REG - Welkin China P.E. Ld - Intention to Float

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05/09/2022 08:15

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RNS Number : 2407Y  Welkin China Private Equity Limited  05 September 2022

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the Prospectus Regulation Rules of the Financial Conduct Authority or
otherwise and is not an offer of securities for sale in any jurisdiction.
Please see the section entitled "Important Notice" at the end of this
announcement.

Neither this announcement, nor anything contained herein, shall form the basis
of, or be relied upon in connection with, any offer or commitment whatsoever
in any jurisdiction. Investors should not subscribe for or purchase any
securities referred to in this announcement except on the basis of information
contained in the prospectus (the "Prospectus") proposed to be published by
Welkin China Private Equity Limited in connection with the admission
("Admission") of ordinary shares ("Ordinary Shares") to the premium listing
segment of the Official List of the Financial Conduct Authority (the "FCA")
and to trading on the premium segment of the main market of London Stock
Exchange plc (the "London Stock Exchange"). The Prospectus proposed to be
published by Welkin China Private Equity Limited will be made available for
inspection on Welkin China Private Equity Limited's website at
welkinchinape.com, subject to certain access restrictions, and will be made
available for viewing at the National Storage Mechanism at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)

 

WELKIN CHINA PRIVATE EQUITY LIMITED

("WCPE" or the "Company")

 

Intention to Float on the Main Market of the London Stock Exchange, Prospectus
to be published in the coming days

 

Welkin China Private Equity Limited today announces its intention to launch an
initial public offering ("IPO") on the Premium Segment of the Main Market of
the London Stock Exchange. The Company is targeting a raise of up to US$300
million and expects to publish its Prospectus in the coming days.

 

INTRODUCTION TO THE COMPANY

 

Welkin China Private Equity Limited is a newly established closed-ended
investment company and will be the first fund listed on the London Stock
Exchange dedicated to investing in unquoted Chinese companies. The Company
will offer public investors exposure to a broadly diversified portfolio of
Chinese private equity investments across sector, stage, maturity, and
manager, through a two-pronged investment strategy designed to capture both
market dislocation and long-term growth opportunities. WCPE will be targeting
an annualised NAV total return of at least 15 per cent. over the long-term.

 

The Company¡¯s investment manager, Welkin Capital Management (Asia) Limited
("Welkin" or the "Investment Manager"), is led by an experienced team with
deep knowledge of the Chinese private equity market and a proven track record,
delivering a compounded annualised return of 28 per cent. for all investments
in Chinese investee companies made across all Welkin Funds up until 31
December 2021.

 

INVESTMENT HIGHLIGHTS

 

Investing in the Company's Ordinary Shares will allow investors access to the
returns available from investing in unquoted Chinese companies with long-term
growth potential, an investment class that has traditionally been difficult to
access for individual investors.

 

Why Invest?

Strategic diversification: The Company will invest in a broadly diversified
portfolio of unquoted Chinese companies across different sectors and
investment horizons by taking a flexible and strategic approach to dynamically
capture both long-term growth opportunities and market dislocations.

Favourable market timing to achieve outsized returns: There has been a
valuation reset in Chinese companies. Welkin believes the growing market
dislocations present attractive investment opportunities for investors who
know and understand China¡¯s private equity market and who can effectively
perform due diligence on opportunities.

Proprietary deal flow: Welkin has strong access to local industry
relationships built on the enduring legacies of well-connected families in
China. These extensive networks help Welkin generate proprietary deals from
trusted referrals and directly access entrepreneurs and asset owners.

Robust pipeline of attractive opportunities: Due to significant deal flow
generated by Welkin's proprietary network, the Company has a large and
well-advanced pipeline of potential opportunities of up to US$500 million
across both Growth Investments and Tactical Investments.

A seeded portfolio with clear growth prospects: The Seed Assets provide
exposure to a diverse portfolio of 10 underlying Chinese companies with a
track record of delivering growth.

Liquidity and transparency: Investors in the Company's Ordinary Shares will be
able to access unquoted Chinese companies with long-term growth potential, an
investment class that has been difficult to access for individual investors,
but with the benefit of high governance standards, public transparency, and
the daily liquidity of the London Stock Exchange.

