BIF Amended Statement of Investment Policy and Objectives

BIF Amended Statement of Investment Policy and Objectives Document


Booster Investment Management Limited, in its capacity as manager of the Booster Innovation Fund,
advises the release of an updated Statement of Investment Policy and Objectives (‘SIPO’), effective 19
June 2024.

The SIPO changes were of a minor administrative nature. An updated version of the SIPO has been
registered and a tracked version is attached.

For further information regarding the Booster Innovation Fund visit https://www.booster.co.nz/booster-
investments/booster-innovation-fund.aspx



For more information, please contact:
Gary Scott
Company Secretary
Booster Investment Management Limited
04 8944300


About Booster
Booster Investment Management Limited (Booster) is the manager and issuer of the Fund, and part of
the Booster Group which has been helping New Zealanders save since 1998. The group currently
administers superannuation and investment funds of over $6 billion on behalf of more than 190,000 New
Zealanders.
BIF is a managed investment fund that invests in early-stage companies founded on intellectual property
originated or developed in New Zealand.
For more information, including a copy of the Product Disclosure Statement, please visit
www.booster.co.nz

Booster
Innovation
Fund

of the Booster Innovation Scheme


Statement of Investment Policy
and Objectives

Effective Date of SIPO 19 June 2024
Version No. 24.0

Booster Innovation Fund
1. Description of the Fund
The Booster Innovation Fund (Fund) is a managed investment product established under the
Booster Innovation Scheme (Scheme) which is a registered managed investment scheme under the
Financial Markets Conduct Act 2013 (Act). The Scheme is managed by Booster Investment
Management Limited (Manager).
The Fund provides investors with an opportunity to invest in a specialised portfolio of early-stage
companies founded on intellectual property originated or developed in New Zealand that are
selected on the basis that they have the potential to become commercially successful globally.

2. Investment and return objectives
a. Investment objective. The Fund aims to provide investors with an exposure to a diversified
portfolio of early-stage companies founded on intellectual property originated or developed in
New Zealand.

b. Return objective. The Fund aims to deliver a significant total rate of return (net of fees but before
tax) that outperforms the NZX 50 Index over rolling 15-year periods.

3. Investment philosophy
The Manager’s investment philosophy for the Fund is to invest in early-stage businesses that are
founded on New Zealand originated or developed intellectual property.
Due to the high rate of failure in early-stage ventures, the Fund aims to invest in many early-stage
businesses across a range of business sectors and stages of development to reduce its
concentrationincrease its diversification and increase the likelihood of investing in ventures that
ultimately succeed.

4. Investment strategy
a. Investment strategy.
The Fund will seek to invest in a diversified portfolio of investments in conjunction with a range
of other specialist investors, across a range of different business sectors and stages of
development to optimise the expected returns from early-stage investments.
The key elements of the Fund’s strategy are:
o Partnering;
o Diversification; and
o Co-investing.
• Partnering. The Fund will seek to partner with entities that have expertise in developing
and commercialising intellectual property.

• Diversification. The Fund will seek to diversify its portfolio by investing in many
businesses, and intend for those investments to be spread across a range of business
sectors and technologies and across the different stages of a company’s development.
• Co-investing. The Fund will seek to invest alongside other investors or companies with
relevant expertise in the field of each new venture to provide the Fund access to
additional investment opportunities and expertise.
Investment opportunities are identified directly by the Manager or via its investment partners and
co-investors. The investments are assessed against a range of investment criteria that consider
the quality of the New Zealand innovation, the quality of the company leadership, market access,
the commitment obtained from a specialist third party investor and the capital required to build
a sustainable business.
b. Permitted investments. The permitted investments of the Fund are:
i. Cash and cash equivalents, which will be held to invest in new investment opportunities, and
may occur following the proceeds from the sale of an investment.
ii. Any equity security (or security convertible to equity), limited partnership interest or managed
fund interest which provides exposure to early-stage businesses. It is likely that such
investments will be unlisted and have extremely limited shareholder liquidity. Investments
outside of New Zealand may be made where the business is commercialising New Zealand
originated or developed intellectual property.
iii. Any loans provided to, or in connection with, a start-up business, where debt is an appropriate
component of the financing strategy of the business.
c. Benchmark asset allocation. The benchmark asset allocation for the Fund (including
benchmark asset allocation and allowable ranges) as at the date of this SIPO, are set out
below:
Asset Class Minimum % Benchmark % Maximum %
Cash & Cash Equivalents
1
0 2 100
Equities
2
0 98 100
Fixed Interest 0 0 25

The Fund may obtain these investment exposures either by investing directly in these asset
classes, or indirectly by investing in underlying funds such as managed investment schemes and
limited partnerships.
1
It is anticipated that the Fund may hold a large proportion of cash for a period of time following
capital raising activity as it seeks to acquire interests in businesses that meet the investment
criteria of the Fund, or following the sale of an investment.
2
Equities includes securities that provide an equity like exposure such as convertible notes,
limited partnership interests, and Simple Agreement for Future Equity (SAFE) notes.

