SCHRODER BRITISH OPPORTUNITIES TRUST PLC

Prospectus • Nov 10, 2020

National Storage Mechanism | Additional information

RNS Number : 8035E

Schroder British Opportunities Tr.

10 November 2020

10 November 2020

LEI: 5493003UY8LIHFW6HM02

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN OR TO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE PUBLICATION, DISTRIBUTION OR RELEASE OF THIS ANNOUNCEMENT WOULD BE UNLAWFUL. PLEASE SEE THE SECTION ENTITLED "DISCLAIMER" TOWARDS THE END OF THIS ANNOUNCEMENT.

This announcement is an advertisement and does not constitute a prospectus and investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in the prospectus expected to be published shortly by Schroder British Opportunities Trust plc (the "Prospectus") and not in reliance on this announcement. Once published, a copy of the Prospectus will, subject to certain access restrictions, be available for inspection on the Company's website: http://www.schroders.com/sbot and at the registered office of the Company. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase, investments of any description, or a recommendation regarding the issue or the provision of investment advice by any party.

Schroder British Opportunities Trust plc 

(the "Company")

Intention to Float on London Stock Exchange

Intention to raise up to £250m

Schroder British Opportunities Trust plc today announces its intention to launch an initial public offering and to admit its shares on the premium segment of the Official List of the Financial Conduct Authority and to trading on the Main Market of the London Stock Exchange plc. 

The Company is seeking to raise up to £250 million1 by means of a placing, offer for subscription and intermediaries offer of Ordinary Shares (the "Initial Issue"). In addition, pursuant to the Prospectus expected to be published shortly, a placing programme will allow the Company to issue further Ordinary Shares and/or C Shares in the 12 months from the date of publication of the Prospectus and following Initial Admission (the "Placing Programme").

Highlights2

Investment proposition

·    Covid-19 and other macro factors are having a dramatic effect on many UK Companies and the Company anticipates an increased need by UK Companies for fresh equity and believes that a proactive public and private equity investment strategy can provide access to positive returns through participation in capital raising opportunities;

·    The Company believes that there is a once in a generation opportunity to invest equity capital into high quality, high growth UK Companies in the c. £50 million to £2 billion equity value range with sustainable business models at attractive valuations. We believe that this will be a platform for driving long term value;

·    The Company will aim to achieve a target allocation of approximately 50 per cent. public equity investments and approximately 50 per cent. private equity investments. It is anticipated that in the period immediately following Initial Admission, the Company's portfolio will predominantly comprise public equity investments until target deployment into private equity investments is achieved;

·    The Company aims to provide a NAV total return of 10 per cent. per annum (once the Company is fully deployed across the target allocation between public and private equity investments) over the life of the Company3; and

·    The Company believes that this is a highly-differentiated investment strategy, where the Company will aim to identify compelling investments in both public and private equity, thereby providing a broader UK investment opportunity set than provided by solely public market investment.

ESG Integration

·    ESG company engagement will be a critical feature of the Company's investment strategy. The Company's focus will be on companies with business models which are considered to be sustainable in terms of both the longevity and durability of their businesses and their environmental, social and governance behaviours.

The Board, the AIFM and the Portfolio Managers

·      The Company's portfolio will be managed by two of Schroders' most senior investment professionals; Rory Bateman, Head of Equities and Tim Creed, Head of UK & European Private Equity. The Portfolio Managers will employ a collaborative, team-based approach built on Schroders' public and private equity investment platforms and its experience of managing hybrid public and private strategies;

·    Schroder Unit Trusts Limited has been appointed to act as the Company's alternative investment fund manager (the "AIFM") for the purposes of the AIFM Directive, and accordingly the AIFM is responsible for the portfolio management of the Company and for exercising the risk management function in respect of the Company. The AIFM has appointed Schroder Investment Management Limited ("SIML") as the Company's portfolio manager, which will manage the investment portfolio of the Company as a delegate of the AIFM. SIML has appointed Schroder Adveq Management AG ("Schroder Adveq") to manage the private equity investments within the Company's investment portfolio. SIML and Schroder Adveq are each referred to as a "Portfolio Manager" in this announcement. The AIFM, SIML and Schroder Adveq are all wholly-owned subsidiaries of Schroders plc; and

·    The Company is overseen by an independent board of non-executive directors, with a complementary mix of investment trust, corporate governance and public and private equity experience. The Board will be chaired by Neil England, formerly chairman of BlackRock Emerging Europe plc and current chairman of Augmentum Fintech plc.

Peel Hunt LLP ("Peel Hunt") is acting as sole sponsor, placing agent and intermediaries offer adviser to the Company and, with effect from Initial Admission, will act as the Company's corporate broker.

Commenting on the launch, Chair of Schroder British Opportunities Trust plc, Neil England, said: "We are pleased to announce the launch of this timely and differentiated investment strategy with Schroders. Recent events have created investment opportunities in a number of quality companies with high growth potential and additionally we believe that many UK businesses are currently mispriced. Several of these companies have already been identified as candidates for early investment. The excellent track record of both the public and private equity investment teams at Schroders gives us confidence that we can deliver compelling returns for investors."