 

Proven Investment Manager

Local experts with an in-depth knowledge of China: Welkin was founded in 2009
by members of well-connected families that have founded or co-founded, built
and/or operated leading businesses in China since the beginning of the 20th
century, giving Welkin access to unique local networks and industry expertise.
Today, Welkin manages approximately US$500 million for global institutional
investors including sovereigns and pension schemes.

A track record of success: Welkin has invested across various business and
economic cycles. The compounded annualised return of all investments in
Chinese investee companies made across all Welkin Funds is 28 per cent. up
until 31 December 2021.

Strategic value creation capability: Welkin can use its strong local networks
and industry expertise to create strategic value for both portfolio companies
and externally managed private equity funds. Welkin believes that China's
private equity market contains many players that value capital partners that
can add strategic value. Welkin's value creation ability helps it source, grow
and realise investments in China.

A proven and disciplined investment process: Throughout its 13-year history,
Welkin has maintained a consistent investment approach which focuses on
fundamental value and pricing discipline, avoids chasing speculative deals and
has a track record of adding value to portfolio companies. The past
performance of Welkin and its history is, however, no indication of its future
performance or the future performance of the Company.

 

Attractive Market Opportunity

A well-established US$1.8 trillion private equity market: China has a large
and well-established private equity market, with a vast number of investment
opportunities for the Company. Through independent research, the Investment
Manager believes that the market size in terms of assets under management is
at least US$1.8 trillion.

Growing domestic exit options: In view of a robust domestic IPO market and
increasing M&A activity in China, Welkin believes there are a wide range
of executable liquidity options for private equity investments in Chinese
companies, in particular, smaller-sized companies.

Exposure to the world's largest consumer market and industrial base: China has
the largest consumer market and industrial base in the world. China's economy
has been the single largest contributor to global GDP growth over the last 30
years, and according to the IMF, this position is expected to continue, with
China contributing more than one-fifth of the total increase in the world's
GDP in the five years through 2026.

Low correlation to the global economic environment: The largely domestic and
niche market focus of the Chinese companies in which the Company seeks to
invest means their business performance and value are often less impacted by
geopolitics and global macroeconomic changes. Welkin believes that investments
in domestic and niche market focused private companies in China that generate
free cash flows in the near to medium term and are lowly leveraged, may
exhibit lower volatility in comparison to many other asset classes.

Exposure to future domestic champions: Welkin believes that innovation driven
companies will be the engines of China¡¯s economic growth in the coming
decades. The Company will adopt a thematic approach to gain exposure to
emerging champions that focus on innovation to produce world-class products
and solutions and are expected to benefit from changes in government policy
that encourage innovation and capital access.

 

 

INVESTMENT POLICY

 

WCPE will leverage the Investment Manager's deep local networks, institutional
platform, and extensive industry relationships to construct a diversified
portfolio of privately negotiated investments in unquoted Chinese companies.
Welkin will focus on Growth and Tactical investment strategies to build a
diversified portfolio with a balanced range of investment horizons that Welkin
believes can generate consistent cash realisations and superior risk-adjusted
returns in all market environments.

Growth Investments: Investments in growing Chinese companies that need to
raise capital for expansion, and which the Investment Manager expects will
generate long term capital growth. These investments will primarily be made
through funds managed by Welkin and adjacent co-investments.

Tactical Investments: Investments in individual companies, portfolios of
assets, externally managed funds and co-investments, which the Investment
Manager expects will have a relatively shorter duration to realisation. For
the period of 12 to 18 months from Admission, the Company will focus primarily
on secondary opportunities in externally managed private equity funds.

 

SEED ASSETS

 

WCPE will acquire:

a)   interests in Welkin's existing private fund ("Welkin Fund II") worth
US$15 million from an affiliate of the Investment Manager (the "Welkin
Affiliate") in exchange for the issue of 15 million Ordinary Shares in WCPE at
US$1.00 per Ordinary Share and subject to a 60-month lock-up; and

b)   interests in the 10 underlying portfolio companies held by Welkin Fund
II worth in aggregate US$15 million in exchange for cash within 30 days of
Admission, subject to the consent of the limited partner advisory committee of
Welkin Fund II (together, the "Seed Assets").

