Greencoat Uk Wind Fund Prospectus - September 2014

8/9/2019 Greencoat Uk Wind Fund Prospectus - September 2014

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IMPORTANT: You must read the following before continuing. The following applies to theprospectus (the Prospectus) which follows, and you are therefore advised to read this carefullybefore reading, accessing or making any other use of the Prospectus. In accessing the Prospectus,you agree to be bound by the following terms and conditions, including any modifications made tothem from time to time by Greencoat UK Wind PLC (the Company) as a result of such access.The Prospectus has been prepared solely in connection with the proposed offer for subscription ofthe securities described in the Prospectus (the New Shares) in the United Kingdom and the

marketing of the New Shares in certain other countries outside the United Kingdom.This document and any offer if made subsequently is subject to the Alternative Investment FundManagers Directive (AIFMD) as implemented by Member States of the European Economic Area.Outside of the United Kingdom, this document and any offer if made subsequently is directed onlyat professional investors in the following member states: Ireland, Belgium and the Netherlands(together with the United Kingdom, the Eligible Member States). The Companys InvestmentManager has not registered a passport for marketing under the passporting programme set out inthe AIFMD in any other member state (each an Ineligible Member State). This document maynot be distributed in any Ineligible Member State and no offers subsequent to it may be made oraccepted in any Ineligible Member State.

This document is only addressed to and directed at persons in Eligible Member States who arequalified investors within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive

2003/71/EC (and amendments thereto, including Directive 2010/73/ EU, to the extent implementedin the Relevant Member State)) (Qualified Investors).

If you are located in the EEA but outside the UK, by accepting this document, you warrant,represent, acknowledge and agree that: (i) you are a Qualified Investor; (ii) you not are a recipientin an Ineligible Member State; and (iii) you have read, agree to and will comply with the contentsof this notice.

PLEASE DO NOT DISTRIBUTE OR COPY THE INFORMATION CONTAINED IN THISDOCUMENT. NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OFSECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THECOMPANY IS NOT REGISTERED UNDER THE US INVESTMENT COMPANY ACT OF 1940, ASAMENDED. IN ADDITION, THE SECURITIES DESCRIBED IN THE PROSPECTUS HAVE NOTBEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, ASAMENDED (THE SECURITIES ACT) OR WITH ANY SECURITIES REGULATORY AUTHORITYOF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BEOFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATESOR TO OR FOR THE ACCOUNT OR BENEFIT OF US PERSONS (AS SUCH TERMS AREDEFINED IN REGULATION S UNDER THE SECURITIES ACT (REGULATION S)) EXCEPT (1)IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OFREGULATION S OR (2) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM, OR IN ATRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THESECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIESLAWS OF ANY STATE OR JURISDICTION OF THE UNITED STATES.

THIS NOTICE AND THE FOLLOWING PROSPECTUS MAY NOT BE REPRODUCED ORREDISTRIBUTED, FORWARDED OR PASSED ON IN WHOLE OR IN PART, DIRECTLY ORINDIRECTLY, TO ANY OTHER PERSON. THE DISTRIBUTION OF THIS PROSPECTUS INCERTAIN JURISDICTIONS MAY BE RESTRICTED BY LAW AND PERSONS INTO WHOSEPOSSESSION THIS DOCUMENT COMES SHOULD INFORM THEMSELVES ABOUT, ANDOBSERVE, ANY SUCH RESTRICTIONS. ANY FAILURE TO COMPLY WITH THESERESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF ANY SUCHJURISDICTIONS. BY ACCESSING THE PROSPECTUS, YOU AGREE TO BE BOUND BY THELIMITATIONS SET OUT HEREIN.

Confirmation of Your Representation: In order to be eligible to view the Prospectus or make aninvestment decision with respect to the securities, you must be a person that is outside the UnitedStates within the meaning of Regulation S. By accessing the Prospectus, you shall be deemed tohave made the above representation and consented to accessing of this Prospectus on a website.

This Prospectus is in electronic form. You are reminded that documents transmitted via thismedium may be altered or changed during the process of transmission, and consequently none ofRBC Europe Limited (trading as RBC Capital Markets), Winterflood Securities Limited, Greencoat


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Capital LLP (each a Party, together the Parties) nor the Company, or any person who controlsany of them, nor any director, officer, employee or agent of any Party or the Company nor anyaffiliate of any such person accepts any liability or responsibility whatsoever in respect of anydifference between this Prospectus in electronic format and the hard copy version available to youon request from the Parties.

None of the Parties nor any of their respective affiliates accepts any responsibility whatsoever forthe contents of this notice or the Prospectus or for any other statement made or purported to be

made by them or on their behalf, in connection with the Company or the New Shares or theoffering referred to herein. The Parties and each of their affiliates disclaim all and any liabilitywhether arising in tort, contract or otherwise which they might otherwise have in respect of theelectronic transmission, the Prospectus or any such statement. No representation or warranty,express or implied, is made by any of the Parties or any of their respective affiliates as to theaccuracy, completeness or sufficiency of the information set out in this electronic transmission orthe Prospectus.

You are responsible for protecting against viruses and other destructive items. Your receipt of thiselectronic transmission is at your own risk and it is your responsibility to take precautions to ensurethat it is free from viruses and other items of a destructive nature.


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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about thecontents of this Prospectus you should consult your accountant, legal or professional adviser, financial adviser ora person authorised for the purposes of the Financial Services and Markets Act 2000, as amended (FSMA) whospecialises in advising on the acquisition of shares and other securities.

If you have sold or otherwise transferred all your Ordinary Shares in Greencoat UK Wind PLC (the Company), please passthis document (and the enclosed Form of Proxy) as soon as possible to the purchaser or transferee or to the stockbroker,bank or other agent through whom you made the sale or transfer for onward transmission to the purchaser or transferee. Ifyou have sold or transferred part of your holding, please consult the stockbroker, bank or other agent through whom thesale or transfer was made immediately.

A copy of this Prospectus, which comprises a prospectus relating to the Company, prepared in accordance with the

Prospectus Rules of the Financial Conduct Authority made pursuant to section 85 of FSMA, has been delivered to theFinancial Conduct Authority and has been made available to the public in accordance with Rule 3.2 of the ProspectusRules. This Prospectus constitutes a circular under the Listing Rules of the Financial Conduct Authority.

It is expected that an application will be made to the UK Listing Authority for all of the New Shares to be admitted to theOfficial List (premium listing) and to the London Stock Exchange for all such New Shares to be admitted to trading on theLondon Stock Exchanges main market for listed securities. It is expected that such admission will become effective, andthat dealings in the New Shares will commence, on 30 October 2014.

The Ordinary Shares are not dealt in on any other recognised investment exchanges and no applications for the OrdinaryShares to be traded on such other exchanges have been made or are currently expected to be made.

The Company and its Directors, whose names appear on page 45 of this Prospectus, accept responsibility for theinformation contained in this Prospectus. To the best of the knowledge of the Company and the Directors (who have takenall reasonable care to ensure that such is the case), the information contained in this Prospectus is in accordance with thefacts and does not omit anything likely to affect the import of such information.

Prospective investors should read this entire document and in particular, the matters set out under the heading RiskFactors on pages 18-40 of this Prospectus, when considering an investment in the Company.

Greencoat UK Wind PLC(Incorporated in England and Wales with company number 08318092 and registered as an investment company

under section 833 of the Companies Act 2006)

Target Issue of 93,457,944 New Shares pursuant to a Placing and an Offer forSubscription at an Issue Price of 107 pence per Share

Admission to listing on the Official List and trading on the London StockExchanges main market for listed securities

and

Notice of General Meeting

Sponsor and BookrunnerRBC Capital Markets

Lead ManagerWinterflood Securities Limited

Investment ManagerGreencoat Capital LLP

RBC Europe Limited (trading as RBC Capital Markets) (RBC) which is authorised in the United Kingdom by the PrudentialRegulation Authority and authorised and regulated in the United Kingdom by the Financial Conduct Authority and thePrudential Regulation Authority, and Winterflood Securities Limited, which is authorised and regulated in the United Kingdomby the Financial Conduct Authority, are acting exclusively for the Company and no-one else in connection with the Issue orthe matters referred to in this Prospectus, will not regard any other person (whether or not a recipient of this Prospectus) astheir respective client in relation to the Issue and will not be responsible to anyone other than the Company for providing the

protections afforded to their respective clients or for providing advice in relation to the Issue or any transaction orarrangement referred to in this Prospectus.

