SVA SOCIAL IMPACT FUND - Social Ventures Australia · ISSUE NUMBER 1 | 4 APRIL 2012 SVA SOCIAL...

SVA SOCIAL IMPACT FUND

INFORMATION MEMORANDUMFOR THE SVA SOCIAL IMPACT FUND4 APRIL 2012

ISSUE NUMBER 1 | 4 APRIL 2012B | SVA SOCIAL IMPACT FUND

Purpose of Information Memorandum

This document has been prepared solely in connection with the offer of Units in the SVA Social Impact Fund (Fund) described herein. It has been prepared on a confidential basis for distribution only to persons who qualify as “wholesale clients” as defined in section 761G of the Corporations Act 2001 (Cth) (Corporations Act). The offer of Units in the Fund is set out entirely in this Information Memorandum (Information Memorandum) and applications for Units will only be offered to persons receiving this Information Memorandum in Australia, or other jurisdictions only where it is lawful to do so.

As the Fund is not required to be registered under the Corporations Act this Information Memorandum is not required to and does not include all the information that would be required in a product disclosure statement, and an Investor is not provided with the protections afforded to an investor in a managed investment scheme that has been registered under the Corporations Act.

Responsibility for Information

The Fund is a managed investment scheme which is not registered with the Australian Securities and Investment Commission (ASIC) and this Information Memorandum has not been lodged with ASIC. The investment manager and administrator of the Fund will be Social Ventures Australia Limited (ACN 100 487 572) (SVA) who is a corporate authorised representative of Third Link Investment Managers Pty Limited (ABN 31 128 965 702 AFSL 321611) (Third Link). This Information Memorandum dated 4 April 2012 has been issued by SVA.

To the fullest extent permitted by law neither the Trustee, SVA, Third Link nor any of their respective related entities, associates, officers, employees or agents, provides or accepts any representations or warranties, express or implied, as to or assumes any responsibility or liability for the authenticity, origin, validity, accuracy or completeness of, or any errors or omissions in, any information, statement or opinion contained in this document or in any accompanying, previous or subsequent material or presentation in relation to this Information Memorandum or the Fund. To the maximum extent permitted by law, the Trustee, SVA, Third Link and

any of their respective related entities, associates, officers, employees or agents disclaims all and any responsibility or liability for any loss or damage which may be suffered by any person relying upon any information contained in, or any omissions from, this document.

If information in this Information Memorandum changes, and it is not a material change, we may update the information by posting the updated information on our website www.socialventures.com.au or an Investor can also obtain this information by calling SVA on +612 8004 6700.

Reliance on Information Memorandum

The information contained in this Information Memorandum has been furnished by the Trustee, SVA and Third Link, but no assurance is given by the Trustee, SVA and Third Link or anyone else named in or associated with the issue of this Information Memorandum as to the accuracy or completeness of this information. The information contained in this Information Memorandum is general information only and does not take into account your objectives, financial situation or needs. Prospective Investors should read this Information Memorandum in its entirety and before acting on the information contained in this Information Memorandum and should consider the appropriateness of the information in this Information Memorandum having regard to their objectives, financial situation and needs. Where appropriate, prospective Investors should seek independent professional advice.

Neither the Trustee, SVA, Third Link nor any of their respective related entities, associates, officers, employees or agents guarantees the performance of the Fund, the rate of income, the return of capital to the Investors, any particular rate of return or any taxation consequences of any investment made in the Fund. The Trustee, SVA, Third Link or any related party, officer, director or associate will not provide any liquidity or secondary market support for dealing in Units of the Fund.

DEEWR is not responsible for the issue of this Information Memorandum and takes no responsibility for and does not guarantee the performance of the Fund, the rate of income, the return of capital to the Investors, any particular rate of return or any taxation consequences of any investment made in the Fund.

The Information Memorandum should be read in conjunction with the Fund’s Constitution which is available from SVA. To the extent of any

IMPORTANT NOTICES

ISSUE NUMBER 1 | 4 APRIL 2010

SVA SOCIAL IMPACT FUND | 1ISSUE NUMBER 1 | 4 APRIL 2012

Letter from the Chief Executive Officer 2

1. Key Terms 3

2. Indicative Dates 5

3. Investment Overview 6

4. Overview of Social Ventures Australia 7

5. Investment Strategy and Process 10

6. Risks of Investing in the Fund 14

7. Grant 16

8. Investing in the Fund 17

9. Transfer of Units 18

10. Redemption of Units 18

11. Distributions 19

12. Valuations 19

13. Fees and Other Costs 19

14. Taxation Issues 21

15. Other Important Information 24

16. Glossary 27

Application Form

for Units in the SVA Social Impact Fund 29 -34

Corporate Directory Inside back cover

CONTENTSinconsistency between this Information Memorandum and the Constitution the provisions of the Constitution will prevail.

This document does not constitute an offer or invitation in any place where, or to any person whom, it would be unlawful to make such an offer of invitation. No action has been taken to register or qualify the units or the offer or otherwise to permit a public offering of the units in any jurisdiction. The distribution of this document in jurisdictions outside of Australia may be restricted by the laws of those jurisdictions. A failure to comply with these restrictions may constitute a violation of the laws in those jurisdictions. The Trustee reserves the right to change or supplement the terms and conditions in this document.

Confidential

This Information Memorandum and all of the information contained in it must not be disclosed to any person or replicated in any form without the prior written consent of SVA.

Interpretation

All references to dollars are in Australian dollars. Capitalised terms in this Information Memorandum are defined terms and they are listed in the ‘Glossary’ section on page 27 or defined elsewhere in the Information Memorandum. Days are calendar days unless otherwise specified as Business Days.

References to the “our”, “us” or “we” throughout this Information Memorandum are references to Social Ventures Australia ACN 100 487 572 in its capacity as the Manager of the Fund.

2 | SVA SOCIAL IMPACT FUND ISSUE NUMBER 1 | 4 APRIL 20122

4 April 2012

Dear Investors,

On behalf of SVA, it is my pleasure to invite you to become an investor in the SVA Social Impact Fund (“the Fund”). SVA’s vision for the Fund is that it will act as a catalyst for the development of the social finance market in Australia, a market which will meet the needs of investors seeking opportunities that achieve both a social purpose and a financial return.

The Fund aims to improve both economic and social inclusion for Australian communities with entrenched disadvantage, while increasing the range of financing options available to Australian social enterprises, and ultimately decreasing their reliance on grant funding. Social enterprises are essentially businesses trading for a social purpose, and although the sector is still developing, it is recognised around the world as an innovative and sustainable model for achieving long-lasting social impact.

Australian social enterprises want to increase their activities, improve performance and scale and achieve long-term financial sustainability. However, they are currently restricted by an absence of a suitable capital market willing to provide investment to achieve social impact. As social enterprises serve a dual purpose, blending commercial focus with social purpose, government subsidies and philanthropic donations remain inadequate and are often not appropriate for the growth and scale of these social enterprises. Further, current commercial finance models premised purely on financial return, are also not suitable.

SVA has a vision to develop funds in the broader social finance sector, funds that provide both social and financial returns. SVA sees the SVA Social Impact Fund as a crucial step in the implementation of this vision and already has a strong pipeline of identified investment opportunities.

SVA’s long term vision is that the Fund will provide an evidence base and enable key learning that will inform the development of future funds, building confidence in the social finance market to ‘crowd-in’ new investors. The Fund will also encourage and nurture collaborations between social finance investors, Governments and other stakeholders, to create a more sustainable marketplace for social impact investments across Australia.

This Information Memorandum contains details of the offer and provides an overview of the Fund’s terms and objectives. Please read it carefully before deciding whether to invest in the offer.

Yours faithfully,

Michael Traill CEO, Social Ventures Australia

M I C H A E L T R A I L L

ISSUE NUMBER 1 | 4 APRIL 2012 SVA SOCIAL IMPACT FUND | 3

Key Term Description

Fund SVA Social Impact Fund

Fund structure Australian domiciled, unregistered managed investment scheme.

Investment Manager and Administrator

Social Ventures Australia Limited (ACN 100 487 572) (SVA). SVA is a corporate authorised representative of Third Link Investment Managers Pty Limited (ACN 128 965 702, AFSL 321611) (Third Link).

Trustee and Custodian The Trust Company (Australia) Limited (ACN 000 000 993, AFSL 235145) (Trustee)

Fund Auditor Ernst & Young

Investment Objective The Fund aims to achieve attractive investment returns whilst making a meaningful social impact, through providing financing to Australian social enterprises. These social enterprises are focused on positive social change including improving education, employment and life outcomes for disadvantaged members of the community.

Grant Subject to the preparation and execution of the Funding Agreement, the Department of Education Employment and Workplace Relations, on behalf of the Commonwealth Government of Australia (DEEWR), will settle on the Trustee the Grant of $4 million as trust capital of the Fund pursuant to a Deed of Settlement and in connection with the Social Enterprise Development and Investment Funds (SEDIF) grants program in support of social enterprise development.

Signing of the Funding Agreement is a condition precedent to receipt of the Grant and the establishment of the Fund. In the event that the Funding Agreement is not signed, DEEWR will not make the Grant and any money received by the Trustee or SVA on behalf of Investors (including any interest on the refunded amount) will be refunded.

The Grant is expected to be subject to a number of terms and conditions which are described in more detail in Section 7. The Grant funds are primarily to be used to meet all costs of the Fund including but not limited to management and trustee fees, capacity building grants, as well as any losses or asset impairment suffered by the Fund. Importantly, at no time will the Grant form part of the asset base for the purposes of calculating the NAV.

Target Returns The Fund aims to generate an internal rate of return (IRR) of 9 - 13%, whilst also making a meaningful social impact in disadvantaged communities.

Portfolio Construction Investments will range from $150,000 to $1 million. SVA intends to cap any single investment at 15% of the FUM at the time of making the investment, subject to SVA’s discretion to exceed the cap in limited circumstances.

Broadly, the Fund intends to invest in a portfolio indicatively broken down as follows:

• 60% loans, for an expected term of 5-7 years at target rates of 8-10% p.a.;

• 20% subordinated debt in companies limited by guarantee, at target rates of 10-14% p.a.; and

• 20% equity (either preferred or ordinary share capital) in suitable private companies, with target IRRs of 12-18%

Eligible Investors Wholesale clients as defined in section 761G of the Corporations Act.

Initial Offer Period 4 April 2012 to 21 May 2012, or such dates as SVA and the Trustee may determine.

Initial Offer Price $1.00 per Unit

Minimum Initial Subscription $50,000

Additional Subscriptions After the close of the initial offer period, prospective and existing Investors may subscribe for additional Units on a quarterly basis on each Subscription Date.

Additional Subscription Price Units issued after the initial offer period will be issued at the NAV per Unit as at the Subscription Date.

1. KEY TERMS

Important Note: The table below provides a summary only of the key terms of the Fund. You should read this Information Memorandum in full prior to making a decision to invest in the Fund.


Key Term Description

Minimum Additional Subscription $20,000

Minimum Aggregate Fund Subscriptions

The Fund will not launch until it receives aggregate Subscriptions of at least $4 million

Distributions The Trustee and SVA intend to make annual distributions of profit, including capital gains. No capital distributions will be made until after the fifth anniversary from the Commencement Date.

Investor Reporting Semi-annual fund performance report concerning fund investments.

Detailed annual performance and social impact report concerning fund investments.

Audited annual accounts within 120 days of Financial Year end.

Annual regulatory reporting (such as income tax and distribution statements).

First Reporting Period The first semi-annual fund report will cover the period from the Commencement Date until 31 December 2012.

The first annual reporting period for the audited accounts, regulatory reporting and detailed annual report, will cover the period from the Commencement Date until 30 June 2013.

