Notice of AGM

27 April 2016

GLI Finance Limited ("GLI" or "the Company")

Notice of AGM and Reclassification of GLI's Investing Company status under the AIM Rules

The Board of GLI confirms that a circular ("Circular") including Notice of AGM together with related Form of Proxy and printed copies of the Company's Annual Report for the year-ended 31 December 2015 have today been posted to Ordinary Shareholders. The AGM is to be held at 2.00 p.m. on 19 May 2016 at the Company's registered office, Sarnia House, Le Truchot, St. Peter Port, Guernsey GY1 1GR.

The Circular includes a letter to Ordinary Shareholders (as summarised below) from Patrick Firth, GLI's Non-Executive Chairman, in which the Board outlines its proposals, subject to Ordinary Shareholder approval at the AGM, for the Company to be no longer classified as an Investing Company under the AIM Rules.

The Circular and Notice of AGM is available to view on the Company's website http://www.glifinance.com/.

Enquiries:

GLI Finance Limited

Andy Whelan

+44 (0)1534 708900

Panmure Gordon (Nominated Adviser and Corporate Broker)

Dominic Morley

+44 (0)20 7886 2954

Peter Steel

+44 (0)113 357 1152

Charles Leigh-Pemberton

+44 (0)20 7886 2906

Instinctif Partners (PR Advisor)

Tim Linacre / Nick Woods

+44 (0)207 457 2020

1. Introduction

The Board is proposing that the Company is no longer classified as an Investing Company under the AIM Rules. The Board believes that the Company has, over recent years, increasingly exhibited the characteristics of a trading company and the Board is of the view that it is no longer appropriate for the Company to retain its status as an Investing Company. As such, the Board is proposing that the Company be treated as an operating company under the AIM Rules ("the Reclassification").

The Reclassification requires the approval of Ordinary Shareholders. Accordingly, the Board has posted a Circular to Shareholders providing details of the background to and reasons for the Reclassification and why the Board considers that the Reclassification is in the best interests of the Company and its Shareholders as a whole. The Board unanimously recommends that Shareholders vote in favour of the Resolution to be proposed at the Annual General Meeting to be held at 2.00 p.m. on 19 May 2016, as the Directors intend to do in respect of their own holdings of Ordinary Shares.

2. Background to and reasons for the Reclassification

Background to the Reclassification

The Company was incorporated in June 2005 and its Ordinary Shares were admitted to AIM in August 2005. The Company has, since its Ordinary Shares were admitted to trading on AIM, been classified as an Investing Company under the AIM Rules.

The Company's business, throughout its history, has been the direct and indirect provision of loan finance to small and medium-sized enterprises ("SMEs"). In the initial years, this was largely via direct or indirect provision of syndicated corporate loans to SMEs; then via investment in collateralised loan obligations ("CLOs"). The Company completed the exit from its portfolio of CLO investments in March 2015.

In November 2012, the Company acquired a controlling stake in the issued share capital of BMS Finance AB Limited ("BMS", a senior lender to SMEs), providing the Company with a platform for building its loan origination capability in the UK and globally. GLI has since acquired equity interests ranging from 5% to 100% in 18 further SME lending platforms and has made new loans available through these platforms. These acquisitions included Sancus Limited ("Sancus"), a Jersey-based peer to peer lender that provides secured lending to individuals and SMEs in the Channel Islands. The Sancus acquisition has provided GLI with additional management resource and experience, underwriting capacity and the platform to drive growth in the Company's direct lending activities.

GLI has also strengthened its head office team and the Company now employs an Executive Management team comprised of four senior staff, supported by 6 other staff members, with further recruitment to be made as the need arises.

The Directors believe that GLI's ownership of Sancus and majority ownership of BMS, together with its operational control of a number of SME lending platforms, reflect its transition from Investing Company to operating company, with the objective of developing its position as a leading player in the alternative finance sector.