This Prospectus may not be published, distributed or transmitted by means or media, directly or indirectly in whole or inpart, in or into the United States. These materials do not constitute an offer to sell, or a solicitation or an offer to buy,securities in the United States or to, or for the account or benefit of any U.S. person (within the meaning of Regulation Sunder the U.S. Securities Act of 1933, as amended (the U.S. Securities Act) (a U.S. Person). Securities may not beoffered or sold in the United States absent: (i) registration under the U.S. Securities Act; or (ii) an available exemption fromregistration under the U.S. Securities Act.

The Ordinary Shares offered by this Prospectus have not been and will not be registered under the U.S. Securities Act orunder the applicable state securities laws of the United States and may not be offered or sold directly or indirectly in or intothe United States or to or for the account or benefit of any U.S. Person. In addition, the Company has not been, and willnot be, registered under the United States Investment Company Act of 1940, as amended (the U.S. Investment CompanyAct).

Prospective investors should consider carefully (to the extent relevant to them) the notices to residents of various countriesset out on pages 156-157 of this Prospectus.

Notice of a General Meeting to be held at 9.30 a.m. on 24 October 2014 at 3 More London Riverside, London SE1 2AQ, isset out on pages 172-173 of this Prospectus.

Shareholders are requested to complete and return the enclosed Form of Proxy for use at the General Meeting. To be valid,the Form of Proxy and any power of attorney or other authority under which it is signed (or a notarially certified copy ofsuch authority) must be received by post or (during normal business hours only) by hand at the Companys Registrars,Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible and in anyevent not later than 9.30 a.m. on 22 October 2014. Proxies may also be submitted through CREST as described herein.

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CONTENTS

SUMMARY .................................................................................................................................. 3

RISK FACTORS.......................................................................................................................... 18

IMPORTANT INFORMATION ..................................................................................................... 41

EXPECTED TIMETABLE AND ISSUE STATISTICS..................................................................

44DIRECTORS, AGENTS AND ADVISERS................................................................................... 45

PART I: LETTER FROM THE CHAIRMAN................................................................................. 47

PART II: THE COMPANY ........................................................................................................... 51

PART III: WIND ENERGY MARKET IN THE UK........................................................................ 58

PART IV: PORTFOLIO AND PIPELINE...................................................................................... 73

PART V: DIRECTORS, MANAGEMENT AND ADMINISTRATION ............................................ 81

PART VI: FINANCIAL INFORMATION ....................................................................................... 89

PART VII: THE ISSUE ................................................................................................................ 95

PART VIII: TAXATION ................................................................................................................ 100

PART IX: ADDITIONAL INFORMATION..................................................................................... 103

PART X: TERMS AND CONDITIONS OF THE PLACING ......................................................... 146

PART XI: TERMS AND CONDITIONS OF THE OFFER FOR SUBSCRIPTION ....................... 150

NOTICES TO OVERSEAS INVESTORS .................................................................................... 156

DEFINITIONS.............................................................................................................................. 158

APPLICATION FORM FOR THE OFFER FOR SUBSCRIPTION .............................................. 169

NOTICE OF GENERAL MEETING ............................................................................................. 172

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SUMMARY

Summaries are made up of disclosure requirements known as Elements. These elements are numberedin Sections A E (A.1 E.7).

This summary contains all the Elements required to be included in a summary for this type of securityand issuer. Because some Elements are not required to be addressed there may be gaps in thenumbering sequence of the Elements.

Even though an Element may be required to be inserted into the summary because of the type ofsecurity and issuer, it is possible that no relevant information can be given regarding the Element. In thiscase a short description of the Element is included in the summary with the mention of not applicable.

Section A Introduction and warnings

Element Disclosure requirement Disclosure

A.1 Warning This summary should be read as an introduction to the prospectus. Anydecision to invest in the securities should be based on consideration ofthe prospectus as a whole by the investor. Where a claim relating to theinformation contained in a prospectus is brought before a court, the

plaintiff investor might, under the national legislation of the MemberStates, have to bear the costs of translating such prospectus before thelegal proceedings are initiated. Civil liability attaches only to thosepersons who have tabled the summary including any transaction thereof,but only if the summary is misleading, inaccurate or inconsistent whenread together with the other parts of the prospectus or it does notprovide, when read together with the other parts of the prospectus, keyinformation in order to aid investors when considering whether to investin such securities.

A.2 Subsequent resale ofsecurities or finalplacement of securitiesthrough financialintermediaries

Not applicable. The Company is not engaging any financialintermediaries for any resale of securities or final placement ofsecurities requiring a prospectus after publication of this document.

Section B Issuer


B.1 Legal and commercialname

The issuers legal and commercial name is Greencoat UK Wind PLC

B.2 Domicile and legalform

The Company was incorporated in England and Wales on 4 December2012 with registered number 08318092 as a public company with anunlimited life under the Companies Act 2006.

B.5 Group description The Company makes its investments via a group structure whichcomprises the LLP and Holdco, a wholly-owned subsidiary of the LLP.The Company and the Investment Manager are the only members of theLLP. Members decisions are taken jointly by designated representativesof each member, with the chairman of the Company having a castingvote in the event of deadlock. Both the LLP and Holdco are party to theInvestment Management Agreement. Holdco invests either directly orindirectly in the SPVs which own the wind farms.

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B.6 Major shareholders As at the close of business on 24 September 2014 (the latest practicabledate prior to publication of this Prospectus), the interests of the Directorsand their connected persons in the share capital of the Company are asfollows:

* Tim Ingram holds 160,706 Ordinary Shares.

* Shonaid Jemmett-Page and her spouse hold 23,060 OrdinaryShares.

* William Rickett and members of his family hold 37,500 OrdinaryShares.

* Dan Badger and his spouse hold 23,080 Ordinary Shares.

* Kevin McCullough holds 10,000 Ordinary Shares.

Insofar as is known to the Company, as at the close of business on24 September 2014 (the latest practicable date prior to publication of thisProspectus) the following registered holdings representing a direct orindirect interest of three per cent. or more of the Companys issued sharecapital were recorded on the Companys share register:

Shareholder

Ordinary

Shares

currently held

OrdinaryShares

currently held

(%)

BIS 50,000,000 14.54

Sarasin & Partners LLP 25,469,032 7.41Investec Wealth & Investment Limited 20,332,149 5.91

Baillie Gifford & Co Limited 18,383,421 5.35

Aberdeen Asset Management Limited 14,723,392 4.28

AXA Investment Managers Limited 10,600,000 3.08

B.7 Historical financialinformation

Selected historical financial information of the Group for the financialperiod from 4 December 2012 to 31 December 2013 and the periods

from 4 December 2012 to 30 June 2013 and 1 January 2014 to 30 June2014 is set out below. The information set out in the table below hasbeen extracted directly without material adjustment from the auditedaccounts of the Group for the period from 4 December 2012 to31 December 2013 and the unaudited half-year reports for the periodsfrom 4 December 2012 to 30 June 2013 and 1 January 2014 to 30 June2014.

As at

30 June 2013

As at

31 December

2013

As at

30 June 2014

Total assets (m) 263.2 402.3 498.0

Total liabilities (m) 0.2 51.2 136.1

Net assets (m) 263.0 351.1 361.9Net assets per Ordinary

Share (p) 101.1 102.9 105.4

From

4 December2012 to

30 June 2013

From

4 December

2012 to31 December

2013

From

1 January2014 30 June

2014

Earnings per OrdinaryShare (p) 2.94 6.89 5.47

Dividend per Ordinary

Share (p) 1.50 4.50 3.08

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There has been no significant change in the financial or trading positionof the Group during the period covered by the historical financialinformation other than: (i) First Admission; (ii) the acquisition ofinvestments in the Portfolio and associated draw down of 130 millionunder the Acquisition Facility Agreement in October and November2013; (iii) the issue of 80,975,610 Ordinary Shares under the Companysfundraising in December 2013 and associated prepayment of 80 million

of acquisition debt; (iv) the prepayment of 8 million of acquisition debt inMarch 2014; and (v) the acquisition of further investments in the Portfolioand associated draw down of 93 million under the Acquisition FacilityAgreement in June 2014.

