Straight Bat Private Equity Generation 1 Trust

Information Memorandum

Investment Manager: Straight Bat Private Equity Pty Ltd

Trustee: Specialised Investment and Lending Corporation Pty Ltd

Change this text 1. Important Information 1

2. Message from Straight Bat’s Managing Director 4

3. Summary of the Offer 7

4. The Fund 10

5. The Investment Strategy / Methodology 16

6. Management of the Fund 24

7. Risk Factors 34

8. Fees and Costs 39

9. Taxation Information 42

10. Additional Information 46

11. Application Process 49

12. Glossary 50

13. Corporate Directory 51 Allan Border, Australian Cricket Captain 1984-1994

We have asked Allan Border to help us personalise this invitation for you to consider investing in the Straight Bat Private Equity Generation 1 Trust. Allan Border does not endorse or recommend this investment opportunity in any way. Please carefully read the “Warning” statement on page 3. In the end, family is the reason why we do this. 1. Important information

Notice No action has been taken to register or qualify interests in the This Information Memorandum (IM) is dated 19 August 2020 Fund, the invitation to participate in the Fund, or to otherwise and is issued by Specialised Investment and Lending Corporation permit any offering of Fund interests in any jurisdiction other Pty. Ltd., ACN 149 520 918, holder of AFSL number 407100, than Australia. (Trustee), which is the trustee of the Straight Bat Private Equity Prospective investors should inform themselves as to the Generation 1 Trust (Fund). The Straight Bat Private Equity legal requirements and consequences of applying for, holding, Generation 1 Trust is established under the Trust Deed of the transferring and disposing of Units and any applicable Straight Bat Private Equity Generation 1 Trust dated 19 exchange control regulations and taxes in the countries of August 2020 as amended from time to time (Trust Deed). their respective citizenship, residence, domicile or place of The purpose of this IM is to provide information for prospective business. It is the responsibility of a prospective investor investors to decide whether they wish to invest in the Fund. outside Australia to obtain any necessary approvals in respect of applying for, or being issued with, Units. The Trustee has appointed Straight Bat Private Equity Pty Ltd, (ACN 636 868 301) (Investment Manager) as the investment By receiving and viewing this IM, the recipient warrants manager of the Fund under the Investment Management that they are legally entitled to do so and the securities Agreement. The Investment Manager is a corporate laws of their relevant jurisdiction do not prohibit them from authorised representative (number 1280685) of Specialised acquiring interests in the Fund. Further, the person receiving Investment and Lending Corporation Pty. Ltd., ACN 149 520 and viewing this IM warrants to the Trustee that they are a 918, AFSL number 407100. wholesale client as defined in section 761G of theCorporations Act 2001 (Cth) (Act) (‘Eligible Investor’). Interests in the Fund The Fund, the Trustee and the Investment Manager do not The Trustee may issue interests in the Fund as units. The bear any liability or responsibility to determine whether a Trustee may only issue interests in the Fund on receipt of a person is able to apply for Units pursuant to this IM. validly completed Application Form (issued together with this IM), and the receipt of cleared funds. In particular, this product has not been and will not be registered under the US Securities Act or the securities laws By applying for Units in the Fund, the recipient agrees to be of any state of the United States and may not be offered, sold, bound by the terms and conditions set out in this IM and the delivered or transferred in the United States or to, or for the Application Form for those Units. account of, any “US Person” (as defined in Regulation S under Fund not registered the US Securities Act). Neither this IM nor any Application The Fund, at the date of this IM, is not required to be, and is Form nor other material relating to this product may be not, registered as a managed investment scheme pursuant to distributed in the United States. section 601ED of the Act. This IM has been prepared on the basis that prospective investors are wholesale clients or sophisticated investors, and Restrictions on distribution not retail clients (all within the meaning of the Act). The distribution of this IM and the offering of interests in the Fund may be restricted in certain jurisdictions. No recipient of Accordingly, this IM is not a product disclosure statement and this IM in any jurisdiction may treat it as constituting an invitation does not contain all of the information that would be included in or offer to apply for interests in the Fund unless, in the relevant a product disclosure statement issued under the Act. This IM has jurisdiction, such an invitation or offer could lawfully be made to not been lodged with the Australian Securities and Investments that recipient in compliance with applicable law. Commission (ASIC) or any other government body.

Contents 1 Not responsible for contents of documents Forward looking statements The Trustee, the Investment Manager, or their related parties, All statements of opinion and/or belief contained in the IM and officers, employees, consultants, advisers or agents have not all views expressed and all projections, forecasts or statements carried out an independent audit or independently verified any relating to expectations regarding future events or the possible of the information contained in this IM, nor do they give any warranty as to the accuracy, reliability, currency or completeness future performance of the Fund represent the Fund’s own of the information or assumptions contained in this IM, nor do assessment and interpretation of information available to it as they, to the maximum extent permitted by law, accept any liability at the date of this IM and are provided for illustrative purposes whatsoever, however caused to any person, relating in any way only. In particular, the Trustee notes that past performance is to reliance on information contained in this IM or any other not indicative of future performance. No representation is made communication relating to the issue of Units in the Fund. or assurance given that such statements, views, projections or This IM does not purport to contain all the information that forecasts are correct or that the objectives of the Fund will be a prospective investor may require in evaluating a possible achieved. Prospective investors must determine for themselves investment in the Fund. what reliance (if any) they should place on such statements, views, This IM must be read in conjunction with the Trust Deed. projections or forecasts and no responsibility is accepted by the Prospective investors should review the Trust Deed for further Fund, the Trustee, the Investment Manager and/or their advisers information regarding the rights and obligations of investors in in respect thereof. Prospective investors are strongly advised to the Trust. To the extent there are any inconsistencies between rights and obligations in the Trust Deed and this IM, the IM conduct their own due diligence including, without limitation, will prevail. on the potential financial, legal and tax consequences to them of investing in the Fund. Not regulated by APRA The Trustee is not authorised under the Banking Act 1959 No guarantee (Cth) and is not supervised by APRA. Investments in the Neither of the Fund, the Trustee, the Investment Manager, nor Fund are not covered by the deposit or protection provisions their related parties, officers, employees, consultants, advisers available to depositors who make a deposit with an Australian or agents, guarantee the repayment of capital invested in the Authorised Deposit taking Institution (ADI). Fund, the payment of income from the Fund or the performance of the Fund or an investment in the Fund generally. As with any Applications investment there are inherent risks in investing in the Fund, The Trustee reserves the right to evaluate any applications for including the risk that an investment in the Fund is speculative, Units and to reject any or all applications submitted, without that the investment may result in a reduction in, or total loss of, giving reasons for rejection. The Fund, the Trustee and the the capital value of the investment, loss of income and returns Investment Manager are not liable to compensate the recipient that are less than expected or delays in repayment of capital or of this IM for any costs or expenses incurred in reviewing, the distribution of income. investigating or analysing any information in relation to the Fund, See Section 7 (Risk Factors) for further information about the in the course of submitting an application for Units or otherwise. risks involved in making an investment in the Fund.

No cooling off rights Trustee limitation of liability Investors do not have any cooling off rights in respect of Units Except in certain circumstances (including fraud, negligence issued in the Fund. or breach of trust by the Trustee), the Trustee enters into transactions for the Fund in its capacity as trustee of the Fund Information is general advice only In providing this IM, the Trustee has not taken into account the only, not in its own capacity, and its liability in relation to those recipient’s objectives, financial situation or needs and accordingly transactions is limited to the assets of the Fund out of which it the information contained in this IM does not constitute personal may be indemnified. advice for the purposes of section 766B(3) of the Act (personal advice). Neither the Trustee, the Investment Manager, nor their related parties, officers, employees, consultants, advisers or agents warrant that an investment in the Fund is a suitable or appropriate investment for the recipient.

Contents 2 Confidentiality Definitions The contents of this IM are: Certain capitalised words and expressions used in this IM are • not intended to be disclosed to any person included in Section 12 (Glossary). other than the person to whom this IM has The primary language of this document is English. This been provided to by the Trustee; document may be translated into different languages. Any • strictly confidential; and translations provided are for reference purposes only. If there • not to be reproduced, either in whole or in any is any inconsistency or conflict between the English version part or parts, without the Trustee’s prior written of this IM and versions of this IM in any other language, the consent and, if such written consent is given, English version prevails. only in accordance with that consent. All references to $ amounts are references to Australian No unauthorised statements or representations Dollars (AUD). The Fund, the Trustee and the Investment Manager are not Any photographs, images or illustrations in this IM or the responsible for any advice or information given, or not given, Application Form are included for illustrative purposes only to potential investors by any other party distributing this and do not depict any assets held or to be held by the Fund. product and, to the maximum extent permitted by law, accept no liability whatsoever for any loss or damage arising from potential investors relying on any information that is not in this IM when investing.

Warning

The information in this IM is general information only and The information in this IM may change, and may be updated does not take into account the financial situation, objectives or replaced from time to time. Unless a change is materially or needs of any particular person. Before making any decision adverse, the Trustee may not always update or replace this about whether to acquire an interest in the Fund, prospective IM to reflect the changed information. Updated information investors should read this IM and consider whether the can be obtained by contacting the Trustee. You should check if acquisition of an interest in the Fund is appropriate in light of there is any updated information before you invest. their own financial situation, objectives or needs. The Trustee strongly recommends that potential investors read this IM in its entirety and seek independent professional advice as to the financial, taxation and other implications of investing in the Fund and the information contained in this IM.

Contents 3 2. Message from the Managing Director

Dear Investor, “alpha” driven returns, but the classic problem with PE and VC investments remains – your capital is tied up for long periods Long game, income, family without consistent income return. At Straight Bat we observe that investors need reliable sources of income more than Straight Bat Private Equity Generation 1 Trust (the Fund) is an ever before. income oriented private equity fund that plays the long game.

