Glossary of terms used in Private Equity

Administrator

means Woodside Corporate Services Limited, registered in England under company number 6171085, with its registered office at 4th Floor, 50 Mark Lane, London EC3R 7QR, or such other administrator or nominee as may be appointed by the Managers from time to time.

Acceptance Date

is the date on which the Administrator confirms that relevant acceptance procedures have been satisfactorily completed and that an individual Manager has accepted the application from you to invest in the Portfolio or Portfolios specified by you and at least £5,000 has been subscribed to each of the relevant Portfolios.

Agreement

the Investor Agreement contained in Appendix 2 of the Scheme Guide.

Annual Allowance (Pension Annual Allowance)

the maximum pension input (earned in a Defined Benefit scheme and contributions paid into a defined contribution scheme) a pension scheme member is allowed each year without giving rise to a tax charge .

Annual Management Charge

the annual management charge as set out in the Scheme Guide.

Applicable Laws

all relevant UK laws, regulations and rules, including those of any government or of the FCA.

Applicant

a customer who has completed an Application Form.

Application Form

an application form to invest in the Scheme completed by a prospective customer in the form supplied by the Promoter.

Approved Person

An ‘approved person’ is an individual who we approve to do one or more activities for an authorised firm. We call these activities ‘controlled functions’.

This person has to know and meet our regulatory requirements, as well as understand how we apply them.

They must:

meet the requirements of our ‘fit and proper’ test and follow its principles comply with the Statements of Principle and Code of Practice (these explain the behaviour we expect of people we approve) report anything that could affect their ongoing suitability to us and the authorised firm.

We can only approve people who we are satisfied are fit and proper to perform the controlled function(s) they apply for.
Read more about the fit and proper’ test.

We will want to approve at least one person in a consumer credit firm when it applies to be authorised.

Individuals cannot perform regulated activities unsupervised until they are assessed as competent.

Anyone who deals with customers will probably need approval. Most advisers (eg financial and retail advisers, investment managers) will need approval. Most providers of not-for-profit debt advice and some sole traders do not need to have an approved person.

Associate

any person or entity, which (whether directly or indirectly) controls or is controlled by another party or is under common control with that party. For the purpose of this definition “control” shall be deemed to refer also to any power to exercise significant influence over the operating or financial policies of any person or entity.

Blind pool

A fund or portfolio where the investors are not aware of what the underlying investments are.

Buyout funds

Private equity funds that provide capital for acquisition transactions or refinancing.

Capital Gains Deferral or CGT Deferral Relief

deferral of CGT as set out in section 150C and Schedule 5B of the Taxation of Chargeable Gains Act 1992.

CGT

Capital Gains Tax

Commitment

An investor’s obligation to provide a certain amount of capital to a fund. Typically institutional private equity funds do not hold cash but rely on their investors to provide funds on demand. Investors may be required to meet capital calls at quite short notice.

Contribution

the total gross amount subscribed by an Investor in accordance with the terms of the offer set out in this Guide.

Custodian

WCS Nominees Limited, registered in England under company number 6002307, with its registered office at 4th Floor, 50 Mark Lane, London EC3R 7QR, or such other custodian or nominee as may be appointed by the Managers from time to time.

Custodian Agreement

the agreement between the Custodian and the Managers setting out the agreed terms for safe custody, nominee and administrative services to be provided by the Custodian in respect of the Portfolios.

Custodian Services

the services provided by the Custodian under the Custodian Agreement.

Defined Benefit

an occupational pension scheme that provides benefits based on accrual rate, pensionable service and pensionable salary.

Distributions

Cash or stock returned to investors after a fund or portfolio exits an investment. Stock distributions are sometimes referred to as “in-kind” distributions.

Early stage

An investment strategy involving investment in companies for product development and initial marketing, manufacturing and sales activities.

EIS

the Enterprise Investment Scheme as set out in Part 5 of Income Tax Act (ITA) 2007.

EIS/SEIS

Portfolio a Portfolio that invests solely in EIS/SEIS Shares

EIS/SEIS Qualifying Company

a company that meets the HMRC requirements EIS/SEIS for qualifications.

EIS/SEIS Relief

the tax reliefs available under the EIS/SEIS, including the income tax relief, capital gains tax exemption and CGT deferral relief.

EIS/SEIS Shares

shares in an EIS/SEIS Qualifying Company which qualify for EIS/SEIS Relief.

Exit

The action of selling an investment. This usually involves a company being sold or listed on a stock exchange.

