| Investment Overview | Gleneagle Asset Management Limited (ABN 29 103 162 278, AFSL No. 226199) (Gleneagle) has established the Fund to facilitate Eligible Investors acquiring an economic interest in listed or unlisted emerging unicorn companies. The Fund's sole purpose is to invest in these companies. |
| Investment universe | Listed and unlisted global equities and global swaps. |
| Legal structure and currency | The Fund is an Australian unit trust. Units in the Trust (Units) are fully paid.
All dollar amounts referred to in this Term Sheet are in Australian dollars. |
| Trustee and Manager | Gleneagle Asset Management Limited (ABN 29 103 162 278, AFSL No. 226199) is the Trustee and Manager of the Fund. |
| Eligible Investors | Interests in the Fund are only available to persons who are wholesale clients for the purposes of the Corporations Act 2001 (Cth) (Corporations Act). |
| Target raising | Gleneagle is proposing to raise $20 million however there is no minimum or maximum size of the Fund. |
| Application cut off and application moneys | Applications will generally be processed on the first business day of each month.
The application form, wholesale status, any information requested and cleared funds (Approved Applications) must be received by the Trustee on or before the 25th of each to be processed on the first business day of the month otherwise it will be processed the following month. Application monies will be held in an account which may be interest bearing until invested in the Fund (or returned to the Applicant) and that interest (if any) earned on this account will be retained by the Trustee. |
| Minimum Investment | The minimum investment by any Investor will be $50,000 unless permitted by the Trustee. [All subscription amounts must be paid in Australian dollars. |
| Closing Dates | The first close is expected to occur on 31 March 2022 (First Closing) for which Approved Application must be received no later than 25 March 2022. The issue price of a Unit issued on the First Closing will be $1.00.
Subsequent closings may be held at the discretion of the Trustee, provided that the final closing will occur no later than 12 months after the date of the First Closing being 31 March 2023 (Final Closing).
The issue price of a Unit issued subsequent to the First Closing will be based on the net asset value of the Fund calculated on the last business day of each month in accordance with the Trust Deed. |
| Term of the Fund | The Fund will have an initial term of 3 years from the First Closing ending on 31 March 2025 (3rd Anniversary) , which may be extended by up to 2 additional extensions each of 1 year as determined by the Trustee in its discretion ending on 31 March 2026 (4th Anniversary) and 31 March 2027 (5th Anniversary), respectively.
The Trustee must give at least 1 months prior notice (Extension Notice Period) before extending the term of the Fund beyond the 3rd Anniversary and the further extension beyond the 4th Anniversary.
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| Withdrawal and Transfer from the fund | Investments in the Fund are illiquid. Subject to the below, Investors have no right to redeem their Units prior to the 3 Anniversary or, if the Fund is extended as referred to above, during either of the 2 extension periods.
If the Fund is extended beyond the 3rd Anniversary or the 4th Anniversary, Investors may request the redemption of their units after they receive an extension notice from the Trustee prior to the end of the relevant Extension Notice Period (i.e. by the 3rd Anniversary or the 4th Anniversary as applicable).
If a redemption requests is accepted by the Trustee the redemption proceeds will generally be paid within 15 business days after the 3rd Anniversary or 4th Anniversary.
The redemption of Units in such circumstances will be funded by selling assets and/or by borrowings secured by lodging stock owned by the Fund with the lender. Any interest charged by the lender will be paid from the assets of the fund.
However, the acceptance of all or some of the Units subject to redemption requests and the time for paying out any accepted redemption requests is at the Trustee's absolute discretion.
An Investor may only transfer any of its Units with the prior written consent of the Trustee in its absolute discretion. Investors may seek to sell or transfer their units by notifying the Trustee in writing which will use commercially reasonable endeavours to facilitate the sale of those Units. |
| Distributions | The Trustee intends that the Fund will pay an annual distribution yield of 5% per annum (i.e. 1.25% per quarter), which may be paid out of the income or capital of the Fund and may be funded by borrowings secured by lodging stock owned by the Fund with the lender. Any interest charged by the lender will be paid from the assets of the fund.