There has been no significant change in the financial or trading positionof the Group subsequent to the period covered by the historical financialinformation, other than acquisition of an indirect 51.6 per cent. interest ineach of Drone Hill SPV, North Rhins SPV, Sixpenny Wood SPV andYelvertoft SPV and associated draw down of 90 million under theAcquisition Facility Agreement.

B.8 Key pro formafinancial

information

Not applicable. No pro formafinancial information has been included in

this Prospectus.

B.9 Profit forecast Not applicable. There are no profit forecasts included within thisProspectus.

B.10 Description of thenature of anyqualifications in theaudit report on thehistorical financialinformation

Not applicable. The audit reports on the historical financial informationcontained within this Prospectus are not qualified.

B.11 Working capitalinsufficiency

Not applicable. The Company believes, taking into account the existingfacilities available to the Group, that the working capital available to theGroup is sufficient for its present requirements, which is for at least thenext 12 months from the date of this Prospectus.

B.34 Investment policy Investment objective

The Company will invest mostly in operating UK wind farms. Over a longterm horizon the Companys aim is to provide investors with an annualdividend per Ordinary Share (6.16p for 2014) that increases in line withRPI inflation while preserving the capital value of its investment portfolioon a real basis through reinvestment of excess cashflow and the prudentuse of portfolio leverage.

Investment policy

The Company will invest in a portfolio of wind farm projectspredominantly with a capacity over 10MW. The substantial majority ofthe portfolio will be operating UK wind farm projects.

The Company will invest in both onshore and offshore wind farms withthe amount invested in offshore wind farms being capped at 40 per cent.of Gross Asset Value calculated immediately after each investment. TheDirectors will ensure that the Company will only invest in an offshorewind farm where a utility company retains an equity interest for a lock-upperiod.

The Company will seek to acquire 100 per cent., majority or minority

interests in individual wind farms. These will usually be held throughSPVs which hold underlying wind farms. When investing in less than

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100 per cent. of the equity share capital of a wind farm SPV, theCompany will secure its shareholder rights through shareholdersagreements and other transaction documents.

The Company will invest in equity and associated debt instruments whenmaking acquisitions in wind farms.

The Company will maintain or modify existing PPAs or seek to sign newPPAs between the individual wind farm SPVs in its portfolio and

creditworthy UK offtakers. The Company will retain exposure to UKpower prices by entering into PPAs that avoid fixing the price of powersold over the long term. The Company may enter into PPAs or hedgingcontracts that fix the price of electricity sold for short periods of time.

The Company intends to make investments in a wide geographicalspread of projects that are situated throughout the UK and its offshorerenewable energy zone. Although it is generally recognised that, at ahigh level, owning multiple wind farms throughout the UK and its offshorerenewable energy zone offers only limited wind diversification benefits (incomparison to a more international portfolio), it does providediversification for a number of different technical risks such as gridaccess, transmission networks and transformer performance. Also, each

site contains a significant number of individual turbines whoseperformance is independent of other turbines.

The Company intends to make prudent use of leverage to finance theacquisition of investments and to preserve capital on a real basis. TheCompany will generally avoid raising non-recourse debt by the SPVsowning individual wind farms in order to avoid the more onerouscovenants required by lenders. The Company can, following a decisionof the Board, raise debt from banks and/or capital markets at the level ofthe Company, the LLP or Holdco. As at the date of this document, theBoard expects that the total of short term acquisition financing and longterm debt will be between zero and 40 per cent. of Gross Asset Value atany time, with average total debt being between 20 and 30 per cent. of

Gross Asset Value in the longer term.

The Company will not seek to employ staff and will engage experiencedthird parties to operate the wind farms in which it owns interests.

There will not be any cross-financing between portfolio investments andthe Company will not operate a common treasury function as betweenthe Company and its investments.

Limits

Investments outside the UK, in construction projects or in non-equity orassociated debt instruments will not be the initial focus of the Group andwill be limited to 15 per cent. of Gross Asset Value calculatedimmediately after each investment.

The Company will invest in both onshore and offshore wind farms withthe percentage invested in offshore wind farms being capped at 40 percent. of Gross Asset Value calculated immediately after eachinvestment.

Single Investment Limit:

It is the Companys intention that when any new acquisition is made, nowind farm project acquired will have an acquisition price (or, if it is anadditional interest in an existing investment, the combined value of boththe existing interest and the additional interest acquired) greater than25 per cent. of Gross Asset Value immediately post-acquisition (and inno circumstances will a new acquisition exceed a maximum limit of 30 per

cent. of Gross Asset Value immediately post-acquisition).

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B.35 Borrowing limits Aggregate Group Debt will be limited to 40 per cent. of Gross AssetValue calculated immediately after such latest amount of AggregateGroup Debt has been drawn down. The Company will have 225 millionin third party debt immediately prior to Admission (representing 38 percent. of Gross Asset Value), which it intends to reduce usingsubstantially all of the Net Issue Proceeds as soon as reasonablypracticable following Admission.

B.36 Regulatory status The Company is incorporated and operates under the Companies Act2006. The Company is not authorised or regulated as a collectiveinvestment scheme by the Financial Conduct Authority. From FirstAdmission, it has been subject to the Listing Rules and the Disclosureand Transparency Rules of the UK Listing Authority. The Company isregistered as an investment company under section 833 of theCompanies Act 2006 and is an investment trust under section 1158 ofthe Corporation Tax Act 2010.

The Company is a UK plc and has been approved as an investment trustand, accordingly, the Shares are excluded securities for the purposes ofthe FCAs restrictions which apply to non-mainstream investment

products since they are shares in an investment trust.The Company is an alternative investment fund and has appointedGreencoat Capital LLP to act as its investment manager. GreencoatCapital LLP is authorised and regulated in the UK by the FCA (FCAregistration number 507962) as an alternative investment fund manager.

B.37 Typical investor Typical investors in the Company are expected to be institutional andsophisticated investors and private clients.

The New Shares are only suitable for investors who understand thepotential risk of capital loss and that there may be limited liquidity in theunderlying investments of the Company, for whom an investment in NewShares is part of a diversified investment programme and who fully

understand and are willing to assume the risks involved in such aninvestment programme.

B.38 Investment of 20 percent. or more in singleunderlying asset orinvestment company

Not applicable.

B.39 Investment of 40 percent. or more in singleunderlying asset orinvestment company

Not applicable.

B.40 Applicants serviceproviders

Investment management arrangements

The Company, the LLP and Holdco have entered into the InvestmentManagement Agreement with the Investment Manager under which theInvestment Manager will be responsible for the day-to-day managementof the Companys investment portfolio, in accordance with theCompanys investment objective and policy, subject to the overallsupervision and discretion as to acquisition execution of the Board.

The Investment Manager provides investment management services tothe Company and acts within the strategic guidelines set out in theinvestment policy. The Investment Manager reports to the Board.

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The Investment Manager is entitled to a combination of a cash fee andOrdinary Shares from the Company and a priority profit share from theLLP as set out below.

The Investment Manager is entitled to a quarterly cash fee (the BaseFee), which is paid quarterly in advance and the amount of which is equalto 275,000, provided that the fee for the quarter during which theInvestment Management Agreement terminates shall be the appropriate

pro-rated amount.The cash fee is exclusive of any applicable VAT which, where relevant, ispayable in addition.

In addition to the Base Fee and the priority profit share described below,the Company shall deliver to the Investment Manager, quarterly1 inadvance, Ordinary Shares having a value calculated as set out below(the Equity Element):

* on that part of the then most recently announced Net Asset Valueup to and including 500 million, 0.25 x 0.2 per cent.; plus

* on that part of the then most recently announced Net Asset Valueover 500 million up to and including 1,000 million, 0.25 x 0.1 per

cent.,provided that the Equity Element for the quarter during which theInvestment Management Agreement terminates shall be the appropriatepro-rated amount.

If the Equity Element comprises Ordinary Shares issued out of treasurythat were purchased by the Company in the market at a discount to NetAsset Value, such Ordinary Shares will be issued to the InvestmentManager at the price at which they were purchased by the Company. Ifthe Company is unable to purchase shares in the market at a discount toNet Asset Value, new Ordinary Shares will be issued to the InvestmentManager at a price equal to the current Net Asset Value per OrdinaryShare.