 

The Seed Assets constitute a diverse range of unquoted Chinese companies with
potential to be the new generation of domestic champions and that are aligned
with secular themes such as digital transformation, industrial innovation, and
consumption.

 

The Prospectus will contain an independent valuation opinion report from BDO
LLP on the reasonableness of the proposed transfer price of the Seed Assets.

 

Any additional details in relation to the Placing will be disclosed in the
Prospectus, which is expected to be published in the coming days.

 

Ivan Chu, Chairman of Welkin China Private Equity Limited commented:

"Welkin China Private Equity will be the first investment company focused on
Chinese private equity to be listed on the London Stock Exchange. This gives
public investors diversified access to private market investments in China,
through funds managed by Welkin and selected external managers.

 

"The Welkin team has deep local market expertise, a strong track-record,
on-the-ground presence, and a good understanding of the Chinese business and
policy environment. We are excited to offer investors exposure to an asset
class which we believe will provide attractive returns with the added benefit
of market-driven liquidity and a high level of transparency."

 

Johnny Kong, CEO and co-founder of Welkin Capital Management (Asia) Limited,
added:

"We believe China's economy is undergoing a structural shift over the next
decade, moving away from volume-fuelled expansion to productivity-led growth.
Changes in government policies over the past year reflect this shift. While
there has been a period of immense volatility in the public markets, secular
growth drivers continue to provide support for long-term investment in the
next stage of China's economic transformation.

 

"We see valuations of private equity assets in China reaching attractive
levels. At the same time, domestic equity capital markets and M&A activity
are strong, so the current environment is opportune for dealmaking. We believe
China¡¯s private market can provide a vital element of diversification to
any investment portfolio, and we are looking forward with confidence to
creating value for shareholders."

 

Capitalised terms used in this announcement shall have the meanings given to
them in the Prospectus, unless otherwise defined in this announcement.

 

For further information:

 

Welkin China Private Equity (Via SEC Newgate)

Ivan Chu, Chairman

Welkin Capital Management (Asia) Limited (via SEC Newgate)

Jonathan Lau, Managing Director

 

SEC Newgate UK

Clotilde Gros / Bob Huxford / Jessica Hodson Walker / Molly Gretton

welkincapital@secnewgate.co.uk welkincapital@secnewgate.co.uk
(mailto:welkincapital@secnewgate.co.uk) or +44 20 3757 6767

 

Deutsche Bank (Sole Sponsor and Sole Global Coordinator)

Jeffrey Wong / Mark Hankinson / Neil Coleman

+44 20 754 58000 / +852 2203 8888

 

CLSA Limited (Joint Bookrunner)

Michael Di / Rachel Sun

+ 852 2600 7744 / +852 2600 7820

 

finnCap Limited (Joint Bookrunner)

 Mark Whitfeld / Pauline Tribe (Sales)

+44 20 3772 4697 / +44 20 7220 0517

Monica Tepes (Research)

+44 20 3772 4698

William Marle (Corporate Finance)

+44 20 7220 0557

 

Huatai Financial Holdings (Hong Kong) Limited (Joint Bookrunner)

Ningwa Lau / Andrew Liao

+852 3465 3851 / +852 3658 6117

 

ADDITIONAL INFORMATION:

THE INVESTMENT MANAGER

Johnny Kong has been a Managing Director, the CEO and a co-founder of the
Investment Manager since 2009. He has over 17 years of private investment and
capital markets experience in the region. Before co-founding the Investment
Manager, he led private investments at the Kong family office and worked in
the investment banking division of Goldman Sachs. He is a member of the
Chinese People's Political Consultative Conference Shanghai Committee, China
Overseas Friendship Association, and China Young Entrepreneurs Association. He
also co-founded the Centum Charitas Foundation.

Christopher Fong has been a Managing Director, the COO and a co-founder of the
Investment Manager since 2009. He has over 17 years of private and public
investment and capital markets experience in the region. Before co-founding
the Investment Manager, he worked as a portfolio analyst at SAC Capital and in
the investment banking division of Evercore Partners.