We invest in highly profitable, medium sized private businesses Investing in highly profitable medium sized businesses for income and long-term sustainable capital growth. Private Australian businesses are an underserved asset class. Our cornerstone investor is Harris Capital, the family office We observed that traditionally large cap / buy-out private of Flight Centre co-founder – Geoff Harris. equity has competed over the ~100 companies in Australia worth more than $1 billion. Mid-market, growth capital Motivated by the Harris family’s desire for reliable income private equity has focused on the ~1,000 companies worth diversification, we have launched our “income oriented” more than $100 million. This has historically left the ~52,000 private equity Fund. mid-lower market (medium sized companies with EV between $10 million and $100 million) underserved. We further note Reliable income becomes more important than ever before that the small number of PE firms operating in this market As this IM “goes to press”, the global economy has entered a largely adopt a growth-capital approach. Growth capital period of uncertainty unlike anything seen before. investors normally rely on the ability to dramatically grow the company in a short period of time and the subsequent Notwithstanding our certain knowledge that “this too shall need to transact the business to realise a capital gain, often pass”, wholesale and sophisticated investors have never faced by selling the business to a larger Private Equity investor. This greater challenges protecting public market asset prices, yield is a proposition that only works for a small subset of business and reliable sources of income. The risk-free rate has been owners that are happy to have their company driven hard for a driven close to “zero” by central banks, however the “risk medium-term transaction and capital gain. premium” in most asset classes has increased dramatically. A two-speed economy has emerged between discretionary and In our experience, business owners in the mid-lower non-discretionary sectors. In the most affected sectors asset market are generally underserved with sources of capital, prices have tumbled and yields improved, but a “flight to asset whether from banks and non-traditional lenders or private quality” sees safe assets rally. As more data is revealed about investors. Transactions in this market, are for this reason, the health and economic crisis, we anticipate asset prices and less competitive and more realistically priced. In the current yields to stabilise, with greater realism regarding value and climate, even the owners of high-quality businesses have reset the enormous opportunities for private equity investors with their expectations of value. “dry powder”. Investors will continue to turn to Private Equity (PE) and Venture Capital (VC) investments in pursuit of higher

Message from Straight Bat’s Managing Director 4 Straight Bat focuses on income oriented private equity Straight Bat is a business family. We welcome investors investments in highly profitable medium sized Australian with complementary skills and experience, entrepreneurs businesses. We look for business owners who want a long- and business owners who understand what it takes to build term capital partner, have a need to partially sell down their sustainable and profitable businesses and will believe, support shareholding as well as some requirement for growth capital. and invest in businesses that meet the investment mandate. We specifically target businesses with revenue between $5- $100 million and EBITDA from $2-$25 million, with EBITDA Each family office brings its own expertise and naturally Margins greater than 20%. attracts a deal flow due to their reputation. Historically this has represented a dilemma, as each family is often naturally We target a broad range of industries which share some “overweight” in their own industry and is therefore somewhat common characteristics. We like consumer businesses ambivalent about the deal flow they naturally attract. with iconic brands, diversified customer bases, long trading Frequently they would like exposure to the deal flow the histories and non-discretionary demand dynamics. In B2B other families in the fund are experienced with and attract. businesses we look for pricing power, natural switching The collective reputation of the family office investors is the inertia and long-term contractually committed customers. strategic strength of Straight Bat. Consequently, the founding We actually prefer businesses with modest growth potential families will participate in ownership of the fund manager but strong market positions. (section 4 for further information). We will seek to invest $10-25 million, initially taking a substantial minority position, but progressively buying out We are long term capital partners. Our investments are founders as appropriate. nominally intended to be an indefinite hold. We seek dividends from the outset. Our investment objective is to deliver gross Over the term of the Fund, we forecast that our selection distribution in excess of 10% per annum (before tax) and process will screen 1,000 companies, engage with 200, capital growth equal to or in excess of inflation. present terms to 50, before conducting due diligence on 15-20 and investing in 5-7 businesses. The objective of the fund is to provide high levels of income. We identify businesses using three channels: companies The incentives for the fund manager and investors are to deliver referred through our investor and personal networks; via substantial income returns and therefore keep capital in the Fund trusted advisors including accountants, lawyers, business for the long term. For investors that want to withdraw from the bankers and corporate advisors; and using an analytical, data fund, the withdrawal price of the units is calculated according to driven approach accessing corporate databases. a formula designed to preserve the real capital value (adjusted for CPI) of the original investment, but preserve the income Relationships with business owners are cultivated over time. entitlements to Fund investors. In the long term our objective We look to invest in values aligned founders, where our is to deliver very substantial income on the original amounts investment proposition is consistent with their own ambitions invested. While it will be important to allow investors to recover and needs. Where a company owner is seeking a conventional their capital, we naturally want to provide a powerful incentive growth capital solution, we are closely aligned with other to remain in the Fund for the long term. Private Equity funds who specifically invest in this way. Our practice is to present indicative terms to business owners To invest with a “straight bat” means making high conviction, early in the process before commencing due diligence. We are values driven investments in good businesses, quietly seeking to establish if our objectives are truly aligned before delivering products and services that frequently underpin commencing a transaction process. the quality of life we enjoy in Australia. Play the long game.

Join our business family Yours faithfully,

Harris Capital and Straight Bat are seeking a small number of family office investors who share these priorities, bring specialist skills and experience relevant to the portfolio business owners Steve Gledden, and seek income diversification through their fund investment. Managing Director.

Message from Straight Bat’s Managing Director 5 THE RULES

Summary of the offer 6 3. Summary of the Offer

Fund Name: Straight Bat Private Equity Generation 1 Trust Target Size: The target Total Investment Amount for the Fund is $100,000,000 Units Offered: The class of units within the Fund known as “Ordinary Units” is offered pursuant to this IM. The Ordinary Minimum Initial Investment Amount: The Minimum Initial Units will be fully paid units. Investment Amount is $1,000,000 with further investments allowed in increments of $100,000, subject to the Trustee’s Trustee: Specialised Investment and Lending Corporation Pty. absolute discretion to accept applications for lesser or greater Ltd., ACN 149 520 918 is the trustee of the Fund, and will be amounts. responsible for holding title to the Fund’s assets. Initial Close Date: The intended initial close date for Investment Manager: Straight Bat Private Equity Pty Ltd, applications for Units in the Fund is 30 September 2020, ACN 636 868 301 has been appointed as the investment subject to change at the discretion of the Trustee. manager of the Fund pursuant to an Investment Management Agreement with the Trustee and is responsible for managing Final Close Date: The date on which the Fund intends to the Fund’s assets and assisting the Fund achieve its cease accepting new applications for Units in the Fund is 30 Investment Objective. August 2021. This date may be extended by the Trustee in its discretion. Administration Manager: SILC Funds Administration Pty Ltd, ACN 628 993 386 is the administration manager of the Fees and Expenses: Fees and expenses that Investors may Fund, and is responsible for, amongst other things, investor be charged for in relation to the management and operation of administration process (including applications for Units and the Fund are set out in section 8. maintaining the Unit registry) and Fund accounting. A portion of the Fund Assets will be set aside for these fees and expenses however Investor returns will be calculated Investment Objective: The Fund’s aim is to achieve long term based on the number of Units held by each Investor. returns through in a portfolio of carefully selected private equity investments. Withdrawal: The Fund is not liquid. Investors may only withdraw from the Fund if existing Target Return: The Target Return of the Fund is: Unitholders, approved of by the Trustee, are prepared to • gross distribution returns of in excess of 10% per annum subscribe for new Units in the Fund to fund the withdrawal (before tax); and proceeds payable to an investor that wishes to withdraw. The • capital growth equal to or in excess of inflation. Withdrawal Price that is calculated as the lesser of: The Target Return is not a forecast and may vary depending • the Net Asset Value of the Unit, or on the performance of the underlying Fund investment. The • the applicable issue price of the Unit indexed by the Fund may not be successful in achieving the Target Return. Consumer Price Index (CPI) from the Initial Close Date. The Fund, the Trustee and the Investment Manager do not This formula is designed to protect the income returns on the guarantee any returns. withdrawn Units for an incoming Investor, while still delivering capital preservation to the withdrawing Investor. Term: An investment term of 10 years commencing from Initial Close Date applies to investments in the Fund, which may be extended up to 12 months at the Trustee’s discretion (Term). At the end of the Term, a meeting of the Investors will be held, whereby the Investors, with a 75% super majority (of those unitholders that vote in person or by proxy), may elect to extend the Term of the fund by a further period of up to 10 years. If the Investors elect to wind up the fund, the assets will be disposed in an orderly fashion and the capital proceeds returned to the Investors.

Summary of the Offer 7 Eligible Investors: Investment in the Fund is only available Key risks: Investments in the Fund are subject to varying to parties (individuals above 18 years of age, trusts or bodies degrees of risks. Some of the key risks of investing are corporate) who are wholesale clients (as defined in section highlighted here: 761G of the Act) and: • Liquidity risk - an investment in the Fund should be viewed • invest $500,000 or more in the Fund; or as an illiquid investment, there is no secondary market for • provides a certificate from a qualified accountant vailable(a Units in the Fund and no Withdrawals from the Fund will be within the Application Form) or substantially in the form available during the Term; available on the Trustee’s website www.silcgroup.com. • Market risk - A change in market conditions could au that states the investor has net assets of at least $2.5 negatively impact the Investee’s business and ultimately its million or has a gross income for each of the last two value. This may impact upon the unit price and may result in financial years of at least $250,000; or a capital loss being incurred by Investors. • is a professional investor (including the holder of an • Return risk - investments will be made from monies raised Australian financial services licence, a person who controls from subscriptions for Units in the Fund. The actual returns more than $10 million or a person that is a listed entity or a for Investors in the Fund are determined only once costs related body corporate of a listed entity). and expenses have been deducted from income received (if any) from each of the investments. Please see Section 7 for a further description of the risks relevant to an investment in the Fund. Key Benefits

The Fund offer Investors an opportunity to participate in • Access to exclusive investment opportunities which private equity investments in Australia which are not typically may not otherwise be available to individual investors. available to individual investors with the aim of achieving • The Fund is managed by a Trustee that is independent of the an attractive Target Return on the investment. Investment Manager who will provide an enhanced level Key benefits of investing in the Fund include: of oversight ensuring that Fund investments are made and managed in accordance with this IM and the Trust Deed. • Identification, due diligence and management of Fund investments are undertaken and managed by an • Accounting, financial reporting and tax affairs of the Investment Manager with extensive experience and track Fund managed by the Trustee to ensure independence, record across a variety of sectors and industries. transparency and good governance.

Summary of the Offer 8 We play the long game, with a straight bat...

9 4. The Fund

Overview Fund Structure

The investment objective of the Fund is to provide gross The Fund was established by a Trust Deed dated 19 August distribution returns in excess of 10% per annum (before tax) 2020. The Fund is an unregistered managed investment with long-term capital preservation in real terms. The Fund scheme whose intended investments will be a portfolio is intended to be a $100m close-ended fund, with an initial of direct interests in unlisted companies (Investees) with 10-year investment term. the view to derive an attractive ongoing yield. Each of the Investees may be engaged in a range of businesses and asset Investors in the Fund are considered foundational investors classes. The Trustee has appointed the Investment Manager in the Fund. As such, Fund investors will enjoy some equity as the investment manager of the Fund pursuant to the participation in the Investment Manager entity in recognition of Investment Management Agreement. their support “proving” the model with this maiden Fund (see sub- section Early Investor Incentive below for further information). The Fund will offer Ordinary Units pursuant to this IM. Monies raised from subscriptions in Units in the Fund will be invested Philosophically, the Fund intends to mimic an “income” in private Australian businesses. product, comparable to a high yield debt fund, but with capital preservation and sustainable growth. The Fund assets, including interests in the Investees, will be held in the name of the Trustee as trustee of the Fund or a Typically, a conventional private equity (PE) or venture capital custodian (if one is appointed by the Trustee) for the benefit (VC) fund would require investor capital to be locked up until of the Investors. Unitholders will not have specific ownership investments were realised at the end of the fund’s life when of trust assets in the Fund but will have a beneficial interest in the portfolio is progressively liquidated. The Fund seeks to the Fund assets. differentiate its offering by delivering substantial income to Unit holders each year. This proposition is enabled by Issue of Units selecting highly profitable companies, with long stable trading Units in the Fund will be issued within 8 Business Days histories, that can support a significant dividend policy and following the end of the month in which the application for a preference for a long-term approach to the investment. If Ordinary Units is received and accepted by the Trustee. successful, it is expected that the Fund will continue to hold However, the Trustee may issue Units more or less frequently assets well beyond the initial 10-year horizon, subject to in its absolute discretion. requisite Investor approval. The Ordinary Units will be fully paid units. It is the Investment Manager’s intention to create an environment where investors would be reluctant to divest Commitments their Units because of the income that would be foregone. Investors may also make an application to invest in the Fund through the following options: Early Investor Incentive As an incentive to early investors, investors subscribing to a Firm Commitments minimum of 25 million units before 30 September 2020 will Firm Commitments are firm (contractually binding) be offered a 10% equity stake in the Investment Manager commitments to subscribe and pay for a specific number of entity being Straight Bat Private Equity Pty Ltd. Investors who fully paid units and are subject to Fees and Costs (particularly subscribe to a minimum 25 million units before 30 June 2021, Investment Management Fees) as set out in Section 8 , will be offered a 5% equity stake in the Investment Manager. whether or not the amount of the Firm Commitment has been This offer is conditional upon the investor entering into a drawn down. subscription deed and a deed of accession to the shareholders Firm Commitment amounts will progressively be drawn agreement. We recommend that investors obtain independent down by Calls by the Trustee until December 31, 2022 financial and legal advice in respect of these documents. (Commitment Period).

