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FAIR OAKS INCOME LIMITED ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS
COMPANY OVERVIEW
Summary Information
Principal Activity
Fair Oaks Income Limited (the “Company”) was registered in
Guernsey under the Companies (Guernsey) Law, 2008 on 7
March 2014. The Company’s registration number is 58123 and
it is regulated by the Guernsey Financial Services Commission
as a registered closed-ended collective investment scheme
under The Registered Collective Investment Scheme Rules
2021. The Company began trading on the Specialist Fund
Segment (“SFS”) of the London Stock Exchange on 12 June
2014.
Reorganisation
On 19 April 2021, the Company announced the result of its
reorganisation proposal, being that 62,562,883 2017 Shares
had been elected for re-designation as Realisation Shares (the
“Realisation Shares”), representing 13.4% of the 2017 Shares
in issue, and 405,815,477 2017 Shares were redesignated as
2021 Shares (the “2021 Shares”), representing the balance of
86.6% of the 2017 Shares in issue (including 650,000 shares
held in Treasury). The Company makes its investments through
FOIF II LP (the “Master Fund II”) and FOMC III LP (the “Master
Fund III”), in both of which the Company is a limited partner (the
“Master Fund II” and the “Master Fund III” together the “Master
Funds”). The Master Fund II was registered in Guernsey on
24 February 2017 and the Master Fund III was registered in
Guernsey on 10 March 2021 under The Limited Partnerships
(Guernsey) Law, 1995. The purpose of the reorganisation was
to allow those Shareholders who wished to extend the life of
their investment in the Company beyond the planned end date
of the Master Fund II, to be able to do so by having their 2017
Shares re-designated as 2021 Shares, with such 2021 Shares
investing in the new Master Fund III, which has a planned end
date of 12 June 2028 and an investment objective and policy
substantially similar to that of the Master Fund II.
On 12 September 2022, the Company returned US$3,999,990
by way of a compulsory partial redemption of Realisation
Shares, which amounted to 6,984,442 Realisation Shares. At
31 December 2022, the Company has 55,578,441 Realisation
Shares (31 December 2021: 62,562,883 Realisation Shares)
and 402,709,500 2021 Shares (31 December 2021:
405,165,477 2021 Shares) in issue. The Realisation Shares
invest solely into the Master Fund II and the 2021 Shares invest
solely into the Master Fund III. At 31 December 2022, the
Company had direct holdings of 9.59% (31 December 2021:
9.59%) in the Master Fund II and 95.32% (31 December 2021:
100%) holding in Master Fund III, which in turn had a holding
of 62.21% (31 December 2021: 62.21%) in the Master Fund
II. Together, the Company held a direct and indirect holding of
68.89% (31 December 2021: 71.80%) in the Master Fund II.
The Master Funds
At 31 December 2022, the Master Fund II had six limited
partners, including Fair Oaks Founder II LP, a related entity.
During the year ended 31 December 2022, the Master Fund III
allowed one new limited partner to enter the partnership and
at 31 December 2022, the Master Fund III had three limited
partners, including Fair Oaks Founder VI LP. The General
Partner of the Master Fund II and Master Fund III is Fair Oaks
Income Fund (GP) Limited (the “General Partner” or “GP”).
Cycad and Wollemi
The Master Fund II is also invested into Cycad Investments
LP (“Cycad”). Cycad is a Limited Partnership registered in
the United States of America on 2 June 2017. Aligned with
the Company’s investment policy, Cycad also invests into
Collateralised Loan Obligations (“CLOs”). On 9 March 2021,
a new Guernsey limited partnership was established called
Wollemi Investments I LP (“Wollemi”). On 23 March 2021, the
Master Fund II transferred its investment in Cycad to Wollemi
in exchange for limited partnership interests in Wollemi. In
addition, since 2021, the Master Fund II also transferred its
investments in FOAKS 1X CLO, FOAKS 2X CLO, FOAKS 3X
CLO and FOAKS 4X CLO (the “Fair Oaks CLOs”) to Wollemi
in exchange for limited partnership interests in Wollemi. At
31 December 2022, the Master Fund II holds 100.00% (31
December 2021: 100%) of the commitment capital of Wollemi.
Founder Partners
Fair Oaks Founder II LP, a Guernsey limited partnership, has
been established to act as the Founder Limited Partner of
Master Fund II. Fair Oaks Founder VI LP, a Guernsey limited
partnership, has been established to act as the Founder
Limited Partner of Master Fund III.
Investment Objective and Policy
The investment objective of the Company is to generate
attractive, risk-adjusted returns, principally through income
distributions.
The investment policy of the Company is to invest (either
directly and/or indirectly through the Master Fund II and/
or Master Fund III) in US, UK and European CLOs or other
vehicles and structures which provide exposure to portfolios
consisting primarily of US and European floating-rate senior
secured loans and which may include non-recourse financing.