Rory Bateman, Head of Equities at Schroders said3: "The current macro environment presents investors with a staggering opportunity with regard to UK public equity valuations. The Company's strategy offers a highly differentiated growth based approach, hand in hand with the support of sustainable development screening metrics that we believe will result in a portfolio that has very limited overlap with any existing London listed investment trust.

Once the Company reaches its target deployment, we are aiming to deliver double digit annual returns3 over the life of the Company by taking advantage of what we believe is a once in a generation opportunity. We believe Schroder British Opportunities is a compelling opportunity for investors given the combination of public and private equity, the intense focus on ESG engagement and the circa seven-year fund life."

Tim Creed, Head of UK and European Private Equity at Schroders said: "We are incredibly excited to be able to offer investors the expertise of the Schroder UK private equity team in this highly compelling growth mandate to take advantage of the displacement in value caused by Covid-19 among other macro factors.

Our goal is to invest into well-established growing British companies to help them develop faster. We have a long track record of growing companies, both domestically and internationally, through active ESG engagement and believe this is the right time to invest equity into high quality businesses."

Expected timetable4

Publication of the Prospectus	10 November 2020
Placing, offer for subscription and intermediaries offer opens	10 November 2020
Latest time and date for receipt of completed application forms in respect of the offer for subscription	11.00 a.m. on 26 November 2020
Latest time and date for receipt of completed applications from intermediaries in respect of the intermediaries offer	1.00 p.m. on 26 November 2020
Latest time and date for commitments under the placing	5.00 p.m. on 26 November 2020
Publication of the results of the Initial Issue	27 November 2020
Admission and dealings in Ordinary Shares commence	8.00 a.m. on 1 December 2020

For further information please contact:

Schroders	Via Buchanan
Peel Hunt (Sole Sponsor, Placing Agent and Intermediaries Offer Adviser) Liz Yong, Luke Simpson, Oliver Jackson, Tom Pocock (Investment Banking) Alex Howe, Chris Bunstead, Ed Welsby, Richard Harris (Sales) Sohail Akbar (Intermediaries)	020 7418 8900
Buchanan (Financial PR) Charles Ryland, Henry Wilson	020 7466 5000

Notes:

1. The Directors have reserved the right, in conjunction with Peel Hunt and the AIFM, to increase the size of the Initial Issue to a maximum of 450 million Ordinary Shares if overall demand exceeds 250 million Ordinary Shares, with any such increase being announced through a Regulatory Information Service.

2. In forming its beliefs, the Company has been advised by the Portfolio Managers.

3. The return targets are targets only and not profit forecasts and there can be no assurance that the targets will be met or that any capital growth or distributions will be achieved.

4. Any changes to the expected timetable will be notified by the Company via a Regulatory Information Service.

The Covid-19 Crisis and the Investment Opportunity

The economic and corporate background

•             Covid-19 is having a dramatic effect on many UK Companies;

•             Government support has been material with initiatives such as the furlough programme allowing workers to continue to get paid. Indeed, circa 9.6 million people have been furloughed in the UK with 1.2 million companies participating and £41.4 billion of claims accruing (as at 18 October 2020). The scheme, however, was scheduled to close on 31 October 2020, but has recently been extended to 31 March 2021. Pressures are therefore expected to mount on businesses as this support ends while deferred payroll taxes and VAT will become due. Many companies delayed payroll taxes for April/May 2020 and VAT payments for H1 2020 but a backlog of payroll taxes will need to be repaid in Q4 2020 and 2021, while VAT payments are expected to have to be paid by March 2021. Elsewhere, banks and mortgage companies allowed companies to defer payments for 2 to 6 months but payments still need to be made and deferrals are unlikely to extend significantly past 2020/2021. The loans advanced through The Coronavirus Business Interruption Loan Scheme (CBILS) and The Coronavirus Large Business Interruption Loan Scheme (CLBILS) need to be repaid but in the report by The City/UK Recapitalisation project, published on 5 June 2020, it was predicted that £100 billion of lending may be written off or written down;

•             As this debt-driven Government support comes to an end, the Company believes, having been advised by the Portfolio Managers, that fresh equity is required and that there are many companies that will need equity over the coming months, both public and private. The stock market will be an important part of the solution for sustainable companies and that it has demonstrated its worth in the crisis so far, as the Portfolio Managers' analysis shows that c.£22 billion was raised by 439 companies (all caps) on the London Stock Exchange (as at 31 October 2020), more than in any year since companies were required to repair their balance sheets during the financial crisis of 2008 and 2009. The Company believes that there will be a continued desire among companies to raise new equity;

•             The Company believes that there is a particular need to support small to mid-sized companies. In this context, c.£5.6 billion of public equity has been raised by companies with a market cap range of between £50 million to £2 billion in the period from 1 January 2020 to 31 October 2020. The Company believes that there are insufficient funds to support all the equity issuance that is expected to be required to assist quality UK Companies. Indeed, across the industry, net outflows from UK small and mid-cap equity funds from March 2020 to September 2020 inclusive totalled an estimated £2.3 billion. This net selling has been significant and the Company believes, having been advised by SIML, that public equity raisings have been financed by selling other public equity holdings, by existing cash balances and by institutional re-allocations; and

•             The Company, having been advised by Schroder Adveq, believes that private companies have also been impacted by recent developments, and that private equity investors have spent time considering the potential impact of the pandemic and as such have been reluctant to inject significant capital into new opportunities, preferring instead to focus on their existing portfolios.  This has created a situation where high quality private companies may not be able to attract sufficient capital to take advantage of existing growth opportunities or may be seeking capital to strengthen their balance sheets to ensure their long-term growth prospects remain unchanged. The Company believes that this would create opportunities from identifying high quality growth companies to support, and that a further wave of Covid-19 would exacerbate the situation and potentially create further investment opportunities.