Reasons for the Reclassification

As outlined above, the Company's activities have evolved over recent years and the Board is now of the view that many of the features typically associated with an Investing Company no longer apply to GLI and that treatment of the Company as an operating company under the AIM Rules would be more appropriate. The Directors' reasons in support of their opinion include the following:

· Termination of investment management agreement

An Investing Company frequently engages an external investment manager on a retained basis. Following the acquisition of BMS, the Group's assets have become increasingly managed and controlled internally. As a result, in April 2013, the Company terminated the investment management agreement with T2 Advisers, LLC, which had been in place since GLI's admission to AIM. The Board also meets frequently, with 26 meetings in the year ended 31 December 2015, unlike the board of an Investing Company, which would typically meet less often.

· Wide ranging Investing Policy

Under the AIM Rules, an Investing Company must have an Investing Policy. GLI's Ordinary Shareholders approved a change in the Company's investing policy in 2013 (now substantially implemented) from one of "investing principally in syndicated corporate loans" to "providing finance to SMEs across the world" and hence the Company has, for some time, seen itself as a finance business: the amended investing policy is wide ranging and provides the Company with a very broad mandate for achievement of its objectives and the Board with significant autonomy in this respect.

· Internalisation of key head office functions

GLI's key activities, such as underwriting, credit analysis and loan origination, have been internalised for some time. GLI's critical support functions, such as finance and compliance including anti-money laundering procedures and risk management are also carried out internally, as is management of areas such as marketing, business development and investor relations. Internalisation of such functions has been a key driver of the increase in headcount referred to above. The Directors believe that such a structure more closely reflects that of an operating company trading as a lending business rather than an Investing Company.

· Provision and sharing of financial and other resources with other GLI platforms

Internalisation of key functions has also enabled the Company to take a much more active role in supporting its platforms to grow organically. Not all of the lending platforms in which the Company is invested operate on a stand-alone basis, relying on GLI for central services such as risk analysis, compliance guidance and marketing and sales support. Increasingly, the lending platforms support one another, e.g. through cross-referral of lending opportunities.

An Investing Company with controlling stakes would ordinarily organise its activities such that the cross-financing or sharing of operations, for example, is limited. As outlined above, the sharing of financial and other resources has become an increasingly common facet of GLI's ongoing activities.

· Level of direct control over other GLI platform businesses

The level of direct control that the Company has over its assets has increased over time, in particular as a result of the BMS and Sancus acquisitions, both of which are accounted for as subsidiary undertakings. In the case of its interests in associated undertakings and equity investments, the Company is also able to exert significant influence over their affairs, for instance it has the right to a board seat and consent rights over individual company budgets. The Board is of the view that an Investing Company typically adopts a passive role as regards the day to day management of its investments and has little or no influence over their activities.

· Nature of income generated

Similar to any other company providing finance to SMEs, GLI's income is derived in part from net interest income generated from loans held on its balance sheet.

· Distribution of investment returns and nature of dividend policy

Unlike many Investing Companies, GLI has no defined mechanism for the distribution of investment returns or fixed winding up date. The Company's aim underlying its stated dividend policy is to distribute income over the longer term rather than at a particular time or over a designated period. There is no certainty that substantially all income will be paid out over any particular time period.

· Guernsey Financial Services Commission ("GFSC") re-registration

Reflecting the Board's view that the Company should no longer be treated as an authorised closed-ended collective investment scheme for Guernsey law purposes, in December 2014, GLI applied to the GFSC to be re-registered as a "Non-Regulated Financial Services Business". On 31 March 2015, the Company announced that the GFSC had approved its application.

The cumulative impact of the various developments noted above forms the basis for the Board's view that GLI should no longer be classified as an Investing Company and that reclassification as an operating company under the AIM Rules for Companies is now appropriate.

The Reclassification - effect on the Company and future strategy

The Company is currently considered to be an investing company for the purposes of the AIM Rules. As a result, it may benefit from certain partial carve-outs to the AIM Rules, such as those in relation to the classification of reverse takeovers (as defined in Rule 14 of the AIM Rules). Were the Company to lose investing company status for any reason, such carve-outs would cease to apply. The AIM Rules also impose requirements on the way in which an Investing Company conducts its affairs, such as consideration of exposure to risk through cross-holdings, thereby providing in this respect a degree of inherent protection to investors in such companies. Shareholders should be aware that such requirements of the AIM Rules would no longer apply to GLI, should the Company no longer be classified as an Investing Company.

Subject to Shareholder approval of the Reclassification, the Company will cease to be regarded as an Investing Company for the purpose of the AIM Rules, and it will cease to have a formal investing policy.