The Fund 10 Investors may agree with the Investment Manager the dates, If a payment in full is not received by the due date specified after which certain amounts of their Firm Commitments, in the Default Notice any Units held by the Investor are will be available for Calls. This is to allow Investors to have a forfeited. degree of control over the rate at which their capital may be Further, the Trustee may, in its absolute discretion, offer any called. For example, an Investor may specify that 25% of their of the Investor’s Units for sale, and/or assign all or part of the Firm Commitments will become available every six months unpaid call in accordance with the Trust Deed. over a period of 2 years from date of application. A defaulting Investor may be liable for the unpaid amount in All Calls are payable within 5 Business Days of a Call being respect of the call, damage and losses suffered by the Fund provided by the Trustee. If any Investors default on Calls, as a result of the non-payment of the call or any future calls, penalties set out in the Trust Deed will apply. call default interest and all expenses associated with any proceedings necessary to recover the amount due from the Soft Commitments investor. Soft Commitments are expressions of interest to subscribe for fully paid units. There is no obligation for an investor to Please refer to the Trust Deed for more information on the subscribe for units when called and conversely, there is no process for the forfeiture and sale of Units. The Trust Deed is obligation on the Trustee or the Investment Manager to make available on request. a Call on Soft Commitment amounts. Unit Pricing As investments are made on behalf of the Fund, Calls The issue price of Ordinary Units will be $1.00 per unit for will be made on Firm Commitments in preference to Soft units applied for prior to the Initial Close Date. Commitments. Soft Commitments will be offered the opportunity to subscribe to fully paid Ordinary Units in Thereafter, Ordinary Units will be priced based on the value of preference to third party co-investors. Soft Commitments are the Fund’s assets , in the proportion or manner set out in the not subject to any Fund fees and costs. Trust Deed.

Failure to Pay a Call Performance Entitlements for Investment Manager If an Investor fails to pay a Call on the due date, the Trustee 100 Manager Units will be issued by the Trustee to the serves the defaulting investor a default notice (Default Investment Manager. Notice) within 5 Business Days of the due date that: The Manager Units provides the Investment Manager with a • contains a demand for payment of all amounts due fixed right to distributions based on the performance of the and payable in respect of the call, any costs and Fund (please refer to Section 8) . The Manager Units will have expenses associated with the failure to pay and no voting rights. any call default interest (see below); and The Manager Units will have no rights to the income or capital • specifies afurther due date for payment which is not sooner of the Fund until investors receive an annualised return of than 5 Business Days after the date of the notice. 8% per annum (pro rated for any period less than a year). The Manager Units will be entitled to 20% of the income and Call default interest is charged at the current Penalty Interest capital of the Fund in excess of 8% per annum with a full catch Rate (as determined under the Penalty Interest Rates Act up when 10% per annum is achieved. 1983 (Vic)) plus 2% accruing daily and being capitalised monthly, in arrears. Call default interest is charged on the amount of the call and any other money owing from the due date until the Trustee receives payment of the overdue amount in full.

The Fund 11 Distributions Withdrawal Price Distributions in respect of Units, if any, will be calculated and The Withdrawal Price is designed to prevent, what is expected paid within 20 Business Days of the end of each calendar to be steadily growing income returns, being capitalised into quarter, subject to retaining sufficient funds to meet near term the unit prices for exiting Unitholders and thereby eroding the expenses and obligations of the Fund. substantial income benefits of a stable capital base and a long term hold. Distributions calculated based on the income earned from the Assets, after fees, costs and expenses that are referable Under the Trust Deed, the Trustee has the discretion to refuse to the Ordinary Units have been paid. Unitholders will receive the withdrawal of Units. Please note that a redemption of a proportion of the income based on the number of Ordinary Units may have taxation consequences. See Section 9 of the Units they hold in relation to the total number of Ordinary IM for further information about taxation. Units on issue and the number of days they have held the Units for during the quarter.

In the event that an asset of the Fund is disposed of during the Term, the Investment Manager may, at its discretion, reinvest the proceeds or make a distribution to the Unitholders

Withdrawal rights The Fund has a 10-year investment term with the possibility of an extension subject to a super majority vote (75%) of the unitholders that vote on the resolution.

There will not be any established secondary market for the sale of Units and it is not expected that the Fund will be liquid during the Term. However, due to the duration of the investment term, the Investment Manager seeks to provide a mechanism for investors to potentially withdraw their capital at an earlier date should their circumstances change.

Unitholders seeking to partially or fully divest their units in the Fund may only do so by submitting a Withdrawal Request to the Trustee. The Trustee, in consultation with the Investment Manager, may accept or deny the Withdrawal Request and will notify the Investor within 20 Business Days of receipt of the Withdrawal Request. Generally, the Trustee will only allow an investor to withdraw if existing Unitholders, approved of by the Trustee, are prepared to subscribe for new Units in the Fund to fund the withdrawal proceeds payable to an investor that wishes to withdraw. If the Withdrawal Request is accepted, whether partially or fully, the Units will be redeemed at the Withdrawal Price.

The Withdrawal Price per Unit is equal to the lesser of;

• the Net Asset Value per unit, and

• the Purchase Price of the unit indexed by the Consumer Price Index (CPI) from the Initial Close Date.

The Fund 12 Other Loans to Unitholders Due to the nature of the asset class invested by the Fund, there may be circumstances where the Investee entity will Borrowing Policy make a loan to its shareholders (including the Fund). Upon The Investment Manager is permitted to borrow on behalf receipt of these loans, the Fund will pay distributions in the of the Fund to increase the scale of the Fund’s investment form of loans to investors. portfolio. Borrowings will be capped at 50% of the Fund’s NAV. The structure is created to provide investors with cash flow Investors should note that any borrowings by the Fund will and an optimised tax outcome (access to franking credits). remain repayable by the Fund regardless of the performance These loans are intended be settled (repaid) at the end of of the underlying investment portfolio. the relevant financial year through the declaration of a fully

Valuation Policy franked dividend by the Investee company. The Portfolio’s NAV will be calculated at least quarterly using A simple example to illustrate, a framework for the valuation that is consistent with current 1. Investee entity, in which the Fund is 50% shareholder, industry practice and regulatory requirements. The assets of makes a $50,000 loan to its shareholders on each of the Fund will be valued using market accepted practices to 30 September 2020, 31 December 2020, 31 March accurately and independently price all relevant Fund assets 2021 and 30 June 2021 (total of $200,000) from time to time. 2. Correspondingly, the Fund provides the loans The value of the Fund’s portfolio shall be determined by of $25,000 on each of 30 September 2020, 31 aggregating the value of each investment forming part of or December 2020, 31 March 2021 and 30 June comprised in the investment portfolio and each investment 2020 (total of $100,000) to investors shall be valued in accordance with the following methodology (as applicable): 3. On 1 July 2021, Investee entity declares a fully franked dividend of $200,000, thereby setting off (extinguishing) • cash (including income) – the amount of the outstanding shareholder loan of $200,000. such cash (in Australian dollars); 4. The Fund distributes the declared dividend of • unlisted securities – based on the most recent $100,000 (including franking credits) by way transaction or valued in accordance with AVCAL of extinguishing the loan of $100,000. guidelines (where appropriate). The value of Pre-IPO Securities and other unlisted Securities may be further Loans to Manager discounted if the Trustee, in consultation with the The Fund will also provide a loan to the Investment Manager Investment Manager, believes this is appropriate; in a similar manner to that provided to Ordinary Units. The • other investments – the value of that Investment Manager’s performance entitlements (dividends) investment determined in accordance with will be assessed at the end of each financial year. Australian Accounting Standards. In the event that the performance entitlement is less than the The Trustee may request that the value of an investment amount loaned to the Investment Manager, the Investment be determined by a duly qualified valuer independent of Manager will be required to repay the excess monies to the Fund. the Trustee, having regard to the particular type or types of investment which are the subject of the valuation.

The Fund 13 We are the only private

equity investor in Australia

who plays the long game

with a straight bat. We deliver exeptional long term income to our investors by backing medium sized private business owners ready for a smooth, safe and successful transition.

14 15 5. The Investment Strategy / Methodology

Overview Capital Preservation and Sustainable Capital Growth The Fund’s primary objective is to offer investors a source The investment strategy, to achieve the Fund’s investment of predictable income diversification to complement their objective, is to buy high quality medium sized businesses with other portfolio holdings, but we are seeking to do this while highly profitable robust earnings histories, that can sustain preserving the capital value of the original investment in “double digit” dividend policies in the long term AND sustainable real terms. Therefore, we are looking for businesses that are capital growth. Judicious investment with values-aligned inherently stable, minimising risks to capital preservation, but business owners, open to incentives that ensure alignment in also businesses that enjoy mild economic tail winds in addition the long term, including an appreciation of the reputational to underlying economic growth, increasing the likelihood of significance of being part of the Fund’s business family, coupled steadily growing revenue, profits and dividends. Themes that with the portfolio effect to ameliorate company specific support this dynamic include aging population, infrastructure idiosyncratic risk, is expected to generate attractive risk-adjusted development, legislated services and compliance obligations, returns – in Straight Bat language “bloody good returns from a growing demand for healthcare, increasingly scarce resources, family of good old-fashioned businesses”. long term shifts in consumer tastes.

Investment Strategy

Dividend Income The Fund will only invest in companies that will support an ongoing dividend program. While some investments will require growth capital as well as purchase of existing shares, we will only invest in businesses where the dividend policy will not be entirely forgone in favour of aggressive growth. This reflects a more traditional approach that does not overweight future capital growth ahead of current income returns.