Investment opportunity

•             The Company believes that the Covid-19 pandemic and other macro factors combine to present a once in a generation opportunity to acquire interests in high quality companies with sustainable business models. Such companies are available at what appear to be attractive valuations given the short-term investment horizons of many active asset managers;

•             An increased need for fresh equity is anticipated and the Company believes, having been advised by the Portfolio Managers, that a proactive public and private equity investment strategy could provide access to positive returns through participation in capital raising opportunities;

•             Through investing in these companies during this period it is probable that these companies would be better able to protect jobs, thereby easing unemployment with a commensurately positive impact on economic growth. The Company will also aim to help companies retain a long-term focus on sustainability; and

•             The Company will seek to identify high quality growth companies, both public and private, with an equity value of between approximately £50 million and £2 billion which require funding to maximise their growth potential as well as in mispriced growth opportunities where equity is required to return businesses to their previous growth trajectories, during the Covid-19 pandemic and beyond. This investment proposition aims to provide investors with exposure to a vehicle mobilising both public and private expertise to help UK Companies and employment in this time of crisis.

Differentiated strategy

•             The Company believes that equity is crucial to future growth and innovation and that without this there is a risk that UK knowledge, intellectual property and insights will be lost with the UK suffering a permanent loss of capital value. Given this need for equity, the Company believes, having been advised by the Portfolio Managers, that it could be part of the solution, by backing UK enterprise, capitalising on innovation and driving long term value;

•             While there are a significant number of Covid-19 investment vehicles, most are debt-focused. The Company believes it has a highly-differentiated investment strategy for which there is a real need from small and mid-cap companies. In particular, the Company will have a focus on equity in its identification of the high quality UK Companies in both the public and private equity arenas. The Company's strategy will therefore provide a broader UK investment opportunity set than provided by solely public market investment;

•             The Portfolio Managers have experience of managing hybrid public and private equity strategies. The Company will be managed by two of Schroders' most senior investment professionals, Rory Bateman (Head of Equities and Member of Schroders' Group Management Committee) and Tim Creed (UK and European Head of Private Equity). Rory will be supported by a Public Equity Investment Committee, as well as being able to draw upon the expertise of over 150 public equity analysts and fund managers globally, including 15 UK public equity managers and analysts (supported by 14 pan-European equity sector analysts). Tim will benefit from the experience of the established Private Equity Investment Committee, whose members have been working together for over 13 years, as well drawing on a 35 strong private equity investment team globally. Furthermore, Schroder Adveq will benefit from its relationships with over 100 general partners/private equity managers; and

•             ESG company engagement will be a critical feature of the Company's investment strategy. The Company's focus will be on companies with business models which are considered to be sustainable in terms of both the longevity and durability of their businesses and their environmental, social and governance behaviours.  The United Nations launched its Sustainable Development Goals (SDGs) in 2015, defining the biggest challenges facing global societies. They comprise 17 discrete goals, each targeting distinct threats and underpinned by a comprehensive range of metrics and have a further 169 sub goals. It is the Company's intention that the activities of each of the investee companies in the Company's portfolio will be consistent with the achievement of at least one of the SDGs or one of the sub-goals. The Company, through the Portfolio Managers, will also assess companies' business models using a variety of Schroders' proprietary and external ESG frameworks and will support and encourage companies in their efforts to incorporate SDGs into their business planning and reporting.

AIFM and Portfolio Managers

The AIFM and the Portfolio Managers are wholly owned subsidiaries of Schroders plc. As a global asset and wealth manager, Schroders plc delivers a broad range of investments designed to meet the diverse needs of institutions, intermediaries and high net worth individuals. For over 200 years Schroders has built partnerships with its clients.

Schroders is a global business, managed locally. Schroders are responsible for £525.8 billion of assets for its clients, as at 30 June 2020.

The Company has appointed Schroder Unit Trusts Limited (the AIFM) to be the alternative investment fund manager of the Company for the purposes of the AIFM Directive. Accordingly, the AIFM is responsible for the portfolio management of the Company and for exercising the risk management function in respect of the Company.

The AIFM has delegated portfolio management services to Schroder Investment Management Limited including responsibility for managing cash not yet invested by the Company.

Schroder Investment Management Limited will manage the Company's public equity investments and has sub-delegated management of the Company's private equity investments to Schroder Adveq Management AG. Schroder Investment Management Limited and Schroder Adveq Management AG are each referred to as a "Portfolio Manager".

