KHP Strategic 2 LP Offer for Private Equity Investor PLC (8765G)

TIDMPEQ

RNS Number : 8765G

KHP Strategic 2 LP

11 August 2016

FOR IMMEDIATE RELEASE

11 August 2016

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO THE SAME WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

RECOMMED CASH OFFER

for

PRIVATE EQUITY INVESTOR PLC ("PEI")

KHP STRATEGIC 2 LP ("KHP")

SUMMARY

The board of KHP Fund GP LLC, the general partner of KHP (the "General Partner"), and the board of PEI are pleased to announce that they have reached agreement on the terms of a recommended cash offer pursuant to which KHP, acting by the General Partner, will acquire the entire issued and to be issued share capital of PEI.

Under the terms of the Offer, PEI Shareholders will be entitled to receive 167.00 pence in cash for each PEI Share held, valuing the entire issued share capital of PEI at approximately GBP19,949,017. The consideration payable under the Offer will be funded by KHP, acting by the General Partner, from existing cash resources.

The Offer price for the entire share capital of PEI represents a premium of approximately 10.6 per cent. to the Closing Price per PEI Share of 151.00 pence on 10 August 2016 (being the last Business Day prior to the start of the Offer Period).

The Offer price for the entire share capital of PEI represents a discount of approximately 20.9 per cent. to the 31 March 2016 reported audited net asset value per PEI Share of 211.2 pence and a discount of approximately 25.1 per cent. to the reported unaudited net asset value per PEI Share of 222.93 pence as at 31 July 2016 (being the last reported net asset value per PEI Share prior to the start of the Offer Period).

KHP is an exempted limited partnership established under the laws of the Cayman Islands specifically established for the purpose of making the Offer. Kline Hill Partners LP (the "Fund") is the sole limited partner of KHP and the General Partner is the general partner of KHP and the Fund. The General Partner has delegated responsibility for the investment operations of the Fund to Kline Hill Partners LLC (the "Investment Manager"). The Fund focuses on and invests in the private equity secondary market with sellers of all types, including those with smaller or more fragmented asset pools. The primary objective of the Fund is to invest in a diversified portfolio of private equity and private equity-related investments, principally purchased in secondary market transactions. The Fund seeks to acquire a portfolio comprised of primarily limited partnership interests in traditional buyout, venture, growth equity, and other private equity funds.

PEI is an investment company incorporated in the United Kingdom and is listed on the London Stock Exchanged with the ticker PEQ. PEI enjoys the tax benefits of investment trust status. The objective of PEI has been to provide shareholders with long-term capital growth, via investment in a broad portfolio of U.S.-based venture capital and buyout funds. PEI has not been making investments in new private equity funds (other than to meet existing capital commitments and occasionally to support follow-ons in respect of existing funds) since 2007 but has been managing its existing investments with a view to making periodic returns of capital to its shareholders.

The PEI Directors intend unanimously to recommend that PEI Shareholders accept the Offer, and believe that it represents an attractive liquidity solution that is in line with its strategy of returning capital to Shareholders.

The Offer is subject to the Conditions and further terms set out in Appendix I to this announcement and to be set out in the Offer Document, which it is expected will be despatched to PEI Shareholders as soon as reasonably practicable and, in any event, within 28 days of this announcement.

Commenting on the Offer, Peter Dicks, Chairman of PEI, said:

"The PEI Board unanimously welcomes this offer as PEI Shareholders will benefit from a clean, single, liquidity event at an attractive premium to the current PEI Share price. This will result in the successful culmination of the PEI Board's strategy to achieve full realisation of PEI's assets for PEI Shareholders."

J.P. Morgan Limited, which conducts its UK investment banking activities as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is acting as financial adviser to PEI in respect of the Offer and EPL Advisory LLP ("EPL Advisory") is acting for PEI for the purposes of Rule 3 of the Code. Shakespeare Martineau LLP is acting as legal adviser to PEI in respect of the Offer.

Compass Advisers Limited (trading as Compass Partners Advisers Limited) ("Compass Partners Advisers") is acting as financial adviser to Kline Hill. Burges Salmon LLP is acting as legal adviser to KHP in respect of the Offer.

Enquiries

 
 Compass Partners Advisers            Tel: (0)20 7245 
  (Financial Adviser to Kline Hill)    7100 
 1 Grosvenor Place 
 7th Floor 
  London 
  SW1X 7JH 
  Jai Singh 
 
 J.P. Morgan Cazenove                 Tel: (0)20 7742 
  (Financial Adviser to PEI)           4000 
 25 Bank Street 
 London 
 E14 5JP 
  William Simmonds 
 
 EPL Advisory                         Tel: (0)7748 776 
  (Rule 3 Adviser to PEI)              433 
 11A Elm Park Lane 
  London 
 SW3 6DD 
 David Anderson 
  KHP                                  Tel: +1 203 340 
   125 Mason Street                     2463 
 Greenwich 
 CT 06830 
  USA 
  Michael Bego 
  PEI                                  Tel: (0)7785 244 
                                        122 
 1 Marylebone High Street 
 1st Floor 
  London 
  S1W 4LZ 
  Peter Dicks

This summary should be read in conjunction with, and is subject to, the accompanying full text of this announcement (including the Appendices). The Offer will be subject to the satisfaction or, where applicable, waiver of the Conditions and certain further terms set out in Appendix I to this announcement and to the full terms and conditions which will be set out in the Offer Document. Appendix I to this announcement contains the Conditions to, and certain further terms of, the Offer. Appendix II to this announcement contains further details of the sources of information and bases of calculations set out in this announcement and the irrevocable undertakings received by KHP in connection with the Offer. Appendix III to this announcement contains definitions of certain expressions used in this summary and in this announcement.

Compass Partners Advisers, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively as financial adviser to Kline Hill in relation to the Offer and no-one else and will not be responsible to anyone other than Kline Hill for providing the protections offered to clients of Compass Partners Advisers or for providing advice in relation to the Offer or the contents of this announcement or any transaction or arrangement referred to herein. Compass Partners Advisers does not accept any responsibility whatsoever to any person other than Kline Hill for the contents of this announcement or for any statement made or purported to be made by it or on its behalf in connection with the Offer. Compass Partners Advisers accordingly disclaims all and any liability whether arising in tort, contract or otherwise which it might otherwise have in respect of this announcement or any such statement.

J.P. Morgan Limited, which conducts its UK investment banking activities as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), which is authorised and regulated by the Financial Conduct Authority, is acting exclusively as financial adviser to PEI in relation to the Offer and no-one else and will not be responsible to anyone other than PEI for providing the protections offered to clients of J.P. Morgan Cazenove or for providing advice in relation to the Offer or the contents of this announcement or any transaction or arrangement referred to herein. J.P. Morgan Cazenove does not accept any responsibility whatsoever to any person other than PEI for the contents of this announcement or for any statement made or purported to be made by it or on its behalf in connection with the Offer. J.P. Morgan Cazenove accordingly disclaims all and any liability whether arising in tort, contract or otherwise which it might otherwise have in respect of this announcement or any such statement

EPL Advisory, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively as financial adviser to PEI in relation to the Offer and no-one else and will not be responsible to anyone other than PEI for providing the protections offered to clients of EPL Advisory or for providing advice in relation to the Offer or the contents of this announcement or any transaction or arrangement referred to herein. EPL Advisory does not accept any responsibility whatsoever to any person other than PEI for the contents of this announcement or for any statement made or purported to be made by it or on its behalf in connection with the Offer. EPL Advisory accordingly disclaims all and any liability whether arising in tort, contract or otherwise which it might otherwise have in respect of this announcement or any such statement.