Fees & Expenses (excluding GST)

Trustee Fee $35,000 p.a. payable quarterly in arrears (indexed at CPI).

Management Fee $250,000 p.a. payable quarterly in arrears (indexed at CPI), subject to a cap at 5%p.a. (excl GST) of FUM. The Management Fee will be used to cover Fund Expenses.

Entry Fee The Trustee waives its entitlement to an entry fee under the Constitution until such further notice.

Redemption Fee The Trustee waives its entitlement to a redemption fee under the Constitution until further notice.

Impact Reporting Fees ● $10,000 p.a. (excl GST) for the first two years from the Commencement Date, and

● $5,000 p.a. (excl GST) thereafter,

payable to SVA from the assets of the Fund to cover the cost of social return on investment reporting.

Fund Expenses Fund Expenses will be paid by SVA out of its Management Fee except that:

(a) for the first three years from the Commencement Date only, to the extent that the amount of Fund Expenses in respect of a Financial Year exceeds the amount of the Management Fee up to a cap of 1% p.a. (excl GST) of FUM. SVA will be reimbursed such an amount from the assets of the Fund; and

(b) notwithstanding (a), initial establishment costs, which we expect to be approximately $75,000 (excl GST), will be recovered from the assets of the Fund on the Commencement Date.

Abnormal Expenses Abnormal Expenses are those expenses which are not ordinarily incurred, or expected to be incurred, during the usual operation of the Fund (such as costs of holding extraordinary Investor meetings, changes to law (including tax and stamp duty), changes to the Constitution, and defending or pursuing legal proceedings). Abnormal Expenses will be recovered from the assets of the Fund. Fund Expenses are not Abnormal Expenses.

Transfers Investors may transfer their Units with the prior consent of the Trustee, such consent not to be unreasonably withheld.

Redemptions Subject to SVA and the Trustee’s absolute discretion, Investors will not be permitted to redeem some or all of the Investor’s Units until after the fifth anniversary of the Commencement Date. Thereafter, SVA and the Trustee intends to allow annual redemptions subject to a discretionary cap on total redemptions, in respect of each Redemption Date, of 15% of NAV as at the Redemption Date (or such other percentage as SVA and the Trustee may determine) and subject to the liquidity of the Fund’s assets.

Key Risks Details concerning key risks are set out in the ‘Risk of Investing in the Fund’ section on page 14.

1. KEY TERMS continued


2. INDICATIVE DATES

Fund Launch

Initial offer open 4 April 2012

Initial applications and application monies received 18 May 2012

Initial offer close 21 May 2012

Initial allotment 21 May 2012

Despatch of first Semi-Annual Fund Report 31 March 2013 (for the period ending 31 December 2012)

Despatch of first Investment Report & Audited Accounts

30 September 2013 (for the period ending 30 June 2013)

Post Financial Close

Additional applications and allotments Anticipated quarterly subscriptions.

Redemptions Anticipated annual redemptions from the fifth anniversary following the Commencement Date subject to a discretionary cap of 15% p.a. of NAV and liquidity of Fund assets.

Distributions Anticipated annual distributions of profit, including capital gains.


3.1 Fund Objective

The Fund objective is to achieve attractive investment returns whilst making a meaningful social impact, through providing financing to Australian social enterprises. The Fund will also seek to achieve the objectives of the Commonwealth’s SEDIF program. These objectives are as follows

In the short term: ● Provide a catalyst for market development; ● Test capacity for and existing barriers to social

impact investment and access to capital for social enterprise;

● Capacity building for social enterprise; and ● Target investment in priority areas for impact.

In the longer term: ● Support development of infrastructure to build

market place for social investment; ● Support innovative product development; and ● Attract longer term investment in priority areas

for impact.

3.2 Fund Overview

The SVA Social Impact Fund is an unregistered managed investment scheme. It will invest in positive social change predominantly through social enterprises seeking to improve employment, education and life outcomes for disadvantaged communities throughout Australia. The Fund will provide financing to Australian social enterprises that may not otherwise have access to capital and that require funding to grow their impact and build their sustainability.

3.3 Grant

Following the preparation and execution of the Funding Agreement, DEEWR will settle on the Fund the Grant as trust capital of the Fund in support of Australian social enterprise development. The Grant is primarily to be used to meet all costs of the Fund including but not limited to management and trustee fees, capacity building grants, as well as any losses or asset impairment suffered by the Fund.

Investors should note that until the Funding Agreement has been prepared and executed by all parties, DEEWR is under no obligation to make the Grant or pay the Grant monies. However, the payment of the Grant monies is a condition precedent to the establishment of the Fund and if the Funding Agreement is not executed, any money received by the Trustee on behalf of Investors (including any interest on the refunded amount) will be refunded.

The Grant is expected to be subject to a number of terms and conditions. More information about the purpose and the proposed terms of the Grant is set out in Section 7.

3.4 Fund Structure

The Fund is an Australian domiciled, unit trust and a managed investment scheme that will not be registered with ASIC under the Corporations Act. The Fund will be established by the constitution of the Fund which may be amended from time to time. The Trust Company (Australia) Limited is the trustee and custodian for the Fund and SVA will be the investment manager and administrator of the Fund.

3.5 Investment Objective

Social enterprises are businesses that trade for a social purpose, typically having the following characteristics:

● explicit social aims; ● commercial orientation; ● social ownership; ● social accountability; ● socially entrepreneurial drive; ● use of profits for community benefit; and ● socially inclusive values base.

Social enterprises provide a range of solutions to deeply entrenched social or environmental issues, ranging from new approaches to delivering public services, to advancements in technology, to financial inclusion, to child care, to community recycling etc.

SVA intends to use the Grant along with matched investor funding, to launch the Fund to offer Investors the opportunity to achieve potentially attractive investment returns whilst making a meaningful social impact in the following social enterprise transactions, including:

● Loans to suitable social enterprises for an expected term of 5 -7 years at reasonable rates and terms (at an interest rate of 8 -10% p.a.);

● Subordinated debt in companies limited by guarantee (with an expected return of 10 -14% p.a.); and

● Equity (either preferred or ordinary share capital) in suitable private companies (with expected IRRs of 12 -18%).

3. INVESTMENT OVERVIEW


4. OVERVIEW OF SOCIAL VENTURES AUSTRALIA

4.1 Details about SVA

SVA was established by The Benevolent Society, The Smith Family, WorkVentures and AMP Foundation in 2002 as an independent non-profit organisation to invest in social change by helping to increase the impact and build the sustainability of social sector participants. SVA brings 10 years experience of investing, supporting, as well as offering consulting services to some of Australia’s most promising and innovative social ventures. SVA’s investments are focused on high potential organisations that are fostering solutions to some of the most pressing challenges facing our Australian communities and provide funding and strategic support to carefully selected non-profit partners.

SVA has been pioneering work in Australia to support the development of social enterprises. With an increasing focus on social enterprise from government, the commercial sector and the non-profit sector, SVA’s work is targeted at developing the sector in Australia. SVA employs 46 full time equivalents, located in Sydney (headquarters), Melbourne, Brisbane and Canberra.

The investment team at SVA is comprised of professionals from the non-profit sector complemented by highly experienced staff from the corporate world who have previously operated as accountants, lawyers, investment bankers, consultants, marketing experts and business managers. SVA believe they have a strong competitive advantage over other fund managers in this space via:

● Experience with Social Enterprises: SVA has over a decade of experience of providing investment and support to Australian social enterprises in disadvantaged areas and clearly understands the investment needs of social enterprises. SVA will work with its existing networks in these communities, referrals from local employment coordinators with whom SVA has established relationships and the Fund’s Development Partners to ensure investment is targeted at priority areas of impact.

Development Partners in the sector include: Brotherhood of St Laurence, Mission Australia, The Benevolent Society, Indigenous Business Australia, Reconciliation Australia, The Australian Community Foundation, Social Traders, Social Firms Australia, Job Futures, Jobs Australia, The Difference Incubator (Donkey Wheel House), The Centre for Social Impact and the School for Social Entrepreneurs. SVA is also a

member of the Social Innovation, Enterprise and Entrepreneurship Alliance (SIEE Alliance), which has a working group on social finance, headed by Social Traders and Foresters Community Finance.

● Experience in Social Finance: SVA will draw upon its proven track record of innovative financial products for investors, as seen through loans to Fair Business, North Queensland Green Solutions and Bonsai Social Firm and the sub-ordinated debt program raised as part of the GoodStart syndicate. In 2009, SVA played a pivotal role in orchestrating the GoodStart syndicate comprising four non-profit organisations – SVA, Mission Australia, Benevolent Society and Brotherhood of St Laurence. Through the development of a new social capital model, the syndicate was able to raise funds to successfully bid for 650 ABC Learning Centres and is now running these centres with business disciplines for social purpose. The GoodStart transaction has to date been the largest social finance deal completed in Australia.

● Strong Pipeline of Investments: The Fund’s investment pipeline will be maintained and developed through SVA’s close links to the Fund’s Development Partners and sector alliances such as the SIEE Alliance.

● Focus on Investor Relations: Through SVA’s investor relations, Social Finance and Consulting teams, Australian Philanthropic Services and Third Link Investment Managers Pty Limited, SVA has experience in developing and nurturing the social investment market in Australia and encouraging philanthropists to give more and invest strategically.

● Commitment to Innovation: SVA will seek to link the Fund’s investment experience with international learning as they develop over time. The Fund’s Reference Committee, which brings together the Development Partners, Government representatives and other key Investors in the Fund on an annual basis, will act as a forum for discussion on any lessons learnt from the Fund to date and other innovations in the Australian and international social finance sector.

The following case study has been included in this Information Memorandum for illustrative purposes only. It is not a current investment of the Fund nor is it intended to suggest that the Fund will enter into such an investment in the future on the same terms.


Case study – SVA’s role in GoodStart

SVA’s role in the transaction of the ABC Learning Centres was two-fold:

(a) developed and delivered the GoodStart capital structure and aligned capital providers; and

(b) convener, facilitator, driver of the syndicate and the acquisition, and key capital raiser – SVA negotiated for and on behalf of the syndicate, acted as an intermediary, sourced capital and expertise from SVA’s philanthropic network and sourced advisory input.

The capital structure of the acquisition resembled that of a private equity transaction and the mix and sources of capital was pioneering for the non-profit sector in Australia. The funding package included senior debt financing from the National Australia Bank as well as $45million of subordinated funding (including $15 million medium-term loan from DEEWR).

The $30million of the $45 million of subordinated debt represented social investment funds raised from private investors and philanthropists in the form of 12% coupon yielding subordinated notes demonstrating SVA’s strong links to investors prepared to invest in enterprises and accept reasonable commercial returns below conventional market returns, provided there is clear evidence of social impact. The innovative structure and the size of the transaction solidified SVA’s position as a market leader.

4. OVERVIEW OF SOCIAL VENTURES AUSTRALIA continued


4.2 Key SVA Personnel

The key SVA personnel who will be involved with the Fund are the members of the SVA Social Impact Fund Investment Committee (Investment Committee) and the Portfolio Manager.

(a) The Investment Committee

The Investment Committee will make all investment decisions. Members include Michael Traill (CEO), Ian Learmonth (Executive Director, Social Finance), Kevin Robbie (Executive Director, Employment) and two independent members. All investment approvals will be reported to the Fund Manager and the Trustee. The Investment Committee has the primary approval discretion over each investment made by the Fund. Further information on the role of the Investment Committee is set out at Section 5.3.

A brief biography of the current members of the committee is set out below.

