the Fund to be subject to tax on the taxable income of the Fund as it is intended that:

• if the Fund enters the AMIT regime: all taxable income will be ‘attributed’ to the Unit Holders in each financial year; and

• if the Fund does not enter the AMIT regime: Unit Holders will be presently entitled to all the net (taxable) income of the Fund in each financial year, with the existing tax rules for the managed fund applying.

Distributions Unit Holders in the Fund are liable to pay tax on the full amount of their share of the taxable income of the Fund which has been attributed to them or which they are presently entitled to, regardless of whether they receive the distribution in cash or it is reinvested. For example, a taxable income distribution for the period ending 30 June 2020 is included in the assessable income for 2019-2020, even if the cash is received in July 2020.

Tax losses made by the Fund will be retained by the Fund and may be applied against the Fund’s future year’s taxable income subject satisfying certain loss integrity rules.

Distributions from the Fund may include various components, the taxation treatment of which may differ. For example, the Fund can derive income in the form of interest and gains on the disposal of investments. Financial arrangements directly held by the Fund may be subject to the Taxation of Financial Arrangement rules (TOFA). Under the TOFA rules, gains and losses on financial arrangements are generally assessed for tax purposes on an accruals basis (where the gains/losses are sufficiently certain) or realisation (cash received) basis, unless a specific TOFA elective methodology is adopted.

Cash distributions in excess of taxable income will generally result in a reduction in the cost base of the Units held by the Unit Holder in the Fund. To the extent the reduction exceeds the cost base of the Units, the excess is treated as a capital gain to the Unit Holder. Where the Fund is an AMIT, the Unit Holders’ cost base will generally be increased if the taxable income exceeds the cash distributions.

Disposal of Units If you redeem or transfer Units in the Fund this will constitute a disposal for tax purposes. The tax consequences of a disposal depend on your particular circumstances.

If you hold your Units in the Fund on capital account, any profit you make on disposal will be subject to capital gains tax. If you make a capital loss, it can only be used to offset against other capital gains made in the current or a future tax year. A discount may be available on the capital gain on Units in the Fund held for 12 months or more by individuals, trusts (conditions apply) or complying superannuation entities. The discount is one half for individuals and trusts, and one third for complying superannuation entities. Companies are not eligible for the capital gains tax discount.

Tax File Numbers and Australian Business Numbers An investor need not quote a Tax File Number ("TFN") when applying for Units in the Fund. However, if a TFN is not quoted, or no appropriate TFN exemption information is provided, tax is required to be deducted from any income distribution entitlement at the highest marginal tax rate plus Medicare levy.

Unit Holders that hold Units in the Fund in the course of carrying on an enterprise of investing may also be entitled to quote their Australian Business Number ("ABN") as an alternative to their TFN.


Fund Details

GST The acquisition, disposal or redemption of Units in the Fund should not be subject to GST. Distributions received from the Fund should not give rise to any GST liability for Unit Holders.

If Unit Holders are registered for GST purposes, the acquisition, disposal or redemption of Units in the Fund should be financial supplies, and therefore should not be subject to GST. However, there could be a restriction from claiming input tax credits to recover the GST included in associated expenses. Professional taxation advice should be sought in relation to the GST treatment of investments and associated expenses.

Taxation reform Reforms to the taxation of funds are generally ongoing and Unit Holders should seek their own advice and monitor the progress of such legislative changes.

United States Foreign Account Tax Compliance Act (“FATCA”) The FATCA is a US tax law aimed at financial institutions and other financial intermediaries to prevent tax evasion by US citizens and US tax residents through use of non-US investments or accounts. The FATCA provisions were included in the US HIRE Act, which was signed into US law on 18 March 2010. Australia has entered into an intergovernmental agreement (“IGA”) with the US to implement FATCA in Australia, via the Australian Taxation Administration Act 1953 (Cth), which is to be administered by the Australian Taxation Office (“ATO”). Under the IGA, Reporting Australian Financial Institutions will have identification and reporting obligations with regard to FATCA. The Funds intend to fully comply with their FATCA obligations as determined by the FATCA regulation, the IGA and any associated guidance from the ATO. These obligations include, but are not limited to, each Fund identifying and documenting the FATCA status of its investors. The Funds must also report certain information on applicable investors to the ATO which will in turn report this information to the US Internal Revenue Service.