Subject to certain exceptions (including any disposal pursuant to atakeover offer, to a member of the Investment Manager provided suchmember agrees to be locked-in on similar terms or in order for anymembers of the Investment Manager to meet any tax liabilities referableto receipt of the Equity Element), the Ordinary Shares issued to theInvestment Manager under the Equity Element are subject to a threeyear lock up.

The Investment Manager is also entitled to receive a priority profit sharefrom the LLP, quarterly in advance, in each case based upon the NetAsset Value as at the start of the quarter in question on the followingbasis:

*

on that part of the then most recently announced Net Asset Valueup to and including 500 million, an amount equal to 0.25 per cent.of such part of the Net Asset Value;

* on that part of the then most recently announced Net Asset Valueover 500 million and up to and including 1,000 million, an amountequal to 0.225 per cent. of such part of the Net Asset Value; and

* on that part of the then most recently announced Net Asset Valueover 1,000 million, an amount equal to 0.2 per cent. of such part ofthe Net Asset Value,

in each case less an amount equivalent to the quarterly Base Fee.

1 In order to save the Company recurring FCA listing fees, the Company and the Investment Manager have agreed that the EquityElement shall continue to accrue quarterly in advance but shall be delivered half-yearly (in arrears in respect of the second and fourthquarters and in advance in respect of the first and third quarters).

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At the end of each financial year of the Company, there will be areconciliation of amounts paid and number of Ordinary Shares deliveredto the Investment Manager in respect of each of the Equity Element andthe priority profit share. The Equity Element and the priority profit shareshall be adjusted to the effect that the obligation to pay such amounts ordeliver such number of Ordinary Shares shall be deemed to have been inarrears. This is deduced using a time weighted average of the relevant

Net Asset Value calculation for the financial year in question adjusted forshare issues and share purchases. Balancing payment will be made bythe LLP or the Investment Manager in relation to the priority profit shareor further numbers of Ordinary Shares to be issued under the EquityElement will be increased or reduced accordingly.

Other than as expressly set out in the Investment ManagementAgreement or any other written agreement entered into with theconsent of the Board, the Investment Manager may not charge anyfees, costs or expenses to any portfolio company and must pay suchamounts in full promptly to the Group (unless retention is also permittedunder the agreement consented to by the Board).

The Investment Manager may appoint a third party independent of the

Investment Manager as a director of any portfolio company. Any suchexternal director may retain any directors fees earned by him from suchportfolio company.

The Investment Manager may retain for its own use and benefit feespayable to it in respect of services provided to clients other than theGroup and to parties who co-invest alongside the Group.

The Base Fee amounts payable to the Investment Manager may bereduced if either or both of the two key individuals identified at FirstAdmission (Laurence Fumagalli and Stephen Lilley (each a Key Man))are not available to dedicate sufficient (in the reasonable opinion of theBoard) time to the management of the Companys portfolio. Thereduction shall be equal to 0.15 per cent. of Net Asset Value in

respect of each Key Man who is not available, up to an amount equal tothe quarterly Base Fee.

Given that the Equity Element and the priority profit share are calculatedas a percentage of Net Asset Value, there is no maximum amountpayable on these amounts under the Investment ManagementAgreement and the Limited Liability Partnership Agreement.

If the Company is taken over (by means of an offer for the OrdinaryShares becoming unconditional, a scheme of arrangement or a sale of allor substantially all of the Groups assets), the Investment Manager willreceive:

* on that part of the Net Asset Value up to and including 500 million,

an amount equal to 1.2 per cent. of such part of the Net AssetValue;

* on that part of the Net Asset Value over 500 million and up to andincluding 1,000 million, an amount equal to 1.1 per cent. of suchpart of the Net Asset Value; and

* on that part of the Net Asset Value over 1,000 million, an amountequal to one per cent. of such part of the Net Asset Value,

plus, in circumstances where the offer price per share is in excess of thefloor price per share (the floor price per share being, depending on thetiming of the takeover offer, the current Net Asset Value per share or thehigher of the current Net Asset Value per share and the price per shareon First Admission (adjusted, as appropriate, for any changes in

capital)), an amount equal to one per cent. of the offer value.

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In such circumstances, the relevant notice period under the InvestmentManagement Agreement shall be reduced by 12 months plus (where alonger notice period would still be required) an additional ten months ifthe additional payment is also made to the Investment Manager.

If Shareholders vote to wind up the Company (other than with theagreement of the Investment Manager) or where the InvestmentManager terminates the Investment Management Agreement following

a material breach by the Company, the Investment Manager may beentitled to a payment equal to 1.1 per cent. per annum on the Net AssetValue most recently announced to the market for the period commencingon the date of termination of the Investment Management Agreement upto and including the earliest date on which the notice period would haveexpired had the Company given the fullest period of notice to terminatethe Investment Management Agreement.

The Company will be liable to UK corporation tax on its income. Incomearising from overseas investments may be subject to foreign withholdingtaxes at varying rates, but double taxation relief may be available. To theextent that the Company has a surplus of deductible expenses over itstaxable income, it will be able to surrender each surplus, to UK resident

companies in which it or Holdco invests, by way of group relief orconsortium relief. Deductible expenses will include any cash feespayable by the Company to the Investment Manager under theInvestment Management Agreement but would not include amounts ofpriority profit share payable by the LLP under the LLP Agreement.

The Investment Manager is entitled to be reimbursed for certainexpenses under the Investment Management Agreement, includingtravel expenses and attendance at Board Meetings.

Other arrangements

Heritage Administration Services Limited has been appointed asAdministrator to the Company and also provides accountancy and

company secretarial services and a registered office to the Company.The Administrator is responsible for calculating the Net Asset Value ofthe Ordinary Shares in conjunction with the Investment Manager andreporting this to the Board.

The maximum amount payable by way of fees under the AdministrationAgreement is 150,000 plus VAT per annum (for the first two years thatthe Administration Agreement is in force (being until 15 February 2015)).

Heritage Administration Services Limited has also been appointed asadministrator to the LLP and Holdco and will provide accountancy andcompany secretarial services and a registered office to the LLP andHoldco.

The maximum amount payable by way of fees under the LLPAdministration Agreement is 17,500 plus VAT per annum (for the firsttwo years that the LLP Administration Agreement is in force (being until15 February 2015)). The maximum amount payable by way of fees underthe Holdco Administration Agreement is 17,500 plus VAT per annum(for the first two years that the Holdco Administration Agreement is inforce (being until 15 February 2015)).

Heritage Depositary Company (UK) Limited has been appointed asDepositary to the Company.

The Depositary has responsibility for overseeing the safekeeping of anycash and share and loan certificates of the Portfolio and any FurtherInvestments and the implementation of the Groups cash management

policy by the Administrator.

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The Depositary received an inital set-up fee of 5,000 and is entitled toon-going fees of 31,000 per annum on the basis of the current Portfolio.Upon the purchase of additional assets, further initial set up fees and on-going fees will be payable by the Company. The fees payable under theDepositary Agreement are not subject to a cap.

The Company utilises the services of Capita Asset Services as registrarin relation to the transfer and settlement of Ordinary Shares held in

uncertificated form.Given that the fees payable under the Registrar Agreement arecalculated as a multiple of the number of Shareholders admitted to theregister each year plus a multiple of the number of share transfers madeeach year, there is no maximum amount payable under the RegistrarAgreement.

BDO LLP provides audit services to the Company. The annual report andaccounts have been prepared according to accounting standards in linewith IFRS.

The fees charged by the Auditor depend on the services provided,computed,inter alia, on the time spent by the Auditor on the affairs of theCompany; there is therefore no maximum amount payable under theAuditors engagement letter.

B.41 Regulatory status ofinvestment manager

The Investment Manager was incorporated in England and Wales on2 June 2009 under the Limited Liability Partnerships Act 2000 (registerednumber OC346088). It is authorised and regulated in the UK by the FCA(FCA registration number 507962) as an alternative investment fundmanager.

