This document has been prepared by Carrhae Capital LLP (“Carrhae”) solely for the purpose of providing background information to the person to whom it has been delivered. The information contained herein is strictly confidential and is only for the use of the person to whom it is sent and/or who attends any associated presentation. The information contained herein may not be reproduced, distributed or published, in whole or in part, by any recipient to any third parties without the prior written consent of Carrhae. Notwithstanding the foregoing, such person (and each employee, representative or other agent of such person) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of (i) Carrhae Capital Fund Ltd, Carrhae Capital Fund LP and Carrhae Capital Master Fund Ltd (collectively, the “Fund”) and (ii) any of its transactions, and all materials of any kind (including opinions or other tax analyses) that are provided to the recipient relating to such tax treatment and tax structure, it being understood that “tax treatment” and “tax structure” do not include the name or the identifying information of (i) the Fund or (ii) the parties to a transaction.
The summary description included herein and any other materials provided to you are intended only for information purposes and convenient reference and are not intended to be complete. This information is not intended to provide and should not be relied upon for accounting, legal or tax advice or investment recommendations. You should consult your tax, legal, accounting, financial or other advisors about the issues discussed herein. This document is not intended as an offer or solicitation with respect to the purchase or sale of any security. No offer or solicitation may be made prior to the delivery of a definitive private placement offering memorandum (the “Memorandum”). PROSPECTIVE INVESTORS SHOULD REVIEW THE MEMORANDUM, INCLUDING THE RISK FACTORS AND CONFLICTS OF INTEREST IN THE MEMORANDUM, BEFORE MAKING A DECISION TO INVEST. In addition, prospective investors should rely only on the Memorandum in making a decision to invest, although certain descriptions contained herein may be more detailed than those contained in the Memorandum. This presentation contains simplified representations of complex processes. Carrhae's actual investment and management processes may differ materially from what is stated herein.
Investments in the Fund are speculative and involve a high degree of risk, and therefore are only suitable for sophisticated investors for which an investment does not constitute a complete investment program and which fully understand and are willing to assume the risks involved in the Fund. The Fund may utilise leverage, which can make performance volatile. There is no secondary market for interests in the Fund and none is expected to develop. There are also restrictions on transferring interests and redeeming interests from the Fund. No guarantee or representation is made that the Fund’s investment program, including, without limitation, the Fund’s investment objectives, diversification strategies, or risk monitoring goals, will be successful, and investment results may vary substantially over time. Investment losses may occur from time to time. Nothing herein is intended to imply that the Fund’s investment methodology may be considered “conservative”, “safe”, “risk free” or “risk averse”. PAST PERFORMANCE IS NOT INDICATIVE NOR A GUARANTEE OF FUTURE RESULTS. NO ASSURANCE CAN BE MADE THAT PROFITS WILL BE ACHIEVED OR THAT SUBSTANTIAL LOSSES WILL NOT BE INCURRED.
The distribution of this document may be restricted in certain jurisdictions. This document is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation, and it is the responsibility of any person or persons in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. In particular, this document is not intended as marketing of any fund in the United Kingdom or any member state of the European Economic Area (“EEA”) within the meaning of the Directive 2011/61/EU on Alternative Investment Fund Managers.
This document is not intended for distribution in the United Kingdom or the EEA to any person categorised as (i) a “retail client” (as defined in point (11) of Article 4(1) of MiFID II); or (ii) a “customer” (within the meaning of Directive 2002/92/EC on Insurance Mediation), where such customer does not qualify as a “professional client” (as defined in point (10) of Article 4(1) of MiFID II). “MiFID II” means Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU, including, where the context so requires, any delegated acts and regulations implementing legislation made thereunder which applies in United Kingdom.
Further, this document is not intended for distribution in the United States or for the account of US persons (as defined in Regulation S under the US Securities Act of 1933, as amended (the “Securities Act”)) except to persons who are “qualified purchasers” (as defined in the US Investment Company Act of 1940, as amended (the “Company Act”)) and “accredited investors” (as defined in Rule 501(a) under the Securities Act). Carrhae Capital LLP is registered with the US Securities and Exchange Commission as an investment adviser. Registration as an investment adviser does not imply any level of skill or training. The Fund is not, and will not be, registered under the Securities Act, the Company Act or the securities laws of any of the states of the United States and interests therein may not be offered, sold or delivered directly or indirectly into the United States, or to or for the account or benefit of any US person, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of such securities laws.
