All private securities listed through online investment platforms and Exempt Market Dealers (EMDs) like SVX are likely to carry more risk than those available on the public markets. Our goal it to make you aware of those risks before making an investment. The following risks have been identified for investors:
1 Limited Operating History
While the team at AIF have a strong track record of businses success, this is the first fund launched by Active Impact Investments. Accordingly, an investment in AIF entails a high degree of risk. There can be no assurance that AIF will achieve its investment objectives or that the General Partner will be able to succeed in achieving AIF's investment objectives. There can be no assurance that AIF or the Manager will achieve results comparable to those that the investment professionals have achieved in the past. Given the factors described herein and otherwise existing, there exists a possibility that an investor could suffer a full or substantial loss of its investment in AIF.
2 No Management by Limited Partners
The Limited Partners have no right or power to participate in the management of AIF or to interfere in the management of AIF. The Limited Partners will be relying on the management of the General Partner in identifying and analyzing a potential investment, negotiating and structuring the transaction, and administering and disposing of AIF’s investments. Accordingly, no investor should purchase LP Interests unless it is willing to entrust all aspects of management of AIF to the General Partner. In addition, if for any reason key personnel of the General Partner should cease to be involved in the investment management of AIF, suitable replacements may be difficult to obtain, with the result that the performance of AIF may be adversely affected.
3 Limited Transferability of Interests; Interests Not Liquid
No prospectus has been filed in connection with the offering or the issuance of LP Interests, nor have such LP Interests been registered under the securities regulations of any jurisdiction, and no such filing or registration is contemplated. No public market for the LP Interests is expected to develop. Furthermore, any outside transfer or assignment of such LP Interests will be dependent on the consent of the General Partner as described in the Partnership Agreement. The LP Interests therefore have limited liquidity and involve a high degree of risk. Subscriptions for LP Interests should be considered only by sophisticated investors who are financially able to maintain their investment and pay the taxes with respect thereto, and who can afford to lose all or a substantial part of their investment.
4 Long-Term Investment
Although certain investments by AIF may generate current income (including interest income), the return of capital and the realization of gains, if any, will occur only upon the partial or complete disposition of an investment by AIF. While an investment may be sold or redeemed by AIF at any time, it is not generally expected that this will occur for a number of years after an initial investment has been made. Prior to such time, there will generally be no current return on investments made by AIF.
5 Number of Investments
AIF invests in a limited number of Investments, some of which will involve a high degree of risk, and, as a consequence, the aggregate return of AIF may be adversely affected by the unfavourable performance of any single investment.
6 Availability of Investments
There is no guarantee that suitable investment opportunities for AIF’s capital will be found, that investments on favourable terms can be negotiated or that AIF will be able to realize on the value of its investments. Among other factors, competition for suitable Portfolio Investments from companies, the public equity markets and other investors may reduce the availability of investment opportunities.
7 Financial Information of Portfolio Investments
Financial and other information concerning investments in Portfolio Investments may be available through certain sources. There may be no consistent means, however, of confirming the accuracy of such information. As a result, the financial condition of individual investments in Portfolio Investments, and their respective credit risk, is difficult, if not impossible, to quantify.
8 Liquidity of Investments in Portfolio Investments
AIF will invest in unlisted securities, including investments that involve a high degree of business and financial risk, which can result in substantial losses to AIF. Due to the absence of any trading market for these investments, AIF may take longer to liquidate its positions with regard to these investments than would be the case for publicly-traded securities.
9 Default by Limited Partners
The Manager expects that the investments will require contributions to meet capital calls over an extended period of time. Failure by a Limited Partner to meet a capital call of AIF could result in the failure of AIF to meet a capital call of an investment, which could have adverse consequences for AIF (including, without limitation, financial penalties and the possibility of forfeiture of AIF’s interest in such investment) and thus for the other Partners. If a Limited Partner defaults on its funding obligation, all other Limited Partners may be required to fund such defaulted amounts pro rata based on their capital commitments, provided, that such amounts will not exceed a Limited Partner’s unfunded capital commitment. If a Limited Partner fails to timely fund a drawdown by AIF and such shortfall is not made up by the other Limited Partners, AIF may fail to meet a capital call.
10 Investment Process and Cash Management Policy
The General Partner conducts and will continue to conduct extensive due diligence with respect to AIF’s Portfolio Investments and, as a result, suitable investment opportunities may not be immediately available. It may take a significant amount of time to fully commit and invest AIF’s capital in Portfolio Investments, which will result in lower returns during the initial years of AIF. AIF cannot predict how long it will take to fully deploy its capital in Portfolio Investments. Timing will depend on, among other things, the availability of suitable investment opportunities.
11 Difficulty in Valuing the Investment Portfolio of AIF
The General Partner values the investment portfolio of AIF from time to time based upon its best estimate of the value of each of the individual investments of AIF. There is typically no public market for the securities of the Portfolio Investments. Thus, portfolio valuation inherently is highly subjective and imprecise. In establishing the value of AIF’s investment portfolio, the General Partner may also consult with accounting firms, investment banks and other consulting firms when needed, to assist with the valuation of AIF’s investments. The value set by the General Partner may not reflect the price at which AIF could dispose of its interests in a particular private equity fund or co-investment at any given time.
This type of investment has substantial risk. Investors should make an investment only if you are prepared not to receive any return on your investment and to lose your investment in its entirety.