Consequently, with all investments we will be seeking dividend drawings from the first quarter after investment is complete. Based on our portfolio model projections we will seek to deliver income returns on the value of the original investment that will steadily grow from 14.4% to 19%, net of performance fees, over 10 years.

The Investment Strategy / Methodology 16 Investment Process • Business-to-consumer (B2C) businesses with diversified customer bases, iconic brands or robust non-discretionary demand dynamics Identification of Portfolio Companies The Investment Manager identifies investment • Business-to-business (B2B) businesses with opportunities in three ways, via: natural switching inertia, privileged assets or long- term contractually committed customers 1. direct approaches from business owners through the reputation of the family office investors in the Fund, • Family originated businesses, with retiring founder or generational transition dynamics 2. trusted advisors including accountants, lawyers, business bankers and corporate advisors, and • Predictable modest growth of 3-5% per annum

3. direct identification and outbound solicitation of • EBITDA Margin 15-30% generating opportunities using multiple industry databases that EBITDA of $2-25 million. provide detailed information on historical financial • Enterprise value (EV) of $8-75 million, performance, ownership structure and key executives. targeting $40-50 million

Investment Criteria • Capital structure targeting 50% debt and 50% The Target Size with respect to the Fund is $100 million equity, with 8-10% cost of debt, >4x Interest providing access to ~$100 million for structured leverage. Cover, and <2.5x debt/EBITDA The summary investment criteria for Fund are as follows: • Significant minority to buy-out positions ranging 25- • 5-7 Portfolio company investments 100% ownership with progressive acquisitions

• Equity investments of $10-25 million, • Typical valuation multiples 2.5-5x current EBITDA targeting on average $20 million earnings with earnouts for higher valuation multiples

• Targeting medium size enterprises typically • Portfolio of investments focused on long term with 20-200 employees and $5–100 million income yield (not exit and capital gain) revenue and targeting $40-50 million • Disposals considered where 7-10 year outlook • Mature businesses with strong brands/reputation is fundamentally compromised • 60% dividend/EBITDA payout ratio.

The Investment Strategy / Methodology 17 Portfolio Selection Process

The table below summarises the pipeline stages in the investment portfolio selection process:

Stage Number of Companies Process Description

Universe 52,000 Australian Businesses with 20 to 200 people

Companies screened from databases, business associations, direct marketing and referral from Prospect 1,000 network and trusted advisors, that meet our investment criteria based on desk research

Companies interviewed and engaged in person Contact 200 to validate suitability for investment

Discussion document presented to establish Terms 50 intention to transact, followed by non-binding indicative offer

Detailed due diligence conducted through to Due Diligence 15 preparation of transaction documentation

Investment 5 Portfolio investments completed

Projections In support of this Information Memorandum, is a Straight Bat Pipeline Summary Memorandum, which provides further information on the current companies the Investment Team Model Portfolio Company is presently engaged with. This memo will be updated from As every sophisticated investor understands, prospective or time to time as investors consider the proposition in this forecast fund economics are inherently uncertain. The Fund Investment Memorandum. is a new Private Equity fund and beyond the experience of the investment team, there is no existing portfolio of investments The model portfolio company has revenues of $40 million, and by extension, historical performance as a guide to with an EBITDA margin of 20% or $8 million in EBITDA. On future returns. The model projections are by their nature average we expect this company’s revenue and EBITDA to precise. This of course does not imply they will be accurate. grow slightly faster than inflation at 4% CAGR. At 5x EBITDA Notwithstanding, the following analysis undertaken by the we value this business at $40 million. We would plan to buy an Investment Manager is presented as the framework under initial 25-50% of the business, before buying out the owners which returns will be pursued on behalf of the Fund investors. entirely over a period of transition. We would also introduce modest levels of debt, for example $20 million or 50% of the The expected fund economics are built around an “average” or enterprise value of the business, which at a 10% interest rate “model” portfolio company. This is used to illustrate the financial will cost $2 million to service the debt and represents a 4x mechanics that will enable the financial returns. In a portfolio of Interest Cover and 2.5x debt/EBITDA. This would result in 5-7 investments we expect some companies to perform better $20 million of equity and $20 million of debt used to fund the and others worse, than the model portfolio company, but for purchase of the business. the purpose of understanding the investment proposition for foundational investors in the Fund, we offer the following.

The Investment Strategy / Methodology 18 EBITDA of $8 million, less $2 million debt service, will leave $6 Regretfully, it is not reasonable to expect every portfolio million dollars cash flow. Of the remainder, 60% is paid out as a investment to produce consistent returns like clockwork. We $3.6 million gross dividend (including franking credits), leaving naturally expect that some portfolio companies will misfire $2.4 million to reinvest in the business, or fund increases in or experience setbacks. As entrepreneurs and operators, working capital. This assumes that the reinvestment (capital we are familiar with these afflictions. To offset other expenditure and increase in working capital) is approximately idiosyncratic risks associated with company performance, equal to tax deductible depreciation and amortisation. the Straight Bat investment team has extensive expertise in further enhancing returns with conventional performance A $3.6 million dividend on a $20 million total investment improvement initiatives. In our experience, medium sized results in an 18% gross dividend yield (12.4% net of business usually have significant latent opportunities for performance fees (3.6%) and management fees (2%)). This further operational efficiency and business growth, without yield is expected to steadily grow to 23% over 10 years (17.6% aggressive investment, from good business practice, net of fees). These returns are excluding 3-5% CAGR capital including procurement programs, operational efficiency growth, protecting the real value of the initial investment. initiatives, technology and process improvements, sales force effectiveness, strategic focus and incentives for the management team.

Great innings are built on partnerships. 19 Fund Model

The fund model economics are based around five investments As a rule of thumb successful venture capital and private of $20 million (on average) in businesses represented (on equity funds will deliver an Internal Rate of Return (IRR) in average) by the “model portfolio company”. We anticipate excess of 20% over the life of the Fund. This results in Total progressive deployment of capital into each business during Value to Paid in Capital (TVPI) of typically 2.5-3.0x over the a business transition (for example $10 million in the first year, life of the Fund. followed by a further $10 million in the 3rd year). The projected Fund returns are comparable. Over 10 years Over the initial 4-5 years, calls will be made on the Firm Distributions to Paid in Capital (DPI) or income equal 1.2x and Commitments (in priority to Soft Commitments) to be deployed the Residual Value to Paid in Capital (RPI) provides a further and deliver gross annual dividends to the fund of $18 million, 1.3x for a total TVPI of 2.5x. These returns are comparable to progressively growing to $20 million and later $23 million. conventional PE and Venture Capital funds but enjoy annual This will result in gross income equal to the original capital cash income returns in excess of 15%. investment, returned over 8 years, with the capital value preserved and growing in the Fund, and a gross dividend in excess of 20% on the original amount invested ongoing.

The Investment Strategy / Methodology 20 The Investment Strategy / Methodology 21 We are private equity investors, but we are also owners, operators, and entrepreneurs, just like you.

22 23 6. Management of the Fund

The Investment Manager The fees paid by the Fund to the Investment Manager are set out in section 8. Straight Bat Private Equity Pty Ltd ACN 636 868 301 (Straight Straight Bat Private Equity Pty Ltd is a 50:50 partnership Bat) is the investment manager of the Fund. The Investment between Harris Capital and Gledden Ventures Pty Ltd (subject Manager’s key role is to promote the Fund and to manage to the issue of equity to early investors in the Fund as set out the investments undertaken by the Fund. The Investment in section 4). The company was established with the objective Manager is an authorised representative (number 1280685) of making “income oriented” private equity investments. of Specialised Investment and Lending Corporation Pty. Ltd., ACN 149 520 918, AFSL number 407100.

Investment Team

Steve Gledden, Managing Partner

Steve brings 25 years’ experience as a business owner, operator and investor. After starting his career at McKinsey & Company, he worked extensively in venture capital funded technology businesses in the US, UK and Australia – environments where “you spend it as fast as you can raise it”. He has also owned and operated his own private family businesses, where “you spend a buck when you make a buck”. His family business experience includes a generational transition and trade sale of an industrial laboratory (EML sold to ASX:ALS in 2011) and building, operating and selling a boutique hotel in the UK (Judges Court).

He is a private and venture capital advisor and investor in the US, UK and Australia. He has direct experience in a range of industries including banking, resources, building products, chemicals, digital publishing, retail, internet banking, media, technology transfer, semiconductor manufacturing equipment, life sciences, industrial services, music licensing, genomics, IoT consumer appliances, hotels and hospitality, aged care SaaS, legal tech, autonomous vehicles, eSports venues, cybersecurity SaaS, logistics SaaS, mining instrumentation, insure tech, private equity and venture capital. He has qualifications in Commerce and Science from Melbourne University and an MBA from Oxford.

Management of the Fund 24 Rob Nicholls, Partner

Rob Nicholls brings 30 years experience as a banker, private equity investor, Chairman and CEO. Rob held senior executive roles as a banker and investor at Westpac and Hastings Funds Management, including, Head of Direct Equity Investments, Head of Institutional Banking (Victoria), Head of Private Banking (Victoria), National Head of Origination for GE Capital Corporate Finance..

In addition to his banking and investing roles, Rob has formidable operating experience having been CEO of Nationwide Towing through to its sale to RACV in 2017. Rob was Executive Chairman and an advisor to the founders of the business (three tow truck drivers), and assisted them through the business’ growth, national expansion and eventual sale.

Rob has also worked as a tradesman and ICT Consultant and has qualifications in computer science and finance. He is a wise and talented mentor for senior managers and business owners growing sustainable businesses.

Brad Harris, Partner

Brad is co-founder and Non-Executive Director of Signature Hospitality Group, which operates the Sporting Globe and TGI Friday’s brands in Australia. He founded the business in 2010 opening the first venue in Geelong, since then the company has rolled out dozens of venues around Australia employing around 1200 staff. He brings 10 years’ experience in establishing, building, managing and directing a national multi-brand hospitality business.

In 2016 he transitioned from Signature Group to establish Harris Capital (the Harris’ Family Office). As CEO of Harris Capital he is responsible for managing a significant pool of assets deployed across fixed income, public and private equities, ventures, property and philanthropy. He has co- ordinated various deal formats and structures from establishing a private mortgage debt fund and establishing a PAF.

A passionate Hawks fan, Brad serves on 3 board sub-committees as well being a director of the Epworth Medical Foundation, Victoria’s largest healthcare provider.

Management of the Fund 25 Richard Palmer, Senior Associate

Richard brings 10 years of experience in investment, strategy and business operations. He has been an analyst, manager, advisor and senior executive with BP, EY and Asahi. Richard has worked with businesses across a wide range of industries including mining and resources, telecommunications, IT, oil and gas, defence, construction, health, education, utilities and FMCG.

Richard believes that regardless of who is on strike, great partnerships lead to long and successful innings.

Geoff Harris, AM, Advisor & Portfolio Mentor

Geoff is a co-founder of Flight Centre, opening the first store in Melbourne in 1982. He was a senior executive until 1998 and a non-executive director on the Board and investor relations manager until 2008. Flight Centre listed in 1995 and is now an ASX top 100 company with 22,000 staff , 2,400 stores and businesses under various retail and corporate brands across 14 countries.