Schroder Investment Management Limited is a private company limited by shares incorporated in England and Wales and is an indirectly-held wholly-owned subsidiary of Schroders plc. It is authorised and regulated by the FCA.

Schroder Adveq is a company limited by shares incorporated in Switzerland. It is a wholly owned subsidiary of Schroders plc and is authorised and regulated by the Swiss Financial Market Supervisory Authority (FINMA).

Schroder Adveq is a leading private equity investment manager in specialist strategies with £9.5 billion of assets under management as at 30 June 2020. In 2017, Schroders acquired Adveq Management AG (now known as "Schroder Adveq Management AG"), a global private equity firm with over 100 professionals with a focus on investing in emerging companies and financing their technology development and commercial growth. Schroder Adveq offers both funds and tailored solutions which enable its clients to access select global private market segments through primary, secondary and direct/co-investments.

The Portfolio Management Teams and track record

Investors in the Company are expected to benefit from the expertise and experience of the portfolio management teams within SIML and Schroder Adveq across public and private equity as well as from other teams within Schroders.

The Company's portfolio will be managed by the Portfolio Managers. Whilst the management functions within the Portfolio Managers will be led by two of Schroders' most senior investment professionals, Rory Bateman (Head of Equities and Member of Schroders' Group Management Committee) and Tim Creed (UK and European Head of Private Equity), the Portfolio Managers will employ a collaborative, team-based approach to investment.

The Company is expected to benefit from the considerable public equity and private equity investment resource within Schroders. This comprises over 150 public equity analysts and fund managers globally, including 15 UK public equity managers and analysts (supported by 14 pan-European equity sector analysts). The Company will also benefit from the expertise of a 35 strong private equity investment team globally and relationships with over 100 general partners/private equity managers.

Rory Bateman will be responsible for the management of the public equity investments within the Company's portfolio.

Rory Bateman, Head of Equities

Rory Bateman is Head of Equities at Schroders. The equity division manages £162 billion (as at 30 June 2020) globally across multiple strategies. Rory has been an equity investor for 20 years. He joined Schroders in 2008 and is based in London.

Rory was the Head of UK/European Equities team at Schroders from 2015 to 2019, which managed over €55 billion across multiple strategies.

Rory was a European Equity Fund Manager and Analyst at Schroders from 2008 to 2015, which involved managing numerous European equity portfolios and being a member of the analyst team.

Rory was a Research Analyst and Continental European Portfolio Manager at Goldman Sachs Asset Management from 1996 to 2008, which involved portfolio management and analytical responsibilities.

Rory holds a MPhil in Economics from University of Cambridge and a BA (Hons) in Financial Economics from Guildhall University.

Tim Creed, Head of UK and European Private Equity

Tim Creed is a member of Schroder Adveq's management committee and a member of the Private Equity Investment Committee. He is also on the advisory boards of several leading European buyout and turnaround fund managers.

Prior to joining Schroder Adveq in 2004, Tim Creed worked as a Project Manager at Aon in London, UK, having previously spent five years at Accenture in Strategy Consulting and Operations Consulting, where he worked mostly with financial services companies across Europe. Tim Creed started his career as a Research Chemist at Astra Zeneca, also in the UK. From 2002 to 2007, Tim Creed held a part time position as an Executive Public member of Network Rail in the UK.   

Tim Creed holds a bachelor's degree in Chemistry from the University of Edinburgh, where he graduated with first class honours and an MBA from Oxford University, UK, where he was the Clifford H. Barclay Scholar.  

In December 2019, Tim Creed was selected as one of "50 Most Influential People in European Private Equity" by Financial News / Private Equity News.

Tim will draw upon the expertise of the private equity investment team and Schroder Adveq's network of private equity partners discussed above and will be supported by a Private Equity Investment Committee, the members of which have been working together for over 13 years. This committee will consider potential private equity investments to be made by the Company.

Although working closely with their respective investment committees, Rory and Tim are anticipated to be the key decision makers and they must agree with each other on every investment decision before it is executed.

Further details on the key individuals responsible for executing the Company's investment strategy are set out in the Prospectus.

Investment objective

The Company's investment objective is to deliver long-term total returns throughout the life of the Company by investing in a diversified public equity and private equity portfolio of predominantly UK Companies.

"UK Companies" means companies which are incorporated, headquartered or have their principal business activities in the United Kingdom, and companies headquartered outside the United Kingdom which derive, or are expected to derive, a significant proportion of their revenues or profits from the United Kingdom.

Investment policy

The Company will invest in a diversified portfolio of both public equity investments and private equity investments consisting predominantly of UK Companies with strong long-term growth prospects.

"Public equity investments" mean any investments in any of the following categories (a), (b) and (c) below (although it is envisaged that the Company will predominantly focus on those of an equity and/or quasi-equity nature as set out under categories (a) and (b) below):

(a)      ordinary shares or similar securities issued by an issuer which are traded on any of the following:

i)          any "regulated market" as defined in MiFID II and as listed in the register of regulated markets within the EEA maintained by the European Securities and Markets Authority from time to time; or

ii)         any "recognised investment exchange" as recognised by the FCA under Part XVIII of FSMA; or

iii)        any "recognised overseas investment exchange" as recognised by the FCA under Part XVIII of FSMA;

(b)      securities or other instruments giving the right to acquire or sell any of the securities referred to in (a) above, including without limitation warrants, options, futures, convertible bonds and convertible loan notes; and

(c)       preference shares issued by an issuer referred to in (a) above.