B.42 Calculation of NetAsset Value

In conjunction with the Investment Manager, the Administrator willcalculate the Net Asset Value and Net Asset Value per Ordinary Shareon a quarterly basis as at each calendar quarter and report suchcalculations to the Board for approval. These calculations will bereported quarterly to Shareholders and reconciled in the Companysannual report. All calculations made by the Investment Manager and theAdministrator will be made, in part, on valuation information provided bythe companies in which the Company has invested and, in part, onfinancial reports provided by the Investment Manager. Although theInvestment Manager and the Administrator will evaluate all informationand data provided by the companies in which the Company has invested,they may not be in a position to confirm the completeness, genuinenessor accuracy of such information or data. In addition the financial reports,where not provided by the Investment Manager, are typically provided ona quarterly or half yearly basis only and generally are issued one to fourmonths after the end of the relevant quarter. Consequently, each

quarterly Net Asset Value will contain information that may be out of dateand require updating and be incomplete. Shareholders should bear inmind that the actual net asset values may be materially different fromthese quarterly estimates.

B.43 Cross liability Not applicable. The Company is not an umbrella collective investmentundertaking and as such there is no cross liability between classes orinvestment in another collective investment undertaking.

B.44 Key financialinformation

The Company has commenced operations and historical financialinformation is included in this Prospectus.

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B.45 Portfolio The Portfolio consists of interests in SPVs, each SPV holding one ormore operating wind farms located in the UK (16 wind farms in total). Theaggregate net installed capacity of the Portfolio is 271.5 MW. 15 windfarms are located onshore and one is located eight kilometres offshore.

The Groups ownership interests in the SPVs comprising the Portfoliovary between 24.95 per cent. and 100 per cent. All wind farms within thePortfolio are operated by experienced utility companies and turbine

manufacturers or other experienced operators and the output from thewind farms is sold to utility companies and a major UK corporate underlong term variable price PPAs (although the corporate PPA has anelement of fixed pricing in the medium term).

B.46 Net Asset Value The Net Asset Value per Ordinary Share at 30 June 2014 was 102.7pence (after deduction of 3.08 pence in respect of the interim dividendwhich the Company paid out on 29 August 2014 (for the period from1 January to 30 June 2014)).

Section C Securities


C.1 Type and class ofsecurity

The Company intends to issue New Shares of one pence each in thecapital of the Company. The ISIN of the New Shares is GB00B8SC6K54and the SEDOL is B8SC6K5.

C.2 Currency The currency of denomination of the Issue is Sterling.

C.3 Number of sharesissued

As at the date of this Prospectus, the Company has 343,893,417 fullypaid Ordinary Shares of one pence each in issue.

The Company has no partly paid Ordinary Shares in issue.

C.4 Description of therights attaching to thesecurities

The New Shares carry the right to receive all dividends declared by theCompany.

Shareholders are entitled to all dividends paid by the Company and, on awinding up, provided the Company has satisfied all of its liabilities, theShareholders are entitled to all of the surplus assets of the Company.

Shareholders will be entitled to attend and vote at all general meetings ofthe Company and, on a poll, to one vote for each New Share held.

C.5 Restrictions on the freetransferability of thesecurities

The Board may, in its absolute discretion, refuse to register any transferof a share or renunciation of a renounceable letter of allotment unless:

(a) it is in respect of a share which is fully paid up;

(b) it is in respect of only one class of shares;

(c) it is in favour of a single transferee or not more than four jointtransferees;

(d) it is duly stamped (if so required); and

(e) it is delivered for registration to the registered office for the timebeing of the Company or such other place as the Board may fromtime to time determine,

accompanied (except in the case of (i) a transfer by a recognised personwhere a certificate has not been issued (ii) a transfer of an uncertificatedshare or (iii) a renunciation) by the certificate for the share to which itrelates and such other evidence as the Board may reasonably require to

prove the title of the transferor or person renouncing and the dueexecution of the transfer or renunciation by him or, if the transfer or

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renunciation is executed by some other person on his behalf, theauthority of that person to do so, provided that the Board shall not refuseto register a transfer or renunciation of a partly paid share on the groundsthat it is partly paid in circumstances where such refusal would preventdealings in such share from taking place on an open and proper basis onthe market on which such share is admitted to trading. The Board mayrefuse to register a transfer of an uncertificated share in such other

circumstances as may be permitted or required by the regulations andthe relevant electronic system.

Unless the Board otherwise determines, a transfer of shares will not beregistered if the transferor or any other person whom the companyreasonably believes to be interested in the transferors shares has beenduly served with a notice pursuant to section 793 CA 2006.

C.6 Admission Applications will be made to the UKLA for the New Shares to be admittedto the premium segment of the Official List and to the London StockExchange for the New Shares to be admitted to trading on the LondonStock Exchanges main market for listed securities. It is expected thatAdmission will become effective and that dealings in the New Shares,

fully paid, will commence at 8.00 a.m. on 30 October 2014.

C.7 Dividend policy The Company has paid the following dividends: (i) 1.5p per OrdinaryShare on 20 September 2013 (for the period from First Admission to30 June 2013); (ii) 3p per Ordinary Share on 21 February 2014 (for theperiod from 1 July 2013 to 31 December 2013); and (iii) 3.08p perOrdinary Share on 29 August 2014 (for the period from 1 January 2014to 30 June 2014) in respect of all Ordinary Shares. The Company intendsto pay an annual dividend per Ordinary Share of 6.16p for 2014 and,given the nature of the Companys income streams, the Board intends toincrease the dividend in line with RPI inflation.

Distributions on the Ordinary Shares are currently paid twice a year,

normally in respect of the six months to 30 June and 31 December, andare made by way of interim dividends in February and August.

Section D Risks


D.1 Key information on therisks specific to theissuer or its industry

The key risk factors relating to the Group and the wind energy industryinclude the following:

* if at any point the international community were to withdraw, reduceor change its support for the increased use of energy fromrenewable sources, including generation of electricity from wind, for

whatever reason, this may have a material adverse effect on thesupport of national or international authorities in respect of thepromotion of the use of energy from renewable sources, includingin respect of wind generation in the UK. If this reduces the value ofthe green benefits that wind energy generators are entitled to itwould have a material adverse effect on the Group if appliedretrospectively to current operating projects including those in thePortfolio. In addition, unexpected success in other areas ofrenewable energy (such as renewable heat) may reducepressure on national governments to develop renewableelectricity production. This may affect the Companys futureinvestment opportunities;

*

a future change of Government or change in Government policycould lead to new renewable energy policies resulting in a changeor abandonment of the Renewables Obligation or any policy

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introduced pursuant to the Electricity Market Reform. If these wereapplied retrospectively to current operating projects including thosein the Portfolio, this could adversely impact the market price forrenewable energy or the value of the green benefits earned fromgenerating renewable energy. This may affect the Companysfuture investment opportunities;

* a decline in the market price of electricity from the levels anticipated

by the Company from time to time could materially adversely affectthe Groups revenues and financial condition. Similarly, a decline inthe costs of other sources of electricity generation, such as fossilfuels or nuclear power, could reduce the wholesale price ofelectricity and thus the price achieved for electricity generated bywind farms;

* the Groups revenues will be dependent upon the wind conditionsat the wind farms owned by the Group and wind conditions at anysite can vary materially across seasons and years. If the Group hasan interest in a wind farm which proves to have lower windresources than anticipated, that wind farm is likely to generatelower electricity volumes and lower revenue than anticipated, which

could have a material adverse effect on the Groups business,financial position, results of operations and business prospects.Similarly, a sustained decline in wind conditions at any wind farmcould lead to a reduction in the electricity generated which wouldhave a material adverse effect on the Groups business, financialposition, results of the operations and business prospects;

* increases in charges relating to the connection to and use of theelectricity transmission and distribution networks and relating tobalancing of the electricity supply and demand may adverselyimpact on the business, financial position, results of operations andbusiness prospects of the Group;

* the Group is dependent upon contractors for the operation and

maintenance of wind farm projects and therefore their availability togenerate electricity. The Groups ability to invest in and operatewind farm projects at the anticipated availability could be adverselyaffected if the contractors with whom the Group wishes to work donot have sufficient capacity to work with the Group on its chosenprojects or if they perform poorly for any other reason;

* wind turbines may have shorter life-spans than their expectedlifespan of 25 years. In the event that the wind turbines do notoperate for the period of time assumed by the Company in itsbusiness model or require additional maintenance expenditure todo so, it could have a material adverse effect on the business,financial position, results of operations and business prospects of

the Group;* the ability of the Company to achieve its investment objective

depends heavily on the managerial experience of the managementteam associated with the Investment Manager, and more generallyon the Investment Managers ability to attract and retain suitablestaff. The Board has broad discretion to monitor the performance ofthe Investment Manager or to appoint a replacement but theInvestment Managers performance or that of any replacementcannot be guaranteed;