Michael Traill – CEO, Social Ventures Australia

Michael joined SVA as founding CEO in 2002 after 15 years as a co-founder and Executive Director of Macquarie Group’s private equity arm, Macquarie Direct Investment. Michael is Vice Chair of GoodStart Childcare Ltd, a Director of the Opera Australia Capital Fund, Documentaries Australia Foundation and the advisory board of MLC Private Equity. He holds a BA (Hons) from Melbourne University and an MBA from Harvard University.

Ian Learmonth – Executive Director, Social Finance

Ian joined SVA in 2011 to lead the Social Finance initiative. Ian was formerly an Executive Director of Macquarie Bank for 12 years and has over 20 years of investment banking experience in Sydney, Hong Kong and London. He has been involved in establishing and leading a number of businesses in Asia & Europe including asset and structured finance, UK retail funds, direct investment in carbon and renewable energy (including wind and solar projects) as well as providing corporate advice in the renewable energy sector. Ian has degrees in Law and Commerce from the University of Queensland. Ian is a director of the Belvoir Theatre.

Kevin Robbie – Executive Director, Victoria and Employment Team

Kevin has been a Director with SVA for over three years. Within SVA, Kevin is responsible for leading SVA’s work around employment creation for people excluded from the labour market. This includes development of new social enterprise investment funding models. Kevin has over 20 years experience in the community sector in the UK, including seven years as Chief Executive of Forth Sector, one of Scotland’s leading social enterprises. Kevin has experience in creating multi-stakeholder partnerships across Europe. Prior to joining SVA, Kevin was on secondment to the UK Government’s Cabinet Office as an advisor on both social return on investment and the role of social enterprise in creating employment for those seriously disadvantaged in the labour market.

(b) The Portfolio Manager

The Portfolio Manager is responsible for administering the investment process including making recommendations to the Investment Committee, portfolio and industry monitoring and ensuring compliance with mandates. The Portfolio Manager is also responsible for constantly monitoring macro and micro factors that may impact specific investment risk. Additionally, the Portfolio Manager is responsible for conducting ongoing monitoring and regular asset and portfolio scenario planning and stress testing to identify Fund performance risks.

The Portfolio Manager of the Fund is Emily Martin, who will report directly to Ian Learmonth. A brief biography is set out below.

Emily Martin – Portfolio Manager, Social Finance

Emily joined SVA’s Social Finance team in 2012 specifically to work on the impact fund. She brings with her experience in the Social Finance market gained through her work on Social Benefit Bond proposals within the Not-for-profit sector. Prior to her work in Social Finance, Emily was a Director and Portfolio Manager at Westpac Bank, overseeing a structured credit portfolio. She has over 10 years capital markets banking experience gained in Sydney and London. During her time in banking she has been involved in both investing and structuring of debt and equity investments, with a specific focus on structured credit products. Emily has a Bachelor of Laws (First Class Honours) and a Bachelor of Business from the University of Technology Sydney, and is a CFA charterholder.

4. OVERVIEW OF SOCIAL VENTURES AUSTRALIA continued


5. INVESTMENT STRATEGY AND PROCESS

5.1 The Investments

The Fund aims to achieve attractive investment returns whilst making a meaningful social impact, through providing financing to Australian social enterprises. The Fund will target social enterprises focused on improving education, employment and life outcomes for disadvantaged members of the community. SVA’s previous experience of tailoring social finance investment packages, suggest that the funds invested will be best suited for social enterprises that are at an early or growth stage in their life cycle.

The Fund will provide financing to Australian social enterprises that may not otherwise have access to capital. Depending on the capacity of the social enterprise to use growth capital, the Fund will provide an innovative combination of the following:

● Loans – loans where the interest rate, principal repayment terms and security requirements are less stringent than commercial banking loan arrangements. Loan facilities will be tailored by SVA to the ability of the social enterprise to meet the terms of the loan. The Fund will target loans of 5 -7 years at 8 -10% p.a. It is expected that approximately 60% of the Fund will be invested in loans.

● Subordinated debt – covering a range of financial products including subordinated debt and profit participating loans. The Fund will target subordinated debt of seven years at 10 -14% p.a. It is expected that up to 20% of the Fund will be invested in subordinated debt.

● Equity investments – will be equity (ordinary or preference share capital) issued by an Australian social enterprise. The Fund will target equity investments that can be realised within seven years of investment with expected IRRs of 12-18%. It is expected that up to 20% of the Fund will be invested in equity.

The percentages noted above are indicative only and are subject to change as determined by SVA.

The investments will be tailored to meet the needs of the social enterprises and the economic and social outcomes sought by the Fund. Any decisions regarding security will be made by SVA taking into account the size of the loan, the potential impact of a default under the loan on the assets of the Fund and the individual circumstances of the specific social enterprise. SVA expect that most loans made by the Fund will be unsecured, with security only taken in limited circumstances.

The average investment from the Fund is expected to be $500,000 with a proposed range of investments from $150,000 to $1,000,000. SVA intends to restrict the value of individual investments to a concentration limit of 15% of FUM i.e. no one individual investment will account for more than 15% of FUM at the time the investment is made. However, in exceptional circumstances, there may be the need for a larger scale commitment outside of the proposed 15% concentration limit.

During the investment process, due diligence investigations, covering operational, credit, legal and liquidity risk, will be assessed and documented. Risk for each future investment opportunity will be aggregated across the Fund’s portfolio and assessed on a whole of portfolio basis.

5.2 The Investment Pipeline

Australia wide Pipeline

SVA has experience in identifying, supporting and investing into organisations across Australia and will not be limited by office location. Similarly, both SVA Consulting and SVA’s network of consultants (for example organisations such as Matrix on Board or independent consultants) ensure that applications for funding and capacity building can be nationwide.

Identifying Investment Ready Social Enterprises

The Fund will build on SVA’s experience in connecting with and facilitating the development of the social enterprise sector in Australia through its Social Enterprise Hubs and more recently through Government contracts including the Jobs Fund, three projects funded by the Queensland Government and a new project in Western Australia due to be launched in April 2012. SVA will work closely with the Fund’s Development Partners who, as experts in the social enterprise sector, will provide a pipeline of social enterprises they have identified as investment ready as at the Commencement Date. The Fund will be promoted to other sector development partners involved in the SIEE Alliance (such as Social Traders) and it is envisaged that some of the investments for the Fund will also come through this source.

The case studies opposite have been included in this Information Memorandum for illustrative purposes only. They are not current investments of the Fund, nor is it intended to suggest that the Fund will enter into such investments in the future on the same terms.


Case Study of an equity investment – STREAT

STREAT is a Melbourne based social enterprise providing a supported pathway to employment for homeless and disadvantaged youth. Its innovative model uses food and coffee carts to take youths off the street, providing them with traineeships that help them develop work and life skills. SVA has been working with STREAT around a possible equity investment to assist STREAT with their replication and growth plans. STREAT, a non-profit organisation with DGR status, is planning to establish a propriety limited company as a subsidiary, to attract equity investors. Social investors would buy shares in this new company, STREAT Enterprises Pty Ltd, while STREAT would retain up to 50 per cent of the ownership. A separate board would be established to oversee the company. STREAT will match all investor commitments with the same value in the form of operational knowledge and support. STREAT is forecasting anticipated returns to shareholders of up to 12%p.a.

Capacity Building – helping enterprises become investment ready

SVA has extensive experience with over 50 social enterprises in assisting in financial and strategic planning, business structuring and resourcing through partnerships between government, philanthropists and the community sector. This form of support is known as capacity building. A number of SVA’s Development Partners who specialise in working with early stage social enterprises also provide forms of capacity building in order to support the growth of social enterprises in Australia.

In a select number of cases (with a maximum amount of $50,000 per annum) SVA may elect to make a contribution of up to $25,000 to new or existing social enterprises as a capacity building grant to assist the enterprise to become ‘investment ready’. The exact amount of funding will be based on the needs of the project. The grant will be given for a specific activity or piece of work that will have been identified during the due diligence process for investments. For example, grants may be provided for helping an organisation to better articulate and track their social impact, establish better financial planning or a fundraising or operational strategy. All decisions around a capacity building grant will be made by a member of the Investment Committee, based on a recommendation from the Portfolio Manager.

Receipt of a capacity building grant should be distinguished from an investment by the Fund. Social enterprises that receive capacity building grants must still complete the formal approval process before having loan or equity funding approved, including approval by the Investment Committee. The process is set out in further detail in Section 5.3 below.

5.3 The Investment Process

The investment process outlined below is currently used by SVA and is designed to thoroughly test the social enterprise’s ability to take on an investment package from the Fund.

Investment Criteria

Throughout the investment process, SVA intends to examine the social enterprises against key investment criteria, including:

Case Study – North Yarra Community Health

North Yarra Community Health (NYCH), a community healthcare organisation located in the inner Melbourne suburbs of Collingwood, Carlton and Fitzroy, has developed a new business opportunity to provide private GP services in the area as a means of generating profits to fund NYCH’s social mission in community healthcare work. NYCH took part in Social Traders’ Crunch Program in 2010-2011 where it received capacity building support in developing its business plan. NYCH was also matched with business mentors who offered business and financial advice through the planning stage. As a graduate of the Crunch Program with a solid business plan, Social Traders’ introduced NYCH to SVA’s Social Finance team in July 2011 for potential investment. SVA has since conducted due diligence on NYCH and NYCH has proposed a social finance package of investment.

5. INVESTMENT STRATEGY AND PROCESS continued


Investment Process

The investment process outlined below is currently used by SVA and is designed to test the social enterprise’s ability to take on an investment package:

Step 1 Asset Origination

All social enterprises will be required to complete an online Expression of Interest (EOI) form as the first step in applying for funding. An application fee of $1,000 will be applicable to all social enterprises that pass the initial screening of the EOI and are subjected to detailed due diligence. The timing of the fee will be clearly explained to all enterprises from the beginning to make sure that only those serious about funding apply. In a select number of cases SVA may grant a capacity building bursary to cover this fee if the social enterprise in question is proposing to replicate a proven social enterprise model but is at early stages of growth at the time of applying for investment). Applicant social enterprises will be assessed according to the above investment criteria to maintain consistency with the fund’s overall strategy.

Investment Criteria Description

Australian-based ● Being based in Australia or affecting change in Australia

Leadership and governance ● The leadership, governance and team behind the business

Suitability assessment ● The compatibility of the investment with the Fund’s overall strategy

● Market research (i.e. the need for the business, its potential for social impact and their competition)

● Analysis of the predicted outcomes of investment

Organisational Readiness ● Operating plan and comprehensive strategic/business plan

● Existence of processes and support services such as finance, marketing and communications, and human resources

Financials ● Financial projections

● Preparation of a financial model and financial evaluation of the project’s expected returns, including an analysis of expected cash flows, as well as an assessment of the project’s anticipated timing.

Risk Analysis ● Identification and analysis of the potential risks associated with the investment opportunities including development, finance and project risks

SVA will encourage applications from social enterprises known to it via its existing investment pipeline (set out in further detail at 5.2) and will also receive applications from the Fund webpage.

Step 2 Due Diligence Process

An SVA manager will carry out due diligence investigations on each potential enterprise, examining their business plan and financials, as well as meeting with the social entrepreneur, and reviewing the enterprise’s Board and governance structure. The due diligence process may involve external experts at different stages. Each applicant social enterprise will be invited to pitch to the Fund’s Commerce Panel made up of independent business experts and pro bono supporters. The panel will serve an advisory function, recommending areas for improvement in order to get the organisation investment ready. The Commerce Panel does not have the authority to make investment decisions, all investment decisions will be made by the Investment Committee.