Geoff is an enthusiastic Hawks supporter and served as Vice President of the AFL football club from 2008 to 2013 . He has extensive philanthropic interests developing affordable housing and supporting disadvantaged kids, including social enterprise StrEat and Reach Youth in Collingwood. He is the author of social enterprise book Dollars & Sense. In 2019 Geoff received an AM (Order of Australia) for his contributions to philanthropy, community and business.

Management of the Fund 26 Janine Allis, Executive Chair in Residence

Janine is the founder of Boost Juice and part-owner of Retail Zoo, which is the parent company of Boost Juice, Salsa’s Fresh Mex Grill and Cibo Espresso.

Allis started Boost Juice from her home in 2000. The first Boost Juice store was located in Adelaide, South Australia, and the franchise is now in 13 countries.

She is also a Director of Michael Hill Jeweller and author of the book The Accidental Entrepreneur - The Juicy Bits.

Janine’s media career includes appearances as a “shark” on the Australian version of the TV show Shark Tank and the sixth season of Australian Survivor.

Adam Lewis, Executive Chair in Residence

Adam spent 20 years as a management consultant with McKinsey & Company, where he was the managing partner Australia & New Zealand from 2002 to 2008. Adam has extensive consulting experience at the most senior levels of corporations across a range of industries including: metals, mining chemicals, manufacturing, telecommunications, retailing, banking and government. His particular expertise is in business unit and corporate strategy, including game theory and competitive analysis, as well as organisation. This experience has been developed in markets including: Australia, New Zealand, USA, United Kingdom, Netherlands, France, Belgium, South Korea, Japan and Singapore.

Adam was Chairman of Aconex (sold to Oracle for $1.6bn) from 2014 until 2017 and is a Non Executive Director of direct access bond market specialist FIIG. He was also a Board member of the Melbourne International Film Festival, Howard Florey Commercialisation Board and Australia Council for the Arts. He is currently the Chairman of: Southern Innovation; Palette; Deliciou; Deep Blue Company (Conveyancing.com. au); and Cast Professional Services. He is a director of the State Library of Victoria and Chop Wood Carry Water and maintains a number of interests in music, agriculture and sport including as “playing President” of Clifton Hill Cricket Club. Adam has an MBA (Honours) from the University of Illinois at Urbana-Champaign, and Bachelor of Electronic Engineering (Honours) from Curtin University, Western Australia.

Management of the Fund 27 Who We Are A standard suite of “ordinary course of business” Performance Improvement Initiatives will follow each investment in the first 12 months – alignment of the team around a “1-page Strategic Straight Bat Stakeholders Plan”, management team transition planning, procurement Straight Bat is a business family. Geoff Harris and his family programs, operational efficiency initiatives, including the office – Harris Capital – are cornerstone investors in the adoption of new technologies, sales force effectiveness, fund and shareholders in the Investment Manager (Straight human resource management, financial structuring, strategic Bat Private Equity Pty Ltd). We are seeking a small number alignment and incentives. of large “family office style” investors, with complementary reputation and expertise from any of the industrial, Beyond the experience of the investment team, our Advisors, healthcare, technology, manufacturing, financial and property Portfolio Mentors, Executive Chairman in Residence (Geoff sectors, to complete the balance of the Fund. Harris, Janine Allis and Adam Lewis) bring decades of experience in sustainably growing organisations. Our investment strategy is directly enhanced by the cornerstone investors in the Fund. Specifically, the business Business and Investment Philosophy owners in which we invest are attracted to Straight Bat As entrepreneurs and operators, at Straight Bat we believe because of our values led approach and the reputation of our that a private equity fund needs to think about its business with investors. The collective reputation of the investor group and the same sophistication expected of our portfolio companies. the indirect benefits of being associated with this extended Straight Bat has suppliers (investors) and customers (business business family, allow us to secure better quality investment owners), competitors (other PE funds) and substitutes (banks and opportunities at more realistic prices and more equitable long other sources of capital). Our business needs to understand its term returns. core customers, deliver a differentiated value proposition, based We observe that large family offices attract a deal flow that on strengths that deliver differentiation, underpinned by beliefs, is relevant to their reputation and expertise. Sometimes, proof points, values and personality. these same family offices are ambivalent about those Together these things are the basis of Straight Bat’s brand deal opportunities, because frequently they are already essence – long game, income, family. “overweight” in those sectors. At the same time, they are naturally interested in the complementary deal flow attracted by the other family offices investors in the fund. A small group of influential and complementary family office investors ensure that “the whole is greater than the sum of the parts” and will attract a diversified group of opportunities as well as more attractive deal terms, in turn enhancing the collective At Straight returns for all.

Sustainable Performance Improvement Bat we are In our experience as entrepreneurs and operators, the Straight Bat team recognises that most medium sized businesses are ripe with opportunity for further performance improvement. “all in it Frequently these are simple and inexpensive things that are the product of good business practice. Furthermore, we believe that these efforts can be as effective, as more conventional private equity, capital fuelled, aggressive growth together”. initiatives, which can sometimes overwhelm the existing talent within medium sized businesses and can have unintended consequences. Don’t over fertilise the lawn.

Management of the Fund 28 Tone of Voice All in it together In our marketing communications and indeed in this At Straight Bat we are “all in it together”. We are egalitarian and fair. document, Straight Bat uses an authentic, direct, Everyone in the team has a role to play - everyone is important and unselfconscious, conversational tone, and the occasional must be treated with respect. We are inclusive, respect difference “colloquial expression”. This is intentional and by design. Our and value diversity. We try to bring a 50:50 partnership mindset. Brand Personality and Brand Essence speaks directly to the It’s important to be fair with our team and in our business dealings. business owners with whom we seek to partner. The best business deals are always a “two-way street”. We tend to prefer a simple, low key approach. We think about what is means to Brand Personality be a “good mate” or a “good person”. We take responsibility for our Down to earth, honest, genuine, sportsman, confident, unique, own behavior and expect the same from those we deal with. To be independent, trustworthy successful we all have to “turn up to training”, pitch in, “roll up our sleeves”, work hard and support one another. We value people who Brand Essence are high achievers AND team players. We all benefit in the long run Long Game, Income, Family when we take an “all in it together” approach.

Our Values and Beliefs Straight Bat The way we communicate, develop relationships, negotiate We play the long game with a straight bat. We believe in the partnerships and invest is anchored in our values and beliefs. principles of a “handshake” deal. This means be your word, We believe in fair play, in “having a crack”, the power of do what you say. Conduct yourself with authenticity, honesty optimism, persistence, self-reliance and hard work. We believe and integrity. No bull-shit. Be humble. Within reason we try in going into business with people we are comfortable having to avoid “big noting” and “showing off” (but we still like to a “beer” with and that there’s more to life than money. We have a good time). It’s great to hit “fours” or ”sixes”, but games believe in having a good time, and that in the end, family is the are usually won by consistently notching up “singles”. We like reason why we do this. Play the long game… to invest in good old-fashioned businesses, that quietly do simple things well – mature businesses, diversified customers, long term contracts, well understood products and business models, high margin, modest growth. Our reputation is important, so we think carefully about our conduct, play the long game and play it with a straight bat.

Management of the Fund 29 Have a crack Balance 168 It takes courage to “have a crack”. We are entrepreneurs. We At Straight Bat we recognize that there are 168 hours in the see possibility. We are made from optimism, persistence, and week, and we are responsible for balancing work, family, self-reliance. When you play the long game, having a crack, health, and personal passions. We believe that hard work doesn’t mean being careless – it’s important to understand results in achievement and satisfaction, but there is more “which ball to let through to the keeper and which to put to life than work and it’s not all about money. It’s important over the fence”. We strive to show leadership in business to have fun. We try not to take ourselves too seriously. It’s and our community. We seek to empower people to make important to maintain perspective. Be money-wise, health- it happen. We believe in taking responsibility for ourselves wise and happy-wise. We look for people who have a balanced and supporting others in our community to have the same approach and who’s company we enjoy – is this someone I opportunity – in the long run the best form of welfare is a job. want to have a “beer” with?

Management of the Fund 30 The Trustee and Administration Manager

Specialised Investment and Lending Corporation Pty. Ltd., ACN 149 520 918, (AFSL 407100) is the Trustee of the Fund. The Trustee’s key responsibilities are to operate the Fund in accordance with the Trust Deed and its duties and obligations under Australian law. The Trustee will have regard to the best interests of investors in all decisions that it makes with respect to the Fund.

The Trustee is bound under Australian legislation, and in particular with regards to its AFSL, to adhere to specific requirements such as ensuring it has adequate professional indemnity insurance, minimum net tangible assets and is subject to independent financial audit.

The Trustee is led by a management team that has a breadth of experience in the banking, funds management and financial services sector.

The Administration Manager is a related party of the Trustee.

The fees paid by the Fund to the Trustee are set out in section 8.

Management of the Fund 31 Core Customer Beliefs Differentiated Value

We believe in fair play, in having a crack and the power of optimism, persistence, self reliance and hard work. We believe Proposition

Our core customer is a 60-year-old if you don’t want to have a beer together you shouldn’t go into business together and that there’s more to life than We play the long game with a business owner. He’s a hard worker money. We believe in having a good time, and that in the end, family is why we do this. straight bat. We deliver and honest as the day is long. exceptional income and wealth creation/preservation by enabling He wants a smooth and safe family business founders a tansition from carrying the load of smooth, safe and successful the business on his back. He sees his Values Strengths er Differentiators th Ba business transition, allowing you business and reputation as his e la g n o t H c T a a e it B ve to achieve balance and fulfill your legacy, often with long standing staff Long term hold for t 1 We are values led in h A 6 l ig C 8 l a r income yield and A r a dreams through the realization of t c relationships that feel like family. S k wealth creation We’re All in it your hard work. His children don’t necessarily want Together - we to take over the business, but Business Family Essence prosper together

seeing his legacy survive is Reputation of the Long Game, Family, Income t U n

D e n d i Brand Positioning o i important to him. He’s ready to Harris Family and q f Balanced view of w u n n e o e n other involved family t - C i what ‘value’ spend more time with the o S - u Statement E p t n o n e offices a r a means - More rt ts d G grandkids and travel with his wife. h m n - e y We are the only private equity - a p h H n de rt than money o In o n w He wants to realize some value from es st investor in Australia who plays the Entrepreneurially t ru Personality T the buisness to financially, Minded Business family long game (long term income worry-free. He’d be forgiven for orientation) with a straight bat for seeing PE fund managers as sharks in medium sized private business suits and is looking for an investment owners ready for a smooth, safe partners with shared values. and successful transition. Proof Points

Quarterly/Monthly dividend payout Buy existing shares, allowing founder to realize value and take cash off the table Boxing Day test with Partners and Family dinner Long term commitment Family Business Patriarchs Cricket bat for deal markers (raise the bat) Entrepreneurial and operational track record of theStraight Bat team Half century - $50m raised, First meeting over a beer Century/ton - $100m raised We publish our values and expect to be held accountable Core Customer Beliefs Differentiated Value