Justino Liang has been a Managing Director and a co-founder of the Investment
Manager since 2009. He has over 17 years of investment and capital markets
experience in the region. Before co-founding the Investment Manager, he led
private investments at the Liang family office and worked in the business
development and risk management departments of GE Capital in Hong Kong.

Samuel Chao has been a Managing Director of the Investment Manager since 2021.
He has over 14 years of private investment, corporate management, business
development and capital markets experience in the region. Before joining the
Investment Manager, he led business development and the IPO of Novel Optics as
an Executive Director.

Jonathan Lau has been a Managing Director of the Investment Manager since
2022. He has over 16 years of private equity, real estate, and corporate
finance experience in the region. Before joining the Investment Manager, he
was a Principal of Petiole Asset Management and a Vice President of Tiger
Group Investments.

Clarence Ling has been a Managing Director of the Investment Manager since
2022. He has over 17 years of private investment, entrepreneurship, and real
estate experience in the region. Before joining the Investment Manager, he was
a co-founder of Ztore, a leading online supermarket platform in Hong Kong and
was recognized as Ernst & Young's Entrepreneur of the Year China in 2018.
He serves as Chairman of the Y.Elites Association and a Committee Member of
the Chinese General Chamber of Commerce.

 

 

THE BOARD

Ivan Chu: Ivan Chu is former Chairman of John Swire & Sons(China) Limited
and former Chief Executive of Cathay Pacific. Mr Chu is a member of the
Chinese People's Political Consultative Conference Shanghai Committee and a
member of the Trade and Industry Advisory Board of the Government of the Hong
Kong Special Administrative Region, amongst holding other roles.

Hani Abuali: Hani Abuali has almost 30 years of experience in investment and
finance. He is a private investor and former Chief Executive Officer of
Petiole Asset Management AG, a Zurich based asset management firm. He was
previously Head of Asia for Petiole Asset Management (Hong Kong) Limited based
in Hong Kong. Hani started his career in finance in New York as an Oil &
Gas research analyst with Donaldson, Lufkin & Jenrette. Hani is a member
of the Board of Trustees of King's Academy, Jordan.

Gary Gould: Gary Gould has a wealth of experience from more than 30 years
advising listed investment companies and financial institutions. He was
corporate head of the listed investment companies team at Jefferies
International for a period of 8 years until 2020 and held a similar role for 7
years at the Royal Bank of Scotland, which he joined in 2001.

Susan Gordon Hardy: Susan Gordon Hardy has over 25 years' experience as a
financial services lawyer advising asset managers and investment companies in
Asia. She is a former Partner of the international law firm, Deacons. Having
qualified as a solicitor with Linklaters in London, she spent most of her
legal career in Hong Kong. Now resident in Guernsey, Susan holds various
tribunal and other public appointments. She also serves as a pension scheme
trustee, and Vice Chair of the governing body of the University of Stirling,
in Scotland.

Teresa Teague: Teresa Teague is a co-founder/partner of TTB and has over 30
years' experience in the financial services industry in US, Europe and Asia.
Teresa is a former Partner at Goldman Sachs where she spent 20 years working
in a variety of capacities including Corporate Finance, Leveraged Finance,
Mergers & Acquisition Advisory, and most recently she was the Co-Head of
the Consumer and TMT Groups in Asia Ex Japan. Teresa has an M.B.A from Harvard
Business School. She is also a director of Epic Acquisition Corp and
non-executive director and Chair of the Audit Committee of Primavera Capital
Acquisition Corp.

 

 

Important Notices

This is a financial promotion and is not intended to be investment advice. The
content of this announcement, which has been prepared by and is the sole
responsibility of the Company, has been approved by Deutsche Bank AG, London
Branch solely for the purposes of section 21(2)(b) of the Financial Services
and Markets Act 2000.

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

The merits or suitability of any securities must be independently determined
by each investor on the basis of its own investigation and evaluation of the
Company. Any such determination should involve, among other things, an
assessment of the legal, tax, accounting, regulatory, financial, credit and
other related aspects of the securities.