5. Investment policies
a. Distributions and redemptions. The Fund does not intend to make regular distributions to its
investors and investors have no general right to redeem their units. However, in the event of a
sale of an investment, the Manager may make all or a portion of the proceeds of the sale
available for the redemption of units in the Fund. Once the Fund has a well-diversified portfolio
(which may take up to 5 years), it is intended that the Manager will make an increasing
proportion of the sale proceeds available for redemption.
b. Leverage. The Fund is not permitted to borrow, either directly or via underlying funds, though
this does not preclude the investee entities themselves from borrowing in the ordinary course of
business.
c. Valuations. For each investment held by the Fund, the valuation approach we apply is
summarised as follows:
Direct Investments
Where the Fund holds the investment directly (which may include investments in conjunction
with a lead co-investor), the last price at which capital was raised by the relevant business from
other external investors is used as a starting reference price. We, or the lead co-investor, will
also consider how recently the business last raised capital and its relevance given changes in the
business, as well as any changes to its target market or its progress towards the
commercialisation of its intellectual property since the last capital raise. An assessment will be
made of the extent to which the business has achieved its business plan since the last capital
raise, its remaining cash available, and any capital raising activity in progress, on at least a
quarterly basis. Where there is uncertainty of outcomes relevant to the value of the business, we
apply probability weightings to reflect the uncertainty and risk.
Where we assess the value of an investment may have materially changed since its purchase or
last formal valuation assessment, a more comprehensive assessment of value is made including
consideration of other indicators of value such as industry valuation benchmarks, similar
investment company comparisons or third-party pricing events where available.
In between formal valuation assessments, any other new information received in respect of an
investment that may be material to the Fund’s Unit Price is considered by us when it is received
and is reflected in the Unit Price and/ or notified via the NZX market announcement platform to
ensure the Fund continues to meet its continuous disclosure obligations.
All valuations are performed by our in-house investment team (or in conjunction with a lead co-
investor) and reviewed by the Fund’s Advisor’s, with final approval by the Fund’s Investment
Committee.
Indirect Investments
Where the Fund holds the investment indirectly, the valuation will be initially determined by the
manager/ Board of the relevant underlying investment fund and reviewed by the Fund’s
Advisorswith final approval by the Fund’s Investment Committee.
We also assess the valuation approach taken by our investment partners for consistency with our
valuation approach described above. For example, our valuation approach is consistent with that
applied by NZIB in respect of its investments.

On a monthly basis we will consult with the manager/ Board of the underlying fund to establish
if there is any other new information that may be material to the Fund’s Unit Price prior to the
issue or redemption of units in the Fund.
Also, consistent with the approach outlined for direct investments above, we will consider any
other new information received by us at any time in between formal valuation assessments to
determine if an adjustment is required to the Unit Price and/ or notified via the NZX market
announcement platform to ensure the Fund continues to meet its continuous disclosure
obligations.
The Fund (including the valuation of its investments held directly by the Fund) is subject to an
independent audit on an annual basis. We may seek independent valuations if considered
appropriate for one or more of the investments in the Fund.
d. Hedging. While foreign currency exposure may be hedged to New Zealand Dollars, the Fund
would not ordinarily hedge the exposure from equity investments that are held in a foreign
company and denominated in a foreign currency.
e. Liquidity management. The Fund does not intend to make regular distributions to its investors.
It will aim to make a limited amount of cash available for redemptions directly with the Fund on a
quarterly basis (and where redemption requests exceed cash available, may require an equitable
scaling of the available cash). As noted above, where an investment has been sold, the Manager
may make some or all of the proceeds available for redemption by investors. Where the
Manager considers the investment opportunities exceed the cash and cash equivalent balances of
the Fund, the Manager may undertake a specific capital raising by issuing more units in the Fund.
f. Diversification. The Manager will aim to diversify the portfolio across a range of business
sectors and the different stages of a company’s development. Due to the potential for extreme
value appreciation of a successful business, the Manager will need to consider the value of the
initial investment as well as its current assessed value when evaluating diversification.
g. Conflicts of interest. Any employees wishing to buy or sell units in the Fund are expected to
follow the Manager’s ‘Personal Account Trading Policy’ and associated procedures.
h. Taxation. The Fund is a listed Portfolio Investment Entity (Listed PIE) for tax purposes. The
amount of tax that the Fund pays is calculated at the rate of 28% on its taxable income which
includes interest, dividends received (if any) from its New Zealand share investments, and a
deemed dividend of 5% of the market value of any overseas shares. Any capital gains made by
the Fund in respect of its share interests are excluded from the calculation of taxable income.
i. Investment exposure limitation. The Fund will generally limit its investment holdings to no
more than 20% of the voting interests (i.e., shareholding) of the relevant underlying
investmentinvestee company. This is to ensure the Fund continues to meet the eligibility criteria
for Portfolio investment Entities (PIE) and Listed PIEs.

6. Investment performance monitoring
The Manager will undertake a regular review of the investment performance of the Fund relative to
the Fund’s stated investment and performance objectives. The Fund’s objectives will be reviewed by
the Manager and the Investment Committee on an annual basis.

7. Investment strategy and SIPO review
The Manager will review the Fund’s investment strategy and this SIPO at least annually.
As the Fund is a long-term investment, it is not expected that the investment objectives and
expectations in the SIPO will necessarily change frequently or annually. Short term changes in Fund
returns should not generally lead to an adjustment in investment objectives or expectations.
The Fund’s investment strategy and SIPO may be reviewed at any time should the Manager deem it
necessary, for events such as where:
• New legislation affects investment requirements.
• Fundamental changes in the long term social, political or economic environment suggest a
change in investment principles and expectations.
• A significant change occurs to the underlying demographics of the Fund.
• New types of investment opportunities require consideration for inclusion in the Fund.
• The Fund’s competitive or market position has implications for investors’ assets and/or
liquidity.
Any changes to the investment strategy or this SIPO will firstly be approved by the Manager’s
Investment Committee in consultation with the Committee’s Advisors . Once approved, the
Manager will consult with the Supervisor and give them written notice of any changes before they
take effect. The current version of the SIPO for the Fund is available on the scheme register at
www.disclose-register.companiesoffice.govt.nz. Any material changes to the SIPO will be advised
in the Booster Innovation Scheme annual report, which will be available on the scheme register.