This announcement does not constitute, or form part of, an offer to buy or invitation to sell or the solicitation of an offer to subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Offer or otherwise, nor will there be any purchase or transfer of the securities referred to in this announcement in any jurisdiction in contravention of applicable law or regulation. The Offer will be made solely through the Offer Document and, in the case of certificated PEI Shares, the form of acceptance accompanying the Offer Document, which will contain the full terms and conditions of the Offer, including details of how to accept the Offer. Any acceptance or other response to the Offer should be made only on the basis of the information in the Offer Document and, in the case of certificated PEI Shares, the form of acceptance. PEI Shareholders are advised to read the formal documentation in relation to the Offer carefully once it has been despatched.

Please be aware that addresses, electronic addresses and certain other information provided by PEI Shareholders, persons with information rights and other relevant persons in connection with the receipt of communications from PEI may be provided to KHP during the Offer Period as required under Section 4 of Appendix 4 of the Code.

There are no agreements or arrangements to which KHP is a party which relate to the circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Offer.

This announcement has been made by KHP.

The contents of KHP's website and PEI'S website are not incorporated into and do not form part of this announcement.

Overseas Shareholders

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements. Further details in relation to overseas shareholders will be contained in the Offer Document.

Unless otherwise determined by KHP or required by the Code, and permitted by applicable law and regulation, the Offer will not be made available, directly or indirectly, in, into or from any jurisdiction if to do so would constitute a violation of the laws of such jurisdiction and no person may accept the Offer by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this announcement and all documents relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this announcement and all documents relating to the Offer (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction.

U.S. Shareholders

It is important for U.S. holders of PEI Shares to be aware that the Offer and this announcement are subject to disclosure and takeover laws and regulations that are different from those in the United States.

The Offer will be made in the United States pursuant to Section 14(e) and Regulation 14E under the United States Securities Exchange Act of 1934, as amended (the "Exchange Act") as a "Tier II" tender offer, and otherwise in accordance with the requirements of the tender offer rules and securities laws applicable to companies incorporated in England and Wales whose shares are traded on the main market of the London Stock Exchange, namely in accordance with the requirements of the Code, and otherwise in accordance with and the Listing Rules. Accordingly, the Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments that are different from those applicable to tender offers made in accordance with United States procedures and law.

Pursuant to an exemption from Rule 14e-5 under the Exchange Act, in accordance with the Code and normal UK market practice, KHP and certain of its Representatives may, from time to time, purchase or make arrangement to purchase PEI Shares outside the Offer from the time the Offer is announced until the expiration of the acceptance period of the Offer, including purchases in the open market at prevailing prices or in private transactions at negotiated prices, in each case outside of the United States and to the extent permitted under applicable United Kingdom laws and regulations, the Code, the Listing Rules and the applicable rules of the London Stock Exchange. Any such purchases will not be made at prices higher than the price of the Offer provided in this announcement unless the price of the Offer is increased accordingly. Any future purchases will be made in accordance with applicable laws, rules and regulations. Any such purchases will be disclosed through a regulatory information service to the extent required by the Code and the UK Listing Authority's Disclosure and Transparency Rules (as applicable) and, if so disclosed, will also be disclosed in the United States and will be available on the London Stock Exchange website at www.londonstockexchange.com.

It may be difficult for U.S. holders of PEI Shares to enforce their rights or to bring a claim arising out of the United States federal securities laws because KHP and PEI are located in non-U.S. jurisdictions and all of the officers and directors of PEI are residents of non-U.S. jurisdictions. U.S. holders of PEI Shares may not be able to sue a non-U.S. company or its officers or directors in a non-U.S. court for violations of U.S. securities laws. Further, it may be difficult to compel a non-U.S. company and its affiliates to subject themselves to the judgement of a U.S. court.

The receipt of cash pursuant to the Offer by a U.S. holder of PEI Shares may be a taxable transaction for U.S. federal income tax purposes and under applicable U.S. state and local, as well as foreign and other, tax laws. Each U.S. holder of PEI Shares is urged to consult with his, her or its independent professional adviser regarding any acceptance of the Offer including, without limitation, to consider the tax consequences associated with such holder's acceptance of the Offer.

NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY UNITED STATES STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED OF THIS OFFER, PASSED UPON THE FAIRNESS OR MERITS OF THIS ANNOUNCEMENT OR DETERMINED WHETHER THIS ANNOUNCEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.

Forward-looking statements

This announcement contains statements that are or may be forward looking statements. All statements other than statements of historical facts included in this announcement may be forward looking statements (including, without limitation, any statements regarding KHP's and/or PEI's future financial condition, results of operations and business strategy, plans and objectives). Statements containing the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning are also forward looking, but the use of such words is not the exclusive means of identifying such statements. Forward looking statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future results in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. In any event, these statements speak only as of the date hereof, and KHP does not undertake to update or revise any such statement, whether as a result of new information, future events or otherwise, except as required by the Code or applicable law.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the Offer Period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the Code applies must be made by no later than 3.30 p.m. (London time) on the 10th Business Day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th Business Day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8 of the Code.

A Dealing Disclosure by a person to whom Rule 8.3(b) of the Code applies must be made by no later than 3.30 p.m. (London time) on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3 of the Code.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4 of the Code).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when an offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

KHP will disclose the details required to be disclosed by it in respect of itself and any other KHP Concert Parties under Rule 8.1(a) of the Code on the same day as this announcement is made.

Publication on website and availability of hard copies

A copy of this announcement will be available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on each of PEI's and KHP's websites at www.peiplc.com and www.khpstrategic2.com, respectively, by no later than 12.00 noon (London time) on the Business Day following this announcement. Neither the contents of PEI's website, nor those of KHP's website, nor those of any other website accessible from hyperlinks on either PEI's or KHP's website, are incorporated into or form part of this announcement.

You may request a hard copy of this announcement (and any information incorporated by reference in this announcement) free of charge (subject to certain restrictions relating to persons resident in Restricted Jurisdictions) by writing to PEI's administrators, ISCA Administration Services Limited at 23 Silverwood Avenue, Newton Abbot, TQ12 4LG or by calling +44 (0)1392 487 056. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday excluding public holidays in England and Wales. Please note that ISCA Administration Services Limited cannot provide any financial, legal or tax advice and calls may be recorded any monitored for security and training purposes. It is important that you note that unless you make such a request, a hard copy of this announcement and any such information incorporated by reference in it will not be sent to you. You may also request that all future documents, announcements and information to be sent to you in relation to the Offer should be in hard copy form.

Rule 2.10 Requirement

In accordance with Rule 2.10 of the Code, PEI confirms that, as at the date of this announcement, it has in issue and admitted to trading on the main market of the London Stock Exchange 11,945,519 ordinary shares of 0.01 pence each. The International Securities Identification Number (ISIN) of the PEI Shares is GB0000504034.

Contents of this announcement

If you are in any doubt about the contents of this announcement or the action that you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom, or, if not, from another appropriately authorised independent financial adviser.