We believe in fair play, in having a crack and the power of optimism, persistence, self reliance and hard work. We believe Proposition

Our core customer is a 60-year-old if you don’t want to have a beer together you shouldn’t go into business together and that there’s more to life than We play the long game with a business owner. He’s a hard worker money. We believe in having a good time, and that in the end, family is why we do this. straight bat. We deliver and honest as the day is long. exceptional income and wealth creation/preservation by enabling He wants a smooth and safe family business founders a tansition from carrying the load of smooth, safe and successful the business on his back. He sees his Values Strengths er Differentiators th Ba business transition, allowing you business and reputation as his e la g n o t H c T a a e it B ve to achieve balance and fulfill your legacy, often with long standing staff Long term hold for t 1 We are values led in h A 6 l ig C 8 l a r income yield and A r a dreams through the realization of t c relationships that feel like family. S k wealth creation We’re All in it your hard work. His children don’t necessarily want Together - we to take over the business, but Business Family Essence prosper together

seeing his legacy survive is Reputation of the Long Game, Family, Income t U n

D e n d i Brand Positioning o i important to him. He’s ready to Harris Family and q f Balanced view of w u n n e o e n other involved family t - C i what ‘value’ spend more time with the o S - u Statement E p t n o n e offices a r a means - More rt ts d G grandkids and travel with his wife. h m n - e y We are the only private equity - a p h H n de rt than money o In o n w He wants to realize some value from es st investor in Australia who plays the Entrepreneurially t ru Personality T the buisness to financially, Minded Business family long game (long term income worry-free. He’d be forgiven for orientation) with a straight bat for seeing PE fund managers as sharks in medium sized private business suits and is looking for an investment owners ready for a smooth, safe partners with shared values. and successful transition. Proof Points

Quarterly/Monthly dividend payout Buy existing shares, allowing founder to realize value and take cash off the table Boxing Day test with Partners and Family dinner Long term commitment Family Business Patriarchs Cricket bat for deal markers (raise the bat) Entrepreneurial and operational track record of the Straight Bat team Half century - $50m raised, First meeting over a beer Century/ton - $100m raised We publish our values and expect to be held accountable 7. Risk Factors

Like any investment, there are risks associated with investing General Risks in the Fund. There are a number of risk factors that could affect the performance of the Fund, the repayment of Investor’s capital Liquidity risk: The Fund is not a liquid scheme and is unlikely and the payment of distributions (returns). Many risk factors fall to be liquid during the Term. Withdrawal Requests submitted outside of the Trustee and the Investment Manager’s control and to the Trustee during the Term may not be accepted or may cannot be completely mitigated. not be able to be fulfilled. This means that Unitholders may not be able to access their invested capital until the expiry of The following is a non-exhaustive list of the main risks the Term. This also means that if there is a delay in realisation associated with investment in the Fund. Investors should of the Fund assets, this will also delay the Fund’s return of consider and weigh them up carefully and make their own capital to Investors. assessment as to whether the Fund is a suitable investment before applying to invest in the Fund. We strongly recommend Return risk: The Fund seeks to deliver the Target Return to that prospective investors obtain independent professional Investors. The Fund is targeting returns which are significantly advice before investing in the Fund. higher than interest paid on basic deposit products. Investors should note that an investment in the Fund is Target Returns and distributions are not guaranteed and not an investment in an ADI (such as a bank) regulated by neither is the return of Investor’s capital. APRA and an investment in the Fund carries more risk than an investment in a bank. As a general rule, higher potential returns have higher levels of uncertainty (high-risk) than investments with lower potential returns and low levels of uncertainty (low-risk).

When you play the long game, having a crack, doesn’t mean being careless - it’s important to understand “which ball to let through to the keeper and which to put over the fence”.

Risk Factors 34 The Target Return is not a forecast. The Fund may not Market risk: This is the risk that negative market movements be successful in meeting this objective. Returns are not will affect the price of assets within a particular market. guaranteed and there is a risk that the Fund may not be able to By their nature, markets experience periods of volatility pay Investors any return or repay the capital invested. involving price fluctuations of varying magnitudes. The Fund is indirectly exposed to private business market risk. Commitment risk: Where an investor agrees to make a Firm Commitment, investors’ Firm Commitment amounts will be The Fund’s primary assets will be unlisted shares of Investees. called progressively by the Trustee at short notice. Failure to Therefore, factors which affect the underlying industry or pay a call on a Firm Commitment may result in the imposition sector of an Investee may impact upon the value of the Fund’s of penalty interest, costs, expenses and/or forfeiture of some primary assets. or all of the investor’s fully paid Units in the Fund. Regulatory and economic risk: There is the risk that Loan risk: Where the Fund makes a loan to investors, these the value of an investment may be affected by changes constitute liabilities on the part of the investor. In the unlikely in domestic or international policies, regulations or laws event that insufficient dividends are declared to extinguish the (including taxation laws). There is also a risk that a downturn loan at the end of a financial year, the Fund may be required in domestic or international economic conditions may to repay these loans from Fund assets, thereby affecting adversely affect investments. investor returns. Insofar as investors are concerned the loan These factors may increase costs, reduce profit margins or to investors will not be repayable by investors other than from delay processes in ways which may have a negative impact on distributions of income by the Fund or redemption proceeds. the value of the Fund’s investments. These factors are outside the control of the Trustee and the Investment Manager but they may have a negative impact upon the operation and performance of the Fund.

Risk Factors 35 Investment risk: The investments (ie. Unlisted shares) Concentration risk: It is possible that the Fund may be highly identified and selected by the Investment Manager for the concentrated and will not hold diversified assets. In the case of Fund may not appreciate in value or may decrease in value the Fund, while there is intention to achieve diversification across with the consequence that the Fund may not be able to make 4-6 Investees, there is a possibility that it may not achieve this distributions or repay the capital invested. where there are no suitable investments identified.

Interest rate risk: Changes to interest rates can have a direct The risk associated with assets that are not diversified is and indirect impact (negative or positive) on the value of the increased because the Fund does not have the ability to use Fund’s assets. the performance of alternative investments to offset losses associated with another investment. The performance of the Default and Credit risk: The financial performance of the Fund will be affected by any negative factors that affect the Fund will be directly impacted by the financial performance of Investees and their respective businesses. the Investees with respect to their debt obligations. Capital loss risk: The Fund will not maintain a reserve of If an Investee defaults on the repayment of a loan, then the funds to meet losses on investments it makes, should they Fund’s ability to achieve the Target Return or to return capital occur. This means any losses caused as a result of an Investee to investors may be affected. As the Fund’s primary asset is default or otherwise will have to be met from the Fund’s shareholder equity, in the event of loan default, the assets of capital, which may impact upon the Fund’s unit price(s) and the Investee will be used to repay the loan as a priority to its may result in a capital loss being incurred by Fund investors. shareholders. This means that the Fund may lose some or all of The Fund does not intend to hold capital (other than working its principal investment as a result, affecting the value of the capital). Units in the Fund. Documentation risk: A deficiency in documentation could, Risks associated with the performance of the in certain circumstances, adversely affect the return on an Investment Manager: The success of the Fund is dependent investment or the repayment of capital to investors. This may on the Investment Manager identifying suitable investments make it difficult for the Trustee to realise assets in respect of for the Fund to make on terms which provide the Fund an Investee, if necessary. with an opportunity to meet its Investment Objective. The Investment Manager will also be responsible for overseeing Valuation risk: The valuation of an investment in an Investee the management of the Investee to protect the interests of the may be inaccurate or not accurately reflect its true value at Fund and its Investors. the time the valuation is undertaken. If the valuation of the Investee is incorrect, then it is possible that the investment is Risks associated with the solvency and financial position made on an overvalued basis. of the Investment Manager: The financial performance of the Fund investment may be impacted by the financial Operational risk: Operational risk exists in all managed performance of the Investment Manager. investments. This refers to the possibility the Investment Manager or the Trustee may fail to anticipate market If the Investment Manager either becomes insolvent or movements, to manage the investment risks appropriately, encounters financial difficulties, which mean that it is unable or to properly execute the Fund’s investment strategy. The to perform its role under the Investment Management Investment Manager or Trustee may also fail to adequately Agreement, then the Trustee may need to terminate the supervise and monitor key service providers or Investee Investment Management Agreement. If that were to occur, management teams to ensure that they adequately manage then the Trustee would either need to find a replacement risk and support the Fund’s Investment Objective. This may be investment manager or wind up the Fund. This could result in due to a failure of the Trustee’s or the Investment Manager’s investors suffering a loss of capital or a diminished return on business systems or processes, technology, key service their investment in the Fund. providers or human resources.

There is also an inherent risk associated with the death or departure of the Trustee’s, the Investment Manager’s, or an Investee’s key personnel.

Risk Factors 36 Reputations are hard won and easily lost. At the end of the day, our conduct matters. That is our enduring legacy.

Risk Factors 37 There is more to life than work. In the end it’s not all about money.

Fees and Costs 38 8. Fees and Costs

This section sets out the fees and other costs that you may of 8% per annum compounding (net of fees and expenses) with be charged. These fees may be deducted from the money you a full catch-up, when a 10% per annum compounding return is apply to invest, the returns on your investment or from the achieved (Capital Performance Entitlement). Fund’s assets. To illustrate, the distributions in a year would flow as: an investor would receive 100% of capital distributions up to an 8% per Investment Management Fees annum compounding return, the Investment Manager would The Trustee will pay a management fee calculated as 2.00% then receive 100% of capital distributions thereafter until a 10% per annum of the funds under management (FUM) of the per annum compounding return is achieved (the catch up) and Fund to the Investment Manager for managing the assets and finally, all remaining capital distributions would be split 80% to overseeing the operations of the Fund. This fee is payable on the investors and 20% to the Investment Manager. a semi-annual basis. The FUM of the Fund will be the value of the Fund investments, net of fees and costs. The capital distributions and Capital Performance Entitlements (if any) are calculated and paid whenever a This fee accrues daily based on the value of the FUM of the capital distribution is made. Fund and is charged semi-annually in advance. The Investment Manager may, in its absolute discretion, accept lower fees Capital Performance Entitlements (if any) will be paid to than it is entitled to receive or may defer payment of those the Investment Manager by way of a distribution made with fees at any time. If payment is deferred, the fee will accrue respect to the Manager Units. until paid. The 8% hurdle and 10% catch-up figures above with respect to both the Income Performance Entitlement and the Capital Performance Entitlement Performance Entitlement are all net of fees and expenses and Performance Entitlement on Income Distributions The before tax. Investment Manager is entitled to receive a performance entitlement on income distributions calculated as 20% of Trustee Fees income returns in excess of a hurdle rate of 8% per annum (net The Trustee’s fees will be paid by the Investment Manager of fees and expenses) with a full catch-up, when a 10% per from its own funds or deducted from any fees payable to it annum return is achieved (Income Performance Entitlement). from the Fund. However, in the event that the Investment To illustrate, the distributions in a year would flow as: an Manager does not pay these fees, the Trustee is entitled to be investor would receive 100% of income distributions up to paid out the assets of the Fund. an 8% per annum return, the Investment Manager would then receive 100% of income distributions thereafter until a The Trustee is entitled to a fee calculated as the greater of: 10% per annum return is achieved (the catch up) and finally, • $2,500* per month, or all remaining income would be split 80% to the investors and • a stepped fee of: 20% to the Investment Manager.