* the growth of the Group depends upon the ability of the InvestmentManager to identify, select and execute Further Investments whichoffer the potential for satisfactory returns. The availability of suitable

investment opportunities will depend, in part, upon conditions in theUK onshore and offshore wind farm markets and the level of

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competition for assets in the wind energy sector. There can be noassurance that the Investment Manager will be able to identify andexecute suitable opportunities to permit the Company to expand itsportfolio of wind farm projects;

* the Companys target dividend and future distribution growth willdepend on the Companys underlying investment portfolio and theavailability of distributable reserves. Any change or incorrect

assumption in relation to the dividends or interest or otherreceipts receivable by the Company (including in relation toprojected power prices, wind conditions, availability and operatingperformance of equipment used in the operation of wind farmswithin the Companys portfolio, ability to pay distributions toShareholders (especially where the Group has a minority interestin a particular wind farm) and tax treatment of distributions toShareholders) may reduce the level of distributions received byShareholders;

* the Group will finance Further Investments either by borrowing orby issuing further Shares. In addition, the ability of the Company todeliver enhanced returns and consequently realise expected real

Net Asset Value growth is dependent on access to debt facilitiesand equity capital markets. There can be no assurance that theGroup will be able to borrow or refinance on reasonable terms orthat there will be a market for further Shares; and

* if an existing Shareholder does not subscribe under the Issue forsuch number of New Shares as is equal to his or her proportionateownership of existing Ordinary Shares, his or her proportionateownership and voting interests in the Company will be reduced andthe percentage that his or her existing Ordinary Shares willrepresent of the total share capital of the Company will bereduced accordingly.

D.3 Key information on therisks specific to thesecurities

The key risk factors relating to the New Shares include the following:* there can be no guarantee that a liquid market in the Ordinary

Shares will exist. Accordingly, Shareholders may be unable torealise their Ordinary Shares at the quoted market price (or at theprevailing Net Asset Value per Ordinary Share), or at all; and

* the Ordinary Shares may trade at a discount to Net Asset Valueand Shareholders may be unable to realise their investmentsthrough the secondary market at Net Asset Value.

Section E Offer


E.1 Net proceeds andcosts of the Issue

The target size of the Issue is 93,457,944 New Shares although amaximum of 210,280,374 New Shares are available under the Issue.Each of the New Shares will be issued at the Issue Price of 107 pence.

On the basis that the target of 93,457,944 New Shares are issued, it isexpected that the Company will receive approximately 98.16 millionfrom the Issue, net of Issue Costs of approximately 1.84 million.

On the basis that the maximum of 210,280,374 New Shares are issued,it is expected that the Company will receive approximately 221.63million from the Issue, net of Issue Costs of approximately 3.37 million.

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E.7 Expenses charged tothe Investor

The Issue Costs will be met by the Company from the proceeds of theIssue. The Issue Costs (excluding VAT) are estimated to beapproximately 1.84 million on the basis of Gross Issue Proceeds of100 million.

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RISK FACTORS

Investment in the Company carries a high degree of risk, including but not limited to the risks inrelation to the Group and the New Shares referred to below. If any of the risks referred to in thisProspectus were to occur, the financial position and prospects of the Group could be materiallyand adversely affected. If that were to occur, the trading price of the New Shares and/or their NetAsset Value and/or the level of dividends or distributions (if any) received from the New Sharescould decline significantly and investors could lose all or part of their investment.

Prospective investors should note that the risks relating to the Group, its industry and the NewShares summarised in the section of this document headed Summary are the risks that theBoard believes to be the most essential to an assessment by a prospective investor of whether toconsider an investment in the New Shares. However, as the risks which the Group faces relate toevents and depend on circumstances that may or may not occur in the future, prospectiveinvestors should consider not only the information on the key risks summarised in the section ofthis document headed Summary but also, among other things, the risks and uncertaintiesdescribed below.

The risks referred to below are the risks which are considered to be material but are not the onlyrisks relating to the Company and the New Shares. There may be additional material risks that theCompany and the Board do not currently consider to be material or of which the Company and the

Board are not currently aware. Potential investors should review this Prospectus carefully and in itsentirety and consult with their professional advisers before acquiring any New Shares.

Introduction

An investment in the Company is suitable only for investors who are capable of evaluating therisks and merits of such investment, who understand the potential risk of capital loss and that theremay be limited liquidity in the underlying investments of the Company, for whom an investment inthe New Shares constitutes part of a diversified investment portfolio, who fully understand and arewilling to assume the risks involved in investing in the Company and who have sufficient resourcesto bear any loss (which may be equal to the whole amount invested) which might result from suchinvestment. Typical investors in the Company are expected to be institutional and sophisticatedinvestors and private clients. Investors may wish to consult their stockbroker, bank manager,solicitor, accountant or other independent financial adviser before making an investment in theCompany.

The New Shares are designed to be held over the long term and may not be suitable as shortterm investments. There is no guarantee that any appreciation in the value of the Companysinvestments will occur and investors may not get back the full value of their investment.

Any investment objectives of the Company are targets only and should not be treated asassurances or guarantees of performance.

A prospective investor should be aware that the value of an investment in the Company is subjectto normal market fluctuations and other risks inherent in investing in securities. There is noassurance that any appreciation in the value of the New Shares will occur or that the investmentobjectives of the Company will be achieved. The value of investments and the income derivedtherefrom may fall as well as rise and investors may not recoup the original amount invested in the

Company.

The value of the New Shares and income derived from them (if any) can go down as well as up.Notwithstanding the existence of the share buyback and tender offer powers as described in Part IIof this Prospectus, there is no guarantee that the market price of the New Shares will fully reflecttheir underlying net asset value. In the event of a winding-up of the Company, Shareholders willrank behind any creditors of the Company and, therefore, any positive return for Shareholders willdepend on the Companys assets being sufficient to meet the prior entitlements of any creditors.

Risks relating to changes in European Union and international policies on renewable energy

The increased use of energy from renewable sources constitutes an important part of themeasures needed in the European Union and elsewhere to reduce greenhouse gas emissions inorder to comply with the UNFCC and the Kyoto Protocol.

The Parties to the UNFCCC and the Kyoto Protocol will meet again in Peru in 2014 and France in2015 in order to negotiate an international climate change agreement. If at any point the

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international community were to withdraw, reduce or change its support for the increased use ofenergy from renewable sources, including generation of electricity from wind, for whatever reason,this may have a material adverse effect on the support of national or international authorities inrespect of the promotion of the use of energy from renewable sources, including in respect of windgeneration in the UK. If this reduces the value of the green benefits that wind energy generatorsare entitled to it would have a material adverse effect on the Group if applied retrospectively tocurrent operating projects, including those in the Portfolio. In addition, unexpected success in other

areas of energy production (such as shale gas or renewable heat) may reduce pressure onnational governments to lower carbon emissions through renewable electricity production. This mayaffect the Companys future investment opportunities.

The EU has set targets for the production of energy from renewable sources pursuant to theRenewable Energy Directive.

The Renewable Energy Directive imposes an obligation on Member States to ensure that theirshare of energy consumption from renewable sources in 2020 is at least at the level prescribed inthe Renewable Energy Directive, with each Member State having its own target. The UKs targetlevel is to achieve a 15 per cent. share of final energy consumption from renewable sources by2020. This target covers energy consumption for all purposes including transport, heating, industrialand commercial uses as well as for production of electricity. Each Member State must adopt aRenewable Energy Action Plan assessing the total expected contribution of each renewable energytechnology to meet the mandatory targets. The Renewable Energy Action Plan should also containdetails of the Member States national support scheme for the promotion of the use of energy fromrenewable sources.

The powers of enforcement granted to the European Commission under the Renewable EnergyDirective are slow and relatively weak. The Renewable Energy Directive does not prescribe anyparticular renewable energy support scheme, nor does it set out any rules on how such schemesare to function. In overview, the European Commission has powers to analyse each RenewableEnergy Action Plan as a whole. It has no formal powers to amend or even reject a MemberStates Renewable Energy Action Plan and may only issue a recommendation in respect of suchplan. While a Member State ought to give consideration to the European Commissions views,there is no obligation to do so. Where Member States are not on course to meet their targets, in

the first instance, a Member State is required to submit an amended Renewable Energy ActionPlan setting out the measures required to get back on track. The European Commission haspowers to issue a recommendation in respect of the amended Renewable Energy Action Plan andis able to initiate infringement proceedings if a Member State fails to introduce appropriatemeasures to enable it to meet its interim trajectory. Where a Member State thinks it will be unableto meet its target as a result of force majeure events, it must inform the European Commissionwho will then take a decision on whether this claim is valid and what, if any adjustment, should bemade to the national target. This decision is a more formal act and is binding on the Member Stateto whom it is addressed.