During the due diligence process, an investment package for each applicant social enterprise will be specifically designed and tailored to their needs, based on the predicted impact of the investment, the confidence in the entrepreneur and any other issues arising from the due diligence process and risk analysis. Where needed, assistance in the documentation of investments will be provided by pro bono supporters.

InvestmentCommittee

2Due

Diligence

1Asset

Origination

3Investment

Decision

4OngoingPortfolio

Management



Step 3 Investment Decision

As set out in further detail at Section 4.2(a), the Investment Committee will consist of Michael Traill, Kevin Robbie and Ian Learmonth, and two independent members. The Investment Committee will make all final investment decisions on behalf of the Fund.

The Investment Committee will make its decision based on the applicant social enterprise’s business plan and financials, the proposed capital structure and a recommendation form (including full due diligence analysis), which will be completed by the Portfolio Manager. Decisions will be made by consensus.

Step 4 Ongoing Portfolio Management

SVA has developed a portfolio management strategy for both social enterprises and Investors that will be applied to the Fund. SVA will utilise existing infrastructure and systems in place to

manage investments and to monitor the Fund against key performance indicators. Each social enterprise will be allocated an SVA manager, who will work closely with the organisation through the period of, and following, investment. Social enterprises in the portfolio will be expected to report to the SVA manager against key performance outcomes, such reports to be made available to the Portfolio Manager.

The Portfolio Manager will conduct portfolio and industry monitoring to ensure compliance with the investment criteria. The Portfolio Manager will constantly monitor macro and micro factors that may impact specific investment risk. Additionally, the Portfolio Manager will conduct ongoing monitoring of the social enterprises (aided by regular reports from the SVA managers), along with regular asset and portfolio scenario planning and stress testing to identify Fund performance risks.

5.4 SVA Social Impact Fund

The Fund is a unit trust and a managed investment scheme that will not be registered with ASIC under the Corporations Act. The Fund is domiciled in Australia and proposes to issue a single class of Units. Investors may only invest by submitting an original Application Form (attached to this Information Memorandum) subscribing for Units.

The Fund structure is shown in this diagram.

in Australia and New Zealand with the same intention, to act as a trustworthy agent. In 2011, The Trust Company Limited acquired New Zealand Guardian Trust Ltd, which added further reach and scale to the business as well as supporting its clearly defined strategic goal to become the leading trustee within the Asia Pacific region.

The Trust Company Limited have also had an office in Singapore since 2006 which has made an increasing contribution to the group over the past two years.

Services provided by The Trust Company Limited include wills and estate planning, financial planning, power of attorney services, funds management and setting up tax-effective charitable trusts which support the community.

5.5 Trustee and Custodian

The Trust Company (Australia) Limited will act as trustee and custodian for the Fund. The Trust Company (Australia) Limited is a wholly owned subsidiary of The Trust Company Limited. The Trust Company Limited began in 1885 as “The Union Trustees, Executors and Administrators Company Limited”. The main purposes for trading were to act as a trustworthy agent to hold and manage businesses and financial assets for families travelling back to England for long periods and to take on the role of executor/administrator of a deceased estate.

The company has since grown and amalgamated with other prominent trustee companies to become one of the largest trustee companies

Trust Deed Governed byTrust DeedFund

ManagementAgreement

The TrustCompany

(Australia) Ltd(Trustee)

SVA(Fund Manager)

Socialinvestors

(Unit holders)

DEEWR(Grant funder)

SVA Social Impact Fund(Unit Trust)

Social enterprises(investee)

FundAgreement

Relevant fundingdocumentation



6. RISKS OF INVESTING IN THE FUND

All investments involve some degree of risk. An investment in the Fund will involve a number of risks that may impact on the income generated and value of the Fund and its investments. This Section outlines key risks that could affect the performance of the Fund (however, please note that these risks may not be an exhaustive list). Many of these risks are outside of the control of the Trustee and SVA, however appropriate mitigation measures will be applied where possible.

6.1 Risk of revocation of Grant

There is a risk that SVA or the Trustee breaches the terms of the Funding Agreement and DEEWR will be entitled to revoke the Grant. SVA will attempt to mitigate this risk by creating a number of checks and balances to ensure that it carries out its role as expected under the Funding Agreement. There will also be regular meetings with DEEWR to ensure any deviations from DEEWR expectations are addressed at an early stage.

6.2 Liquidity risks

An investment in the Fund will be illiquid and there is no established secondary market in which to sell Units. Investors will be reliant on principal repayments from the underlying Fund investments for redemption of their units. Principal repayments from the underlying Fund investments will not be distributed to Investors until at least five years from the Commencement Date and subject to a cap on total redemptions in respect of each Redemption Date of 15% of the NAV of the Fund as at the Redemption Date and the liquidity of the assets of the Fund.

6.3 Target fund return

Neither SVA, the Trustee, nor any other person guarantees that the Target Fund Return will be achieved from all or any of the Fund assets.

Prospective Investors are advised to review the description of the Fund’s target investments and the other disclosure in this document to determine their own view on the future performance of the Fund. The value of an investment in the Fund may go up or down.

6.4 Investment risk

The Fund will be investing in social financial products made available to Australian social enterprises. The social finance market is an emerging market and there is little historical data available to assess the risk of the financial products and social enterprises. Due to the untested nature of the market there is the risk that Investors may lose their entire investment and receive no return of either capital or income. SVA’s experience in working with Australian social enterprises, and stringent due diligence of the social enterprises in which the Fund invests, will assist in mitigating this risk.

6.5 Tax risk

The tax treatment and tax risk of an investment in the Fund is discussed in ‘Taxation issues’ in Section 14. Tax laws are subject to continuous change, which can operate retroactively and may or may not have an adverse impact on Investors.

We recommend that Investors seek independent tax advice on the tax treatment of their investment.

6.6 Due diligence risk

There exists a risk that material items that could affect the performance of individual investments of the Fund may not be identified during the investment process and due diligence investigations. SVA will attempt to manage this risk through the use of a due diligence checklist which will be applied to all investments.

It also act as a responsible entity, wholesale trustee, trustee for structured finance products, superannuation trustee and undertake property and mortgage custody services.

The Trust Company Limited is a publicly listed company with offices in Australia, Singapore and New Zealand with a current market capitalisation of around $160 million.

Its funds under management for corporate clients is currently around $140 billion and for personal clients is over $3 billion. As the only trustee licensed to provide corporate trustee services in Australia, New Zealand and Singapore, its clients benefit from the experience, ingenuity and genuine local knowledge of our dedicated teams.



6.7 Dependence on key personnel

The performance of the Fund is reliant on a number of key personnel employed by SVA and SVA’s ability to attract and retain quality staff. The loss of staff members could potentially have an adverse impact on the Fund’s performance. SVA will attempt to manage this risk by involving a number of senior and experienced people in the management of the Fund. Furthermore, SVA has a strong track record of recruiting a high calibre of candidates over the last 10 years.

6.8 Sourcing suitable investment opportunities

The Fund’s performance may be limited by SVA’s ability to source suitable investment opportunities.

Sourcing suitable investments may be difficult due to the emerging nature of the social finance market, which may make it difficult to acquire quality investment opportunities within the forecast timeframe or for the prices anticipated in line with this strategy. This could have a negative impact on the Fund’s performance and result in Investors being more greatly exposed to the underperformance of any of the individual Fund investments. SVA will endeavour to limit such risk through a multi-faceted approach to the investment pipeline, including analysis of SVA’s existing venture partners, discussions with Development Partners and providing information about the Fund on SVA’s website.

6.9 Operating expenses

The Fund’s expenses might be greater than anticipated, adversely impacting the net income of the Fund. This may be caused by higher than expected rates of inflation, unforeseen expenses and other factors.

6.10 Manager risk

By investing in the Fund, Investors delegate their control over operations and investment decisions to SVA. The success of the Fund depends largely on SVA’s performance and the performance of its external service providers.

6.11 Credit risk

There is a risk that one of the Australian social enterprises in which the Fund has invested will default on its obligations due to insolvency or financial distress, resulting in an adverse effect on the value of the Fund’s investments and hence the NAV per Unit. SVA will attempt to manage this risk through a thorough due diligence of each investment.

6.12 Entity risk

When a security in a company or other entity is purchased, an Investor is exposed to many of the risks to which the individual company or other entity is itself exposed. These risks may impact the value of a security in the company. They include such factors as changes in management, actions of competitors and regulators. SVA will endeavour to manage this risk through a thorough due diligence of each investment, including meetings with senior managers and analysis of market conditions and competitors.

6.13 Fund risk

Fund risk refers to specific risks associated with the Fund, such as termination and changes to fees and expenses. Your investment in the Fund is governed by the terms of the constitution for the Fund, as amended from time to time. There is also a risk that investing in the Fund may give different results from holding the underlying assets of the Fund directly because of income or capital gains accrued in the Fund at the time of investing, and the impact of investments into and withdrawals out of the Fund by other Investors. SVA aims to manage these risks by monitoring the Fund and acting in Investors’ best interests.

6.14 Regulatory risk

The risk that the value or tax treatment of an investment in the Fund or its underlying assets, or the effectiveness of the Fund’s investment strategy may be adversely affected by changes in government (including taxation) policies, regulations and laws, or changes in generally accepted accounting policies or valuation methods. The regulatory environment for funds is evolving and, subject to change, which may adversely affect the ability of the Fund to pursue its investment strategies.

6.15 Other risks

The risks listed are not exhaustive, however, they are the most material risks that relate to the Fund. The above and other risks may impact the future performance of the Fund and the value of the Units. There is no guarantee as to the future performance of the Fund in terms of distributions, capital appreciation or return of capital.

6. RISKS OF INVESTING IN THE FUND continued


7.1 The Funding Agreement

The Funding Agreement refers to the agreement to be entered into on or prior to the Commencement Date between DEEWR, the Trustee and SVA in relation to the payment of the Grant. DEEWR and SVA are in the process of preparing the Funding Agreement, the material terms of which have been agreed, however the parties have not yet finalised this agreement.

Execution of the Funding Agreement is a condition precedent to receipt of the Grant and the establishment of the Fund. In the event that the Funding Agreement is not executed, DEEWR will not make the Grant and any money received by the Trustee on behalf of investors (including any interest on the refunded amount) will be refunded.

7.2 Settlement of Grant

Following the signing of the Funding Agreement, DEEWR on behalf of the Commonwealth Government of Australia (Government) will settle funds for the amount of $4 million (Grant) on the Trustee as trust capital of the Fund pursuant to a Deed of Settlement and in connection with the SEDIF grants program.

7.3 Purpose of the Grant

The SEDIF grants program has both short and long term objectives, which are described in Section 3.1. DEEWR has assessed the objectives of the Fund and considers that these are consistent with the objectives of the SEDIF grants program.

The Grant will be applied to the payment of fees and expenses of the Fund, capacity building grants, and asset losses and impairments. The amount of the Grant (as reduced over time by fund expenses, capacity building grants and asset losses and impairments) will be deducted from the asset base. At no time will the Grant form part of the asset base for calculation of the NAV.

7.4 Revocation of Grant

DEEWR, the Trustee and SVA intend to enter into a Funding Agreement prior to the Commencement Date of the Fund. This agreement will contain the conditions precedent and conditions subsequent of the settlement of the Grant as well as the situations whereby DEEWR is entitled to revoke the Grant and require the return of such amounts (Events of Default).