Distributions and Income Performance Entitlements (if any) Fund Gross Asset Value (GAV) % per annum are calculated and paid quarterly. However, the Trustee may at its discretion pay distributions more frequently. First $100m 0.125% Income Performance Entitlements (if any) will be paid to the Investment Manager by way of a distribution made with Next $100m 0.100% respect to the Manager Units. Over $200m 0.075% Performance Entitlement on Capital Distributions Distributions In addition, the Investment Manager is entitled *Subject to an annual increase of 3.5% per annum on the anniversary of the date of the Trust Deed. to receive a performance entitlement on capital distributions calculated as 20% of capital returns in excess of a hurdle rate

Fees and Costs 39 Fund Administration Other Costs and Expenses All other costs and expenses are paid by the Investment Manager The Administration Manager’s fees will be paid by the from its own funds or deducted from any fees payable to it from Investment Manager from its own funds or deducted from the Fund. However, in the event that the Investment Manager any fees payable to it from the Fund. However, in the event does not pay these fees, these costs and expenses will be paid out that the Investment Manager does not pay these fees, the the assets of the Fund. Administration Manager is entitled to be paid out the assets of the Fund. All costs and expenses properly incurred in the operation of the Fund by the Trustee are reimbursable out of the Fund’s assets. The Administration Manager is entitled to a fee of: These are expense recovery costs and typically include day- • $1,250 per month; plus to-day expenses such as professional fees relating to audit, • $50 per distribution per investor; and accounting, tax and legal services, government charges, and • $50 per unit registry activity (excluding applications, Fund compliance costs. Where the Trustee is entitled to distributions and reinvestments) charge an additional fee for time spent on Fund operational matters, it will be at a rate of $350 per hour or part thereof.

Some of these fees are fixed and will fall as a proportion of the FUM of the Fund as the FUM of the Fund grows.

Unless otherwise stated, all fees quoted in this IM are quoted exclusive of GST.

Subject to the Act and the Trust Deed, the Trustee or Investment Manager may agree with any prospective investor any fee arrangements with that prospective investor which are different to the fees set out in this section.

We believe in fair play, in “having a crack”, the power of optimism, persistence and self reliance and hard work”.

Fees and Costs 40 Fees and Costs 41 9. Taxation Information

There are Australian tax implications when investing, Taxation of trusts that are AMITs withdrawing and receiving income from the Fund. The Trustee The AMIT provisions in the income tax legislation apply cannot give tax advice and the Trustee recommends that to qualifying managed investment trusts that make an investors consult their professional tax adviser as the tax irrevocable election to become an AMIT. The consequences implications for the Fund can impact investors differently. for Australian resident Investors should be similar whether What follows outline of some key tax considerations for the Fund is an AMIT or not (refer to the comments on Australian resident investors. Australian resident Investor tax consequences below).

This information is based on our current interpretation of the An AMIT must attribute its taxable income to investors on a relevant taxation laws. The Australian tax laws are subject fair and reasonable basis, and investors are advised of their to continual change, and the tax treatment applicable to share of the taxable income and any cost base adjustment, via particular investors may differ. As such, investors should not an AMIT Member Annual Statement (AMMA Statement). place reliance on this as a basis for making their decision as to whether to invest. Managed Investment Trusts Eligible MITs may make an irrevocable election to apply a

deemed capital account treatment for gains and losses on Taxation of the Fund disposal of certain eligible investments (including equities and units in other trusts but excluding fixed interest securities, General derivatives and foreign exchange contracts). The Fund will generally not be liable to pay income tax on the basis that:

• where the Fund is an Attribution Managed Tax position of Australian Investment Trust (AMIT) - all taxable income resident Investors is intended to be attributed to Investors for each income year (see below); or General • where the Fund is not an AMIT - Investors are presently Taxable income earned by the Fund, whether attributed (for entitled to all of the Fund’s distributable income. an AMIT), distributed, retained or reinvested, can form part of the assessable income for Investors in the year of entitlement The Trustee is not intending that the Fund will be taxed as a or allocation. Tax losses incurred by the Fund cannot be ‘public trading trust’ and will monitor the position periodically distributed (or attributed) and will remain in the Fund, but can to mitigate the risk that the public trading trust rules will apply be applied to reduce the Fund’s income in future years (subject to the Fund. to the Fund satisfying the specific provisions of the trust loss The Trustee does not expect that the Fund will qualify as an carry forward legislation). AMIT or be an eligible Managed Investment Trust (MIT) in the Further, the timing of when the Fund’s income is brought to short to medium term. However, the Trustee will monitor the account for tax purposes may be different to when amounts Fund’s position periodically and provide an update to investors are distributed to Investors, so that Investors may be required in due course if the position changes. The guidance below to pay tax on income that has not yet been or may not be regarding AMITs and MITs is provided for completeness. distributed to them.

Taxation Information 42 For each year ending 30 June, the Trustee will send to each Australian GST Investor the details of assessable income, capital gains, tax offsets and any other relevant tax information to include The application for and withdrawal of Units in a Fund and receipt in their tax return and to determine any required tax of distributions will not be subject to GST. However, GST will adjustments. Certain income may impact the cost base of an generally be incurred on various acquisitions made by the Fund. Investor’s Units and if the Fund is an AMIT, the cost base per The relevant Fund may be able to claim input tax credits and/or Unit may increase, as well as decrease. reduced input tax credits of at least 55% of the GST incurred. Investors may also be entitled to tax offsets (e.g. franking Unless otherwise stated, all fees quoted in this IM are quoted credits) distributed by the Fund. Provided Investors satisfy on a GST inclusive basis and net of any applicable input tax certain provisions of the tax legislation, Investors may be able credits or reduced input tax credits referable to the Fund. to utilise these offsets against their tax liability on the taxable components of the distributions. In order to claim the amount of tax offsets, Investors must include the amount of the offsets Tax File Number (TFN) and (in addition to the income to which the offset relates) in their Australian Business Number (ABN) assessable income. On your application form you may provide us with your TFN or TFN exemption. Alternatively, if you are investing in the Fund Applications and withdrawals in the course of an enterprise, you may quote an ABN. It is not If an Investor acquires Units part way through a distribution compulsory for you to quote a TFN, exemption or ABN, but if you period, that amount of accumulated income which is included do not, then we are required to deduct tax from any distribution in the Unit price for the Units acquired may eventually be payable to you at the highest marginal tax rate plus the Medicare distributed to the Investor as taxable income. levy (and any other levies we are required to deduct, from time to An Investor’s assessable income for each year may include net time). The collection of TFNs is authorised, and their use is strictly realised capital gains (i.e. after offsetting capital losses). This regulated by tax and privacy laws. Non-residents are generally will include capital gains made upon withdrawing Units from exempt from providing a TFN. the Fund.

Individuals, trusts and complying superannuation entities may be eligible for capital gains tax (CGT) concessions in relation to capital gains made with respect to Units that have been held for at least 12 months prior to their disposal. If an Investor holds their Units on revenue account, gains and losses on withdrawal will be taxable as ordinary income or allowed as a deduction, as the case may be, and will not qualify for the CGT discount.

43 We invest in business for old fashioned reasons - Income, wealth preservation and sustainable capital growth.

Taxation Information 44 Taxation Information 45 10. Additional Information

Summary of material documents Investment Management Agreement The Investment Management Agreement is between the The following is a summary of material documents relevant Investment Manager and the Trustee under which the to the Fund. You should consider whether it is necessary to Investment Manager is appointed to provide investment obtain independent advice in relation to any of the documents management services to the Fund.

Trust Deed It sets out the Investment Manager’s obligations to the The Trust Deed is dated 19th August 2020 and is the primary Trustee and to the Fund. The agreement also contains the document that governs the way the Fund operates and sets arrangements in relation to the Fees and Costs that are out many of the rights, liabilities and responsibilities of both summarised in Section 8. the Trustee and Investors. The Investment Management Agreement will remain in force Each Ordinary Unit gives Investors an equal and undivided until the Fund is wound up unless the agreement is terminated interest in the Fund’s Assets but not any other Fund assets. earlier in the event the Investment Manager is in material breach of the agreement, and that breach has not been Subject to the Trust Deed, an Investor has the following rights remedied after a certain time or if the Investment Manager relating to the Units in the Fund : becomes insolvent. 1. the right to share in any distributions; Investor Reports and Communication 2. the right to attend and vote at To ensure that Investors are kept abreast of their investment, meetings of Investors; and the Trustee will provide Investors with the following 3. the right to participate in the proceeds information: of winding up of the Fund. • Confirmation of investments and redemptions The Trust Deed also contains provisions about convening and • Annual statements of unit holdings conducting meetings of Investors. and interest payments Subject to the Trustee’s duties and obligations to Investors • Annual taxation distribution statements the Trustee can amend the Trust Deed without Investors’ approval provided it reasonably considers the change will not All communications including reports will be sent electronically adversely affect Investors’ rights. The Trust Deed may also be unless otherwise instructed in writing by the Investor. amended by a special resolution passed by Investors (being Investor Meetings a resolution passed by at least 75 percent of the votes cast Under the Trust Deed, the Trustee may elect to call a meeting by Investors entitled to vote on the resolution). However, if of all Fund investors . the proposed amendment relates to the process to remove the Trustee, then an extraordinary resolution will be required In respect of a meeting of all Fund investors, investors with at (being a resolution passed by at least 90 percent of the total least 35% of the votes that may be cast on the resolution can votes that may be cast by Investors entitled to vote on the request the Trustee to call and arrange such a meeting resolution (including Investors who are not present in person or by proxy)).

A copy of the Trust Deed is available free of charge by contacting the Trustee at [email protected].

Additional Information 46 Related party transactions Anti-money laundering law The Trustee may from time to time face conflicts between its The Trustee is required to comply with the Anti-Money duties to the Fund as trustee, its duties to other funds that it Laundering and Counter Terrorism Financing Act 2006 (“AML/ manages and its own interests. The Trustee will manage any CTF Law”). This means that the Trustee will require potential conflicts in accordance with its conflicts of interest policy, the investors to provide personal information and documentation Trust Deed, ASIC policy and the law. in relation to their identity when they apply to invest in the Fund. The Trustee may need to obtain additional information The Investment Manager is not a related party of the Trustee. and documentation from prospective investors to process The contractual arrangements between the Trustee and the applications for Units or to undertake subsequent transactions or Investment Manager are negotiated at arm’s length between at other times while a person is an investor in the Fund. the parties. The Trustee may need to identify: The Trustee may from time-to-time enter into transactions with related entities (such as with the Administration 1. a prospective investor prior to purchasing Units in the Manager). All transactions will be effected at market rates or Fund. The Trustee will not issue Units until all relevant at no charge. information has been received and a prospective investor’s identity has been satisfactorily verified; and Privacy 2. anyone acting on behalf of a prospective investor, In applying to invest, you are providing the Trustee and the investor or a deceased investor, including a power Investment Manager with certain personal details (your name, of attorney or a legal personal representative if an address etc). The Trustee uses this information to establish investor dies while a member of the Fund. and manage that investment for you. If you do not provide the Trustee with your contact details and other information, then In some circumstances, the Trustee may need to re-verify this it may not be able to process your application to invest. information.