There is no guarantee that Member States will sustain their commitment to supporting therenewable energy sector. Further, though European leaders have agreed to decide on the post-2020 regime in 2014, a number of important elements remain to be determined. These include

whether there will be legally binding renewable energy targets post 2020, how ambitious suchtargets will be, how stringent any enforcement powers will be and whether there will be a moveaway from a renewable energy target to a low carbon target, which would also take account oftechnologies such as nuclear power generation and carbon capture and storage.

In the UK the government has set long term emissions reduction targets through carbon budgets.The Climate Change Act 2008 established a legally binding target to reduce the UKs emissions ofgreenhouse gases (GHGs) to at least 80 per cent. below 1990 levels by 2050. Progress towardsthis objective is measured through carbon budgets that place legally binding ceilings on the level ofallowed UK emissions over five year periods.

Carbon budgets have been set up to and including the fourth carbon budget for 2023-2027. Thisbudget sets a limit of 1950 MtCO2e over the years 2023-2027, amounting to an emissions cut of

50 per cent. on 1990 levels. The Government legislated the level of the fourth carbon budget inJune 2011 and the budget was further reviewed (and confirmed) in 2014. This figure can only bechanged by future legislation.

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The wind energy industry is currently dependent on political and governmental support (the form ofsupport available in the UK is described below). In the event that national or international politicaland governmental support for the generation of electricity from wind power were to decline, bewithdrawn or change, and be applied retrospectively to current operating projects, including thosein the Portfolio, or prove to be insufficient to offset any continuing competitive disadvantage whichenergy generated from wind would otherwise have compared to energy generated from othersources (including other renewable sources as well as energy generated from fossil fuels and

nuclear power), such events could have a material adverse effect on the business, financialposition, results of operations and future growth prospects of the Group as well as returns toinvestors.

Given the sustained fall in the cost of renewable power generation equipment, Member Stateshave generally revised their regulations supporting the renewable energy sector from time to timein order to reduce the benefits available to new renewable power generation projects. However, inorder to maintain investor confidence, some Member States including the UK have ensured thatthe benefits already granted to operating renewable power generation projects are exempted fromfuture regulatory change for the life of the project; this practice is referred to as grandfathering.The UK government has applied the policy of grandfathering support consistently, ensuring thatprojects receive the same level of support throughout their eligibility period under the scheme andare not affected by any subsequent reduction in support levels. The policy of grandfathering

support is not fully harnessed in legislation, in that there is not a general legal obligation under theElectricity Act 1989 or the Renewables Obligation Order that requires grandfathering to be applied.However, policy statements and their application to date have been consistent and haverecognised the importance of maintaining investor confidence in the UK by ensuring that no futurepolicy changes would retrospectively affect existing projects. The importance of grandfathering hasbeen reiterated by the UK government in more recent policy statements made in the context ofpolicy discussions regarding the approach to the Renewables Obligation (RO) under the EnergyMarket Reform (EMR), in particular following the transition from the RO to the Contract forDifference Feed-in Tariffs (CFD FITs). The drafting of the Energy Act 2013, which provides for thetransition from ROCs to fixed price certificates from 2027, does not enshrine grandfathering inprimary legislation, although it leaves scope for banding to apply (ie allowing different levels ofsupport to apply to different projects), mirroring the position that applies under the RO.Grandfathering remains a policy decision and, as such, there is no guarantee that the practice of

grandfathering will be continued. The Group is likely to suffer a loss if the UK were to abandon thepractice of grandfathering and apply adverse retrospective changes to the levels of support foroperating projects in which the Group has a financial interest.

Risks relating to regulation and incentives of the renewable energy market in the UK

A future change of UK Government, or change in UK Government direction regarding renewableenergy, could lead to unfavourable renewable energy policies. Such unfavourable renewable energypolicies could include a change or abandonment of the current RO support mechanism or certainpolicies introduced pursuant to the EMR programme, including but not limited to the introduction ofnew CFD FITs or changes to the proposed levels of support or method of allocation of supportunder CFD FITs (all of the assets in the Groups current Portfolio are supported under the ROregime). Unfavourable renewable energy policies if applied retrospectively to current operating

projects including those in the Portfolio could adversely impact the market price for renewableenergy or the green benefits earned from generating renewable energy.

In relation to Further Investments, the Group may be exposed to risks arising from theimplementation of EMR and potential future regulatory change in the United Kingdom.

In particular, it is expected that a general election will be held in the UK in May 2015. Theoutcome of such general election may have an effect on the renewable energy policies adopted inthe UK. Any changes to renewable energy policies in the UK could have a material adverse effecton the Group and returns to Shareholders, especially if they were retroactively applied to currentlyoperating wind farms.

The main support regimes in respect of the increased use of energy from renewable sources in theUK are currently the RO (or, in Scotland and Northern Ireland respectively, the Renewables

Obligation Scotland (SRO) and the Northern Ireland Renewables Obligation (NIRO)) and exemptionfrom the Climate Change Levy (CCL). Under the RO, eligible renewables generators are issuedwith Renewables Obligation Certificates (ROC) for electricity generation.

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Generating stations receiving full accreditation under the RO on or after 26 June 2008 will receive20 years of support from the date they are first accredited, subject to the ROs 2037 end date. Fora description of these support mechanisms, please refer to Part III of this Prospectus.

The projects in the Portfolio are already accredited under one of the RO, SRO or NIRO and,therefore, subject to the UK Government, the Scottish Executive or the Northern Irish Government,as applicable, maintaining and properly implementing a policy of grandfathering (see above),changes to these regimes are not expected materially to affect revenue relating to the Portfolio.

Some changes are expected to these regimes however as a result of EMR. These are outlinedbelow.

Renewable generators are also eligible to receive transferable exemptions from the CCL in theform of Levy Exemption Certificates (LECs). The CCL and the renewable LEC regime thatprovides relief against the CCL were implemented in 2001. The government has not announcedplans to remove this regime and has said that the arrangements relating to Climate ChangeAgreements that exist alongside LECs as a means of providing discounts to business users willendure to at least 2023. While legislation can always vary these arrangements, the Companybelieves renewable LECs will continue to be available until 2023.

Support schemes in respect of energy from renewable sources in England and Wales are currentlybeing changed as a result of EMR pursuant to the Energy Act 2013 and related secondary

legislation which is in the process of being passed. EMR will also apply to Scotland and NorthernIreland but with some adjustment to take account of the roles and responsibilities of the devolvedadministrations (see further below). The main changes in respect of the EMR are:

* reform of the support regime for new renewable generation by the introduction of CFD FITsfor new low carbon generation projects above 5MW (extending support to include nuclear andcarbon capture and storage projects, as well as renewables projects). New renewable energyprojects may continue to gain accreditation under the RO until 31 March 2017 but thereafterthe RO will be closed to new accreditation (subject to limited grace periods);

* a capacity market to ensure that there is sufficient reliable capacity to meet demand;

* an emissions performance standard for all new fossil fuel plants (further details set outbelow); and

* the removal of the exemption for CCL on fossil fuels used for electricity generation and theimposition of a form of CCL on such fuel at the relevant carbon price support rate in theUK, to underpin the cost of emissions allowances under the EU Emissions Trading Scheme(EU ETS) for fossil-fuelled plants at a pre-determined level. This carbon price floor orcarbon price support (CPS) aims to set a price floor for carbon over the long term to 2030.

All policies in EMR extend to Scotland and Wales although, because environment policy is broadlydevolved in both of these administrations, DECC is working to ensure that EMR policy is coherentin these devolved administrations.

In Northern Ireland, responsibility for renewable energy policy is transferred to the Northern IrishExecutive. The Northern Irish Executive has agreed that CFD FITs and the emissions performancestandard will apply to Northern Ireland, whilst taking account of Northern Irelands position within

the Single Electricity Market that operates across Ireland. As a result of market differences, theremay be differences in the CFD FIT regime applicable to Northern Ireland. As per currentdiscussions, the extent of these differences will only be known once policy has been finallydetermined in relation to both England and Northern Ireland.