11 August 2016

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO THE SAME WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

RECOMMED CASH OFFER

for

PRIVATE EQUITY INVESTOR PLC ("PEI")

KHP STRATEGIC 2 LP ("KHP")

   1          Introduction

The board of KHP Fund GP LLC, the general partner of KHP (the "General Partner"), and the board of PEI are pleased to announce that they have reached agreement on the terms of a recommended cash offer for the entire issued and to be issued ordinary share capital of PEI ("Offer").

   2          The Offer

Under the Offer, which will be subject to the Conditions and terms set out in Appendix I to this announcement and to the further terms to be set out in the Offer Document, PEI Shareholders shall be entitled to receive:

for each PEI Share: 167.00 pence in cash

The Offer values the entire issued ordinary share capital of PEI at approximately GBP19,949,017 (assuming that no further PEI Shares are issued) and represents:

-- a premium of approximately 10.6 per cent. to the Closing Price per PEI Share of 151.00 pence on 10 August 2016 (being the last Business Day prior to the start of the Offer Period); and

-- a discount of approximately 20.9 per cent. to the 31 March 2016 reported audited net asset value per PEI Share of 211.2 pence and a discount of approximately 25.1 per cent. to the reported unaudited net asset value per PEI Share of 222.93 pence as at 31 July 2016 (being the last reported net asset value per PEI Share prior to the start of the Offer Period).

The Offer will extend to all issued PEI Shares and any further PEI Shares which are unconditionally allotted or issued and fully paid before the Offer closes (including pursuant to the exercise of outstanding options over PEI Shares (if any)).

It is expected that the Offer Document will be published as soon as reasonably practicable and, in any event, within 28 days of this announcement.

The Offer will remain open for acceptance, subject to the terms and conditions set out in Appendix I of this announcement and to be set out in the Offer Document, until 1.00 p.m. (London time) on the 31st day after the date of publication of the Offer Document or (if that day is a Saturday, Sunday or a public holiday) on the next following Business Day.

The PEI Shares will be acquired by KHP fully paid and free from all liens, equities, charges, equitable interests, encumbrances, rights of pre-emption and other third party rights and/or interests of any nature whatsoever and together with all rights attaching to them, now or in the future, including the right to receive and retain all dividends, interest and other distributions paid or made after 11 August 2016.

   3          Background to and reasons for the Offer

KHP considers the acquisition of PEI, and therefore the Offer, to be in line with the investment strategy of the Fund (as defined below), given that the holdings of PEI include a broad portfolio of U.S.-based venture capital and buyout fund investments.

KHP also believes that the Offer represents a compelling proposition for PEI Shareholders in respect of their entire shareholding and gives certainty of cash today against the inherent uncertainty of the delivery of future value through a realisation of PEI's investments.

   4          Recommendation

The PEI Directors, who have been so advised by J.P. Morgan Cazenove and EPL Advisory as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable. In providing advice to the PEI Directors, J.P. Morgan Cazenove and EPL Advisory have taken into account the commercial assessments of the PEI Directors. EPL Advisory is providing independent financial advice to the PEI Directors for the purpose of Rule 3 of the Code. The PEI Directors unanimously intend to recommend that PEI Shareholders accept the Offer as they intend to do so in respect of their own holdings of PEI Shares (and have provided irrevocable undertakings in respect of such holdings as further detailed below).

   5          Background to and reasons for the recommendation

PEI has not been making investments in new private equity funds (other than to meet existing capital commitments and occasionally to support follow-ons in respect of existing funds) since 2007 but has been managing its existing investments with a view to making periodic returns of capital to shareholders.

PEI announced on 4 July 2016 that it had received a proposal to acquire the majority of the fund portfolio of PEI which PEI intended to progress and, therefore, it was clear to the market that PEI would be receptive to an approach for some or all of PEI's portfolio or the company as a whole.

PEI has received a number of approaches for the sale of some or all of its investments. There are a number of fund investments which may be difficult to transfer for some time and a sale of part of the investments would result in PEI continuing to require a run-off period (likely to be at least two years). Further, following a sale of investments, PEI would need to consider the status of PEI as a listed investment trust and how effectively to return capital to its shareholders in a cost efficient manner.

As a result and following various discussions, the PEI Directors consider an offer for all of PEI's shares to be the best option by which effectively to return remaining capital to PEI shareholders and that the Offer from KHP represents the best value for PEI Shareholders.

   6          Irrevocable undertakings

KHP has received irrevocable undertakings (including from those PEI Directors who hold PEI Shares) to accept (or procure acceptance of) the Offer in respect of, in aggregate, 8,704,857 PEI Shares, representing approximately 72.87 per cent. of the issued ordinary share capital of PEI as at 10 August 2016 (being the latest practicable date before this announcement). Further details of the irrevocable undertakings in relation to the Offer are set out in Appendix II to this announcement.

   7          Information on PEI

PEI is a publicly listed company, an "investment company" as defined under Section 833 of the Companies Act 2006 and has received written approval from HM Revenue and Customs as an authorised investment trust under Section 1158 of the Corporation Tax Act 2010. The Company will be treated as an investment trust company in each accounting period, subject to there being no serious breaches on the conditions to maintain investment trust status. PEI Shares have a premium listing on the Official List of the UK Listing Authority and are traded on the London Stock Exchange. PEI was incorporated on 19 January 2000 under the name Net Investor PLC (changed to PEI on 19 July 2001) and its shares were admitted to listing on 3 February 2000. PEI has no subsidiaries and one full-time employee.

PEI's investment objective has been to provide shareholders with long term capital growth. PEI has invested in, and maintains a broad portfolio of, U.S. based venture capital and buyout funds. Through the funds, PEI has exposure to a diverse portfolio of underlying companies.

PEI's more recent strategy has been not to make new fund investments (other than to meet existing capital commitments and occasionally to support follow-ons in respect of existing funds). PEI has been actively managing its existing investments (including sales of PEI's investments on the secondary market) with a view to achieving liquidity to make periodic returns of capital to its shareholders. PEI has returned over GBP76.85 million through seven tender offers and the remaining fund investments represent a small percentage of the original portfolio of fund investments made by PEI.

As at the end of the last financial year ended 31 March 2016, PEI's total assets less current liabilities were GBP25.2 million and shareholders' funds were GBP25.2 million. The audited net asset value per PEI Share as at 31 March 2016 was 211.2 pence.

The unaudited net asset value per PEI Share as at 31 July 2016 was 222.93 pence (this being the last announced net asset value per PEI Share) and the mid-market price per PEI Share was 151.00 pence as at 10 August 2016 (this being the latest practicable date prior to this announcement).

Additional information about PEI can be found at its website, www.peiplc.com.

   8          Information on KHP

The Fund is a Delaware limited partnership that was organized in November 2015. The General Partner, a Delaware limited liability company, is the general partner of the Fund and has full and exclusive discretionary authority and responsibility to manage the operations of the Fund. The General Partner has delegated responsibility for the investment operations of the Fund to Kline Hill Partners LLC, a Delaware limited liability company and an affiliate of the General Partner ("Investment Manager"). The Investment Manager is a private, U.S. based investment firm.