This announcement does not constitute or form a part of any offer to sell or
issue, or any solicitation of an offer to purchase, subscribe for or otherwise
acquire, any securities by any US Persons (as defined below) or in the United
States or any jurisdiction. Neither this announcement nor any part of it shall
form the basis of or be relied on in connection with or act as an inducement
to enter into any contract or commitment whatsoever.

The information contained in this announcement is for background purposes only
and does not purport to be full or complete and may not be used in making any
investment decision. This announcement does not contain sufficient information
to support an investment decision and investors should ensure that they obtain
all available relevant information before making any investment. This
announcement does not constitute and may not be construed as any offer to sell
or issue, or any solicitation of an offer to purchase, subscribe for or
otherwise acquire, investments of any description, nor as a recommendation
regarding the possible offering or the provision of investment advice by any
party. No information in this announcement should be construed as providing
financial, investment or other professional advice and each prospective
investor should consult its own legal, business, tax and other advisers in
evaluating the investment opportunity. No reliance may be placed by any person
for any purposes whatsoever on this announcement, or its accuracy, fairness or
completeness.

Past performance of similar instruments is not a reliable indicator of future
results of the Company.

Nothing in this announcement constitutes investment advice and any
recommendations that may be contained herein have not been based upon a
consideration of the investment objectives, financial situation or particular
needs of any specific recipient.

YOUR CAPITAL IS AT RISK. THE VALUE OF YOUR INVESTMENT CAN GO DOWN AS WELL AS
UP, SO YOU COULD GET BACK LESS THAN YOU INVESTED.

The information in this announcement may include forward-looking statements,
which are based on the current expectations and projections about future
events and in certain cases can be identified by the use of terms such as
"may", "will", "should", "expect", "anticipate", "project", "estimate",
"intend", "continue", "target", "believe" (or the negatives thereon) or other
variations thereon or comparable terminology. These forward-looking
statements, as well as those included in any related materials, are subject to
risks, uncertainties and assumptions about the Company, including, among other
things, the development of its business, trends in its operating industry, and
future capital expenditures and acquisitions. In light of these risks,
uncertainties and assumptions, the events in the forward-looking statements
may not occur.

The information and opinions contained in this announcement are provided as at
the date of this announcement and are subject to change and no representation
or warranty, express or implied, is or will be made in relation to the
accuracy or completeness of the information contained herein and no
responsibility, obligation or liability or duty (whether direct or indirect,
in contract, tort or otherwise) is or will be accepted by the Company or the
Investment Manager or any of their respective affiliates or by any of their
respective officers, employees or agents in relation to it. Each of the
Company, the Investment Manager, Deutsche Bank AG, London Branch ("Deutsche
Bank"), CLSA Limited ("CLSA"), finnCap Limited ("finnCap") and Huatai
Financial Holdings (Hong Kong) Limited ("Huatai" and, together with Deutsche
Bank, CLSA and finnCap, the "Joint Bookrunners"), their respective affiliates
and their and their affiliates' respective directors, officers, employees,
advisors and agents expressly disclaim any obligation or undertaking to
update, review or revise any forward looking statement contained in this
announcement whether as a result of new information, future developments or
otherwise, and none of them accepts any responsibility or liability whatsoever
for or makes any representation or warranty, express or implied, in relation
to the truth, fairness, reasonableness, adequacy, accuracy or completeness of
the information, statements or opinions, whichever their source, contained in
this announcement (or whether any information has been omitted from the
announcement) or any oral information provided in connection herewith, or any
data it generates and accepts no responsibility, obligation or liability
(whether direct or indirect, in contract or otherwise) in relation to any of
such information.

Each of the Company, the Investment Manager, the Joint Bookrunners, their
respective affiliates and their and their affiliates' respective directors,
officers, employees, advisors and agents expressly disclaim any and all
liability which may be based on this announcement and any errors therein or
omissions therefrom.