Under the Privacy Act 1988 (Cth), you can access personal By applying to invest in the Fund, prospective investors and information about you held by the Trustee, except in limited investors also acknowledge that the Trustee may decide circumstances. Please let the Trustee know if you think the to delay or refuse any request or transaction, including by information is inaccurate, incomplete or out of date. You can suspending the issue or withdrawal of Units in the Fund, if it also tell the Trustee at any time not to pass on your personal is concerned that the request or transaction may breach any information by advising it in writing. obligation of, or cause the Trustee to commit or participate in an offence under, any AML/CTF Law, and the Trustee will incur Under various laws and regulatory requirements, the no liability to prospective investors or investors if it does so. Trustee may have to pass-on certain information to other organisations, such as the Australian Tax Office or the Australian Transaction Reports and Analysis Centre (AUSTRAC).

By applying to invest, you give the Trustee permission to pass information it holds about you to other companies which are involved in helping it administer the Fund, or where they require it for the purposes of compliance with AML/ CTF law or in connection with the holding of Application Money. Subject to relevant law, the Trustee may also use your information to provide you with details of future investment offers made by it or the Investment Manager.

Additional Information 47 Common Reporting Standards (CRS) Indemnification CRS is the single global standard set by the Organisation for Subject to the IM and unless otherwise agreed with the Economic Co-operation and Development (OECD) for the Trustee, the Trustee is entitled to be indemnified out of the automatic exchange of information with revenue authorities Fund for any loss, damage, expense or other liability incurred for tax non-residents that invest in certain financial accounts. by it in properly performing or exercising any of its powers, The standard covers both the identification of tax non- duties or rights in relation to the Fund. residents and reporting on the applicable financial accounts. The Investment Manager and the Administration Manager are The Trustee will be a ‘Reporting Financial Institution’ under similarly entitled to be indemnified by the Trustee (out of the CRS and intends to comply with its CRS obligations under any assets of the Fund) for all claims, losses, liabilities, damages, relevant Australian laws and regulations, including obtaining costs and expenses (Costs) incurred by them in relation to and disclosing information about certain investors to the the proper performance of their role as Investment Manager ATO or other foreign tax authorities as required. To facilitate and Administration Manager respectively. However, the these disclosures, Investors will be required to provide certain Investment Manager and Administration Manager are not information such as that relating to their country of tax entitled to be indemnified by the Trustee and will be liable to residence and their relevant taxpayer identification number (if the Fund for any Costs arising as a result of their fraud, gross applicable). negligence, wilful default or material breach of the agreement under which they are appointed. Foreign Account Tax Compliance Act (FATCA) The Trustee considers that the Fund will be required to comply Questions and complaints with FATCA, United States (US) tax law which was enacted for If an Investor has any questions or complaints, the the purpose of improving tax information reporting regarding Investor should contact the Trustee in writing. The Trustee US persons in respect of their offshore investments to the US will acknowledge an Investor’s query or complaint in Internal Revenue Service (IRS). Certain obligations relating to writing within 14 days. The Trustee will then give proper the FATCA have been given force of law in Australia. consideration to the complaint and advise the Investor of the In order to comply with FATCA requirements, the Trustee: outcome within 45 days after receipt of the complaint. The Trustee’s contact details may be found in section 13. • may require Investors to provide certain information regarding their identification and will undertake certain due diligence procedures with respect to Investors to determine their status for FATCA reporting purposes - this information may be required at the time an application is made for the issue of Units or at any time after the Units have been issued; and

• will report annually to the IRS, via the Australian Taxation Office (ATO), in relation to relevant Investors’ financial information required by the ATO (if any) in respect of any investment in the Fund.

Accordingly, by making an application to invest in the Fund, prospective investors agree to provide the Trustee with certain identification and related information in order to enable it to comply with its obligations in connection with FATCA.

Additional Information 48 11. Application Process

General Call Default Interest may also be charged to the defaulting After reviewing this IM, prospective investors can invest in Unitholder being the current Penalty Interest Rate plus 2% Units by completing the Application Form accompanying accruing daily and being capitalised monthly, in arrears. Call this IM and remitting their Application Money (being the Default Interest is charged on the amount of the call and proportion of the Issue Price payable as advised by the any other money owing from the due date until the date the Investment Manager) into the Fund’s bank account detailed Trustee receives payment of the overdue amount in full. within the Application Form. Any amount payable to a defaulting Unitholder out of the Incomplete applications (including where required Fund may be applied by the Trustee to set off any amounts due identification documentation is not provided or payment of and payable by the investor to the Fund, including amounts set Application Money is not paid) will not be processed until such out in the Default Notice. All rights attaching to a defaulting time the complete information pertaining to that application Unitholder’s Units will be suspended until such time as the is provided and Application Money is received by the Trustee. Unitholder is no longer a defaulting Unitholder. Any funds held during this time will not earn any interest. If payment in full is not received by the due date specified Application Monies are held in the Fund’s application account in the Default Notice any Units held by the Unitholder are prior to being allocated Units in the Fund and may not be forfeited. The Trustee may, in its absolute discretion offer any withdrawn. of the Unitholder’s units for sale, and/or assign all or part of the unpaid call, as set out below. Investors will be notified when Units are issued. However, where the Trustee rejects an application, it will provide a The Trustee may sell a defaulting Unitholder’s forfeited units notice to the applicant and return Application Money (if any as follows: received) without interest within 20 Business Days of receipt • between 10 Business Days and 15 Business Days before of that application. the sale date, give notice to all other Unitholders that The Ordinary Units will be fully paid units. Applicants will be they have a right to purchase a portion of the forfeited notified of the applicable Issue Price payable at the time of units in proportion to their Unit holding at a price their application. The Trustee may make a Call on all or determined by the Trustee acting reasonably; part of any unpaid proportion of the Firm Commitments by • Unitholders may purchase more than their giving not less than 10 Business Days’ written notice to each proportionate share if there are forfeited Unitholder. Generally, the Trustee will make a Call on all or units remaining after the above sale; part of any unpaid proportion to all Unitholders on an equal basis. Payment of Calls must be received in cleared funds • if there are unsold Units, the Trustee may sell the on or before the due date for payment specified by the Call. forfeited units in any manner, including to new investors, at a price that is not less than that at Failure to pay a Call which they were offered to Unitholders; If a Unitholder fails to pay a Call on the unpaid proportion of • If there are still unsold Units, the Trustee may the Firm Commitments on the due date, the Trustee may send recommence the above process at a lower price. the defaulting Unitholder notice (Default Notice) that: The net proceeds of the sale of any of the defaulting a. contains a demand for payment of all amounts Unitholder’s units (if any) will be paid back to the defaulting due and payable in respect of the Call, any costs Unitholder after making deductions which are permitted and expense associated with the failure to pay by the Trust Deed including, without limitation, costs and and any call default interest payable; and expenses incurred as a result of the default. b. specifies a further due date for payment which is not sooner than 5 Business Days after the date of the notice

Application Process 49 12. Glossary

Act: Corporations Act 2001 (Cth) for the time being in force Initial Close Date: 30 September 2020, subject together with the regulations of the Corporations Act. to change at the discretion of by the Trustee.

ADI: Authorised deposit-taking institution. Investment Management Agreement: The investment management agreement between the Trustee and Administration Manager: SILC Funds the Investment Manager dated 19 August 2020. Administration Pty Ltd, ACN 628 993 386 Investment Manager: Straight Bat Private Equity AFSL: Australian financial services licence issued Pty Ltd, ACN 636 868 301. A corporate authorised under Part 7.6 of the Corporations Act. representative (number 1280685) of Specialised Application Form: The application form issued Investment and Lending Corporation Pty Ltd, together with and accompanied by this IM. ACN 149 520 918, AFSL number 407100.

Application Money: The money paid Investor: A holder of Ordinary Units in the Fund. by an applicant for Units. Offer: The offer under this IM to acquire ASIC: Australian Securities and Investments Commission Ordinary Units in the Fund

Business Day: A day on which banks are open for business Penalty Interest Rate: The rate set under section 2 of the in Melbourne, except a Saturday, Sunday or public holiday. Penalty Interest Rates Act 1983 (Vic) from time to time

Call: A written request from the Trustee to Straight Bat: Straight Bat Private Equity a Unitholder requesting payment of part or Pty Ltd ACN 636 868 301 all of the unpaid amount on the Units. Target Return: The Target Return of the Fund is: CAGR: Compound annual growth rate • gross dividend returns of in excess of 10% EBITDA: Earnings before interest, tax, per annum (before tax), and depreciation and amortisation • capital growth equal to or in excess of inflation.

EBITDA Margin: Profitability ratio calculated The Target Return is not a forecast and may vary as EBITDA/revenue. that measures a company’s depending on the performance of the underlying Fund earnings before interest, taxes, depreciation, and investment. The Fund may not be successful in achieving amortization, as a percentage of revenue. the Target Return. The Fund, the Trustee and the Investment Manager do not guarantee any returns. Eligible Investor: A person to whom the Offer is available, being a person who is a wholesale Term: Has the meaning given to that term in Section 3. client as defined in section 761G of the Act. Total Investment Amount: The sum of all FUM: The funds under management of the Fund. investor funds invested in the Fund The FUM will be the value of the Fund assets. Trust Deed: The trust deed of the Straight Bat Fund: Straight Bat Private Equity Generation Private Equity Generation 1 Trust dated 19 1 Trust established by a deed of trust dated 19 August 2020 as amended from time to time. August 2020 as amended from time to time. Trustee: Specialised Investment and Lending Corporation Fund Assets: assets (including investments Pty. Ltd., ACN 149 520 918, AFSL number 407100. held in private companies) of the Fund Unit: A unit in the Fund

GST: Goods and Services Tax as defined in A New Tax System Withdrawal Request: A withdrawal request by an investor (Goods and Services Tax) Act 1999 (Cth), as amended. to withdraw some or all of their Units from the Fund. IM: This information memorandum.

Glossary 50 13. Corporate Directory

Trustee Specialised Investment and Lending Corporation Pty. Ltd. Level 9, 179 Queen St Melbourne, VIC 3000 Tel: +613 9600 2828 Email: [email protected]

Investment Manager Straight Bat Private Equity Pty Ltd Level 1, 572 Swan Street, Burnley VIC 3121 Tel: +61 418 350 737 Email: [email protected]

Administration Manager SILC Funds Administration Pty Ltd Level 9, 179 Queen St, Melbourne VIC 3000 Tel: +613 9600 2828 Email: [email protected]

Australian Legal Advisors Hall & Wilcox Level 11, Rialto South Tower, 525 Collins St, Melbourne VIC 3000 Tel: + 613 9603 3555

Corporate Directory 51