In order for the Funds to comply with their FATCA obligations, the Funds may be required to request certain information from their investors. Please consult your tax advisor should you wish to understand the implications of FATCA on your particular circumstances. We are not liable for any loss an investor may suffer as a result of the Funds’ compliance with FATCA.

The Common Reporting Standard (“CRS”) The CRS is a single global standard on Automatic Exchange Of Information. It was approved by the Organisation for Economic Co-operation and Development (“OECD”) in February 2014 and draws on earlier work of the OECD and the EU, global anti-money laundering standards and, in particular, the Model FATCA Intergovernmental Agreement. Under the CRS, participating jurisdictions will be required to exchange certain information held by financial institutions regarding their non-resident investors. The CRS was effective in Australia from 1 July 2017. The Fund may be required to provide certain information to the Australian Tax Office about non-Australian tax resident holders of Units (which information will in turn be provided to the relevant tax authorities). In light of the above, holders of Units in the Fund will be required to provide certain information to the Trustee to comply with the terms of the reporting systems.

51

Australia's transition to a renewable energy

powered nation has started, and creates a compelling investment opportunity.


Insurance Options GuideDefinitions

$ Australian dollars

ABN Australian business number that is a single identifier used to deal with the Australian Taxation Office and other Australian Government agencies

Administrator the administrator of the Fund, namely, Unity Fund Services Pty Ltd, or its successor appointed by the Trustee

AEMO Australian Energy Market Operator

AEOI the Automatic Exchange Of Information

AFSL Australian Financial Services Licence as issued by the ASIC under section 911A of the Corporations Act 2001

AMIT Attribution Managed Investment Trusts

AML/CTF Law the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth), as amended from time to time

Application Form an application form or agreement in respect of subscription application for Units

ASIC Australian Securities and Investments Commission

Business Day a day that is not a Saturday, Sunday, bank holiday or public holiday in Sydney, New South Wales, Australia

Climate Bonds Initiative or CBI an international, investor-focused not-for-profit that has developed the Climate Bonds Standard and Certification Scheme

Climate Bonds Standard or CBS an international, investor-focused not-for-profit that has developed the Climate Bonds Standard and Certification Scheme

Closing Date a date on which the Trustee accepts subscriptions and agrees to issue Units to applicants for Units

Common Reporting Standard or CRS a single global standard on Automatic Exchange Of Information

Corporations Act Corporations Act 2001 (Cth), as amended from time to time

CPI the Consumer Price Index published by the Australian Bureau of Statistics from time to time

Deployed Capital the amount of capital committed to underlying project loans and deployed in accordance with the Fund's investment objective and investment strategy

EU European Union

Final Closing Date the date as set out in the "Fund Summary" of this IM, as determined by the Trustee

First Closing Date the Closing Date for the final tranche of subscriptions, as determined by the Trustee.

Foresight Group or Foresight Foresight Group LLP

FREIF or the Fund the Foresight Renewable Energy Income Fund

Fund Term the duration term of the Fund, as set out in the "Fund Summary" of this IM

GBP or Green Bond Principles voluntary process guidelines created by ICMA that recommend transparency and disclosure and promote integrity

GST goods and services tax

ICMA the International Capital Market Association

Information Memorandum this Information Memorandum dated 30 August 2019 (as amended and supplemented by supplements issued from time to time)

Invested Capital the amount of capital invested in the Fund, including Deployed Capital and undeployed cash held in the Fund’s bank account

Investment Committee the committee responsible for the credit approval of each loan in the Fund