"Private equity investments" mean any investments in any of the following categories (w), (x), (y) and (z) below (although it is envisaged that the Company will predominantly focus on those of an equity and/or quasi-equity nature as set out under categories (w) and (x) below):

(w)     shares in companies and other securities/units/interests equivalent to shares in companies, partnerships (including limited partnership interests) or other entities, provided that they are not already captured under the definition of "public equity investments" above;

(x)      securities, derivatives or other instruments giving the right to acquire or sell any of the shares/securities/units/interests referred to in (w) above, including without limitation warrants, options, futures, contingent value rights, convertible bonds, convertible loan notes, convertible loan stocks or convertible preferred equity;

(y)      preference shares issued by an issuer referred to in (w) above; and

(z)       debt-based investments not otherwise covered above, including loan stock, payment-in-kind instruments and shareholder loans.

It is anticipated that the Company's portfolio will typically consist of 30 to 50 holdings and will target companies with an equity value between approximately £50 million and £2 billion at the time of initial investment.

The Company will focus on companies which the Portfolio Managers consider to be sustainable from an environmental, social and governance perspective, supporting at least one of the goals and/or sub-goals of the United Nations' Sustainable Development Goals ("SDGs"), or which the Portfolio Managers consider would benefit from their support in helping them incorporate SDGs into their business planning and/or in reporting their alignment with SDGs.

The Company will aim to achieve a target allocation of approximately 50 per cent. public equity investments and approximately 50 per cent. private equity investments. It is anticipated that in the period immediately following Initial Admission, the Company's portfolio will predominantly comprise public equity investments until target deployment into private equity investments is achieved.

Investment restrictions

The Company will invest and manage its assets with the object of spreading risk through the following investment restrictions:

·    no more than 10 per cent. of Net Asset Value may be invested in any investee company;

·    once fully invested, the Company's portfolio shall comprise no fewer than 30 holdings;

·    private equity investments will be limited to 60 per cent. of Gross Asset Value;

·    no more than 20 per cent. of Net Asset Value may be invested in investee companies which are not UK Companies;

·    the Company may not take a controlling stake in any investee company, whether directly or indirectly, and:

·    in respect of public equity investments, the Company may own no more than 10 per cent. of the total voting rights of any investee company; and

·    in respect of private equity investments, the Company may own no more than 20 per cent. of the enterprise value of any investee company; and

·    the Company will not invest more than 10 per cent. in aggregate of Gross Assets in other listed closed-ended investment funds, except that this restriction shall not apply to investments in listed closed-ended investment funds which themselves have stated investment policies to invest no more than 15 per cent. of their gross assets in other listed closed-ended investment funds. Additionally, in any event, the Company will itself not invest more than 15 per cent. of its Gross Assets in other investment companies or investment trusts which are listed on the Official List.

Unless otherwise stated, each of the above restrictions will be calculated at the time of commitment. Where the Company makes investments through one or more special purpose vehicles, owned in whole or in part by the Company or one of its affiliates (being an affiliate of, or person affiliated with, the Company, including a person that directly, or indirectly through one or more intermediate holding companies, controls or is controlled by, or is under common control with, the Company), the investment restrictions will be applied on a look-through basis. 

Where the calculation of an investment restriction requires an analysis of underlying investments held by a fund in which the Company is invested, such calculation will be based on the information reasonably available to the Portfolio Managers at the relevant time. 

The Company will not be required to dispose of any investment or to rebalance the portfolio as a result of a change in the respective valuations of its assets.  However, the Portfolio Managers will regularly monitor the Company's portfolio and make adjustments from time to time in light of the above restrictions.

Borrowing Policy

The Company may, from time to time, use borrowings for investment and efficient portfolio management purposes.  Gearing will not exceed 10 per cent. of Net Asset Value, calculated at the time of drawdown of the relevant borrowing, except that there will be no re-calculation where a facility is renewed, varied or replaced, and that there will be no re-calculation at the time of a subsequent drawdown under the same facility, provided that the absolute amount of borrowing is not increased at the time of any subsequent renewal, variation, replacement or subsequent drawdown.

Hedging and derivatives

Derivatives may be used for investment purposes, efficient portfolio management or for currency hedging purposes, although it is not expected that a material proportion of the Company's investments will be denominated in currencies other than pounds sterling and any such currency exposure will not normally be hedged. 

Where derivatives are used for investment purposes, the Company does not intend to increase the Company's gearing in excess of the limits set out in the borrowing policy above, and any restrictions set out in the investment policy shall apply equally to exposure through derivatives.

Cash management

The Company may hold cash on deposit and may invest in cash equivalent investments, which may include short-term investments in money market type funds ("Cash and Cash Equivalents").