Distributions will be paid in cash and payments will be made quarterly, based on the 1.25% per quarter in proportion to the time those Units have been invested in the fund for that quarter. Distributions cannot be reinvested in the Fund.
The Fund will not be distributing dividends that have franking credits for taxation purposes. |
| Administration, Audit, and Registry costs and expenses | The Trustee is entitled to receive:
- a once off upfront administration cost paid to the administrator of $10,000 payable on the commencement of the Fund and a monthly administration cost of the greater of $3,000 per month or 0.09% per annum on the gross assets of the Fund less than $50m, reducing to 0.05% on the assets between $50m-$200m, and 0.02% on assets greater than $200m (plus any GST) payable monthly in arrears.
This minimum amount is increased annually by the annual adjustment being the higher of 3% and CPI on 1 April each year, commencing 1 April 2023;
- a once off upfront registry cost paid to the registrar of $1,000 payable on the commencement of the Fund and a monthly minimum maintenance registry cost of $600 per month (plus any GST) payable monthly in arrears;
- compliance tax and investor reporting paid to the administrator of $4,400 for each financial year ending 30 June each year, payable on completion of the reporting being sent to unitholders and accrued for monthly with each financial year ending 30 June each year;
and
- audit cost (if an audit is conducted in that year) paid to the auditors of $10,000 for each financial year ending 30 June each year, payable on completion of the audit and accrued for monthly with each financial year ending 30 June each year, these payments which is used to pay costs charged by the external administrator, Registry Manager and external auditor. The monthly costs will be accrued monthly in arrears and paid within 15 business days after the month end out of the Fund's assets.
- audit cost (if an audit is conducted in that year) paid to the auditors of $10,000 for each financial year ending 30 June each year, payable on completion of the audit and accrued for monthly with each financial year ending 30 June each year, these payments which is used to pay costs charged by the external administrator, Registry Manager and external auditor. The monthly costs will be accrued monthly in arrears and paid within 15 business days after the month end out of the Fund's assets.
These fees are subject to change by the Trustee giving at least 30 days written notice to unitholders.
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| Establishment Fee | The Trustee is entitled to receive a once off establishment fee of 4% paid out of each investor's subscription amount which will be used to, without limitation, fund the establishment costs and expenses below. |
| Establishment Costs and Expenses | All costs incurred in the establishment of the Fund and other indirect expenses incurred by the Trustee in connection with the operation of the Fund, excluding external administrator, registry and audit costs, will be paid by the Trustee in its personal capacity from the establishment fee. Transaction costs incurred in relation to the acquisition of the Fund's assets or its borrowings will be borne by the Fund. |
| Performance Fee | - 20% of the surplus (if any) of the aggregate of all realisation proceeds (including income and capital) received by the Fund above the amount invested in the Fund;
and
- 30% of the surplus of the aggregate of all realisation proceeds received by the Fund above the amount invested in the Fund, if the surplus is 300% above the amount invested in the Fund.
- The Performance fee will not be accrued based on unrealised assets. If the performance fee is payable, it will generally be paid within 15 business days after the month end in which the assets were realised out of the realisation proceeds. |
| Risks | The risks of investing in unicorn companies i.e. early stage ventures is typically seen as a highly risky venture, with the potential to bring in high returns. Unicorn companies aren't a commonality and only a limited number succeed. It is not suitable for conservative or risk-averse investors or those who cannot recover from capital loss or have a short term outlook. There is also the liquidity risk and sellers might have to wait for liquidity events to get their money out.
The other risk is majority control where the founders' interests might be poorly aligned with those of small investors. Gleneagle Group, its partners and our sophisticated investors already have significant holdings in those emerging unicorn companies.
The risk is decreased as Gleneagle may also seek to appoint a representative of the Fund to the company's board, providing further opportunity to apply strategic influence, pivot business strategy and facilitate growth. |