Deutsche Bank AG is a joint stock corporation incorporated with limited
liability in the Federal Republic of Germany, with its head office in
Frankfurt am Main where it is registered in the Commercial Register of the
District Court under number HRB 30 000. Deutsche Bank AG is authorised under
German banking law. The London branch of Deutsche Bank AG is registered in the
register of the companies for England and Wales (registration number BR000005)
with its registered address and principal place of business at Winchester
House, 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank AG is
authorised and regulated by the European Central Bank and the German Federal
Financial Supervisory Authority (BaFin). With respect to activities undertaken
in the UK, Deutsche Bank AG is authorised by the Prudential Regulation
Authority with deemed variation of permission. It is subject to regulation by
the Financial Conduct Authority and limited regulation by the Prudential
Regulation Authority. Details about the Temporary Permissions Regime, which
allows EEA-based firms to operate in the UK for a limited period while seeking
authorisation, are available on the Financial Conduct Authority's website.

finnCap Limited is authorised and regulated in the United Kingdom by the
Financial Conduct Authority and each of Huatai Financial Holdings (Hong Kong)
Limited and CLSA Limited is licensed by the Securities and Futures Commission
of Hong Kong.

Each of the Joint Bookrunners is acting exclusively for the Company in
connection with the matters referred to in this announcement, and will not be
responsible to any other person for providing the protections afforded to
customers of any of the Joint Bookrunners or advising any other person in
connection with the matters referred to in this announcement.

The date of Admission may be influenced by things such as market conditions.
There is no guarantee that Admission will occur and you should not base your
financial decisions on the Company's intentions in relation to Admission at
this stage. Acquiring investments to which this announcement relates may
expose an investor to a significant risk of losing the entire amount invested.
Persons considering making such investments should consult an authorised
person specialising in advising on such investments. This announcement does
not constitute a recommendation concerning the offering of shares in the
Company. Potential investors should consult a professional advisor as to the
suitability of the acquiring shares in the Company for the person concerned.

No representation or warranty is given to the achievement or reasonableness of
future projections, management targets, estimates, prospects or returns, if
any. Any views contained herein are based on financial, economic, market and
other conditions prevailing as at the date of this announcement. The
information contained in this announcement will not be updated. The target
gross proceeds is a target only and should not be taken as an indication of
the gross proceeds which will be raised.

Neither this announcement nor any part or copy of it may be taken or
transmitted into the United States, Australia, Canada, South Africa,  Japan
or any member state of the EEA (other than any member state of the EEA where
the securities may be lawfully marketed), or distributed directly or
indirectly to US Persons (as defined below) or in the United States,
Australia, Canada, South Africa or Japan or any member state of the EEA (other
than any member state of the EEA where the securities may be lawfully
marketed). Any failure to comply with this restriction may constitute a
violation of applicable law. This announcement does not constitute an offer of
securities to the public in the United States, Australia, Canada, South
Africa, Japan, any member state of the EEA or in any other jurisdiction.
Persons into whose possession this announcement comes should observe all
relevant restrictions. There will be no public offer of the shares in the
United States, Australia, Canada, South Africa, Japan, any member state of the
EEA or any other jurisdiction.

The Company has not been and will not be registered under the United States
Investment Company Act of 1940, as amended (the "Investment Company Act") and
as such investors are not and will not be entitled to the benefits of the
Investment Company Act. The Ordinary Shares have not been and will not be
registered under the United States Securities Act of 1933, as amended (the
"Securities Act"), or with any securities regulatory authority of any state or
other jurisdiction of the United States and may not be offered, sold, resold,
pledged, delivered, assigned or otherwise transferred, directly or indirectly,
into or within the United States or to, or for the account or benefit of, any
"U.S. persons" as defined in Regulation S under the Securities Act ("US
Persons"), except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and in
compliance with any applicable securities laws of any state or other
jurisdiction of the United States and in a manner which would not require the
Company to register under the Investment Company Act. Offers and sales of the
shares are being made only outside the United States in "offshore
transactions" to non-US Persons pursuant to Regulation S under the Securities
Act. There has been and will be no public offering of the Ordinary Shares in
the United States.

Neither the United States Securities and Exchange Commission (the "SEC") nor
any securities commission of any state or other jurisdiction of the United
States has approved or disapproved this announcement or the issue of the
shares or passed upon or endorsed the merits of the offering of the Ordinary
Shares or the adequacy or accuracy of this announcement. Any representation to
the contrary is a criminal offence in the United States.

