Craven House Capital Regulatory News (CRV)

2 August 2011

AIM Investments Plc

("AIM Investments" or the "Company")

Adoption of New Investing Policy

Notice of AGM

Notice of GM

Introduction

Following last year's developments, and the injection of capital into the Company by Desmond, the Directors have reviewed the Company's strategy and believe that shareholder value would be enhanced by a building a closer relationship with Desmond, through their proposed appointment as Investment Manager, and the adoption of the New Investing Policy, focussing on the agricultural, energy, engineering, infrastructure, manufacturing, logistics, transportation and natural resource sectors in emerging and frontier markets, all as set out below.

The proposed adoption of the New Investing Policy will be considered at the Company's AGM on Wednesday 24 August 2011. A Circular continuing the proposal to adopt the New Investing Policy and the Notice of AGM is today being posted to Shareholders

Background

On 13 October 2010, the Company announced that it had secured a non-interest bearing loan facility of up to £500,000 from Desmond, a Hong Kong-based investment company, in order to make qualifying investments under its investing policy. On 2 November 2010, it was announced this loan facility had been increased up to £700,000. The Company agreed to pay Desmond a fee of £120,000 for providing the Desmond Loan, such fee to be satisfied, following the lifting of the suspension of the trading in the Company's shares, by the issue of such number of new ordinary shares in the capital of the Company as equated to 29.99 per cent. of the Company's then issued share capital. Following the restoration of trading in the Company's shares on 10 December 2010, this fee was satisfied, and Desmond were issued with 29.99% of the Company's issued share capital on 15 December 2010. On 15 December 2010, Mark Pajak, both a director and a shareholder in Desmond, was appointed to the board of the Company as a Non-Executive Director. On 16 March 2011, Mark became an Executive Director of the Company. On 28 June 2011, it was subsequently announced that Sir Bernard Zissman had resigned as Non-Executive Director and Acting Chairman to be replaced in the latter role by Mark Pajak. Furthermore, Balbir Bindra was appointed as a Non-Executive Director.

Background on Desmond

Desmond is an unquoted investment company established in Hong Kong. The management of Desmond have over 15 years' experience in investing in emerging and frontier markets, and have managed gross assets of over $500million. Over this period, Desmond has established an extremely wide network of relationships across the globe, which now generate a high volume of prospective investment opportunities, in particular, but not exclusively, in South America, China and Sub-Saharan Africa. Desmond's track record and the access they provide to relationships in the Company's target markets make Desmond an ideal strategic partner for the Company. Mark Pajak is a director and shareholder of Desmond. 

Management Services Agreement

Conditional upon the adoption of the New Investing Policy, the Company will enter into a Management Services Agreement with Desmond, whereby Desmond will be retained as the Company's Investment Manager. Pursuant to the Management Service Agreement, Desmond agrees to originate potential investments and undertake the necessary due diligence before submitting an investment proposal for approval by the Board. Desmond may also assist in any negotiations regarding the structuring of a proposed investment. Desmond will also manage the portfolio of investments held by the Company, monitoring the individual performances of each investment and reporting to the Board. Desmond will also assist in implementing any exit or realisation determined by the Board.

In addition, the Investment Manager agrees to provide some administrative functions in respect of the Company's operations.

In consideration for the services provided by the Investment Manager to the Company pursuant to the Management Services Agreement, the Company shall pay the Investment Manager the Services Fee, equal to the greater of £17,500 or 0.25% of the NAV payable per quarter. In addition to the Services Fee, the Company shall pay the Investment Manager an annual Performance Fee equal to 20% of the increase in the NAV.

Payment of the Performance Fee is conditional upon the increase in the NAV per Share over the relevant year, being at least the Hurdle Rate (5%). If, in any year, the Hurdle Rate is not achieved and no Performance Fee is payable to the Investment Manager, then before any Performance Fee is payable in a subsequent year, the aggregate increase in NAV per share over the periods must exceed the aggregated Hurdle Rate for those periods, and then the Performance Fee shall be equal to 20% of the difference.

The Services Fee and Performance Fee will be payable by the Company to the Investment Manager, at the sole option of the Investment Manager, in cash or, subject to regulatory approval, Ordinary Shares.