These Events of Default are expected to include :

● Failure by the Trustee to operate the Fund in accordance with the Constitution in a material respect;

● Failure to operate the Fund in accordance with SVA’s business plan, this Information Memorandum and the SEDIF objectives;

● Encumbering the Fund’s assets for purposes other than in respect of the Fund;

● A material change to the Constitution without DEEWR’s consent;

● The Trustee ceasing to hold the necessary authorisations to operate the Fund or an insolvency event in respect of the Trustee occurs and a replacement trustee approved by DEEWR not being appointed within a reasonable time; or

● The winding up of the Fund during the term of the Funding Agreement

The Funding Agreement will be effective for an initial term of three years from the Commencement Date. However, after three years from the Commencement Date, most of the conditions imposed on the Trustee and SVA will cease to apply except that it will still be a requirement that:

● Redemptions are not permitted until after the fifth anniversary of the Commencement Date; and

● In the calculation of the NAV, the amount of the Grant (as reduced over time by Fund expenses, capacity building grants, and asset losses and impairments) will be deducted from the asset base.

The breach of these remaining conditions will be considered an Event of Default under the Funding Agreement. Accordingly, if these conditions were breached, DEEWR would be entitled to revoke its Grant. On the occurrence of such an event, the relevant amount of the Grant to be returned to DEEWR will be reduced by all expenses of the Fund including appropriately incurred management fees as well as all losses suffered or expected on loans, subordinated debt or equity investments.

The process for the handling of the return of the funds (including the management of the assets during the recovery period) will be agreed at the time of the relevant breach.

To the extent that an Event of Default occurs and the Grant is revoked, Investors will be entitled to return of their capital in priority to the return of the Grant to DEEWR.

7. GRANT


8. INVESTING IN THE FUND

7.5 Winding up of the Fund

If the term of the Funding Agreement has expired and the Fund is to be wound up (other than as a result of an Event of Default under the Funding Agreement) at a time when the amount of the Grant held by the Fund has not been reduced to nil through losses on investments made by the

8.1 Investor Eligibility

An offer to invest in the Fund is made only to wholesale clients (as defined in section 761G of the Corporations Act).

8.2 Initial subscriptions and applications

The minimum initial investment is $50,000. Units issued in connection to the initial offer period, will be issued at the initial offer price of $1 per Unit.

An application for Units in respect of the initial offer period must be made on an original Application Form attached to this Information Memorandum. New applications must also provide supporting identification documents as part of the requirements of AML/CTF identification/verification.

All initial applications will only be accepted if received by at least 3:00 pm (Sydney time) on 18 May 2012 or such later date as SVA advises together with cleared application monies, which may be made in accordance with the ‘Payment options’ below. The Trustee will not accept initial applications received by facsimile without prior agreement.

The Trustee may in its discretion accept or reject an application. If accepted, Units will generally be issued on the immediately following Business Day after the close of the initial offer.

8.3 Additional subscriptions and applications

After the close of the initial offer period, prospective and existing Investors may subscribe for additional Units on the last Business Day of each Calendar Quarter or on such other dates as SVA and the Trustee may determine in its absolute discretion (Subscription Date). The minimum additional investment is $20,000. Units will be issued at the NAV per Unit determined on the date of issue (or such other date as SVA and the Trustee determines in its absolute discretion). The NAV will be calculated in accordance with the Constitution (see Section 12).

Additional investments will be deemed to have been made on the terms of the then current Information Memorandum.

All additional applications will only be accepted if received by at least 3:00pm (Sydney time), two Business Days prior to the Subscription Date together with cleared application monies, which may be made in accordance with the ‘Payment options’ below.

The Trustee will not accept applications received by facsimile without prior agreement and unless it is satisfied with all details disclosed in the Application Form and associated client identification documents have been received. The Trustee may in its discretion accept or reject an application.

8.4 Anti-Money Laundering and Counter Terrorism Financing

Prospective investors must provide certain information as required by the Trustee as part of the Fund’s client identification documents under the Anti-Money Laundering and Counter Terrorism Financing regime (AML/CTF Law). A prospective investor’s interest in Units cannot be registered without having provided this information.

The Trustee and SVA may provide to the Australian Taxation Office, or any other government department or agency, information regarding prospective investors, investments, income, or any other information requested by those organisations.

See the ‘AML/CTF acknowledgement’ section on page 26 for further detail.

Fund, capacity building grants and payment of the Trustee fee, Management Fee and Abnormal Expenses, then a condition of the Grant funding will be that any such amount must be paid by the Trustee directly to SVA and not distributed to Unitholders. This money must then be applied by SVA for a purpose which is consistent with the objectives of the SEDIF grants program.

7. GRANT continued


Investors will not be permitted to transfer Units except with the trustee’s prior consent, such consent not to be unreasonably withheld. If a transfer is permitted, a transferee does not become

10.1 Redemptions

Subject to SVA and the Trustee’s absolute discretion, Investors will not be permitted to redeem some or all of their Units until after the fifth anniversary of the Commencement Date. Thereafter, SVA and the Trustee intends to allow annual redemptions on such date as SVA and the Trustee determine in their absolute discretion (Redemption Date) subject to:

● The Trustee’s right, at its discretion, to cap total redemptions in respect of each Redemption Date at 15% of NAV as at the Redemption Date (or such other percentage as the Trustee may determine); and

● The liquidity of the Fund’s assets as at the Redemption Date.

● Further, the Trustee retains the discretion to suspend redemptions and to compulsorily redeem Units in accordance with the Constitution.

10.2 Redemption process

Redemption requests must be received at least 60 Business Days before the relevant Redemption Date (or such lesser period as the Trustee may allow) otherwise the request will be held over for consideration for the following Redemption Date.

10.3 Payment of redemption proceeds

Payment of redemption proceeds will generally be made within 60 days of the Redemption Date. A redemption request is irrevocable once made (other than with the Trustee’s consent).

Redemptions will be paid in accordance with the Constitution and the redemption proceeds will be based on the NAV of the Fund as at the close of market on the Redemption Date following the receipt of the redemption request, divided by the number of Units on issue as at that time and date.

Redemption proceeds will consist of an amount representing the Redemption Price plus an amount representing distributable income. Investors will be advised of the breakdown of such amounts at a later date.

10.4 Deferred redemptions

If redemption requests received by the Trustee in respect of a Redemption Date exceed 15% of the NAV of the Fund as at the Redemption Date, the Trustee and SVA may, at their absolute discretion, scale down redemption requests for each redeeming Investor on a pro-rata basis. Unsatisfied redemption requests as a consequence of this scaling down will be deferred to the next Redemption Date without priority over subsequent redemption requests.

10. REDEMPTION OF UNITS

9. TRANSFER OF UNITS

8.5 Payment options

There are two options for payment:

1. Cheque payments

Cheques should be crossed ‘Not negotiable’ and made payable to:

The Trust Company (Australia) Limited as trustee for SVA Social Impact Fund

and mailed to:

Social Ventures Australia Limited Suite 1, Level 6 6 -10 O’Connell Street Sydney NSW 2000

2. Direct Deposit

If you wish to make an investment by direct deposit, please contact SVA for further details. Where funds are electronically transferred or deposited directly to the bank account, details of the deposit should accompany the Application Form. The Trustee will accept notice of electronic transfer of funds as if deposited and cleared.

Physical cash will not be accepted at any time.

a Unit Holder until the transfer has been entered in the register of Unit Holders. However, prospective investors should note that there is unlikely to be a secondary market in Units.

8. INVESTING IN THE FUND continued


11. DISTRIBUTIONS

12. VALUATIONS

13. FEES AND OTHER COSTS

The calculation of an Investor’s income distribution in respect of a distribution period is generally as follows:

A is the number of Units held by the Investor at the end of the distribution period;

B is the number of Units held by all Investors at the end of the distribution period; and

C is the distributable income for the distribution period.

Due to the nature of investment returns, annual distributions may comprise income and/or capital. SVA and the Trustee intends to make annual distributions to Investors commencing one year after the establishment of the Fund. SVA and the Trustee may in their discretion set distribution periods of different durations. SVA and the Trustee intends to make distribution payments shortly after the end of the relevant distribution period. Investors will receive distributions (if made) of their share (based on their proportionate holding of Units at the end of the distribution period) of any income and/or return of capital.

The NAV of the Fund will be calculated in accordance with the Constitution at 5:00pm (Sydney time) on the last Business Day of each Financial Year, or such other times and dates as SVA and the Trustee may determine in their absolute discretion.

This document shows fees and other costs that you may be charged for the Fund. These fees and costs may be deducted from your principal investment, from the returns on your investment or from Fund assets as a whole.

Tax details are set out in the ‘Taxation issues’ section on page 21 of this Information Memorandum.

You should read all the information about fees and costs, because it is important to understand their impact on your investment.

13.1 Trustee Fee

The Trustee will charge a trustee and custodial fee for providing its services as trustee and custodian for the Fund (Trustee Fee). The Trustee Fee will be $35,000 p.a. (excl GST) , accrued daily and payable in arrears on the last Business Day of each quarter. The Trustee Fee is payable out of the assets of the Fund and will be increased annually by the percentage increase in the Consumer Price Index released by the Australian Bureau of Statistics for the year ending 31 March.

13.2 Management Fee

This is a fee collected by SVA for its services as investment manager in overseeing the operations of the Fund and/or for providing access to a Fund’s underlying investments.

Unitholders should note that at no time will the Grant monies be included in the asset base for the purposes of calculating the NAV. In calculating the NAV, the amount of the Grant monies (as reduced over time by Fund expenses, capacity building grants and asset losses and impairments) will be deducted from the asset base.

The Management Fee will be $250,000 p.a. (excl GST), accrued daily and payable in arrears on the last Business Day of each quarter. The Management Fee is subject to a cap of 5%p.a. (excl GST) of the FUM of the Fund.

The Management Fee is payable out of the assets of the Fund and will be increased annually by the percentage increase in the Consumer Price Index released by the Australian Bureau of Statistics for the year ending 31 March.

13.3 Entry Fee

The Trustee is entitled under the Constitution to charge an entry fee of up to 1% (excl GST) of the consideration in respect of an application for Units which has been accepted. However, currently the Trustee waives its entitlement to an entry fee until further notice.

13.4 Redemption Fee

The Trustee is entitled under the Constitution to charge a redemption fee of up to 1% (excl GST) of the redemption proceeds of Units which have been redeemed in accordance with the Constitution. However, currently the Trustee waives its entitlement to a redemption fee until further notice.

A x CB

10. REDEMPTION OF UNITS continued


13.5 Impact Reporting Fee

A fee of $10,000 p.a. (excl GST) in the first two years from the Commencement Date, and $5,000 p.a. (excl GST) thereafter, will be payable to SVA from the assets of the Fund to cover the cost of social impact investment reporting.

13.6 Fund Expenses

All the Fund Expenses, being the usual costs of the Fund including expenses associated with the operation, administration and management of the Fund and the Fund’s assets, the promotion of the Fund, dealing in the Fund’s investments, insurance, valuations, custody, the maintenance of the Fund’s registers, the keeping of financial records, the payment of the Fund’s advisers, communications with Investors, complying with the law and any request of relevant regulatory bodies and authorities and the handling of complaints will be paid by SVA out of its Management Fee except that:

(a) for the first three years from the Commencement Date only, to the extent that the amount of Fund Expenses in respect of a Financial Year exceeds the amount of the Management Fee up to a cap of 1% p.a. (excl GST) of the FUM of the Fund, SVA will be reimbursed such an amount from the assets of the Fund; and

(b) notwithstanding 13.6(a), initial establishment costs, which we expect to be approximately $75,000 (excl GST), will be recovered from the assets of the Fund on the Commencement Date.

13.7 Abnormal Expenses

The Trustee may recover abnormal expenses (such as costs of holding extraordinary Investor meetings, changes in law (including tax and stamp duty), changes to the Constitution, and defending or pursuing legal proceedings) from the assets of the Fund (Abnormal Expenses). Abnormal Expenses are not ordinarily incurred, or expected to be incurred, during the usual operation of the Fund and are not necessarily incurred in any given year. The management costs outlined above do not include any Abnormal Expenses. Fund Expenses are not Abnormal Expenses.