There is no restriction on the amount of Cash and Cash Equivalents that the Company may hold and there may be times when it is appropriate for the Company to have a significant cash position instead of being fully or near fully invested. Cash and Cash Equivalents will be held with approved counterparties and in line with prudent cash management guidelines agreed between the Board, AIFM and Portfolio Managers. For the avoidance of doubt, the restrictions set out above in relation to investing in listed-closed ended investment funds do not apply to money market type funds.

Changes to the investment policy

No material change will be made to the investment policy without the approval of Shareholders by ordinary resolution.  Non-material changes to the investment policy may be approved by the Board.

In the event of a breach of the investment policy set out above and the investment and gearing restrictions set out therein, the AIFM shall inform the Board without delay, and if the Board considers the breach to be material, notification will be made to a Regulatory Information Service.   

Target returns and distribution policy3

The Company aims to provide a NAV total return of 10 per cent. per annum (once the Company is fully deployed across the target allocation between public and private equity investments) over the life of the Company.

The Company will pay out its income as required by applicable law but does not have any distribution targets.  The Company intends to pay distributions on an annual basis.

Fixed life

The Company has a fixed life. The Articles require the Directors to put forward, at a general meeting of the Company to be held in the year 2028 but in any event no later than 31 May 2028, a Winding-Up Resolution to place the Company into voluntary liquidation. The Articles provide that voting on the Winding-Up Resolution will be enhanced such that, provided any single vote is cast in favour, the Winding-Up Resolution will be passed. In light of this, the Company is referred to as having a fixed life.

Costs of the Initial Issue

The formation and initial expenses of the Company are those which are necessary for the incorporation of the Company, the Initial Issue and Initial Admission. These expenses include fees and commissions payable under the Placing Agreement, the Receiving Agent's fees, admission fees, printing, legal, valuation and accounting fees and any other applicable expenses.

Such costs and expenses are expected to be approximately £3.2 million, assuming 250 million Ordinary Shares are issued pursuant to the Initial Issue. 

Listing

The Company will seek admission of its ordinary shares to the premium segment of the Official List of the Financial Conduct Authority and to trading on the premium segment of the Main Market of the London Stock Exchange ("Admission"). The Company will be structured as a closed-ended investment company incorporated in England & Wales and registered as an investment company under Section 833 of the Companies Act 2006. Schroder British Opportunities Trust plc intends to carry on business as an investment trust within the meaning of Chapter 4 of Part 24 of the Corporation Tax Act 2010.

Directors' Participation in the Initial Issue

Pursuant to the Initial Issue, certain of the Directors intend to subscribe for an aggregate of 100,000 Ordinary Shares, as further detailed in the Prospectus.

Directors

The directors, all of whom are independent, are as follows:

Neil England - Non-executive Chair

Neil England has extensive international business expertise in a career spanning public and private companies varying in size from start-ups to global corporations. His career started in manufacturing and he has held leadership roles in sales, marketing and general management across sectors including food, FMCG (fast moving consumer goods), distribution and technology. Neil was a Vice President of Mars Incorporated; Group Chief Executive at The Albert Fisher Group Plc and Group Commercial Director at Gallaher Group Plc. Additionally he started two technology businesses and has advised on others.

Neil has been Chairman of a number of companies and in the past three years these have included ITE Group Plc, Blackrock Emerging Europe Plc and four private businesses. He is currently the chairman of Augmentum Fintech plc (a specialist venture capital investment company) and a private equity backed software business.

Diana Dyer Bartlett - Non-executive Director

After qualifying as a chartered accountant with Deloitte Haskins & Sells, Diana spent five years in investment banking with Hill Samuel. Since then she has held a number of executive roles including as finance director of various venture capital and private equity backed businesses and listed companies involved in software, financial services, renewable energy and coal mining. She was also company secretary of Tullett Prebon plc and Collins Stewart Tullett plc. Diana is currently Non-executive Director and Chairman of the Audit Committee of Smithson Investment Trust plc and Mid Wynd Investment Trust plc, as well as Smart Space Software plc, an AIM-listed software company.

Tim Jenkinson - Non-executive Director

Tim is Professor of Finance at the Saïd Business School, University of Oxford, Director of the Oxford Private Equity Institute and one of the founders of the Private Equity Research Consortium. Tim is an experienced researcher, teacher and presenter, and teaches executive courses on private equity, entrepreneurial finance, and valuation. His research has won many awards, including the 2016 Harry Markowitz Prize (from the Journal of Investment Management for his work on private equity), the 2015 Commonfund Prize (for the paper with the most relevance to institutional investors) and a 2014 Brattle Group Prize (awarded by the American Finance Association for the best research on corporate finance). He is also a Professorial Fellow at Keble College, University of Oxford and a Research Associate of the European Corporate Governance Institute.

Tim is a partner at the European economic consulting firm Oxera, through which he has consulted for a large number of companies, regulators, government agencies and industry associations. He has previously held board positions in several funds and companies, including PSource Structured Debt Limited, the US financial services firm DFC Global Corporation and the German utility comparison firm Verivox GmbH. In 2016 Tim was appointed as a Specialist Advisor to the Culture, Media and Sport Select Committee of the UK Parliament.