New Investing Policy

The Directors propose to amend the Company's investing policy, as follows.

The Company's Investing Policy would be to invest in or acquire a portfolio of companies, partnerships, joint ventures, businesses or other assets in emerging and frontier markets (particularly South America, Africa and Asia), as well as rapidly growing economies and economies undergoing or recovering from some form of crisis. The principal sectors would be energy, infrastructure, engineering, manufacturing, logistics, natural resources, transportation and agriculture. The investments or acquisitions may be funded wholly by cash, the issue of new shares or debt, or a mix thereof, as the Board deems appropriate. The Company's equity interest in a proposed investment may range from a minority position to 100 per cent. ownership; the proposed investments may be either quoted or unquoted, although will likely be unquoted in the majority of cases.

The Company will specifically invest in investments which the Board believes offer high growth opportunities or steady cash flows and where the exit will be a liquidity event, such as a trade sale or IPO. However, the Company's investments may also take the form of private placements in companies that are already listed on an international exchange but are seeking additional capital to expand operations or make acquisitions. It is anticipated that the investments will be held for the short to medium term but the Board will place no minimum or maximum limit on the length of time that any investment may be held. The Company intends to deliver Shareholder returns through capital growth. As such, the Board do not envisage the distribution of dividends in the short to medium term.

The Company intends to be an involved and active investor. Accordingly, where necessary, the Company may seek participation in the day to day management through board representation in an entity in which the Company invests with a view to seeking to improve the performance and use of its assets in order to grow the business. In this instance, the Investment Manager will be appointed to the board of such entities in which the Company invests. The Investment Manager may appoint consultants or independent industry experts or other representatives to represent the Company in managing the investments it makes and/or their business operations.

As an active investor, the Company may be involved in such activities as reverse takeover transactions, formation or identification of capital pool companies, going private transactions, advisory services (to assist companies with the identification, assessment and "spin-in" of products and/or subsidiaries, which may be strategic to building their businesses), and financial restructuring. Advisory fees may be charged at the Company's discretion.

If it appears unlikely that the investing policy can be implemented at any time, the Directors may consider returning any remaining funds to the Shareholders.

The Directors consider that as investments are made, and new opportunities arise, further funding of the Company will be required.

Investment Process

The following list details qualifying criteria for companies and assets the Company would consider as potential investments, although the list is not intended to be exhaustive and the Investment Manager will exercise discretion where necessary when submitting a potential investment for consideration by the Board.

·; The key consideration will be the quality of the investee company or asset, and whilst there will be a preference for those operating in emerging, frontier and rapidly growing economies, other geographical locations will be considered including economies in crisis or transition.

·; Growth potential will be the key determinant above any specific industry sector

·; Strong operational management team

·; The Company may choose to invest in newly formed or early stage asset backed companies without any track record

·; The Company may also consider private placements in companies that are already listed on an international exchange but are seeking additional capital to expand operations or make acquisitions

As detailed in the terms of the Management Services Agreement, prospective investment opportunities will be identified by the Investment Manager. The Investment Manager is responsible for conducting appropriate levels of due diligence in investee companies / assets before preparing a submission to the Board.

Related Party Transaction

Under AIM Rule 13, the appointment of Desmond as Investment Manager constitutes a related party transaction. Desmond holds 23.14% in the Company. Mark Pajak is a director and shareholder in Desmond. The Independent Directors consider, having consulted with the Company's nominated adviser Daniel Stewart & Company plc, that the terms of the transaction are fair and reasonable insofar as the shareholders of the Company are concerned.

Notice of GM

The Company is also convening a general meeting immediately following the AGM on Wednesday 24 August 2011. The business of the GM, pursuant to section 656 of the Act where the net assets of a public company are half or less than its called-up share capital, is to consider whether any, and if so what, steps should be taken to deal with the situation. The Notice of GM is included within the Circular being posted to Shareholders today.

For further information please contact:

www.aiminvestmentsplc.com

The Circular may be viewed in its entirety on, or downloaded from, the Company's website www.aiminvestmentsplc.com .

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