ARC FUNDS LIMITED — Investor Presentation 2021

Aug 11, 2021

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THE NEW ARC

Investor Presentation August 2021

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DISCLAIMER

Disclaimer - Future performance and forward looking statements

This announcement contains certain forward looking statements with respect to the financial condition, results of operations, projects and business of the Company and certain plans and objectives of the Company. Forward looking statements can generally be identified by the use of forward looking words such as ‘expect’, ‘anticipate’, ‘likely’, ‘intend’, ‘propose’, ‘should’, ‘could’, ‘may’, ‘will’, ‘predict’, ‘plan’, ‘believe’, ‘forecast’, ‘estimate’, ‘target’, ‘continue’, ‘objectives’, ‘outlook’, ‘guidance’ and other similar expressions.

The forward looking statements, opinions and estimates contained in this announcement are based on the Company’s intent, belief or current expectations, assumptions and contingencies which are subject to change without notice, as are any statements about market and industry trends, which are based on interpretations of current market conditions. They involve known and unknown risks and uncertainties and other factors, many of which are beyond the control of the Company and its officers, employees, agents and associates, and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct.

Any forward-looking statements are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Readers are cautioned not to place undue reliance on forward-looking statements. There can be no assurance that actual outcomes will not differ materially from these forward looking statements. A number of important factors could cause actual results or performance to differ materially from the forward looking statements. Investors should consider the forward looking statements contained in this announcement in light of those disclosures.

Neither the Company, nor any other person, gives any representation, warranty, assurance, nor will guarantee that the occurrence of the events expressed or implied in any forward looking statement will occur.

To the maximum extent permitted by law, the Company, other persons referred to in this announcement and each of their respective advisors, affiliates, related bodies corporate, directors, officers, partners, employees and agents disclaim any responsibility and undertake no obligation for the accuracy or completeness of any forward looking statements whether as a result of new information, future events or results or otherwise. The Company disclaims any responsibility to update or revise any forward looking statements to reflect any change in the Company’s financial condition, status or affairs or any change in the events, conditions or circumstances on which a statement is based except as required by Australian law.

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NEW VISION AND STRATEGY

To build a listed boutique funds management platform and investment company by investing in, supporting and partnering with the best fund managers across a range of asset classes and investment strategies.

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CAPITAL STRUCTURE

ASX Code

ARC

22nd July Harley Grosser appointed Managing Director 8th March 1st July Capital H Harley Grosser becomes appointed substantial Non-Executive shareholder Director

ASX Code	ARC
Shares on issue	29,776,352
Options	Nil
Board Ownership: Market Capitalisation: (at 41c share price on 10th August) Net Cash (at 31st July)	44.3% $12.2m $3.4m

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10th June
10th Feb
ARC completes
ARC completes Entitlement offer
in-specie
Share Price Performance at 21c raising
distribution of
Chart adjusted for 27c capital return in Namoi shares on 10th Feb, 2021 $3.127m
NAM shares
High 0.450
0.40
0.30
0.20
0.10
Sept Oct Nov Dec Jan Feb March April May June July August
2020 2020 2020 2020 2021 2021 2021 2021 2021 2021 2021 2021
Source: ASX
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THE NEW ARC

• New strategy to build a listed funds management platform and investment company.

• We will do this by investing in, supporting and partnering with the best fund managers across a range of asset classes and investment strategies.

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What we do
• Own 25-40% of the equity in our affiliate boutique funds
management businesses.
• Provide support services and nurture our investee funds
management businesses via an ‘Affiliate Management
Agreement’ (AMA).
• We will initially rely on 3rd party services (e.g. AFSL, trustee,
custodian, legal, tax). These service providers have already
been identified. Services provided in-house by ARC will grow
as our capabilities grow, increasingly becoming an additional
income stream.
• ARC has begun the process of acquiring its own AFSL as the first
step in providing in-house services to our managers
• Use balance sheet capital to invest in affiliate businesses
and support them through to profitability.
• Make strategic acquisitions that are value accretive
to shareholders
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The Opportunity
• Boutiques deliver outperformance and are sort out by
asset allocators.
• Large pool of talented investors capable of outperforming the
market and seeking to launch their own funds management
company. ARC has the opportunity to become the ‘Partner-
of-Choice’ for the best boutique funds management talent
in Australia.
• Incoming executive team highly immersed in the investment
community and in touch with upcoming talent.
• Target in-demand and niche sectors of funds management such
as small caps, ESG friendly, global, innovation, etc.
• ARC will seek to build its own distribution platform, leveraging
new methods of technology and distribution
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THE NEW ARC PLAN

• Find and invest in the best talent in each asset class/investment strategy

• Provide them with access to capital, support, infrastructure and guidance in order to allow them to focus on what they do best – investing

• Be active but patient investors in our management companies, providing a platform for success and support them through the early stages of their journey

• Our managers start to perform, • As our managers build a successful generating larger management 3+ year track records they will fees as FUM grows and strong become more marketable, driving returns drive performance fees. an increase in FUM growth and Defined dividend policies return size of performance fees cash to ARC