13.8 Waiver

The Trustee may, in its absolute discretion, waive its right to the fees it is entitled to receive under the Constitution from time to time.

13.9 Changing the fees

The Trustee may change the amount of any fees in this Information Memorandum (including increase fees up to the maximums set out in the Constitution) without your consent on 30 days’ advance notice to you. In accordance with the Constitution and subject to law, the Trustee may vary the amount of abnormal expense recoveries and the buy/sell spread at any time without your consent or notice.

The Trustee may introduce and increase fees at its discretion, including where increased charges are due to Government changes to legislation, increased costs, significant changes to economic conditions and/or the imposition of increased processing charges by third parties.

However, the Trustee cannot charge more than the maximum fees permitted under the Constitution.

13.10 Taxation

Tax details are set out in the ‘Taxation issues’ section on page 21of this Information Memorandum.

13.11 GST

Unless stated otherwise, all fees and costs outlined in this Information Memorandum are inclusive of GST less any Reduced Input Tax Credit (RITC) entitlement where applicable.

The following table summarises the GST treatment of fees.

We note that the GST Regulations are proposed to be amended from 1 July 2012 which, if enacted, will have the effect of increasing some fees. This is because, under the proposed changes and subject to certain exceptions, “recognised trust schemes” (which includes the Fund) will only be eligible for a reduced input tax credit (RITC) of 55% of the GST it pays on an acquisition rather than the prevailing rate of 75%.

We note that the Entry Fee and the Redemption Fee have not be included in the following table on the basis that they are not intended to be charged. To the extent that either or both of the Entry Fee and the Redemption Fee is charged, GST may apply.

13. FEES AND OTHER COSTS continued


14.1 Tax treatment of the Fund

The Fund is an Australian resident trust for Australian tax purposes. The Trustee intends to limit the investment activities of the Fund to ensure that it is treated as a ‘flow through’ entity for the purposes of Australian tax, i.e. so that the provisions in the Tax Act that tax certain trusts in a manner similar to a company should not apply. The Trustee, as responsible entity of the Fund, should not be liable to tax on the Fund’s net (taxable) income, on the basis that the Fund will have an amount of distributable income each income year that will be wholly distributed to Investors each financial year. Instead, you (and each other Investor) will be required to include your share of the net (taxable) income of the Fund in your own assessable income in the financial year to which the distribution relates. This takes into account income that has been reinvested, or for which the entitlement has arisen but it has not yet been distributed to you.

14.2 Net Income of the Fund

The net income of the Fund should take into account the following amounts:

(a) interest received on the loans and subordinated debt held by the Fund;

(b) Dividends (or dividend equivalent payments) paid in respect of the equity investments of the Fund, including any franking credits attached to the dividends (or dividend equivalent payments);

(c) Any loss on repayment of the loans and subordinated debt held by the Fund (which would be a loss of an income nature);

(d) Any gain or loss on any disposal of the loans and subordinated debt held by the Fund (which would be a gain or loss of an income nature);

Fee/Cost Amount (inc GST pre 1 July 2012)

Trustee Fee $35,875 being $35,000 plus GST amount $3,500 less RITC amount of $2,625

Management Fee $256,250 pa being $250,000 plus GST amount of $25,000 less RITC amount of $18,750

Impact Reporting Fee $10,000 plus GST amount of $1,000 less RITC amount of $750

$5,000 plus GST amount of $500 less RITC amount of $375

14. TAXATION ISSUES

The following is a general tax summary of the key Australian income tax, stamp duty, and goods and services tax (GST) implications of investing in the Fund for individuals that are Australian resident taxpayers.These individuals are assumed to hold their Units in the Fund on capital account and to be dealing at arm’s length.

The information in this summary is general in nature. This information does not constitute legal or tax advice and does not seek to address all of the tax issues that may be relevant to a prospective investor. Taxation issues are complex and taxation laws, their interpretation and associated administrative practices may change over the term of an investment.

All references in this tax summary to legislative provisions are to provisions of the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997 (together, the ‘Tax Act’), unless otherwise stated.

The tax treatment will vary according to individual circumstances and prospective investors are advised to seek their own independent tax advice in respect of their proposed investment in the Fund. All tax liabilities are, and will remain, the responsibility of each Investor. The Trustee is not responsible for any taxation or penalties incurred by Investors in any circumstance.

The taxation summary is based on the Australian taxation laws in force and the administrative practices of the Australian Taxation Office (the ATO) generally accepted as at the date of this IM. Any of these may change in the future without notice and legislation introduced to give effect to announcements may contain provisions that are currently not contemplated and may have retroactive effect.

13. FEES AND OTHER COSTS continued


(e) Any “net capital gain” on repayment or disposal of the loans, subordinated debt or equity interests held by the Fund (note that the capital gains tax cost base of the loans, subordinated debt and equity investments may be reduced to the extent that the Grant could be said to be a recoupment of the cost base of those assets); and

(f ) any expenses or fees that the Fund incurs from time to time, including any interest on borrowings by the Fund; and

For the purposes of calculating the net income of the Fund, a 50% discount would be applied to capital gains made on assets the Fund had held for at least 12 months.

14.3 Tax treatment of Investors

The Constitution provides that Investors are presently entitled to their proportionate share of trust income. Investors will receive an annual distribution statement which will identify the components of their distributions.

As discussed above, for the purposes of calculating the net income of the Fund, a 50% discount would be applied to capital gains made on assets the Fund had held for at least 12 months. Investors would be required to gross up the capital gain component of Fund distributions. An Investor would then be able to apply its own capital losses, if any, against the trust capital gains before applying the relevant discount percentage if any, which is also 50% for individuals and 331/3 for complying superannuation funds, to any remaining capital gains.

Distributions from the Fund may include non-assessable amounts including a return of capital. Such amounts are not taxable as income to the Investors when distributed but rather will reduce the cost base of the Units held in the Fund for the purposes of determining a capital gains tax liability on the disposal of the Units.

If the trust is in a tax loss or net capital loss position for a financial year, this loss cannot be distributed to you, i.e. used by you to offset other income. However, such a loss may be able to be carried forward and deducted against future income of the Fund if, in the case of a tax loss, the Fund meets certain requirements in relation to the continuity of persons with an interest in the Fund.

An investment in Units in the Fund should generally not be regarded as a financial arrangement subject to the TOFA rules.

14.4 CGT treatment

The cost base of your Units for CGT purposes will include, among other things, the amount paid to acquire the Units and any incidental costs. As discussed above, where you receive a distribution in excess of your share of the net income of the Fund, the amount of the distribution not included in your assessable income will reduce the cost base in your Units. If Investors receive distributions of non-assessable amounts that exceed their cost base in their Units, they would make a capital gain to the extent of the excess.

You may make a capital gain or capital loss when you dispose of your Units. As a general rule, where the proceeds on disposal of your Units are greater than the cost base of those Units, you will make a capital gain. The amount of proceeds on disposal will depend on whether or not you withdraw from the Fund and redeem your Units or whether you dispose of your Units to a third party.

If you withdraw from the Fund and redeem your Units, your total redemption proceeds may comprise both a distribution of income from the Fund and a payment for the redemption of your Units. In these circumstances, only the component relating to the payment for the redemption of Units will be relevant in determining whether or not you make a capital gain or loss.

Where you are able to assign or sell your Units to a third party, the total sale proceeds you receive for this assignment will be taken into account in determining whether you make a capital gain or capital loss.

Where CGT discount treatment applies, this means that only half (if you are an individual (or trust) or two thirds (if you are a complying superannuation entity) of any capital gain on Units which are held for more than twelve months will be included in your assessable income.

If you make a capital loss on the disposal of your Units, this loss will only be able to be offset against capital gains you derive from other sources and not against other ordinary income, like distributions or wages. However, capital losses can be carried forward and used to offset capital gains you may make in later years.

14. TAXATION ISSUES continued


14.5 Tax file number

If you do not provide a tax file number or claim a valid exemption (or in certain circumstances provide an Australian Business Number), the Trustee will be required to deduct tax from your distributions at the highest marginal tax rate plus Medicare levy (currently 46.5%). Any tax file number you provide will be reported to the ATO by the Trustee in connection with your investment.

14.6 Stamp duty

On the basis that the assets of the Fund will not comprise land or an interest in land (such as a lease), you should not have to pay stamp duty in any State or Territory other than New South Wales upon the transfer, issue or redemption of Units.

On the basis that the register on which the Units will be kept will be located in New South Wales, a transfer or an agreement to transfer your Units will give rise to a liability for stamp duty in New South Wales. Duty on the transfer or an agreement to transfer your Units will be payable at the rate of 0.6% of the greater of the sale price (if any) and the value of the Units that you are transferring. The purchaser will be the person liable to pay the duty.

Depending on the nature of the asset, stamp duty may be payable on the acquisition of the assets by the Fund. This will be a transaction cost for the Fund which may affect the value of your Units.

14.7 GST

GST will not apply to the issue or redemption of Units. GST may apply to the fees charged to the Fund and some other expenses of the Fund (including on the acquisition of certain types of assets). The Fund may be entitled to a reduced input tax credit equal to 75% of the GST paid in respect of certain expenses. GST may also apply to fees and commissions charged to you by your financial adviser. You should obtain independent advice as to whether any input tax credits are available for any such GST, as it will depend on your personal circumstances.

14.8 Tax Reform

The Australian Government has announced that it is proposing to implement a new tax system for managed investment trusts. The rules are intended to provide greater certainty in relation to the tax treatment of managed investment trusts, however, no legislation has been introduced as at the date of this Information Memorandum. On the basis of current information, the rules would apply from 1 July 2013.

14. TAXATION ISSUES continued


adverse information, we will publish the updated information on our website: http://www.socialventures.com.au

A copy of the updated information will be available free of charge upon request by contacting the Trustee.

15.3 Our legal relationship with investors

The Corporations Act, general law and the Constitution set out the rights and interests of the Unitholders in the Fund as investors and also set out the rights, duties and obligations of The Trust Company (Australia) Limited as the Trustee of the Fund.

15.4 Constitution

The Fund is governed by its Constitution. The main provisions of the Constitution are summarised below. The Constitution is legally binding between the Trustee and each Unitholder. To the extent of any inconsistency between this Information Memorandum and the Constitution, the provisions of the Constitution will prevail. Subject to the Corporations Act, The Trust Company (Australia) Limited, as the Trustee, may amend the Constitution. A copy of the Constitution is available for inspection free of charge at the offices of SVA during normal business hours.

15.5 Rights and liabilities of Investors

Each Unit carries with it an equal beneficial interest in a Fund as a whole but not in any particular asset of that Fund. Fund income is only distributed to registered Unitholders entitled to a distribution as at the last Business Day of the distribution period. Unitholders may not interfere with the Trustee’s powers or exercise any rights in respect of any investment of the Fund. Under the Constitution and the Corporations Act unit holders may:

(a) transfer Units in a Fund;

(b) requisition, attend and vote at meetings of a Fund;

(c) share in the income and capital distributions of a Fund; and

(d) participate in the winding up of a Fund.

Generally, the Constitution limits an Investor’s liability to the Trustee to the value of that Unitholder’s investment in a Fund. However, no absolute assurance can be given due to the fact that this has not been tested in superior courts.

15.1 Keeping you informed

SVA will provide Investors with two reports each year. Investors will receive a semi-annual Fund Performance Update and an annual Investment Report that will provide detailed accounts of the social impact of the Fund, and the annual statutory accounts. These are explored in more detail below.