The primary purpose of the Fund is to seek to generate investment returns for its limited partners by acquiring, holding and disposing of a diversified portfolio of private equity and private equity-related investments, principally purchased in secondary market transactions. The Fund seeks to acquire a portfolio comprised of primarily limited partnership interests in traditional buyout, venture, growth equity, and other private equity funds. The Fund's investor base consists of a collection of well-regarded foundations, endowments and family offices, as well as certain high net worth individuals. As of 10 August, 2016, the Fund has $128.5 million of capital under management.

The Investment Manager maintains offices at 125 Mason Street, Floor 1, Greenwich, CT 06830, United States.

Additional information about the Investment Manager and the Fund can be found at the Investment Manager's website, http://klinehillpartners.com/.

   9          Intentions regarding PEI, its investment strategy and employees

KHP does not intend to make any material changes to the current investment policy of PEI which is in line with the investment policy of KHP.

Following the Offer becoming or being declared unconditional in all respects, KHP intends to ensure that the existing employment rights, including pensions rights, of the employee of PEI will be safeguarded. KHP's current plans for PEI do not involve any material changes to the conditions of employment of PEI's employee. However, KHP intends over time to evaluate the transfer of PEI's underlying investments to the Fund and/or the eventual winding-up of PEI. In that context, the employment of PEI's sole employee would terminate. In such circumstances the employee's contractual and statutory employment rights would be honoured in full.

   10         Financing arrangements

The Fund has agreed by one or more direct or indirect contributions into KHP to finance the entire cash consideration payable to PEI shareholders under the terms of the Offer. Those funds will be drawn down by the Fund from its limited partners pursuant to their existing commitments and/or called down under existing credit lines available to the Fund. The General Partner, on behalf of the Fund, has provided confirmation to KHP and Compass Advisers Limited (trading as Compass Partners Advisers Limited) ("Compass Partners Advisers") as to the availability of funds for this purpose. Compass Partners Advisers, the financial adviser to Kline Hill, is satisfied that sufficient financial resources are available to KHP to enable it to satisfy in full the cash consideration payable to PEI Shareholders under the terms of the Offer.

   11         Offer-Related Arrangements

On 7 July 2016, the Investment Manager and PEI entered into a confidentiality agreement in a customary form in relation to the Offer, pursuant to which the Investment Manager undertook to keep information relating to PEI strictly confidential and not to disclose it to third parties. Unless terminated earlier, the confidentiality obligations will remain in force for two years from the date of the agreement.

There are no incentivisation arrangements with the management of PEI and none are proposed.

   12         Compulsory Acquisition, Delisting and Cancellation of Trading in PEI Shares

If KHP receives acceptances under the Offer in respect of, and/or otherwise acquires, 90 per cent. or more of the PEI Shares by nominal value and voting rights attaching to such shares and assuming that all of the other conditions of the Offer have been satisfied or waived (if capable of being waived), KHP intends to exercise its rights in accordance with the provisions of Chapter 3 of Part 28 of the Companies Act 2006 to acquire compulsorily the remaining PEI Shares to which the Offer relates on the same terms as the Offer.

Following the Offer becoming or being declared unconditional in all respects and subject to any applicable requirements of the UK Listing Authority, KHP intends to apply to the UK Listing Authority for the cancellation of PEI Shares from the Official List and to the London Stock Exchange for cancellation of trading in PEI Shares on its market for listed securities. It is anticipated that such cancellation will take effect no earlier than 20 Business Days after the Offer becomes or is declared unconditional in all respects.

It is KHP's intention that, following a delisting, PEI will be re-registered as a private limited company. Delisting and re-registration will significantly reduce the liquidity and marketability of any PEI Shares in respect of which the Offer has not been accepted at that time.

   13         Disclosure of interests in PEI Shares

As at the close of business on 10 August 2016, being the latest practicable date before this announcement, neither KHP, nor any persons acting in concert with it, hold any PEI Shares. An Opening Position Disclosure will be made to this effect setting out details required to be disclosed under Rule 8.1(a) of the Code.

   14         Offer website

The following documents will be published on KHP's website (www.khpstrategic2.com) and PEI's website (www.peiplc.com) in accordance with Rule 26.1 and 26.2 of the Code:

   --      A copy of this announcement; 
   --      the irrevocable undertakings summarised in Appendix II to this announcement; and 
   --      the confidentiality agreement referred to in paragraph 11 of this announcement. 
   15         General

The bases and sources of certain financial information contained in this announcement are set out in Appendix II to this announcement. Certain terms used in this announcement are defined in Appendix III to this announcement.

The Offer will comply with, and be subject to, the applicable rules and regulations of the FCA, the London Stock Exchange, the Panel, the UK Listing Rules and the Code.

   16         Further details

EPL Advisory is acting exclusively as financial adviser to PEI in relation to the Offer and no-one else and will not be responsible to anyone other than PEI for providing the protections offered to clients of EPL Advisory or for providing advice in relation to the Offer or the contents of this announcement or any transaction or arrangement referred to herein. EPL Advisory does not accept any responsibility whatsoever to any person other than PEI for the contents of this announcement or for any statement made or purported to be made by it or on its behalf in connection with the Offer. EPL Advisory accordingly disclaims all and any liability whether arising in tort, contract or otherwise which it might otherwise have in respect of this announcement or any such statement.

There are no agreements or arrangements to which KHP is a party which relate to the circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Offer.

This announcement has been made by KHP.

The contents of KHP's website and PEI's website are not incorporated into and do not form part of this announcement.

   17         Overseas Shareholders

   18         Special notice to shareholders in the United States

   19         Forward-looking statements

   20         Dealing Disclosure Requirements

A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the Business Day following the date of the relevant dealing.

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

The Offeror will disclose the details required to be disclosed by him in respect of himself and the other Offeror Concert Parties under Rule 8.1(a) of the Code on the same day as this announcement is made.

   21         Rule 2.10 requirement

In accordance with Rule 2.10 of the Code, PEI, confirms that as at the date of this announcement, it has in issue and admitted to trading on the main market of the London Stock Exchange 11,945,519 ordinary shares of 0.01 pence each. The International Securities Identification Number (ISIN) of the PEI Shares is GB0000504034.

   22         Enquiries: 
 
Compass Partners Advisers            Tel: (0)20 7245 
 (Financial Adviser to Kline Hill)    7100 
1 Grosvenor Place 
7th Floor 
 London 
 SW1X 7JH 
 Jai Singh 
 
J.P. Morgan Cazenove                 Tel: (0)20 7742 
 (Financial Adviser to PEI)           4000 
25 Bank Street 
London 
E14 5JP 
 William Simmonds 
 
EPL Advisory                         Tel: (0)7748 776 
 (Rule 3 Adviser to PEI)              433 
11A Elm Park Lane 
 London 
SW3 6DD 
David Anderson 
 KHP                                  Tel: +1 203 340 
  125 Mason Street                     2463 
Greenwich 
CT 06830 
 USA 
 Michael Bego 
 PEI                                  Tel: (0)7785 244 
                                       122 
1 Marylebone High Street 
1st Floor 
 London 
 S1W 4LZ 
 Peter Dicks

Appendix 1

Conditions to the Offer

The Offer will be conditional upon:

(a) valid acceptances of the Offer being received (and not, where permitted, withdrawn) by 1.00 p.m. (London time) on the date that is the 31st day after the date of the Offer Document (or such later time(s) and/or date(s) as KHP may, subject to the rules of the Code or with the consent of the Panel, decide) in respect of not less than 90 per cent. (or such lesser percentage as KHP may decide) in nominal value of the shares to which the Offer relates, and not less than 90 per cent. (or such lesser percentage as KHP may decide) of the voting rights carried by the shares to which the Offer relates, provided that this condition will not be satisfied unless KHP and/or any of its associates shall have acquired or agreed to acquire, whether pursuant to the Offer or otherwise, PEI Shares carrying in aggregate more than 50 per cent. of the voting rights then exercisable at a general meeting of PEI including, to the extent (if any) required by the Panel, any voting rights attaching to any PEI Shares which are unconditionally allotted or issued before the Offer becomes or is declared unconditional as to acceptances pursuant to the exercise of any outstanding conversion or subscription rights or otherwise. For the purposes of this condition:

(i) PEI Shares which have been unconditionally allotted shall be deemed to carry the voting rights which they will carry upon issue; and

(ii) the expressions "shares to which the Offer relates" and "associates" shall be construed in accordance with sections 974 to 991 of the Companies Act 2006;

(b) no government or governmental, quasi-governmental, supranational, statutory, regulatory or investigative body, authority, court, trade agency, association or institution or professional or environmental body in any jurisdiction in which PEI carries on business (each a "Third Party") having instituted, implemented or threatened or having announced its intention to institute, implement or threaten any action, proceedings, suit, investigation, enquiry or reference or having required any action to be taken or information to be provided or otherwise having done anything or having made, proposed or enacted any statute, regulation, order or decision or having done anything which would reasonably be expected to:

(i) make the Offer or its implementation, or the acquisition or the proposed acquisition by KHP of any shares or other securities in, or control of, PEI or any of its subsidiaries or subsidiary undertakings (together, the "PEI Group") void, illegal or unenforceable under the laws of any jurisdiction, or otherwise directly or indirectly materially restrain, prohibit, restrict, prevent or delay the same to a material extent or impose additional materially adverse conditions or material financial or other material obligations with respect thereto, or otherwise materially challenge or interfere therewith;

(ii) require, prevent or materially delay the divestiture or materially alter the terms envisaged for any proposed divestiture by PEI of all or any material portion of its business, assets or property, or (to an extent which is material in the context of the Offer or the PEI Group taken as a whole) impose any limit on the ability of any of them to conduct their respective businesses (or any of them) or to own or control any of their respective assets or properties or any part thereof;

(iii) impose any material limitation on, or result in any material delay in, the ability of KHP or PEI to acquire, hold or exercise effectively, directly or indirectly, all or any rights of ownership of PEI Shares or any shares or securities convertible into PEI Shares or to exercise voting or management control over any member of PEI in any such case which is material in the context of the PEI Group taken as a whole;

(iv) require KHP and/or PEI to acquire or offer to acquire or repay any shares or other securities in and/or indebtedness of any member of the PEI Group owned by or owed to any Third Party in circumstances which would impose on KHP or any member of the PEI Group a liability which is material in the context of the PEI Group taken as a whole; or

(v) otherwise adversely affect any or all of the businesses, assets or profits or financial or trading position of PEI or KHP to an extent which is material in the context of the PEI Group taken as a whole, and all applicable waiting and other time periods during which any Third Party could institute, implement or threaten any such action, proceedings, suit, investigation, enquiry or reference under the laws of any jurisdiction in which PEI carries on business, having expired, lapsed or been terminated;

(c) all necessary filings and applications having been made and all necessary waiting and other time periods (including any extensions thereof) under any applicable legislation or regulations of any jurisdiction in which PEI carries on business having expired, lapsed or been terminated and all statutory or regulatory obligations in any jurisdiction in which PEI carries on business having been complied with in each case as may be necessary in connection with the Offer and its implementation or the acquisition or proposed acquisition by KHP of any shares or other securities in, or control of, PEI and all authorisations, orders, recognitions, grants, consents, clearances, confirmations, licences, certificates, permissions and approvals ("Authorisations") which are material and necessary for or in respect of the Offer or the acquisition or proposed acquisition by KHP of any shares or other securities in, or control of, PEI or the carrying on by any member of the PEI Group of its business or in relation to the affairs of PEI having been obtained in terms and in a form reasonably satisfactory to KHP from all appropriate Third Parties or persons with whom PEI has entered into material contractual arrangements and all such Authorisations remaining in full force and effect and all filings necessary for such purpose having been made and there being no notice or written intimation of any intention to revoke, suspend, restrict or amend or not renew the same at the time at which the Offer becomes or is declared wholly unconditional in each case where the absence of such Authorisation would have a material adverse effect on the PEI Group taken as a whole;

(d) except as publicly announced by PEI prior to the date of this announcement through a Regulatory Information Service (a "RIS") or disclosed in writing to KHP or its advisers prior to the date of this announcement or as disclosed in the annual report and accounts of PEI for the year ended 31 March 2016, there being no provision of any arrangement, agreement, licence or other instrument to which PEI is a party or by or to which any of its respective assets is or are or may be bound, entitled or subject or any circumstance which, in consequence of the making or implementation of the Offer or the proposed acquisition of any shares or other securities in, or control of, PEI by KHP, or because of a change in the control or management of PEI or otherwise, would reasonably be expected to result in (in each case to an extent which is material in the context of the PEI Group taken as a whole):

(i) any indebtedness or liabilities actual or contingent of, or any grant available to, PEI being or becoming repayable or capable of being declared repayable immediately or prior to its stated maturity or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or capable of being withdrawn or inhibited;

(ii) the creation or enforcement of any mortgage, charge or other security interest over the whole or any material part of the business, property, assets or interests of PEI or any such security (whenever created, arising or having arisen) being enforced or becoming enforceable;

(iii) any such arrangement, agreement, licence or instrument or the rights, liabilities, obligations, or interests of PEI under any such arrangement, agreement, licence or instrument (or any arrangement, agreement, licence or instrument relating to any such right, liability, obligation, interest or business) or the interests or business of any such member in or with any other person, firm, company or body being or becoming capable of being terminated or adversely modified to a material extent or adversely affected to a material extent or any materially adverse action being taken or any materially onerous obligation or liability arising thereunder;

(iv) any asset or interest of PEI being or falling to be disposed of or charged (otherwise than in the ordinary course of business) or ceasing to be available to PEI Group or any right arising under which any such asset or interest could be required to be disposed of or charged or could cease to be available to any member of the PEI Group;

(v) PEI ceasing to be able to carry on business under any name under which it presently does so;

(vi) KHP or PEI being required to acquire or repay any shares in and/or indebtedness of PEI owned by any Third Party;

(vii) any material adverse change in or material adverse effect on the ownership or use of any intellectual property rights owned or used by PEI; or

(viii) the creation of any material liability, actual or contingent, by any such member, and no event having occurred which, under any provision of any such arrangement, agreement, licence or other instrument, might reasonably be expected to result in any of the events referred to in this condition (e) to an extent which would be material in the context of the PEI Group taken as a whole;

(e) since 31 December 2015 and except as disclosed in PEI's annual report and accounts for the year ended 31 March 2016, or as disclosed by or on behalf of PEI to KHP or its advisers in writing prior to 10 August 2016 or as otherwise publicly announced by PEI on or prior to 10 August 2016 through a RIS, PEI has not:

(i) issued or agreed to issue or proposed the issue of additional shares or securities of any class, or securities convertible into or exchangeable for shares, or rights, warrants or options to subscribe for or acquire any such shares, securities or convertible securities (save for issues between PEI and any of it wholly-owned subsidiary) or redeemed, purchased, repaid or reduced or proposed the redemption, purchase, repayment or reduction of any part of its share capital or any other securities;

(ii) recommended, declared, made or paid or proposed to recommend, declare, make or pay any bonus, dividend or other distribution whether payable in cash or otherwise other than any distribution by any of its wholly-owned subsidiaries within PEI's Group. KHP reserves the right to make an equivalent reduction in its Offer Price if PEI announces, declares or pays any dividend or any other distribution to shareholders on or after the date of this announcement;

(iii) save as between PEI and any of its wholly-owned subsidiaries and other than pursuant to the Offer, effected, authorised, proposed or announced its intention to propose any merger, demerger, reconstruction, arrangement, amalgamation, commitment or scheme or any acquisition or disposal or transfer of assets or shares (other than in the ordinary course of business) or any right, title or interest in any assets or shares or other transaction or arrangement in respect of itself or another member of the PEI Group which would be material in the context of the PEI Group taken as a whole;

(iv) acquired or disposed of or transferred (other than in the ordinary course of trading) or mortgaged, charged or encumbered any assets or shares or any right, title or interest in any assets or shares (other than in the ordinary course of trading) or authorised the same or entered into, varied or terminated or authorised, proposed or announced its intention to enter into, vary, terminate or authorise any agreement, arrangement, contract, transaction or commitment (other than in the ordinary course of trading and whether in respect of capital expenditure or otherwise) which is of a long-term (which shall mean for a fixed term in excess of 12 months and/or not terminable by the giving of 12 months' notice or less) or unusual or materially onerous nature or magnitude, or which involves or could involve an obligation of an unusual or materially onerous nature or magnitude, which is material in the context of the PEI Group taken as a whole;

(v) entered into any agreement, contract, transaction, arrangement or commitment (other than in the ordinary course of trading) which is material in the context of the PEI Group taken as a whole;

(vi) been unable or admitted that it is unable to pay its debts or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business or proposed or entered into any composition or voluntary arrangement with its creditors (or any class of them) or the filing at court of documentation in order to obtain a moratorium prior to a voluntary arrangement or, by reason of actual or anticipated financial difficulties, commenced negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness;

(vii) save as between PEI and any of its wholly-owned subsidiaries, granted any lease or third party rights in respect of any of the leasehold or freehold property owned or occupied by it or transferred or otherwise disposed of any such property in each case where such lease or third party rights is material in the context of the PEI Group taken as a whole;

(viii) taken or proposed any corporate action or had any proceedings started or threatened in writing against it for its winding-up (voluntary or otherwise), dissolution, striking-off or reorganisation or for the appointment of a receiver, administrator (including the filing of any administration application, notice of intention to appoint an administrator or notice of appointment of an administrator), administrative receiver, trustee or similar officer of all or any part of its assets or revenues or for any analogous proceedings or steps in any jurisdiction or for the appointment of any analogous person in any jurisdiction;

(ix) waived or compromised any claim or authorised any such waiver or compromise, save in the ordinary course of business, which is material in the context of the PEI Group taken as a whole;

(x) taken, entered into or had started or threatened against it in writing in a jurisdiction outside England and Wales any form of insolvency proceeding or event similar or analogous to any of the events referred to in condition (e) (viii) or condition (e) (ix) above; or

(xi) agreed to enter into or entered into an agreement or arrangement or commitment or passed any resolution or announced any intention with respect to any of the transactions, matters or events referred to in this condition (e);

(f) except as publicly announced by PEI prior to the date of this announcement through a RIS or disclosed in writing to KHP or its advisers prior to the date of this announcement and save as disclosed in the annual report and accounts of PEI for the financial year ended 31 March 2016 or in the Offer Document, since 31 December 2015:

(i) there having been no material adverse change in the business, assets, financial or trading position or profits of PEI Group which is material in the context of the PEI Group taken as a whole;

(ii) no material litigation, arbitration proceedings, prosecution or other legal proceedings to PEI is or may become a party (whether as claimant or defendant or otherwise), and no material enquiry or investigation by or complaint or reference to any Third Party, against or in respect of PEI, having been threatened in writing, announced or instituted or remaining outstanding by, against or in respect of PEI in any way which is material in the context of the PEI Group taken as a whole; and

(iii) no contingent or other liability having arisen or become apparent or increased which might be reasonably likely in either case to have a material adverse effect on PEI Group which is material in the context of the PEI Group taken as a whole;

(g) except as publicly announced by PEI prior to the date of this announcement through a RIS or disclosed in writing to KHP or its advisers prior to the date of this announcement and save as disclosed in the annual report and accounts of PEI for the financial year ended 31 March 2016 or the Offer Document, KHP not having discovered:

(i) that any financial, business or other information concerning PEI which is contained in the information publicly disclosed at any time by PEI either publicly or in the context of the Offer contains a material misrepresentation of fact which has not, prior to the date of this announcement, been corrected by public announcement through a RIS or omits to state a fact necessary to make the information contained therein not materially misleading;

(ii) that PEI is subject to any liability, contingent or otherwise which is material in the context of the PEI Group taken as a whole;

(iii) there has been a disposal, spillage or leakage of waste or hazardous substance or any substance likely to impair the environment or harm human health on, or there has been an emission or discharge of any waste or hazardous substance or any substance likely to impair the environment or harm human health from, any land or other asset now or previously owned, occupied or made use of by PEI which would be likely to give rise to any liability (whether actual or contingent, civil or criminal) or cost on the part of PEI which is material in the context of the PEI Group taken as a whole;

(iv) there is, or is reasonably likely to be, a liability (actual or contingent) on any past or present member of the PEI Group to make good, alter, improve, repair, reinstate, clean up or otherwise assume responsibility for any property or any controlled waters now or previously owned, occupied, operated or made use of or controlled by PEI, under any environmental legislation, regulation, notice, circular or order or any government, governmental, quasi-governmental, state or local government, supranational, statutory or other regulatory body, agency, court, association or any other person or body in any jurisdiction which is material in the context of the PEI Group taken as a whole;

(v) circumstances exist (whether as a result of the making of the Offer or otherwise) which would be reasonably likely to lead to a Third Party instituting, or whereby any present or past member of the PEI Group would be reasonably likely to be required to institute, an environmental audit or take any other steps which would, in any such case, be reasonably likely to result in any actual or contingent liability to improve or install new plant or equipment or make good, repair, reinstate or clean up any land or other asset now or previously owned, occupied or made use of by PEI, which, in any such case, would be material in the context of the PEI Group taken as a whole.

KHP reserves the right to waive all or any of conditions (b) to (g) inclusive, in whole or in part.

Conditions (b) to (g) inclusive must be satisfied as at, or waived on or before, midnight on the 31st day after the later of the first closing date of the Offer and the date on which condition (a) is fulfilled (or in each such case such later date as KHP may, with the consent of the Panel, agree), failing which the Offer will lapse provided that KHP shall be under no obligation to waive or treat as fulfilled any of conditions (b) to (g) inclusive by a date earlier than the latest date specified above for the fulfilment thereof notwithstanding that the other conditions of the Offer may at such earlier date have been fulfilled and that there are at such earlier date no circumstances indicating that any of such conditions may not be capable of fulfilment.