• Their success and positive experience helps build our brand & reputation as a ‘Partner Of Choice’ making deal origination easier

• ARC will use this cash flow to 1) invest in other managers and 2) build our in-house service offering to increase our utility to managers and provide an income source to ARC

• Combined with developing our internal sales & distribution team, this will allow a step change in the size & scale of the managers we invest in

• Services include AFSL, compliance, operations, sales & distribution (key asset), legal & advisory, tax

• Repeat the process, focusing now on more scalable strategies where FUM size is larger, leveraging our brand, reputation and sales team

• We will always focus on backing managers that can outperform, but at this stage FUM size and capacity becomes more important as we scale

• Highly scalable, capital light model with significant operating leverage capable of delivering strong returns to shareholders

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THE NEW ARC STRUCTURE

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ARC
40% owned by ARC
Any Asset
Merewether Mid Cap Fund Large Property Fund Venture Class/
Capital Manager Cap Fund Manager Capital Fund Investment
Management Manager Manager Strategy that
Meets ARC
Criteria
ARC will provide in-house and 3rd party services to our Managers
ARC Services
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APPOINTMENT OF MANAGING DIRECTOR – HARLEY GROSSER

• ARC has appointed Harley Grosser as Managing Director, effective 1st August 2021

• Mr Grosser is the Founder of Capital H Management - the largest shareholder of ARC

• Mr Grosser has built Capital H from scratch in 2018 to now managing $40m+ of FUM on behalf of wholesale clients (as at 31st July, 2021)

• Capital H Management is a Sydney based funds management company with a strong track record of outperformance. Capital H Inception Fund has delivered 37% per annum net of fees in the 3 years from founding to 30 June, 2021

• Mr Grosser will be tasked with developing and executing on the business plan to grow ARC into a leading Australian funds management platform and investment company

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“I’m excited to be leading ARC as Managing Director. After 12 years on the investing side,
this is our opportunity to leverage those existing skill sets and networks to build a listed
company of substantial value. With significant board ownership at ARC, shareholders
can be assured we will run the business with a complete focus on delivering shareholder
returns. Our priority now is on identifying, investing in and supporting the very best funds
management talent in Australia, and providing them with what they need to succeed.”
- Harley Grosser, Managing Director
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FIRST AFFILIATE MANAGER – MEREWETHER CAPITAL MANAGEMENT

• ARC has entered into binding agreements to acquire 40% of Merewether Capital Management, a newly established boutique micro & small cap funds management company, for $200,000. ARC will also provide Merewether with a $150,000 working capital facility;

• Merewether Capital Management will be the Investment Manager of the Merewether Capital Inception Fund, a wholesale managed fund intended to be launched in 2H2021;

• ARC is pleased to be investing in and supporting Merewether Capital Management’s Founder, Luke Winchester;

• Mr Winchester is a well-regarded investor and portfolio manager with experience and expertise in the funds management industry with a focus on investments in ASX listed micro and small cap stocks, having most recently worked as the Portfolio Manager of Oracle Investment Emerging Companies Fund;

• ARC & Merewether will now seek to progress the Merewether Capital Inception Fund to Launch Day;

• Internal modelling suggests Merewether can achieve break even with 12 months;

• The deal will be fully funded from existing cash reserves;

• ARC is excited to be backing such a high quality investor and encourages all ARC shareholders to follow Merewether Capital’s journey.

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STRONG SOCIAL MEDIA PRESENCE & WELL KNOWN IN THE MARKET

• Luke has spent a number of years building his following including regular appearances on AusBiz TV and sharing of his investment theses online

• Popular online investment community Strawman.com recently highlighted his success (Luke comments as ‘Wini’ shown to the right)

• ARC & Merewether will seek to leverage Luke’s existing network of followers and supporters to seed the Merewether Capital Inception Fund

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Source: AusbizTV

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Source: Strawman.com

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OVERVIEW & NEXT STEPS

• Merewether Capital Management is the first investee manager under ARC’s new strategy of building out a leading funds management investment platform

• ARC will seek to support Merewether through its early growth phase through to becoming a successful funds management operation

• ARC is progressing additional opportunities with other managers in various assets classes & investment strategies and will keep the market informed on an as-needed basis

• Over time, ARC intends to increase it’s in-house service offering and sales & distribution capability to increase our utility and value to our investee managers

• ARC has begun the process of acquiring its own AFSL

• We recognize that our biggest assets are our people and our reputation, so our actions and strategic decisions will be guided by this in order to build ARC into the ‘Partner of Choice’ for the best funds management talent in Australia

• ARC will look to change the Company Name and refresh the brand and logo as part of our new strategy

• ARC has sufficient cash reserves to fully fund the continued execution of our new strategy

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11

Thank you for your time Any questions please refer to

Harley Grosser - Managing Director Harley.Grosser@RuralCapital.com.au James Jackson - Chairman James.Jackson@RuralCapital.com.au

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