The Board believes that the Company has an attractive and unique portfolio of platform companies, a number of which are growing very rapidly and are conservatively valued. This portfolio is expected to bring significant long-term capital gains to shareholders. As previously announced, the Board is part-way through a strategic review of GLI's operations, however, its overriding strategy for generating shareholder value will be to focus on supporting and developing those platforms with the greatest potential, taking into account the capital available to the Company.

3. Annual General Meeting

Resolution

Shareholders are being asked to approve the Reclassification at the Annual General Meeting. The Resolution will be proposed as an ordinary resolution. The Resolution requires a simple majority of those members present (whether in person or by proxy) and voting, to vote in favour of it in order for it to be passed.

Notice of Annual General Meeting

A notice convening the Annual General Meeting of the Company, which is to be held at 2:00 p.m. on 19 May 2016, is set out at the end of the Circular.

4. Recommendation

The Board believes that the Reclassification is in the best interests of the Company and the Shareholders as a whole and unanimously recommends that Shareholders vote in favour of each of the resolutions to be proposed at the Annual General Meeting to be held at 2:00 p.m. on 19 May 2016.

The Directors intend to vote in favour, or procure the vote in favour, of each of the resolutions at the Annual General Meeting in respect of their beneficial holdings of Shares which, in aggregate, amount to 4,416,575 Ordinary Shares representing approximately 1.92 per cent of the Company's issued Ordinary Share capital.

5. Expected timetable

	2016
Publication of the Circular	27 April
Latest time and date for receipt of Forms of Proxy	2.00 p.m. on 17 May
Annual General Meeting	2.00 p.m. on 19 May
Effective date for the Reclassification	20 May

References to times are to times in London unless otherwise stated.

The above times and/or dates may be subject to change and, in the event of such change, the revised times and/or dates will be notified to Shareholders by an announcement through a regulatory information service.

6. Definitions

The following definitions apply throughout this announcement unless the context otherwise requires:

"AIM"	the market of that name operated by the London Stock Exchange
"AIM Rules"	the rules published by the London Stock Exchange entitled "AIM Rules for Companies"
"Annual General Meeting" or "AGM"	the annual general meeting of the Company to be held at 2:00 p.m. on 19 May 2016, or any adjournment thereof, for the purpose of considering and, if thought fit, passing the Resolutions
"Board" or "Directors"	the board of directors of the Company, including a duly constituted committee thereof
"Form of Proxy"	the form of proxy for use by Ordinary Shareholders in connection with the AGM which accompanies the Circular
"Group"	the Company and its subsidiaries from time to time
"Investing Company"	any AIM company (that is, a company with a class of securities admitted to AIM such as GLI) which has as its primary business or objective, the investing of its funds in securities, businesses or assets of any description (as defined in the AIM Rules)
"Investing Policy"	the policy that an Investing Company will follow in relation to asset allocation and risk diversification, as defined in detail in the AIM Rules
"London Stock Exchange"	London Stock Exchange plc
"Notice"	the notice of the Annual General Meeting set out at the end of the Circular
"Ordinary Shareholders" or "Shareholders"	holders of Ordinary Shares
"Ordinary Shares"	ordinary shares of no par value each issued by the Company
"Resolution"	Resolution 8 to be proposed at the AGM as set out in the Notice
"ZDP Shareholders"	holders of ZDP Shares
"ZDP Shares"	zero dividend preference shares of no par value each issued by the Company that entitle their holders to a capital repayment per share of 130.696 pence on 5 December 2019

About GLI Finance Limited

GLI Finance (www.glifinance.com) is a specialist provider of finance to small and medium sized enterprises. Its ordinary shares are quoted on the AIM and its issued zero dividend preference shares are listed and traded on the main market of the London Stock Exchange (ticker GLIF (Ord) and GLIZ (2019 ZDP)). The loans are provided to SMEs through a variety of finance platforms in which GLI Finance has an equity stake.

The platforms in which GLI Finance is invested vary by geography, industry, size of lending and by type of lending. They include Global trade Finance, UK and US SME Lending, Offshore Lending, UK invoice discounting, European invoice discounting, Global multi-asset crowd funding and UK property-backed lending.