The Ordinary Shares may not be acquired by: (i) investors using assets of: (A)
an "employee benefit plan" as defined in Section 3(3) of the United States
Employee Retirement Income Security Act of 1974, as amended ("ERISA") that is
subject to Title I of ERISA; (B) a "plan" as defined in Section 4975 of the
United States Internal Revenue Code of 1986, as amended (the "U.S. Tax Code"),
including an individual retirement account or other arrangement that is
subject to Section 4975 of the U.S. Tax Code; or (C) an entity whose
underlying assets are considered to include "plan assets "by reason of
investment by an "employee benefit plan" or "plan" described in preceding
clause (A) or (B) in such entity pursuant to the U.S. Plan Assets Regulations;
or (ii) a governmental, church, non-U.S. or other employee benefit plan that
is subject to any federal, state, local or non-U.S. law that is substantially
similar to the provisions of Title I of ERISA or Section 4975 of the U.S. Tax
Code (collectively, "Benefit Plan Investors") unless its purchase, holding,
and disposition of the Ordinary Shares will not constitute or result in a
non-exempt violation of any such substantially similar law.

In addition, the Ordinary Shares are subject to restrictions on
transferability and resale in certain jurisdictions and may not be transferred
or resold except as permitted under applicable securities laws and regulations
and under the articles of incorporation of the Company. Any failure to comply
with these restrictions may constitute a violation of the securities laws of
any such jurisdictions.

The issue of Ordinary Shares in the Company is not being made available to any
investor domiciled in any EEA Member State unless: (i) JTC Global AIFM
Solutions Limited (the "AIFM") has confirmed that it has made the relevant
notifications or applications in that EEA Member State and is lawfully able to
market shares into that EEA Member State; or (ii) such investors have received
any materials in connection with the offering of Ordinary Shares on the basis
of an enquiry made on the investor's own initiative.

INFORMATION TO DISTRIBUTORS

Target Market Assessment

Solely for the purposes of the product governance requirements contained
within the FCA¡¯s PROD3 Rules on product governance within the FCA Handbook
(the "FCA PROD3 Rules") and disclaiming all and any liability, whether arising
in tort, contract or otherwise, which any "manufacturer" (for the purposes of
the FCA PROD3 Rules) may otherwise have with respect thereto, the Ordinary
Shares have been subject to a product approval process, which has determined
that such Ordinary Shares are: (i) compatible with an end target market of
retail investors and investors who meet the criteria of professional clients
and eligible counterparties, each as defined in FCA Glossary; and (ii)
eligible for distribution through all distribution channels as are permitted
by PROD3 (the "Target Market Assessment").

Notwithstanding the Target Market Assessment, distributors should note that:
the price of the Ordinary Shares may decline and investors could lose all or
part of their investment; the Ordinary Shares offer no guaranteed income and
no capital protection; and an investment in the Ordinary Shares is compatible
only with investors who do not need a guaranteed income or capital protection,
who (either alone or in conjunction with an appropriate financial or other
adviser) are capable of evaluating the merits and risks of such an investment
and who have sufficient resources to be able to bear any losses that may
result therefrom. The Target Market Assessment is without prejudice to the
requirements of any contractual, legal or regulatory selling restrictions.
Furthermore, it is noted that, notwithstanding the Target Market Assessment,
the Joint Bookrunners will only procure investors who meet the criteria of
professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute:
(i) an assessment of suitability or appropriateness for the purposes of the
FCA PROD3 Rules; or (ii) a recommendation to any investor or group of
investors to invest in, or purchase, or take any other action whatsoever with
respect to the Ordinary Shares.

Each distributor is responsible for undertaking its own target market
assessment in respect of the shares and determining appropriate distribution
channels.

PRIIPs Regulation

In accordance with the UK version of the EU PRIIPs Regulation (1286/2014)
which is part of UK law by virtue of the European Union (Withdrawal) Act 2018,
as amended and supplemented from time to time (the "UK PRIIPS Laws"), a key
information document in respect of an investment in the Ordinary Shares will
be prepared by the Company and made available to investors at
www.welkinchinape.com

Accordingly, if you are distributing Ordinary Shares, it is your
responsibility to ensure that the key information document is provided to any
relevant clients.

 

 

 

 

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