UK Ministers may set FIT CFD strike prices in Northern Ireland in conjunction with Northern IrelandMinisters and the cost of support may be socialised across the UK. However, Northern IrelandMinisters may maintain the right to set Northern-Ireland-only strike prices for CFDs.

The Energy Act 2013 legislates for a number of aspects of the UK Governments currentprogramme of EMR. Further details of the EMR proposals are set out in Part III of this Prospectus.

From 31 March 2017, the UK Government intends to close the RO to new accreditation (subject tolimited grace periods), from when a closed pool of RO-supported electricity capacity will be created

which will decrease over time until the end date for the RO of 31 March 2037. The Governmenthas stated that it intends to grandfather support for all RO-accredited stations on the basis of thesupport rates applicable on 31 March 2017.

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ROCs will convert to fixed price certificates a new type of certificate. DECC has indicated thatthe intention is to maintain levels and length of support for existing participants under the RO, withthe long term value of a fixed price certificate to be set at the prevailing buy-out price plus a fixedpercentage expected to be 10 per cent. These changes will apply from 2027.

Fixed price certificates are expected to be inflation linked, but there is no guarantee that the sameindex (RPI) as is currently used to inflate the buy-out price under the RO will be used for fixedprice certificates. In the event that fixed price certificates are indexed at a rate less than that

currently used to inflate the buy-out price under the RO, this may have an adverse effect on theGroup.

Following the introduction of fixed price certificates, generators will not be able to deliver ROCscontracted under existing power purchasing arrangements, which may (depending on the exactwording of any change in law clauses in the power purchase agreements (PPAs)) givecounterparties an opportunity to re-open or even terminate some PPAs, albeit only some of thePortfolios PPAs last post-2027 and any future PPAs are likely to anticipate any such change.

A change in law under a PPA may result in a worsening or improvement of the terms that apply.This may provide an opportunity for the counterparty to renegotiate terms. Such a renegotiationmay lead to worse terms for the Group and may negatively impact returns to the Group and,consequently, investors.

In late 2012 the Government issued its Gas Generation Strategy. It is intended to ensure thatthere is sufficient gas capacity available to meet demand and provide flexibility to the grid,particularly as increasing levels of intermittent and inflexible generation come onto the system.Modelling detailed in the strategy suggests that as much as 26GW of new gas plant could berequired by 2030, in part to replace older coal, gas and nuclear plant as it retires from the system.

The Energy Act 2013 also sets out provisions in respect of the introduction of the emissionsperformance standard (EPS), which is proposed to be fixed until 2045 at a level (450g per kWh).The EPS is set at a level which does not impact on the new combined cycle gas turbines ( CCGT)needed to make the transition to a low-carbon electricity system. This level of standard is set to bereviewed by the end of 2015.

In addition, the Government is also implementing a capacity market which could prove an attractivefinancial incentive for the development of CCGT projects. There is a risk that the introduction ofEPS and the capacity market may encourage the development of CCGT projects, discouraging thedeployment of renewable technologies. An increase in construction of CCGT plants could beexacerbated by the uptake of significant volumes of domestically-produced shale gas or any otherfactor that results in falls in wholesale gas prices. Further, lower marginal costs for gas-firedgenerating plants will likely lead to lower overall electricity prices (see further below). Anysignificant move to CCGTs or other modern gas technologies, and away from renewabletechnologies, greater than that currently assumed in the market, could negatively impact theGroups performance.

The carbon price floor is an element of EMR which is designed to support the deployment ofrenewable generation technologies by underpinning the price of carbon emissions allowances(required to be surrendered by fossil-fuelled combustion plants) under the EU ETS. The UKGovernment may decide to abolish the carbon price floor (described above) or set a lowertrajectory for the increase of the carbon price floor. In the 2014 budget the UK governmentconfirmed that it would cap the price floor from 2016/2017 to 2019/2020 (consistent with theCompanys assumptions). Any abolition, or the UK Government further lowering the trajectory forthe increase of the carbon price floor, would likely reduce the wholesale power price and couldhave a material adverse effect on the Groups business, financial position, results of operationsand business prospects.

In relation to Further Investments, a major planned review of the level of support for differentrenewable technologies (known as bands) for newly accredited generating stations under the RO,SRO and NIRO for the period from April 2013 to April 2017 was concluded in July 2012. However,under RO legislation the Government can call at any time a review of the level of support affordedto eligible renewables technologies if certain circumstances specified in the RO legislation are met(such as a reduction in technology costs).

RO support for onshore wind was subject to a UK Government call for evidence which waslaunched in September 2012, with a response from the Government published in June 2013. This

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review was limited to England, Wales and Northern Ireland only. The Scottish Executive has said itintends to administer existing bands until 31 March 2017. Although the evidence gathered showedan increase in costs relating to planning and operation and maintenance, the change was notconsidered significant, and as such, did not meet the legislative requirements for a further reviewof RO support levels. However, further reviews may take place in future in relation to the level ofsupport for renewable generation in the UK, and may result in a lower level of green benefitsreceived in relation to electricity generated by new projects. Unless reflected in the price paid for

Further Investments, this would adversely affect the financial position, results of operations andbusiness prospects of the Group. Further details of the level of support which is expected to be inplace for future projects are set out in Part III of this Prospectus.

The Control framework for DECC levy-funded spending (Levy Control Framework) was firstpublished in March 2011 and then updated in November 2012 and in July 2013. The purpose ofthe Levy Control Framework is to make sure that DECC achieves its fuel poverty, energy andclimate change goals in a way that is consistent with economic recovery and minimising the impacton consumer bills. The Levy Control Framework sets an overall cap for DECCs tax and spendingthrough policies that entail levy-funded spending in the period to 2020-21. This includes spendingrelating to support schemes for renewable electricity generation. If forecasts or actual spend aregreater than the agreed cap, the Treasury can request that DECC put in place a plan that willbring spending back down within the cap. DECC will need to set a policy such that the central

forecast for DECC levy-funded spending is equal to or less than the agreed cap. Where the cap isexceeded, this could ultimately result in the Treasury refusing DECC permission to retain all or partof the tax income received above the agreed cap, which would leave DECC to fund all or part ofthe spending gap from within its Departmental Expenditure Limit. Where the cost of the RO, SROand NIRO exceeds the relevant cap, support levels for new projects (or, possibly even, existingprojects) under these regimes may require to be adjusted. In due course the cost of CFD FITs willalso fall within the Levy Control Framework. How quickly and to what extent these adjustments areimplemented will depend on the various factors pertaining to the policy at the time. However,DECC will follow all required procedures such as statutory consultation and Parliamentary scrutiny.

As a result of EMR, as mentioned above, the support regime for new renewable generation willtransition to CFD FITs which the UK Government intends to introduce from 2014. The UKGovernment has indicated that new renewable energy projects may continue to gain accreditation

under the RO until 31 March 2017. All new renewable energy capacity accrediting after theintroduction of CFD FITs but before 1 April 2017 will have a one-off choice of support schemes.There will be some limited flexibility around the 2017 closure date for those projects that aredelayed due to grid connection or radar issues beyond their control.

The final terms of CFD FITs were published on 29 August 2014 and most secondary legislationand related policy documents in respect of CFD FIT and EMR implementation came into force orwas finalised over the summer of 2014. Projects which are supported under CFD FITs may beincluded in the Portfolio in the future. CFD FITs are described in Part III of this Prospectus.

The risk of a Project not being allocated a CFD FIT or allocated at a strike price which is too lowis mitigated in respect of the Portfolio as only Further Investments that will be supported under theRO or that have entered into a CFD FIT at a strike price which is, in the view of the InvestmentManager, set at an appropriate level, will be included in the Portfolio and the acquisition price will

reflect such a strike price.

Payments under CFD FITs will be made by the Low Carbon Contracts Company (the LCCC), alimited recourse special purpose company which will funded by a levy applied to licenced electricitysuppliers. Projects included in the Portfolio which are subject to a CFD FIT will only receivepayments from the LCCC under a CFD FIT to the extent that the strike price in respect of theproject is greater than a market reference price. To the extent that the market reference pricee

Documents

Greencoat Uk Wind Fund Prospectus - September 2014