Christopher Keljik, OBE - Non-executive Director

Christopher was with Standard Chartered plc for most of his executive career serving in Singapore, New York, Hong Kong and London. At retirement he was the Group Executive Director with responsibilities for Africa, the Middle East, South Asia, Europe and the Americas. Christopher was senior independent director of F&C Investment Trust plc, Millennium and Copthorne Hotels plc and Schroder Asian Total Return Investment Company plc (formerly Henderson Asian Growth Trust plc). Christopher has also held non-executive director positions on a number of other companies including Sanditon Investment Trust plc, Waverton Investment Management Limited and Jardine Lloyd Thompson Group plc. He is a Fellow of the Institute of Chartered Accountants in England and Wales.

Key Risks Specific to the Company and the Securities

The attention of investors is drawn to the key risks specific to the Company and an investment in the Ordinary Shares and/or C Shares, which include the risks set out below. Further details of the material risks relating to the Company and an investment in the Ordinary Shares and/or the C Shares will be set out in the Prospectus. Investors should not subscribe for or purchase any securities referred to in this announcement except on the basis of the information in the Prospectus. No reliance should be placed on this announcement.

•             The Company's strategy is to invest, initially, in companies impacted by the Covid-19 crisis in the approximately £50 million to £2 billion equity value range. These companies may not have the financial strength, diversity and resources which larger companies may have and there may be a higher risk that these companies will find it more difficult to operate during the Covid-19 crisis, as well as in periods of economic slowdown and recession. The risk of bankruptcy of such companies is also generally higher. Therefore, investment in such companies could be riskier than investments in larger companies and the deterioration in the financial condition or bankruptcy of such companies may result in greater volatility in the Company's net asset value ("NAV") and may materially and adversely affect the performance of the Company and returns to Shareholders.

•             The long-term impacts of Covid-19 are unknown, rapidly-evolving and may be materially more severe and/or more permanent than anticipated. It is difficult to accurately predict the effects these factors may have on the investee companies within the Company's portfolio and on the Company. The Company may invest in investee companies which do not meet the target returns anticipated by the Portfolio Managers (being Schroder Investment Management Limited and Schroder Adveq Management AG (the "Portfolio Managers")) due to the Portfolio Managers underestimating or failing to accurately predict or foresee the time scale, severity and/or impacts of the Covid-19 crisis, which could result in a material adverse impact on the performance of the Company, the NAV and the returns to Shareholders.

•             Private equity investments are difficult to value. Information from underlying investee companies may be delayed, missing or restricted which would lead to valuations being made on incomplete information.

•             It is difficult to accurately time the exit of private equity investments. Exits will take time and the Portfolio Managers may have very little influence on any decisions around the timing on exits.  Realisations of private equity investments may not occur on a regular straight line basis. Should an exit of a private equity investment be effected in such manner or time frame which is not compatible with the Company's investment horizon, this could result in a material adverse impact on the Company's NAV and on the return to Shareholders. 

•             There may not necessarily be a liquid market for shares in investee companies in the approximately £50 million to £2 billion equity value range even if their shares are publicly traded.

•             The AIFM, the Portfolio Managers and their affiliates will provide services to other clients, which could compete directly or indirectly with the activities of the Company and may be subject to conflicts of interest in respect of their activities on behalf of the Company.

•             The Company may not meet its investment objective and returns of the Company are not guaranteed.

•             The Company has a fixed life and in the event that no alternative proposals are put forward to Shareholders and approved by Shareholders ahead of the winding-up date, a winding-up resolution will be proposed at the winding-up date to voluntarily liquidate the Company. This could mean that certain investments, in particular, private equity investments, may not be able to be realised at an optimal price, or that the realisation of such investments may take longer than anticipated (as it could take several years after the commencement of the winding-up of the Company until all of the Company's private equity investments could be disposed of and any final distribution of proceeds made to Shareholders).

•             The Company has no employees and the Directors have all been appointed on a non-executive basis.  Therefore, the Company is reliant upon the performance of third party service providers for its executive function. Failure by any of these or any other service provider to carry out its obligations to the Company in accordance with the terms of its appointment, together with a failure by the Company to enforce such terms, could have a materially detrimental impact on the operation of the Company.

•             Failure by the Company to maintain investment trust status, or changes in taxation legislation or practice, could result in the Company not being able to benefit from the current exemption for investment trusts from UK tax on chargeable gains and could affect the Company's ability to provide returns to Shareholders.

•             Changes in tax legislation or practices or laws or regulations governing the Company's operations (in particular, the Listing Rules, the Prospectus Regulation, the Prospectus Regulation Rules, the Disclosure Guidance and Transparency Rules, the Market Abuse Regulation, the AIFMD and the PRIIPs Regulation) may adversely affect the Company's business.

•             The Company has a total return strategy and therefore may not pay dividends to Shareholders.

•             The value of the Shares can fluctuate and may go down as well as up and an investor may not get back the amount invested. The market price of the Shares, like shares in all investment trusts, may fluctuate independently of their underlying Net Asset Value and may trade at a discount or premium at different times, depending on factors such as supply and demand for the Shares, market conditions and general investor sentiment.

