Private Equity Inv: Tender Offer

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Not for distribution in or into the United States, Canada, Australia, Japan,
South Africa, or the Republic of Ireland
21 November 2008
Private Equity Investor PLC (the "Company")
Tender Offer
The Company has today published a circular (the "Circular") in respect of a
tender offer (the "Tender Offer") to purchase Shares having an aggregate value
at the Tender Price of up to £17,500,000. Terms used in this announcement shall
have the same meanings as in the Circular.
Introduction
The Circular sets out the background to and reasons for the Tender Offer and
why the Board believes the Tender Offer to be in the best interests of
Shareholders as a whole.
The Tender Offer is being made available to all Shareholders who are on the
Register at the close of business on 9 December 2008, with the exception of
holders in certain overseas jurisdictions. Shareholders can decide whether they
want to tender any of their Shares at the Tender Price, which will be the NAV
per Share as at the Calculation Date (as calculated by the Company) adjusted
downwards to reflect the costs of the Tender Offer.
The Company requires the authority from Shareholders to purchase Shares under
the Tender Offer which is being sought at an Extraordinary General Meeting to
be held at the offices of JPMorgan Cazenove Limited, 20 Moorgate, London EC2R
6DA at 11.30 a.m. on 11 December 2008. The Board is making no recommendation to
Shareholders in relation to participation in the Tender Offer, however,
Shareholders should note that the Board intends to tender their Shares in full.
The Board is unanimously recommending Shareholders to vote in favour of the
Resolution to be proposed at the Extraordinary General Meeting, as the
Directors intend to do in respect of their own beneficial holdings of Shares.
Background to the Tender Offer
You will recall that in December 2007 a tender offer was made by JPMorgan
Cazenove to all Shareholders (other than certain overseas shareholders) to
purchase Shares to return £12,500,000. This was as a result of a number of
material Shareholders indicating to the Board that they wanted to see a
principal part of the returns made on existing funds distributed to
Shareholders. I am pleased to advise that almost all Shareholders took up this
opportunity to realise part of their holdings.
Between 31 March 2008 and 30 September 2008, the NAV per Share of the Company
increased by 6.85 per cent. from 181.02p per Share to 193.42p per Share,
largely as a result of the strengthening of the Dollar, in which the Company's
principal assets are denominated. In Dollar terms, however, the NAV fell by
4.17 per cent., from 359.78 cents per Share to 344.76 cents per Share,
reflecting some reduction in the value of the investment portfolio. Over this
period the exchange rate moved from $1.98:£1 to $1.78:£1.
The Company's portfolio has, despite difficult economic times, continued to
deliver a flow of distributions arising from a mix of sales of underlying
investments to third parties and initial public offerings. It is the Company's
stated policy that it continues to meet existing commitments but is not making
commitments to new investments. Instead the Company proposes to make periodic
returns of capital to Shareholders. The Board feel that it is now appropriate
to make a further return to Shareholders.
In order for the Company to be able to return further monies Shareholders
approved on 29 May 2008 (subject to the sanction of the court), the
cancellation of the Company's entire share premium account. This court sanction
was obtained on 29 October 2008 and, following registration at Companies
House, the cancellation became effective on that date. The amount set free from
the cancellation has been used to create a special reserve which can be used
for, amongst other things, share buy-backs, distributions and writing off
losses.
The creation of the above special reserve places the Company in a position that
it can now, and in a similar manner as last year, make a further tender offer
by JPMorgan Cazenove available to purchase Shares as detailed in the Circular.
As at 19 November 2008, the Company had approximately £32,000,000 in cash and
readily realisable assets. The Company intends to distribute to Shareholders £
17,500,000 of such amount (which amount has already been converted from Dollars
to Sterling). The remainder of the cash and readily realisable assets held by
the Company, comprising £12,000,000 set aside to meet portfolio commitments and
a further £2,500,000 will be retained by the Company to meet the Company's
costs and contingencies, including amounts which will or may become due to
investment vehicles to which the Company has made commitments.
The Company's NAV as at 30 September 2008 was £82,600,000, hence the Tender
Offer, if taken up in full, would amount to a distribution of 21.18 per cent.
of the Company's NAV as at that date. Following the Tender Offer (and assuming
full take up) the Company will have returned to Shareholders approximately £
30,000,000, which represents 30 per cent. of the original funds raised.
The Board believes that it is equitable to give all Shareholders (other than
certain overseas shareholders) the opportunity to tender Shares for purchase at
a price close to the NAV on a pro rata basis by way of the Tender Offer. To the
extent that fewer than all of the Shares available for purchase under the
Tender Offer are tendered in the Tender Offer, the Company will retain the
right to utilise the remainder of its authority to make individual market
purchases of Shares.
It is envisaged that, after the Tender Offer, the Company will continue
periodically to distribute excess funds to Shareholders.
The Tender Offer
The Tender Offer is, as previously, being made by JPMorgan Cazenove to all
Shareholders (other than certain overseas shareholders). Full details of the
Tender Offer, including the terms and conditions on which it is being made, are
set out in the Circular and on the Tender Form which has been sent to
Shareholders who hold their Shares in certificated form.
The Tender Offer is conditional on the passing of the Resolution set out in the
notice of Extraordinary General Meeting and the other conditions more
particularly described in the Circular.
The Tender Offer involves the following:
  * The Tender Offer is being made to Shareholders (other than certain overseas
    shareholders) by JPMorgan Cazenove for up to a number of Shares equal in
    value, in aggregate, to £17,500,000 at the Tender Price.
   