Exit strategy

A fund or portfolio’s intended method for exiting investments.

FCA

Financial Conduct Authority or any successor regulator.

FCA Rules

the rules of the FCA as set out in the FCA’s Handbook of Rules and Guidance and any other rules and guidance issued by the FCA from time to time.

Financial Services Compensation Scheme (FSCS)

has the definition given to it under the FSMA.

First stage

The first round of financing following a company’s start-up phase.

FSMA

Financial Services and Markets Act 2000 (as amended from time to time).

Fund of funds

A private equity fund that, instead of being used to make direct investments in companies, invests in a number of other private equity fund managers, who in turn invest the capital directly. Funds-of-funds often give individual investors access to funds from which they would otherwise be excluded.

Fund size

The total amount of capital committed by the limited and general partners of a fund.

General partner (GP)

The team that oversees the investment of a specific private equity fund.

Guide

the Scheme Guide.

HMRC

HM Revenue and Customs.

Holding period

The amount of time an investment remains in a portfolio.

IHT

Inheritance tax.

Initial Fee

the initial fee as set out in the in the Scheme Guide.

Initial public offering (IPO)

When a privately held company offers shares of its stock to the public. An IPO of the company’s shares is one of the ways in which a private equity fund can exit from an investment.

Interim Investments

assets held with the Custodian prior to investment in Qualifying Shares. These will normally be cash held by the Custodian in bank deposits but could be other investments.

Internal rate of return (IRR)

The net return earned by investors from the fund’s activity from inception to a stated date. The IRR is calculated as an annualized effective compounded rate of return, using cash outflows, cash inflows and the latest valuation.

Investee Company

a company which is, at the time that an investment in its shares is made, an investee company for the purposes.

Investee Companies

companies in which the Managers invest.

Investment

an investment in Qualifying Shares acquired at the direction of a Manager in relation to the Portfolio that it manages.

Investment Guide

the document titled The Kuber Ventures Multi Manager EIS Investment Guide.

Investor Agreement

the agreement to be entered into between each investor and the Manager(s), in the terms set out in the Scheme Guide.

Investment Objectives

the respective investment objectives for the Portfolios as set out in the Investment Guide.

Investment Performance Fee

the investment performance fee as set out in the Scheme Guide.

Investment Restrictions

the Managers will only invest in Qualifying Shares in order to have access to EIS Relief as may be prescribed by HMRC from time to time. Any additional Investment Restrictions for the Portfolios are set out in the Kuber Investment Guide.

Investor

a person who completes an Application Form which is accepted by the Investment Manager(s) and so enters into an Investor Agreement and invests through one of more of the Portfolios.

ITA

The Income Tax Act 2007 as may be amended.

Kuber

Kuber Ventures Limited a limited liability company whose registration number is 8693809 and whose registered office is 25 Sackville Street, London, W1S 3AX.

Kuber Ventures Alternative Investment Platform, Platform Guide

the documents issues by the Promoter in connection with the raising of capital from Investors for subscription in the Portfolios via Kuber Ventures Alternative Investment Platform outlining the different investment choices available within the Platform.

Kuber Ventures Alternative Investment Platform

the arrangements being made by the Promoter and which are described in the Kuber Ventures Alternative Investment Platform, Platform Guide (as amended from time to time).

Later stage

A fund investment strategy involving financing for the expansion of a company that is already well established.

Leveraged buyout (LBO)

The acquisition of a company in which the purchase is leveraged through loan financing, rather than being paid for entirely with equity funding. The assets of the company being acquired are put up as collateral to secure the loan.

Lifetime Allowance (Pension Lifetime Allowance)

all benefits provided from registered pension schemes are subject to a “Lifetime Allowance” (LTA). The LTA has been set at £1.5 million for the 2013/14 tax year, after which it will reduce to £1.25 million. Protection may be available for those that may exceed the Lifetime Allowance. The excess, when taken, will be subject to a lifetime allowance tax charge.

Management buy-in (MBI)

Type of buyout transaction where experienced executives buy not their own business, but one that is operating in the same sector.

Management buyout (MBO)

Type of buyout transaction in which the team of executives managing the business buys it out from the parent company with the support of a buyout firm.

Manager

a company that assumes authority over a specified amount of capital, invests that capital in assets using a separate account, provides asset management and is authorised and regulated by the FCA.

Mature funds

Funds that have been investing for at least five years.

Mezzanine finance

Debt finance which sits behind senior debt but ahead of other creditors in a winding up of a company.