Fund Performance Update

Produced on a semi-annual basis this report will provide a brief update of the Fund’s overall performance including current value of the Fund, number of enterprises in the Fund portfolio and total funds committed and invested.

Investment Report

Each Investor will also receive an annual Investment Report which will provide a more detailed report outlining overall progress of the Fund including:

(a) Financial performance: current FUM of the Fund, number of social enterprises in Fund portfolio, total funds committed and invested and statutory audited accounts.

(b) Social Impact: overall summary of social impact of Fund based on targets including qualitative and quantitative information (for example number of jobs created and case studies of social enterprises), percentage of enterprises that are on track in delivery of social impact.

(c) Benchmarking of Fund performance: Fund performance compared with suitable peers.

The first Fund Performance Update will cover the period from the Commencement Date until 31 December 2012.

The first Investment Report will cover the period from the Commencement Date until 30 June 2013. For the avoidance of doubt, there will be no interim version of these reports covering the period from the Commencement Date until 30 June 2012.

Information will also be provided to Investors to enable Investors to complete taxation returns.

15.2 Up-to-date information

Certain information in this Information Memorandum may change from time to time. This includes but is not limited to potential changes which we have identified. Where we indicate to you that we will give notice of such changes, or where the updated information includes no materially

15. OTHER IMPORTANT INFORMATION


15.6 Liability of The Trust Company (Australia) Limited as the trustee

Subject to the Corporations Act, except in the case of its own fraud, gross negligence, or wilful default, the Trustee is not liable to any greater extent to which it is entitled to be and is in fact indemnified out of the Fund.

15.7 Retirement and removal of The Trust Company (Australia) Limited as the trustee

The Trust Company (Australia) Limited may be removed from a Fund in the circumstances set out in the Constitution and the Corporations Act, including where Unitholders pass an extraordinary resolution to remove The Trust Company (Australia) Limited as the Trustee. The Trust Company (Australia) Limited may also retire voluntarily and must call a meeting of Unitholders who may choose a replacement by extraordinary resolution.

15.8 Termination of the Fund

The Trustee may terminate the Fund at any time by giving notice to Unitholders or in the circumstances provided in the Corporations Act, including pursuant to an extraordinary resolution passed by Unitholders. However, if the Fund is terminated during the term of the Funding Agreement, this will be an Event of Default under the Funding Agreement, which will trigger DEEWR’s right to revoke the Grant.

Where the Fund is terminated, the Trustee must sell all the assets of the Fund and distribute the net proceeds to Unitholders in proportion to the number of Units held. For the avoidance of doubt, any remaining Grant monies will not be distributed to Unitholders. The Funding Agreement will require that, provided the Fund is not being wound up due to an Event of Default under (or in default of ) the Funding Agreement, any remaining Grant monies be paid to SVA, who will be obligated to utilise any such money for a purpose which is consistent with the SEDIF grants program.

15.9 Dealing with complaints

The Fund has procedures in place for dealing with complaints. The Complaints Officer for the Fund will seek to acknowledge receipt of your complaint in writing as soon as reasonably practicable and in any event within 30 days from receipt, and address your complaint within 60 days. Investors with enquiries should contact the Complaints officer. Notification of any complaint should be made in writing addressed to:Attn: Complaints Officer Social Ventures Australia Limited Suite 1 Level 6 6 -10 O’Connell Street Sydney NSW 2000

15.10 Privacy

The Trustee, SVA and Third Link must comply with the Privacy Act. This Act generally regulates the collection, storage, quality, use and disclosure of personal information. The Trustee, SVA and Third Link may collect personal information from Investors to provide its products and services. The Corporations Act requires the Trustee, SVA and Third Link to collect some personal information about you. In most cases, Investors have rights to access their personal information. The Trustee and SVA can use your personal information to assess your application for the investment product and, if you obtain the product, to manage that product. The Trustee and SVA may disclose information to related entities, and anyone acting on the Trustee or SVA’s behalf such as external service suppliers who supply administrative, financial or other services to assist the Trustee and SVA in providing financial services, anyone you have authorised, or government departments or agencies. If the Trustee or SVA are not able to collect all the personal information they require, they may not be able to assess your application for the investment product or manage the product.

Please note that if you provide personal information to the Trustee or SVA about another person, you warrant that you are authorised by that person to do so and that you have informed that person of the information in this Privacy section.

Enquires regarding access to personal information must be in writing and addressed to:

Attn: Privacy Officer Social Ventures Australia Limited Suite 1 Level 6 6 -10 O’Connell Street Sydney NSW 2000

15. OTHER IMPORTANT INFORMATION continued


15.11 Terms and conditions of applications and redemptions

Units in the Fund will only be allocated following receipt and acceptance by the Trustee of a completed Application Form, accompanying this Information Memorandum, plus any required documentation. The Trustee has absolute discretion to accept or reject any application. Please refer to the ‘Investing in the Fund’ section on page 17 for further information on applications. Please note that the Trustee may require additional information or documentation about the Investor(s) in addition to those detailed in the Application Form before accepting any applications.

Redemption requests will only be processed following receipt and acceptance by the Trustee of a properly authorised instruction. The Trustee has absolute discretion to accept or reject any redemption request. Please refer to ‘Redemption of Units’ section on page 18 for further information.

15.12 AML/CTF Acknowledgement

By applying to invest in the Fund you warrant that:

(a) You comply and will continue to comply with applicable anti-money laundering (AML) and counter-terrorism financing (CTF) laws and regulations, including but not limited to the law and regulations of Australia in force from time to time (AML/CTF law).

(b) You are not aware and have no reason to suspect that:

(i) The monies used to fund your investment in a Fund have been or will be derived from or related to any money laundering, terrorism financing or similar activities illegal under applicable laws or regulations or otherwise prohibited under any international convention or agreement (“illegal activity”); or

(ii) The proceeds of your investment in a Fund will be used to finance any illegal activities.

(c) You will provide us with all additional information and assistance that we may request in order for us to comply with any AML/CTF Law.

(d) You are not a ‘politically exposed’ person or organisation for the purposes of any AML/CTF Law.

(e) You acknowledge that the Trustee may, in its sole and absolute discretion but otherwise in accordance with the law, vary the terms of this Information Memorandum or alter the arrangements in respect of any Fund, where the Trustee is required to do so due to changes in AML/CTF Law.

By applying to invest in the Fund, you also acknowledge that we may decide to delay or refuse any request or transaction, including by suspending the issue or withdrawal of Units in a Fund, if we are concerned that the request or transaction may breach any obligation of, or cause us to commit or participate in an offence under any AML/CTF Law, and we will incur no liability to you if we do so. You further acknowledge that the Trustee is under no obligation to inform you of its intention to do any of the above, or the fact that is has done any of the above, nor is the Trustee obliged to provide you with its reasons for any such actions.

15. OTHER IMPORTANT INFORMATION continued


16. GLOSSARY

Abnormal Expenses means out-of-pocket expenses incurred by the Trustee (or SVA) in managing and administrating the Fund which are not generally incurred in the usual operation of the Fund and in any given year and excludes all Fund Expenses.

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

Application Form means an application form attached to this Information Memorandum.

ASIC means the Australian Securities and Investments Commission or if it ceases to exist, any regulatory body or authority as then serves substantially the same objects.

AFSL means an Australian Financial Services Licence.

Business Day means any day excluding a Saturday or Sunday on which banks are open for business in Sydney, Australia.

Calendar Quarter means 31 March, 30 June, 30 September and 31 December of each year.

Commencement Date means the date that the Fund is established.

Constitution means the constitution of the Fund, as amended or replaced from time to time.

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

Custodian means The Trust Company (Australia) Limited (ABN 000 000 993).

DEEWR means, unless otherwise specified as a specific state or territory government body, the Department of Education Employment & Workplace Relations on behalf of Commonwealth Government of Australia.

Deed of Settlement means the deed poll executed by DEEWR.

Development Partners means currently those partners indicated in Section 4.1.

Financial Year means, for the first Financial Year, the period from the Commencement Date to the following 30 June and thereafter the 12 month period ending on 30 June of each year.

FUM means funds under management which will consist of the Grant and Investors funds.

Fund means the SVA Social Impact Fund.

Funding Agreement means the agreement to be entered into on or prior to the Commencement Date between DEEWR, the Trustee and SVA in relation to the payment of the Grant monies.

Fund Expenses means all usual costs of the Fund including expenses associated with the operation, administration and management of the Fund and the Fund’s assets, the promotion of the Fund, dealing in the Fund’s investments, insurance, valuations, custody, the maintenance of the Fund’s registers, the keeping of financial records, the payment of the Fund’s advisers, communications with Investors, complying with the law and any request of relevant regulatory bodies and authorities and the handling of complaints.

Grant means the amount of $4 million settled on the Trustee as the trustee of the Fund as trust capital, pursuant to the Deed of Settlement.

GST means Goods and Services Tax. GST has the meaning given in the GST Law.

GST Law has the meaning given in A New Tax System (Goods and Services Tax) Act 1999 (Cth).

Information Memorandum means this Information Memorandum dated 4 April 2012 as amended or replaced from time to time.

Investor(s) or Unitholder(s) means a person name in the Fund’s register of unitholders as a holder of Units.

Investment Committee means the SVA Social Impact Fund Investment Committee currently consisting of the members identified in Section 4.2(a).

Investment Manager means Social Ventures Australia Limited (ACN 100 487 572) the investment manager of the Fund.

Investment Report means as defined in Section 15.1.

Management Fees has the same meaning as the fee described in Section 13.2.

NAV or Net Asset Value means the total assets minus the total liabilities of the Fund, Units or portfolio in question, as determined in accordance with the Constitution.

NAV per Units means NAV of the Fund divided by the total number of Units on issue as at the date of calculation.

Portfolio Manager means such portfolio manager appointed by SVA from time to time, currently identified in Section 4.2(b).

Privacy Act means the Privacy Act 1988 (Cth) as amended from time to time.

Redemption Date means the last Business Day of each Financial Year and/or such other days as the Trustee may determine.

Redemption Price means the Unit price calculated in accordance with the redemption price procedures set out in the Constitution.

RITC means a “reduced input tax credit” as defined in the A New Tax System (Goods and Services Tax) Act 1999 (Cth) as amended from time to time.

Subscription Date means the last Business Day of each Calendar Quarter or such other dates as the Trustee may determine in its absolute discretion that prospective Investors and Investors may subscribe for additional Units following the close of the initial offer period.

SIB means social impact bonds.

SIEE Alliance means Social Investment Enterprise and Entrepreneurship Alliance.

SVA means Social Ventures Australia Limited (ABN 94 100 487 572).

Target Fund Return means a targeted financial return of the Fund.

Third Link means Third Link Investment Managers Pty Limited (ABN 31 128 965 702, AFSL 321 611).

Trustee means The Trust Company (Australia) Limited (ABN 000 000 993) the trustee of the Fund.

Units mean units of the Fund.


APPLICATION FORM FOR UNITS IN THE SVA SOCIAL IMPACT FUND

Please complete all the sections indicated.

Individual, joint or sole trader – must complete section A1, B, C, D, E and F

Partnership – must complete A1, A4, B, C, D, E and F

Australian Company – must complete A1 (Directors), A2, B, C, D, E and F

Trust with Individuals as Trustee – must complete A1 (Trustees), A3, B, C, D, E and F

Trust / Super Fund with Corporate Trustee – must complete A1 (Directors), A2 (Company), A3, B, C, D, E and F

Other: Please contact SVA.

This is an application form for the SVA Social Impact Fund (Fund) issued by The Trust Company (Australia) Limited (ACN 000 000 993, AFSL 235415).

