CLC Calculus Vct Plc

 
TIDMISP 
 
INVESTEC STRUCTURED PRODUCTS CALCULUS VCT PLC 
 
11 July 2011 
 
RECOMMENDED PROPOSALS TO APPROVE THE RELATED PARTY TRANSACTION, CHANGE THE 
COMPANY'S INVESTMENT POLICY AND NOTICE OF GENERAL MEETING 
 
SUMMARY 
 
The board of directors of the Company ("Board") sent on Friday (8 July 2011) a 
circular to shareholders ("Circular") with proposals to enter into a related 
party transaction with Investec Structured Products (an investment manager of 
the Company) and change the Company's investment policy. 
 
The Board advised in the recent C Share prospectus dated 7 January 2011 (in 
respect of an offer for subscription of C ordinary shares of 1p each ("C 
Shares")) that one of the structured products in which the Company would invest 
was likely to be issued by Investec Bank plc. Investec Bank plc, is regarded as 
a related party of the Company under the Listing Rules of the UK Listing 
Authority and, therefore, an investment by the Company in such a Structured 
Product would be a related party transaction and requires the prior approval of 
shareholders of the Company ("Shareholders"). 
 
Due to the relatively small size of the C Shares fund, it is proposed that the 
structured product to be issued by Investec Bank plc will be one which provides 
the C Shares fund with exposure to a variety of underlying issuers through a 
collateralised Investec issued structured product. This will allow the Company 
access to a more diversified portfolio of underlying issuers than might be the 
case if direct investments were made and, as a result, potentially reduce risk 
and improve returns. The opportunity is being taken to request Shareholder 
approval of an amendment to the investment policy for the purposes of 
clarifying that investments in these types of structured products are 
permitted. 
 
The entering into of a related party transaction (which, for the avoidance of 
doubt, will be in respect of the C Shares fund) and the change to the Company's 
investment policy require approval from Shareholders under the Listing Rules of 
the UK Listing Authority and will be sought at a general meeting to be held on 
4 August 2011 at 12.00 noon ("the General Meeting"). 
 
COLLATERALISED STRUCTURED PRODUCT 
 
The Company proposes to invest in a "collateralised" structured product issued 
by Investec Bank plc in respect of the C Shares fund. In summary, this 
collateralised structured product is designed to protect against potential loss 
to the investment in the event that Investec Bank plc fails or becomes 
insolvent. The risk to the investment will instead be dependent on the solvency 
of HSBC Bank plc, Nationwide Building Society, Santander UK plc, The Royal Bank 
of Scotland plc and Lloyds TSB Bank plc (the "UK 5"), 20 per cent. per 
institution. 
 
The Board believes that investing in this collateralised structured product 
will allow for greater diversification within the C Shares fund whilst 
providing a more attractive return than would be achieved by investing directly 
in structured products issued by the UK 5. A more detailed explanation of the 
characteristics of this collateralised structured product is set out in the 
Circular posted to Shareholders. 
 
RELATED PARTY TRANSACTION 
 
Investec Structured Products, which is a team within Investec Bank plc, as the 
manager to the Company's structured products portfolio, is regarded as a 
`related party' of the Company under the Listing Rules of the UK Listing 
Authority. The investment by the Company into the collateralised structured 
product issued by Investec Bank plc is a related party transaction ("Related 
Party Transaction") requiring the approval of Shareholders pursuant to the 
Listing Rules of the UK Listing Authority. 
 
It should be noted that the Related Party Transaction is in respect of the C 
Shares fund alone and does not impact on the Company's fund for the ordinary 
shares of 1p each ("Ordinary Shares fund"). Approval from all existing 
Shareholders is, however, required under the Listing Rules. Resolution 1 to be 
proposed at the General Meeting seeks such approval. 
 
CHANGE TO THE INVESTMENT POLICY 
 
The Board believes that an investment in the type of structured product to be 
issued by Investec Bank plc is within the scope of the existing investment 
policy of the Company and is consistent with the approach to spread risk across 
different issuers as set out in the existing investment policy of the Company. 
The use of a collateralised structured product issued by Investec Bank plc 
enables the Company to diversify the portfolio of structured products within 
the C Shares fund by spreading the investment risk across the UK 5 within one 
structured product. Due to the size of the C Shares fund, if the resolutions to 
be proposed at the General Meeting are not passed the Company could not 
presently access and achieve equivalent terms to those offered under the 
Investec Bank plc collateralised product by investing directly in structured 
products issued by each of the UK 5. 
 
The Board proposes, however, for clarity to amend the investment policy by 
adding the following paragraph to the `Structured Products' section: 
 
"The Structured Products may also be collateralised whereby notes are issued by 
one issuer (such as Investec Bank plc) but with the underlying investment risk 
being linked to more than one issuer (as approved by the Board) reducing 
insolvency risks, creating diversity and potentially increasing returns for 
Shareholders. If the Company invests in a collateralised Structured Product, 
the amount of the exposure to an underlying issuer will be taken into account 
when reviewing investments for diversification. The maximum exposure to any one 
issuer (or underlying issuer) will be limited, in aggregate, to 15 per cent. of 
the assets of the Company at the time of investment." 
 
The existing and revised investment policy is set out in detail in the 
Circular. The amendment will allow the Company to make investments in, firstly, 
the collateralised structured product issued by Investec Bank plc in respect of 
the C Shares fund and, secondly, in other similar products in respect of the 
Company generally. Whilst this will give flexibility for either the Ordinary 
Shares fund and the C Shares fund to invest a greater amount in any one issuer 
(including Investec Bank plc) from either fund, the maximum which may be 
invested in any one issuer will continue to be no more than 15 per cent. of the 
assets of the Company at the time of investment (or, if lower, the maximum 
amount which may be invested pursuant to VCT restrictions). 
 
The amendment to the investment policy requires the approval of Shareholders 
and resolution 2 to be proposed at the General Meeting seeks such approval. 
 
FURTHER INFORMATION 
 
Shareholders will receive a copy of a Circular convening the General Meetings 
to be held on 4 August 2011 at 12.00 noon at which Shareholders will be invited 
to approve resolutions in connection with the proposals. A copy of the circular 
for the Company has also been submitted to the UK Listing Authority and will be 
shortly available for inspection at the National Storage Mechanism which can be 
accessed at the website www.hemscott.com/nsm.do 
 
For further information, please contact: 
 
Investment Manager to the Structured Products Portfolio 
 
Investec Structured Products 
 
Gary Dale 
 
Telephone: 020 7597 4065 
 
Investment Manager to the Venture Capital Portfolio 
 
Calculus Capital Limited 
 
Susan McDonald 
 
Telephone: 020 7493 4940 
 
 
END 
 

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