Money Laundering Regulations

The Money Laundering Regulations 2007 as may be amended from time to time.

Nominee

such nominee as the Custodian may appoint from time to time, and at the date of this Guide is WCS Nominees Limited.

Order Execution Policy

the Manager’s internal process for dealing with the execution of investment transactions within their portfolios as required under the FCA Rules. These policies are available on request from Kuber.

Pension Scheme

a Registered Pension Scheme, which is registered under Chapter 2 of Part 4 of the Finance Act 2004. This will include personal and stakeholder pension schemes, occupational pension schemes and Section 32 buyout contracts.

Platform

the Kuber Ventures Alternative Investment Platform as described in the Platform Guide for EIS/SEIS/BPR, the Kuber Investment Guide and the Investor Agreement.

Portfolio

investments made through a portfolio which are allocated to Investors and which are registered in the Investor’s name or in the name of a nominee on his behalf who shall be the Manager or such nominee as the Manager may appoint from time to time.

Promoter

Kuber Ventures Limited.

Qualifying Shares

ordinary shares in an Investee Company which at time of acquisition for the account of a Portfolio are qualified under the relevant provisions of ITA for the purposes of conferring EIS tax benefits on the holders thereof.

Qualifying Trade

a trade permitted by Sections 189 and 192 ITA.

Quartile performance

The threshold performance above which 25% (upper quartile) or 50% (second quartile) of private equity funds’ performance lies.

Regulated Market

any exchange or market included on the list maintained by any of the competent securities regulatory authorities 46 The Alternative Investment Platform – Platform Guide in Member States of the European Economic Area in accordance with the provisions of Article 47 of the EC Markets in Financial Instruments Directive.

Relevant Business Property or Business Property Relief

Relevant Business Property is property which qualifies for Business Property Relief. Business Property Relief is a relief for IHT purposes. For an asset to qualify as Relevant Business Property it must be held for a period of at least 2 years prior to the IHT tax point. Shares in unlisted trading companies may qualify as Relevant Business Property. The relief available is set out in the Inheritance Tax Act 1984 (Part V Chapter I).

Relevant Period

the period beginning on the date that the Qualifying Shares are issued by the Investee Company and ending three years after that date, or three years after the commencement of the Investee Company’s trade, whichever is later.

Replacement Property Relief

if an Investor sells an asset which qualified for Relevant Business Property and replaces it with a new asset that would also qualify within a 3 year period they may be entitled to Replacement Business Property immediately thereby not having to wait for a further 2 years to qualify. The relief is restricted to the amount of relief that would have been available against the original asset.

Restructuring/distressed debt

Restructuring partnerships make new equity investments in financially or operationally distressed companies; distressed debt partnerships purchase debt of companies in distress. Distressed companies do not normally qualify for EIS relief.

Roll-up

Buyout transaction where a fragmented industry is targeted, and a number of small businesses are bought before being consolidated into one large entity.

Seed-stage fund

A pool of money used to back companies too small to attract mainstream venture firms. Seed EIS attract additional tax benefits to mainstream EIS.

SEIS

the Seed Enterprise Investment Scheme is set out in Part 5 of ITA.

Senior debt

Debt finance which sits in first place in the event of a winding up of a company. Senior debt is usually secured against specific assets.

Services

the services provided by the each of the respective Managers under the Investor Agreement.

Special situations

Partnerships with a specific focus, i.e. distressed debt, or unique opportunities falling outside the regular subclasses, i.e. mezzanine or situations resulting from changing government regulations or industry trends.

Subscription

the amount of money the Investor invests in a Portfolio.

Tax Benefits

the various tax benefits, that may be available for eligible persons arising from subscriptions for Qualifying Shares.

Terms and Conditions

the terms and conditions of an investment in the Portfolio as set out in the Investor Agreement in this document.

Venture capital

Early-stage (which provide capital for businesses in the conceptual stage, or where products are not fully developed and revenues and/or profits may not exist) and later-stage (which provide growth or expansion capital for more mature businesses) venture capital partnerships. Venture capital funds typically focus on information technology and/or healthcare related investments.

Vintage year

The year of fund formation and/or first drawdown of capital. A private equity program may not invest all of its capital in a specific vintage year. However, since investors give up use of capital in the vintage year, this is the year used for measuring returns on private equity.

Vintage year performance

Comparing returns of a portfolio to the returns of its peers; in private equity, fund performance is benchmarked against a sample of funds formed in the same vintage year with the same investment focus.