Except with the Panel's consent KHP will not invoke any of the above conditions (except for the acceptance condition in (a)) so as to cause the Offer not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the relevant conditions are of material significance to KHP in the context of the Offer.

Certain Further Terms of the Offer

1 The Offer will extend to all existing issued PEI Shares and any further PEI Shares which are unconditionally allotted or issued and fully paid while the Offer remains open for acceptance (or by such earlier date as KHP may, subject to the Code, decide), including pursuant to the exercise of any outstanding options over the PEI Shares.

2 The Offer will be open for acceptance until, subject to the provisions of the Offer Document, until 1.00 p.m. (London time) on the 31st day after the date of publication of the Offer Document or (if that day is a Saturday, Sunday or a public holiday) on the next following Business Day.

3 The availability of the Offer to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.

4 The PEI Shares which are the subject of the Offer will be acquired, fully paid, free from all liens, charges, encumbrances, rights of pre-emption and any other third party rights of any nature whatsoever and together with all rights now or hereafter attaching thereto, including the right to receive and retain in full all dividends and other distributions, if any, declared, made or paid after the date hereof.

5 KHP reserves the right, with the consent of the Panel (where necessary), to elect to implement the Offer by way of a scheme of arrangement as an alternative to the takeover offer. Any such scheme of arrangement will be implemented on substantially the same terms, so far as applicable, as those which apply to the takeover offer, subject to appropriate amendments to reflect the change in the method of effecting the offer.

6 The Offer will comply with the Listing Rules and the provisions of the Code. The Offer and any acceptances under it and any dispute or claim arising out of, or in connection with it (whether contractual or non-contractual in nature) will be governed by, and construed in accordance with, English law and be subject to the jurisdiction of the courts of England. The Offer will be made on the terms and conditions to be set out in the Offer Document.

Appendix 2

Sources of Information and Bases of Calculations

Part A

Information and Calculations

In this announcement, unless otherwise stated or the context otherwise requires, the following bases and sources have been used:

a. historic PEI Share prices are sourced from the Daily Official List of the London Stock Exchange and represent closing middle market prices for PEI Shares on the relevant date;

b. the value of the whole of the existing issued share capital of PEI is based upon the entire issued share capital at the date of this announcement, namely 11,945,519 ordinary shares of 0.01 pence each in the capital of PEI;

c. the information of PEI is extracted or derived from the annual report and accounts of PEI for the year ended 2016 and announcements made by PEI through a RIS; and

d. the information provided in relation to the Fund, including in relation to the value of the Fund's capital under management, has been provided by the General Partner.

Part B

PEI Shareholders' Irrevocable Undertakings

The following PEI Shareholders have given an irrevocable undertaking to accept, or procure the acceptance of, the Offer, as soon as practicable after, and in any event no later than the date falling (i) 21 days after the publication of the Offer Document in the case of CG (as defined below), and (ii) five Business Days after the publication of the Offer Document in the case of each of the other PEI Shareholders:

 
 Name                     Number of PEI Shares   Percentage of PEI's 
                                                  issued share capital 
                                                  (%) 
-----------------------  ---------------------  ---------------------- 
 Nicholas Greenwood       1,130,320              9.462 
-----------------------  ---------------------  ---------------------- 
 Damille Investments 
  II Limited              2,562,263              21.450 
-----------------------  ---------------------  ---------------------- 
 CG Asset Management 
  Limited                 1,853,329              15.515 
-----------------------  ---------------------  ---------------------- 
 QVT Associates GP LLC    3,075,689              25.748 
-----------------------  ---------------------  ---------------------- 
 TOTAL                    8,621,601              72.174 
-----------------------  ---------------------  ----------------------

The irrevocable undertakings given by Nicholas Greenwood and QVT Associates GP LLC (in its capacity as general partner of QVT Fund LP and Quintessence Fund LP ("QVT")) will cease to be binding if:

(a) the Offer Document is not published within 28 days after the date of this announcement;

(b) the Offer once made is withdrawn or lapses; or

(c) prior to the 21st day after the posting of the Offer Document any third party announces a firm intention to make a general offer (which is not subject to any pre-conditions) to acquire the entire issued and to be issued share capital of PEI on terms which represent an improvement of not less than 15 per cent. on the value of the consideration of the Offer and KHP does not, within 5 Business Days of the announcement of such higher offer, revise the Offer such that the amount or value of cash consideration offered under the Offer equals or exceeds the amount or value of consideration offered under the alternative offer.

The irrevocable undertakings given by Nicholas Greenwood and QVT will, subject to the provisions detailed at paragraph (c) above, prevent it from (i) selling, transferring, charging, encumbering or otherwise disposing of all or any of its PEI Shares or of any interest therein, (ii) soliciting, encouraging, accepting or agreeing to accept any competing offer, (iii) exercising any right of withdrawal of any acceptance of the Offer where such a right is otherwise exercisable under the Code, (iv) acquiring any PEI Shares or other securities in PEI or any interest therein, (v) convening any meeting of the PEI Shareholders or exercising voting rights in any manner which might frustrate the Offer, and (vi) entering into any agreement or incurring any obligation which relates to its PEI Shares, is in connection with any of the acts referred to in sub-paragraph (ii) above and would restrict or impede the acceptance of the Offer.

The irrevocable undertakings given by Damille Investments II Limited ("Damille") will cease to be binding if:

(a) the Offer Document is not published within 28 days after the date of this announcement;

(b) the Offer, once made, lapses or is withdrawn; or

(c) prior to the 21st day after the posting of the Offer Document any third party announces a firm intention to make a general offer (which is not subject to any pre-conditions) to acquire the entire issued and to be issued share capital of PEI on terms which represent an improvement of not less than 12 per cent. on the value of the consideration of the Offer and KHP does not, within 5 Business Days of the announcement of such higher offer, revise the Offer such that the amount or value of cash consideration offered under the Offer equals or exceeds the amount or value of consideration offered under the alternative offer.

The irrevocable undertaking given by Damille will, subject to the provisions detailed at paragraph (c) above, prevent it from (i) selling, transferring, charging, encumbering or otherwise disposing of all or any of its PEI Shares or of any interest therein, (ii) soliciting, encouraging, accepting or agreeing to accept any competing offer, (iii) exercising any right of withdrawal of any acceptance of the Offer where such a right is otherwise exercisable under the Code, (iv) convening any meeting of the PEI Shareholders or exercising voting rights in any manner which might frustrate the Offer, and (v) entering into any agreement or incurring any obligation which relates to its PEI Shares, is in connection with any of the acts referred to in sub-paragraph (ii) above and would restrict or impede the acceptance of the Offer.

The irrevocable undertakings given by CG Asset Management Limited (as the investment manager of Capital Gearing Trust PLC, Capital Gearing Portfolio Fund PLC and Capital Gearing Fund PLC ("CG")) will cease to be binding if:

(a) the Offer Document is not published within 28 days after the date of this announcement;

(b) the Offer once made is withdrawn or lapses; or

(c) prior to the 21st day after the posting of the Offer Document any third party announces a firm intention to make a general offer (which is not subject to any pre-conditions) to acquire the entire issued and to be issued share capital of PEI on terms which represent an improvement of not less than 10 per cent. on the value of the consideration of the Offer and KHP does not, within 5 Business Days of the announcement of such higher offer, revise the Offer such that the amount or value of cash consideration offered under the Offer equals or exceeds the amount or value of consideration offered under the alternative offer.