  * The Tender Price in pence per Share (which will be calculated to four
    decimal places) will be the NAV per Share as at 11 December 2008 (the
    "Calculation Date") as calculated by the Company, less an amount equal to
    the Company's estimated costs and expenses of the Tender Offer divided by
    the total number of Shares in issue (the "Tender Costs per Share"). The
    total costs of the Tender Offer (assuming that the Tender Offer is fully
    taken up) are estimated to be £309,913, comprising fixed costs of £187,413
    and variable costs of 0.2 per cent. commission payable to JPMorgan Cazenove
    and stamp duty at the rate of 0.5 per cent of the amount paid by the
    Company for the Exit Shares under the terms of the Repurchase Agreement. If
    the Calculation Date had been 18 November 2008, the NAV per Share would
    have been 224.7596p (compared to a Share price of 119.5p as at close of
    business on the same date), resulting in a Tender Price of 224.0342p after
    deducting the Tender Costs per Share.
   
  * The number of Shares to which the Tender Offer will apply will be
    determined by dividing £17,500,000 (being the total amount being made
    available to purchase Shares under the Tender Offer) by the Tender Price
    and rounding the result down to the nearest whole number of Shares, subject
    to a maximum of 10,676,579 Shares (representing 24.99 per cent. of the
    Company's issued share capital on 20 November 2008).
   
  * Each Shareholder will be entitled to have purchased at the Tender Price
    under the Tender Offer such percentage (the "Basic Entitlement Percentage")
    of their shareholding as is equal to the percentage which the total number
    of Shares to which the Tender Offer will apply bears to the total number of
    Shares in issue on the Record Date, rounded down to the nearest whole
    number of Shares (such entitlement being a Shareholder's "Basic
    Entitlement"). Shareholders may tender a higher or lower percentage of
    their holdings but tenders in excess of the Basic Entitlement will only be
    satisfied to the extent that other Shareholders tender less than their
    Basic Entitlement.
   
  * Shareholders (other than certain overseas shareholders) will be able to
    decide whether to continue their existing investment in the Company without
    tendering any Shares or to tender some or all of their Shares within the
    overall limit of the Tender Offer.
   
  * All Shares tendered by any Shareholder up to their Basic Entitlement (which
    represents such Shareholder's pro-rata share of the total number of Shares
    to be acquired under the Tender Offer) will be accepted in full.
   
  * Shareholders who hold their Shares in certificated form and who wish to
    tender their Shares should complete the tender form in accordance with the
    instructions thereon.
   
  * Shareholders who hold their Shares in uncertificated form (ie in CREST) and
    who wish to tender their Shares should send a TTE instruction through
    CREST.
   
  * If the aggregate value, at the Tender Price, of the number of Shares
    validly tendered equates to a value of £17,500,000 or less, all such Shares
    will be accepted and purchased.
   
  * If the aggregate value, at the Tender Price, of the number of Shares
    validly tendered equates to more than £17,500,000, tenders will be accepted
    in the order set out below:
   
  * all Shares tendered by any Shareholder up to their Basic Entitlement will
    be accepted in full; and
   
  * all Shares tendered by Shareholders in excess of their Basic Entitlements
    will be satisfied in proportion to the amount tendered by each Shareholder
    in excess of their Basic Entitlement so as to ensure that the aggregate
    price paid in respect of all Shares purchased under the Tender Offer does
    not exceed £17,500,000.
   
  * All successfully tendered Shares will be repurchased from JPMorgan Cazenove
    by the Company and will be cancelled and will not rank for any future
    dividends.
   
  * Any rights of Shareholders who choose not to tender their Shares will be
    unaffected.
   