In the United Kingdom, this document is only available to persons who are, as applicable: (i) investment professionals within the meaning of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (“FP Order”) or Article 14 of the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001
(the “PCIS Order”); (ii) high net worth companies and certain other entities falling within Article 49 of the FP Order or Article 22 of the PCIS Order; or (iii) any other persons to whom such communication may lawfully be made. It must not be acted, or relied, upon by any other persons. The Fund has not been authorised or recognised by the Financial Conduct Authority and investors will not have the benefit of the Financial Services Compensation Scheme or other protections available under the UK regulatory system. Recipients should also be aware that Carrhae is not acting for, or advising, them and is not responsible for providing them with the protections available under the UK regulatory system.
Any financial indicators or benchmarks shown are for illustrative and/or comparative purposes only, may not be available for direct investment, are unmanaged, assume reinvestment of income, and have limitations when used for comparison or other purposes because they may have volatility, credit, or other material characteristics (such as number and types of securities or instruments) that are different from the Fund. A number of indices (each an “Index”) are referenced herein. Each Index is presented because Carrhae feels that it serves as a useful point of comparison with aspects of the Fund’s portfolio management and composition. The Fund’s portfolio will not replicate the Index and no guarantee is given that performance will match the Index; it is not possible to invest in any index. There are significant differences between the Fund’s investments and the Index. For instance, the Fund may use short sales and leverage and may invest in securities that have a greater degree of risk and volatility, as well as less liquidity, than those securities contained in the Index. Moreover, the Index is not subject to any of the management fees or expenses that the Fund must pay. It should not be assumed that the Fund will invest in any specific securities that comprise the Index, nor should it be understood to mean that there is a correlation between the Fund’s returns and the Index’s performance. The MSCI Emerging Markets and MSCI World Index is a market-capitalisation weighted index of the largest companies in Emerging Markets and Global Markets respectively. These are the most widely used index to benchmark active equity managers in Emerging Markets and Global Markets. For further information on these indices please visit (https://www.msci.com/our-solutions/indexes/emerging-markets and https://www.msci.com/our-solutions/indexes/developed-markets). The HFRX Equity Hedge Index is the most widely used index to compare equity long-short managers. For further information on this index please visit (https://www.hfr.com/hfrx-indices-index-descriptions).
Part of the track record and past performance information set out in this document is unaudited. The information contained in this document, including data sourced from third parties, has not been verified independently . No reliance may be placed for any purpose on the information and opinions contained in this document or their accuracy or completeness. Carrhae believes the information or opinions contained in this document to be reliable but does not warrant its accuracy or completeness and Carrhae accepts no liability for the accuracy and completeness of any such information. The estimates, investment strategies, and views expressed in this document are based upon a subjective assessment of current market conditions and/or data and information provided by unaffiliated third parties and is subject to change without notice. Additionally, there is no obligation on Carrhae to update, modify or amend the information contained in this document or to otherwise notify a reader in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. Carrhae may provide you with further data or material but makes no representation that such further data or material will be calculated or produced on the same basis, or in the same format, as this material.
The net performance results set forth herein (i) represent the return of a hypothetical limited partner who invested in the Class A1 Share Class limited partnership interests of the Carrhae Capital Fund Ltd (i.e., the highest fee-paying class currently being offered by the Funds) on 12 December 2011, unless otherwise specified, (ii) include the reinvestment of dividends, interest and other earnings, (iii) are calculated net of all expenses, management fees and incentive allocations, if any, that would apply to a full fee-paying limited partner invested in the Class A1 Share Class limited partnership interests of the Carrhae Capital Fund Ltd, (iv) assume that such hypothetical limited partner participates in the allocation of “new issues” as defined in Rule 5130 of FINRA, and (v) include all designated investments, if any. The gross performance results set forth herein (i) are a composite of the returns of all long and short assets of the Master Fund and do not represent the returns of any individual investor in the Funds, (ii) include the reinvestment of dividends, interest and other earnings, and (iii) are calculated net of all applicable investment-level expenses but gross of all applicable fund-level expenses, management fees and incentive allocations, if any, which, when deducted, will materially lower performance. An individual investor’s actual return may vary from the performance results presented above based upon, among other factors, the timing of investments and withdrawals/redemptions, differing fees/allocations and expenses, and an investor’s participation in, or exclusion from, certain investments, including new issues and designated investments. Because the Carrhae Capital Fund Ltd and Carrhae Capital Fund LP both invest through the Master Fund, the returns of the Carrhae Capital Fund Ltd are similar to the returns of the Carrhae Capital Fund LP, though differences may exist due to, among other factors, legal, regulatory and tax considerations, and differences in expenses and expense ratios. Results may not have been audited or realized and should not be relied upon as such. Past performance is not indicative of, and not a guarantee of, future results.