The irrevocable undertaking given by CG will, subject to the provisions detailed at paragraph (c) above, prevent it from (i) selling, transferring, charging, encumbering or otherwise disposing of all or any of its PEI Shares or of any interest therein, (ii) soliciting, encouraging, accepting or agreeing to accept any competing offer, (iii) exercising any right of withdrawal of any acceptance of the Offer where such a right is otherwise exercisable under the Code, (iv) acquiring any PEI Shares or other securities in PEI or any interest therein, (v) convening any meeting of the PEI Shareholders or exercising voting rights in any manner which might frustrate the Offer, and (vi) entering into any agreement or incurring any obligation which relates to its PEI Shares, is in connection with any of the acts referred to in sub-paragraph (ii) above and would restrict or impede the acceptance of the Offer.

PEI Directors' Irrevocable Undertakings

The following PEI Directors have given an irrevocable undertaking to accept, or procure the acceptance of, the Offer, as soon as practicable after, and in any event no later than the date falling five Business Days (in the case of Peter Dicks) and 15 Business days (in the case of Julian Cazalet who holds his shares through a nominee) after, the publication of the Offer Document:

 
 Name              Number of PEI Shares   Percentage of PEI's 
                                           issued share capital 
                                           (%) 
----------------  ---------------------  ---------------------- 
 Peter Dicks       12,388                 0.104 
----------------  ---------------------  ---------------------- 
 Julian Cazalet    70,868                 0.593 
----------------  ---------------------  ---------------------- 
 TOTAL             83,256                 0.697 
----------------  ---------------------  ----------------------

The irrevocable undertakings given by the PEI Directors will cease to be binding if:

(a) the Offer Document is not published within 28 days after the date of this announcement; or

(b) the Offer once made is withdrawn or lapses.

The irrevocable undertaking given by the PEI Directors will, subject to the provisions detailed at paragraph (d) above, prevent them from (i) selling, transferring, charging, encumbering or otherwise disposing of all or any of its PEI Shares or of any interest therein, (ii) accepting or agreeing to accept any competing offer, (iii) exercising any right of withdrawal of any acceptance of the Offer where such a right is otherwise exercisable under the Code, (iv) acquiring any PEI Shares or other securities in PEI or any interest therein, (v) convening any meeting of the PEI Shareholders or exercising voting rights in any manner which might frustrate the Offer, and (vi) entering into any agreement or incurring any obligation which relates to its PEI Shares, is in connection with any of the acts referred to in sub-paragraph (ii) above and would restrict or impede the acceptance of the Offer.

Appendix 3

Definitions

The following definitions apply throughout this announcement (including the summary) unless the context requires otherwise:

 
 "Business Day"               a day other than a Saturday or Sunday 
                               or a public holiday in England and Wales; 
 "the Code"                   the City Code on Takeovers and Mergers; 
 "Compass Partners            Compass Advisers Limited (trading as 
  Advisers"                    Compass Partners Advisers Limited) 
 "Concert Party"              a group "acting in concert" as defined 
                               in the Code; 
 "Conditions"                 the conditions to the Offer set out in 
                               Appendix I; 
 "Closing Price"              the mid-market price of a PEI Share at 
                               close of trading on a particular day; 
 "Dealing Disclosure"         as defined in the Code; 
 "EPL Advisory"               EPL Advisory LLP 
 "Exchange Act"               United States Securities Exchange Act 
                               of 1934, as amended 
 "FCA"                        the Financial Conduct Authority of the 
                               United Kingdom; 
 "FSMA"                       the United Kingdom Financial Services 
                               and Markets Act 2000 (as amended); 
 "Form of Acceptance"         the form of acceptance accompanying the 
                               Offer Document; 
 "Fund"                       Kline Hill Partners Fund LP; 
 "General Partner"            KHP Fund GP LLC; 
 "Investment Manager"         Kline Hill Partners LLC; 
 "J.P. Morgan Cazenove"       J.P. Morgan Limited, which conducts its 
                               UK investment banking activities as J.P. 
                               Morgan Cazenove; 
 "KHP"                        KHP Strategic 2 LP 
 "Kline Hill"                 KHP, the Fund, the General Partner and 
                               the Investment Manager, as the context 
                               requires; 
 "London Stock Exchange"      London Stock Exchange plc; 
 "Main Market"                the London Stock Exchange's main market 
                               for listed securities; 
 "Offer"                      the recommended cash offer by KHP to 
                               acquire all of the issued and to be issued 
                               PEI Shares on the terms and conditions 
                               set out in this announcement and to be 
                               repeated in the Offer Document, including, 
                               where the context requires, any subsequent 
                               revision, variation, extension or renewal 
                               of such offer; 
 "Offer Document"             the formal document to be sent to the 
                               Shareholders (or made available electronically 
                               in accordance with the Code) setting 
                               out the full terms and conditions of 
                               the Offer; 
 "Offer Period"               the offer period (as defined by the Code) 
                               relating to PEI which commenced on the 
                               date of this announcement; 
 "Offer Price"                167.00 pence per PEI Share; 
 "Official List"              the official list maintained by the UK 
                               Listing Authority pursuant to Part VI 
                               of FSMA; 
 "Opening Position            as defined in the Code; 
  Disclosure" 
 "Panel"                      the Panel on Takeovers and Mergers; 
 "PEI"                        Private Equity Investor plc; 
 "PEI Board"                  the board of directors of PEI; 
 "PEI Directors"              the directors of PEI; 
 "PEI Shareholders"           holders, from time to time, of PEI Shares; 
 "PEI Shares"                 the existing issued or unconditionally 
                               allotted and paid (or credited as fully 
                               paid) ordinary PEI Shares of nil par 
                               value in the capital of PEI and any further 
                               PEI Shares which are unconditionally 
                               allotted or issued fully paid (or credited 
                               as CLOSE fully paid) on or prior to the 
                               date on which the Offer closes or, subject 
                               to the provisions of the Code, such earlier 
                               date or dates as KHP may determine; 
 "Restricted Jurisdiction"    any jurisdiction in respect of which 
                               the making of the Offer, directly or 
                               indirectly, in, into or from, such jurisdiction 
                               would constitute a violation of the laws 
                               of such jurisdiction; 
 "RIS"                        regulatory information service 
 "UK Listing Authority"       the FCA acting in its capacity as the 
                               competent authority for the purposes 
                               of admission to the Official List; and 
 "unconditionally allotted"   in relation to PEI Shares, means any 
                               PEI Shares which have not been issued 
                               but which PEI is unconditionally obliged 
                               to issue; 
 "United Kingdom"             the United Kingdom of Great Britain and 
                               Northern Ireland; 
 "U.S." or "United            United States of America, its territories 
  States"                      and possessions, any state of the United 
                               States and the District of Columbia 
 "GBP"                        Great British pound, the lawful currency 
                               of Great Britain.

Click on, or paste the following link into your web browser, to view the associated PDF document.

http://www.rns-pdf.londonstockexchange.com/rns/8765G_-2016-8-10.pdf

This information is provided by RNS

The company news service from the London Stock Exchange

END

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August 11, 2016 02:01 ET (06:01 GMT)

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