This Application Form accompanies the Information Memorandum dated 4 April 2012.

It is important that you read the Information Memorandum in full and the acknowledgements contained in this Application Form before applying to participate in the Fund. The Trustee will provide you with a paper copy of the Information Memorandum including any supplemental Information Memorandum and the Application Form, on request without charge.

This Application Form may only be distributed to persons who qualify as “wholesale clients” as defined in section 761G of the Corporation Act 2001 (Cth).

Applicants can only participate in the Fund on receipt of:

● this Application Form,

● verification of the applicant’s identity, and

● payment of the application monies in full.

This Application Form and application monies must be received by SVA by 3:00 pm on 18 May 2012 or such later date as SVA advises.

Note: Capitalised terms used in this Application Form and not defined herein, shall have the meaning given in the Information Memorandum.

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APPLICATION FORMSVA Social Impact Fund

Section A1 – Individuals / Sole Trader (including individuals acting as trustee and corporate directors and partners)

Applicant 1 (Your name MUST match your ID exactly.)

All individuals must provide certified copies of photo identification, such as passports, driver’s licenses or similar government issued photo ID.

Title: Given Names (in full): Surname:

Date of Birth (dd/mm/yyyy): Country of Citizenship:

Are you an Australian resident for tax purposes? ● Yes ● No

If no, please specify your country of tax residence:

Australian Tax File Number (TFN): OR

Exempt from quoting a TFN (Exemption details):

Residential Address:

City/Suburb/Town: State: Postcode: Country:

Email Address:

Telephone (home): Area code: Number:

Telephone (business hours): Area code: Number:

Mobile:

Fax: Area code: Number:

Applicant 2 (Your name MUST match your ID exactly.)

All individuals must provide certified copies of photo identification, such as passports, driver’s licenses or similar government issued photo ID.

Title: Given Names (in full): Surname:

Date of Birth (dd/mm/yyyy): Country of Citizenship:





Residential Address:


Email Address:


Telephone (business hours): Area code Number:

Mobile:


ISSUE NUMBER 4 | 31 MARCH 2010

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COMPLETE THIS PART IF INDIVIDUAL IS A SOLE TRADER

Full Business Name (if any) ABN: ABN:

Principal Place of Business (if any): (PO Box is NOT acceptable)


Email Address:



Mobile:


Section A2 – Australian Corporations & Corporate Trustees

Must provide a certified copy of an ASIC search on the company name or certificate of registration.

Full name of the company as registered by ASIC: ABN:

Registered Office Address (PO Box is NOT acceptable):


Principal Place of Business (if any): (PO Box is NOT acceptable)


Main Contact:

Email Address



Company Type:

Name of Directors (in full): Note: Each director must also complete A1

Is the company an Australian resident for tax purposes? ● Yes ● No




APPLICATION FORM continued

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Section A3 – Trusts or Super Fund

Must provide certified copy of the first few pages of the trust deed or ATO website extract or ATO communication.

Name of trust or fund:

Country of establishment:

Date of establishment: ABN:

Business name of the Trustee (if any):

NOTE: Individual trustees must complete A1; corporate trustees must complete A2.

Type of trust:

● Regulated trust (SMSF)

● Registered managed investment scheme

● Unregistered managed investment scheme with only wholesale clients which does not make small-scale offerings under section 1012E of the Corporations Act 2001:

● Government superannuation fund:

● Other:

If other, please specify (e.g. family, unit, charitable, estate):


If no, please specify the trust’s or fund’s country of tax residence:



NOTE: Only the trustee(s) will be recognised as the Investor, however, we are required to record details of the individual beneficiary.

BENEFICIARY 1

Name: ABN (if applicable):

BENEFICIARY 2


BENEFICIARY 3


BENEFICIARY 4


Section A4 – Partnerships

Must provide certified copy of the Partnership Agreement or ATO correspondence in the past 12 months or Certificate of Registration.

Full Name of the partnership:

Full Business Name of partnership registered in any State or Territory (if applicable):

Business of Partnership:

Country of Establishment: Date of Establishment:




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How many partners are there?:

Each partner’s details (in capitals):

Full Name: Partnership Share:

Full Residential Address:







NOTE: One partner MUST complete A1.

Section B – Contact Details

Please specify if contact details is different to those provided in Section A or if joint investors, please indicate the preferred contact details:

Postal Address:


Email Address:



Mobile:


Section C – Investment Details (must complete)

Total investment amount: $

Total no. of Units (at $1.00 per Unit): Units

For Australia applicants: Please tick the box below to advise how your payment will be made.

● Payment by cheque (Please complete Sections D)

● Electronic Funds Transfer (EFT) (Please complete Section D and provide a clear reference when EFT funds)

Section D – Bank Account Details

All applicants must complete this section by providing details of an Australian banking institution. The nominated bank account must be in the name of the applicant.

Bank Name/Institution:

Branch name and address:


BSB: Account Number:

Account Name:

Reference No. (if EFT):

When giving instructions to us about your investment please indicate who has authority to operate your account (e.g. any one to sign / all to sign / other):

Please complete the signature page (Section F) of this Application Form.


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Section E – Declarations & Signatures

By completing the Application Form you:

(a) declare that before executing this Application Form, you have fully read and understood the Information Memorandum, the Constitution and this Application Form and have made your own independent investigation and appraisal of the taxation, legal, economic and credit aspects associated with the investment, including seeking professional, taxation and legal advice as it deems appropriate in respect of the Units before deciding whether to subscribe for Units pursuant to this Application Form;

(a) agree to be bound by the Constitution and the terms of the Information Memorandum;

(b) acknowledge that this Information Memorandum does not constitute an offer in any jurisdiction in which, or to any person of whom, it would be unlawful to make the offer;

(c) represents and warrants that you are not prohibited by law from receiving the Information Memorandum or executing this Application Form;

(d) declare that you are a “wholesale clients” for the purposes of section 761G of the Corporations Act;

(e) declare that you have power to make an investment in the Fund in accordance with the terms of the Information Memorandum, the Constitution and this Application Form;

(f ) declare that you have full legal capacity to execute this Application Form and have taken all action that is necessary to authorise the execution of this Application Form;

(g) if this Application Form is signed under power of attorney, the attorney declares that he or she has not received notice of revocation of that power;

(h) in the case of joint applications, you each agree to hold the Units as joint tenants and acknowledge that, unless otherwise stated, either Investor is able to operate the account;

(i) declare that, if investing as a trustee on behalf of a superannuation fund or trust, you are acting in accordance with your designated powers and authority under the trust deed. In the case of superannuation funds, you also confirm that the funds are complying funds under the Superannuation Industry (Supervision) Act;

(j) declare that if investing as a trustee on behalf of a self managed superannuation fund (SMSF) that an investment under the Fund is an appropriate investment for your SMSF;

(k) declare that, if you are investing as a company or incorporated association, you confirm that you are an officer of the company or incorporated association and that you have the authority to bind the company or incorporated association to the investment;

(l) acknowledge that neither the Trustee, SVA nor Third Link, their related body corporates and related entities (as defined in the Corporations Act, any other members of their respective groups, or any of their directors or associates or any other entity, guarantees the performance of, or the repayment of capital invested in, or income from, the Fund, or that the Fund will achieve a particular rate of return;

(m) acknowledge that an investment in the Fund is subject to investment risk, including possible loss of capital invested, and agree that those risks are appropriate for a person in your circumstances and with your investment objectives;

(n) acknowledges that the applicant has not relied in any way whatsoever on any statements made by, or purported to be made by, the Trustee, SVA or Third Link, their related body corporates and related entities, any other members of their respective groups, any of their directors or associates, agents or service providers in relation to this investment, other than as set out in the Information Memorandum, the Constitution or this Application Form and acknowledge that neither the Trustee, SVA or Third Link, their related body corporates and related entities, any other members of their respective groups, any of their directors or associates, agents or service providers have made, and the Information Memorandum, this Application Form and the Constitution do not contain, any regarding the suitability or appropriateness of the investment in the Units, given your investment objectives, financial situation or particular needs or the tax consequences of making this investment in Units;

(o) declare that all information provided in this Application Form or any other information provided in support of the subscription for Units in the Fund is true and correct;

(p) agree to the collection, use and disclosure of your personal information provided to the Trustee, SVA or Third Link, their related body corporates and related entities, any other members of their respective groups, any of their directors or associates, agents or service providers;

(q) acknowledge that all information relating to this Application Form or any subsequent information relating to the investment in the Fund may be disclosed to any service provider. This authority will continue unless revoked in writing by you;

ISSUE NUMBER 4 | 31 MARCH 2010


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(r) agree to give all further information or personal details and provide assistance to the Trustee, SVA, Third Link or their nominees, if required to allow them to meet their obligations under anti-money laundering (AML), counter-terrorism financing (CTF) and taxation legislation;

(s) warrant that:

(i) you comply and will continue to comply with applicable AML and CTF Laws, including but not limited to the law and regulations of Australia in force from time to time;

(ii) you are not aware and have no reason to suspect that:

(A) the application monies have been or will be derived from or related to any money laundering, terrorism financing or similar activities illegal under Applicable Laws or otherwise prohibited under any international convention or agreement (illegal activity); or

(B) the proceeds of your investment in the Fund will be used to finance any illegal activities;

(iii) you are not a ‘politically exposed’ person or organisation for the purposes of any AML/CTF Law;

(t) acknowledge that the Trustee may, in its sole and absolute discretion but otherwise in accordance with the law, vary the terms of this Application Form or alter the arrangements in respect of the Fund, where the Trustee is required to do so due to changes in AML/CTF Law;

(u) acknowledge that we may decide to delay or refuse any request or transaction, including by suspending the issue or withdrawal of Units in the Fund, if we are concerned that the request or transaction may breach any obligation of, or cause us to commit or participate in an offence under any AML/CTF Law, and the Trustee, SVA and Third Link will incur no liability to you if we do so. You further acknowledge that the Trustee, SVA and Third Link is under no obligation to inform you of their intention to do any of the above, or the fact that they have done any of the above, nor are they obliged to provide you with their reasons for any such actions;

(v) acknowledge that the Trustee, SVA and Third Link will rely on the representations given in this Application Form, and you agree to indemnify the Trustee, SVA and Third Link against any loss or claim of or against the Trustee, SVA and Third Link to the extent that the loss or claim arises from or is connected with any breach of any of the representations contained in this Application Form; and

(w) acknowledges that until any Units are issued to you, you have no interest in the Fund.

Section F – Signature

Signature of Applicant 1:

Name of Applicant 1: Date:

Tick capacity – mandatory for companies: ● Sole Director ● Director ● Secretary

Signature of Applicant 2:

Name of Applicant 2: Date:

Tick capacity – mandatory for companies: ● Sole Director ● Director ● Secretary



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TRUSTEE / CUSTODIAN

The Trust Company (Australia) Limited Level 15, 20 Bond Street Sydney NSW 2000

INVESTMENT MANAGER / ADMINISTRATOR

Social Ventures Australia Limited Suite 1, Level 6 6 -10 O’Connell Street Sydney NSW 2000

Phone: 02 8004 6700 Fax: 02 8004 6701 Email: [email protected] Website: www.socialventures.com.au

LEGAL AND TAX ADVISERS

Allen & Overy Level 25 85 Castlereagh Street Sydney NSW 2000

AUDITORS

Ernst & Young Level 33, Ernst & Young Centre World Square 680 George Street Sydney, NSW 2000

CORPORATE DIRECTORY

Date post:	22-Sep-2020
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SVA SOCIAL IMPACT FUND - Social Ventures Australia · ISSUE NUMBER 1 | 4 APRIL 2012 SVA SOCIAL...

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