Risk Factors Summary
An investment in the Fund will entail substantial risks, including, but not limited to, those listed below, and a prospective investor should carefully consider the following summary of certain risk factors below and carefully consider the section of the Fund’s Confidential Private Placement Memorandum entitled “Certain Risk Factors,” in determining whether an investment in the Fund is suitable:
Competition; Availability of Investment Strategies. The success of the Fund’s investment activities will depend on the Carrhae’s ability to identify investment opportunities as well as to assess the import of news and events that may affect the financial markets. Identification and exploitation of the investment strategies to be pursued by the Fund involves a high degree of uncertainty. No assurance can be given that Carrhae will be able to locate suitable investment opportunities in which to deploy all of the Fund’s assets or to exploit discrepancies in the securities and derivatives markets.
No Material Limitation on Strategies. While it is Carrhae’s current intention to invest a substantial portion of the Fund’s assets in the strategies described in the Fund’s Confidential Private Placement Memorandum, the Fund will be permitted to opportunistically implement whatever strategies or discretionary approaches Carrhae believes from time to time may be best suited to prevailing market conditions. There can be no assurance that Carrhae will be successful in applying any strategy or discretionary approach to the Fund’s trading.
General Risks of Investing in Securities. Any investment in securities carries certain market risks. An investment in the Fund is highly speculative and involves a high degree of risk due to the nature of the Fund’s investments and the investment strategies and trading strategies to be employed. An investment in the Fund should not in itself be considered a balanced investment program. Investors should be able to withstand the loss of their entire investment.
All Investments in Securities Risk the Loss of Capital. No guarantee or representation is made that the Fund’s investment program will be successful. The investment program will involve, without limitation, risks associated with possible limited diversification, leverage, volatility, tracking risks in hedged positions, credit deterioration or default risks, systems risks and other risks inherent in the Fund’s activities. Certain investment techniques of the Fund can, in certain circumstances, magnify the impact of adverse market moves to which the Fund may be subject. In addition, the Fund’s investment in financial instruments may be materially affected by conditions in the financial markets and overall economic conditions occurring globally and in particular countries or markets where the Fund may invest its assets.
Emerging Market Investments. The Fund may invest in securities of companies located in emerging countries or issued by the governments of such countries. Investing in such securities involves certain considerations not usually associated with investing in securities of companies located in developed countries or issued by the government of such countries, including security and economic considerations, such as greater risks of expropriation, confiscatory taxation, imposition of withholding or other taxes on dividends, interest, capital gains, other income or gross sale or disposition proceeds, limitations on the removal of funds, nationalization and general social, political and economic instability; the small size of the securities markets in such countries and the low volume of trading, resulting in potential lack of liquidity and in price volatility; fluctuations in the rate of exchange between currencies and costs associated with currency conversion; certain government policies that may restrict the Fund’s investment opportunities; and problems that may arise in connection with the clearance and settlement of trades. There is also less regulation, generally, of the securities markets in emerging countries than there is in more developed countries.
Leverage and Borrowing. The use of leverage will allow the Fund to make additional investments, thereby increasing its exposure to assets, such that its total assets may be greater than its capital. However, leverage will also magnify the volatility of changes in the value of the Fund’s portfolio. The effect of the use of leverage by the Fund in a market that moves adversely to its investments could result in substantial losses to the Fund, which would be greater than if the Fund were not leveraged.
Short-selling. Short-selling involves selling securities which are not owned by the short seller, and borrowing them for delivery to the purchaser, with an obligation to replace the borrowed securities at a later date. Short-selling allows the seller to profit from a decline in market price to the extent such decline exceeds the transaction costs and the costs of borrowing the securities. The extent to which the Fund engages in short sales will depend upon Carrhae’s investment strategy and opportunities. A short sale creates the risk of a theoretically unlimited loss, in that the price of the underlying security could theoretically increase without limit, thus increasing the cost to the Fund of buying those securities to cover the short position.
THIS GENERAL INVESTMENT FUND RISK DISCLOSURE IS NOT COMPLETE. THE ABOVE SUMMARY IS NOT A COMPLETE LIST OF THE RISKS AND OTHER IMPORTANT DISCLOSURES INVOLVED IN INVESTING IN THE FUND