Investment Period the period commencing on the First Closing Date and ending on the earlier of (a) when the Invested Capital is deemed fully invested by the Manager, (b) the first anniversary of the Final Closing Date, and (c) a date determined by the Trustee in its sole discretion

Investment Amount the amount that a Unit Holder irrevocably offers to invest in the Fund as set out in its Application Form

Investment Management Agreement the Investment Management Agreement between the Trustee and the Manager as amended from time to time

Investment Management Team responsible for the execution of the investment strategy and process of the Fund and will provide recommendations on individual loans to the Investment Committee

In this Information Memorandum the following defined words and phrases are used:

53

IRR internal rate of return

Manager Foresight Group Australia Pty Ltd (ABN 76 611 110 617)

Minimum Investment Amount the minimum initial investment amount of $100,000 to be committed by the investor upon subscription unless a lesser amount is determined by the Trustee

Net Asset Value or NAV the net asset value of a Unit, a class or the Fund, as the context requires

OECD the Organisation for Economic Co-operation and Development

RBA Reserve Bank of Australia

Registrar the registrar of the Fund, namely, One Registry Services Pty Limited, or its successor appointed by the Trustee

Side Letter other agreements and arrangements into which the Trustee may enter with certain investors in accordance with the Trust Deed

Special Resolution a) a resolution passed at a meeting of

Unit Holders by at least 75% of the votes cast by Unit Holders entitled to vote on the resolution, or

b) a written resolution that has been approved by Unit Holders holding in aggregate at least 75% of all Units on issue

Subsequent Closing Dates Closing Dates for subsequent tranches of subscriptions, as determined by the Trustee

Super Majority Resolution a resolution passed at a meeting of Unit Holders by at least 85% of the votes cast by Unit Holders entitled to vote on the resolution, or a written resolution that has been approved by Unit Holders holding in aggregate at least 85% of all Units on issue

TFN Tax File Number, a unique nine-digit number issued by the Australian Taxation Office to individuals and organisations to help with the administration of tax and other Australian Government systems

TOFA Taxation of Financial Arrangement rules

Total Expense Ratio total fees and costs of the Fund borne by Unit Holders, expressed as a percentage of Invested Capital

Trust Deed the Trust Deed of the Fund to be dated on or about 30 August 2019, as amended from time to time

Trustee One Funds Management Limited (ABN 28 117 797 403) or its successor under the Trust Deed

UK United Kingdom

Units the Units in the Fund issued by the Trustee in accordance with the Trust Deed

Unit Holder a holder of Units in the Fund

United Nations Principles for Responsible Investment a set of six principles that provide a global standard for responsible investing as it relates to environmental, social and corporate governance (ESG) factors

United Nations Sustainable Development Goals a collection of 17 global goals set by the United Nations General Assembly in 2015 for the year 2030

US or United States United States of America


PA RT X :

Other Service Providers

Other key service providers of the Fund at the time of launch are:


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Other Service Providers

Other key service providers of the Fund at the time of launch are:

MinterEllison

as the legal advisers for the Manager.

Ernst & Young

as the auditors and tax advisers for the Fund;

One Registry Services Pty Limited

as the registrar for the Fund; and

Unity Fund Services Pty Ltd

are the tax agent and administrator for the Fund.

Carbon Trust are the third party verifier of the Fund's adherence to commitments as may be stated in the Green Bond Framework.

Climate Bond Initiative confirm certification of loans within the Fund with reference to the Climate Bonds Standards.

LOGO

LOGO

For more more information on how to invest, or to register your interest please do not hesitate to get in touch using the details below.

+61 (0)2 8046 3905 [email protected]

Foresight Group LLP

Level 35, One International Tower

100 Barangaroo Avenue

Sydney NSW

2000

foresightgroupau.com

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FORESIGHT RENEWABLE ENERGY INCOME FUND · 4 Foresight Renewable Energy Income Fund Important Notice...

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