•             There can be no guarantee that a liquid market in the Shares will exist. Accordingly, Shareholders may be unable to realise their Shares at the quoted market price or at all.

•             The Company may issue new equity in the future pursuant to the Placing Programme or otherwise. Where statutory pre-emption rights are disapplied, any additional equity financing will be dilutive to those Shareholders who cannot, or choose not to, participate in such financing.

All capitalised terms used and not defined herein shall have the same meaning as in the Prospectus expected to be published on or around 10 November 2020.

Disclaimer

This is a financial promotion and is not intended to be investment advice. The content of this announcement, which has been prepared by and is the sole responsibility of the Company, has been approved by Schroder Investment Management Limited solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000 (as amended).

This announcement is an advertisement and does not constitute a prospectus and investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in the Prospectus expected to be published by the Company (and in any supplementary prospectus) and not in reliance on this announcement. Copies of the Prospectus may, subject to any applicable law, be obtained from the registered office of the Company and will shortly be made available for viewing at the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase investments of any description or a recommendation regarding the issue or the provision of investment advice by any party. No information set out in this announcement is intended to form the basis of any contract of sale, investment decision or any decision to purchase shares in the Company.

The information in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The material contained in this announcement is given as at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment. In particular, any proposals referred to herein are subject to revision and amendment.

Peel Hunt, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company and for no-one else in connection with the matters described in this announcement and will not regard any other person (whether or not a recipient of the Prospectus) as its client and will not be responsible to anyone for providing the protections afforded to its clients or providing any advice in relation to the matters contained herein.

The shares of the Company have not been, and will not be, registered under the U.S. Securities Act of 1933 (as amended) (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. Persons absent registration or an exemption from registration under the Securities Act. Moreover, the shares of the Company have not been, nor will they be, registered under the applicable securities laws of Australia, Canada, the Republic of South Africa, Japan or any member state of the EEA (other than any member state of the EEA, including the United Kingdom, where the Ordinary Shares and/or C Shares are lawfully marketed). Further, the Company is not, and will not be, registered under the US Investment Company Act of 1940, as amended. The shares of the Company will be offered and sold outside of the United States to non-U.S. Persons in reliance on the exemption from the registration requirements of the Securities Act provided by Regulation S thereunder. Subject to certain exceptions, the shares of the Company may not be offered or sold in the United States, Australia, Canada, the Republic of South Africa, Japan or any member state of the EEA (other than any member state of the EEA, including the United Kingdom, where the Ordinary Shares and/or the C Shares are lawfully marketed) or to, or for the account or benefit of, any national, resident or citizen of, the United States, Australia, Canada, the Republic of South Africa, Japan or any member state of the EEA (other than the United Kingdom or to professional investors in certain EEA member states for which marketing approval has been obtained). The Initial Issue and any subsequent placing under the Placing Programme, and the distribution of this announcement, in certain jurisdictions may be restricted by law and accordingly persons into whose possession this announcement is received are required to inform themselves about and to observe such restrictions.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America.  This announcement is not an offer of securities for sale into the United States.  The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration.  No public offering of securities is being made in the United States.

The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements.  When you sell your investment you may get back less than you originally invested. Figures refer to past performance and past performance should not be considered a reliable indicator of future results. Returns may increase or decrease as a result of currency fluctuations.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "might", "will" or "should" or, in each case, their negative or other variations or similar expressions. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, strategy, plans, proposed acquisitions and objectives, are forward-looking statements.

Forward-looking statements are subject to risks and uncertainties and, accordingly, the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These factors include but are not limited to those described in the Prospectus. These forward-looking statements speak only as at the date of this announcement and cannot be relied upon as a guide to future performance. Subject to their respective legal and regulatory obligations (including under the Prospectus Regulation Rules), the Company, the AIFM and Peel Hunt expressly disclaim any obligations or undertaking to update or revise any forward-looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based unless required to do so by law or any appropriate regulatory authority, including FSMA, the Listing Rules, the Prospectus Regulation Rules, the Disclosure Guidance and Transparency Rules, the Prospectus Regulation and MAR.

None of the Company, the AIFM or Peel Hunt, or any of their respective affiliates, accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. The Company, the AIFM and Peel Hunt, and their respective affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.  

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("Directive 2014/65/EU"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing Directive 2014/65/EU; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Ordinary Shares and the C Shares have been subject to a product approval process, which has determined that the Ordinary Shares and/or C Shares to be issued pursuant to the Placing Programme (including the Initial Issue) are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in Directive 2014/65/EU; and (ii) eligible for distribution through all distribution channels as are permitted by Directive 2014/65/EU (the "Target Market Assessment"). 

Notwithstanding the Target Market Assessment, distributors should note that: the price of the Ordinary Shares and/or C Shares may decline and investors could lose all or part of their investment; neither the Ordinary Shares nor the C Shares offer guaranteed income or capital protection; and an investment in the Ordinary Shares and/or C Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Initial Issue and Placing Programme. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Peel Hunt will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of Directive 2014/65/EU; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Ordinary Shares and/or C Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the Ordinary Shares and/or C Shares and determining appropriate distribution channels.

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