Laxey Partners Limited, a company of which Colin Kingsnorth (a Director of the
Company) is a director, acts as investment adviser and/or investment manager to
a number of investment funds which, as at 20 November 2008 (this being the
latest practicable date prior to the publication of the Circular), beneficially
owned an aggregate of 11,711,304 Shares, representing 27.41 per cent. of the
total number of Shares in issue. Laxey Partners Limited has irrevocably
undertaken to procure that such investment funds (or any nominee which holds
legal title to such shares on their behalf) will tender not less than their
Basic Entitlement under the Tender Offer and also vote in favour of the
Resolution to be proposed at the Extraordinary General Meeting referred to
below.
Calculation of the Tender Price
The NAV per Share as at the Calculation Date will be the Company's published
NAV per Share as at 30 November 2008, amended to include current period revenue
from 1 November 2008 and adjusted to reflect movements in cash, debtors,
creditors and quoted investment valuations held by the Company between 30
November 2008 and the Calculation Date. The values attributed to the Company's
interests in limited partnerships and other unquoted investment vehicles in
which the Company invests for the purposes of calculating the Company's NAV per
Share as at the Calculation Date will be the latest such revaluations notified
to the Company as at the 30 November 2008, adjusted to reflect calls of
commitments made on the Company, and cash distributions made to the Company, by
such limited partnerships and investment vehicles. Shareholders should note
that the revaluations of the Company's investments in limited partnerships and
other investment vehicles as at 30 September 2008 will not reflect matters
which may be known about which have affected such investments since that date.
Recent volatility may result in material movements in the NAV.
Had the Calculation Date occurred on 18 November 2008, based on the Company's
published NAV as at 31 October 2008, amended to include current period revenue
from 1 October 2008 and adjusted to reflect movements in cash, debtors,
creditors and quoted investment valuations held by the Company between 31
October 2008 and 18 November 2008, the NAV per Share would have been 224.7596p,
resulting in a Tender Price of 224.0342p (after deducting an amount equal to
the Tender Costs per Share). The values attributed to the Company's interests
in limited partnerships and other unquoted investment vehicles in which the
Company invests for the purposes of calculating the Company's NAV per Share as
at 31 October 2008 were the latest revaluations of such investments notified to
the Company as at that date (adjusted to reflect calls of commitments made on
the Company, and cash distributions made to the Company, by such limited
partnerships and investment vehicles).
Taxation
Shareholders who sell Shares pursuant to the Tender Offer should, subject to
the potential application of section 703 of ICTA 1988 and section 698 of ITA
2007, be treated as having sold their Shares in the normal way. Shareholders
may, depending on their individual circumstances, incur a liability to taxation
on capital gains. UK individual Shareholders should be aware that HMRC may seek
to treat part or the whole of the disposal proceeds of their Shares as income
under section 698 of ITA 2007. Further information on the UK taxation
consequences of the Tender Offer is set out in Part IV of the Circular.

Shareholders who are in any doubt as to their tax position or who are subject
to tax in a jurisdiction other than the UK should consult an appropriate
professional adviser.
Overseas Shareholders
Shareholders with registered or mailing addresses outside the UK, or who are
citizens or nationals of, or resident in, a jurisdiction other than the UK,
should read paragraph 9 of Part III of the Circular and the relevant provisions
of the Tender Form. It is the responsibility of all Overseas Shareholders to
satisfy themselves as to the observance of any legal requirements in their
jurisdiction, including, without limitation, any relevant requirements in
relation to the ability of such holders to complete and return a Tender Form.
Repurchase Agreement
Under the terms of the Repurchase Agreement, the Company will acquire, through
an on-market purchase, all of the Exit Shares at an aggregate price equal to
the amount paid by JPMorgan Cazenove for the Exit Shares. Further details of
the Repurchase Agreement are set out in paragraph 2 of Part V of the Circular.
In addition, the Company will be liable to pay stamp duty (or stamp duty
reserve tax) at the rate of 0.5 per cent. (rounded up to the nearest £5 in the
case of stamp duty) of the aggregate amount payable by the Company in respect
of Shares purchased from JPMorgan Cazenove. The Company will also be liable to
pay JPMorgan Cazenove's fee, costs and expenses under the terms of JPMorgan
Cazenove's engagement by the Company in connection with the Tender Offer.
Extraordinary General Meeting
The Company will require, under the CA 1985, the authority from Shareholders to
purchase the Shares under the Tender Offer. A notice convening an Extraordinary
General Meeting of the Company, which is to be held at the offices of JPMorgan
Cazenove Limited, 20 Moorgate, London EC2R 6DA on 11 December 2008 at 11.30
a.m., is contained within the Circular. At this meeting, a resolution will be
proposed to authorise the Company to make the repurchase of Shares which is
necessary to enable the Tender Offer to be implemented. The resolution will be
proposed as a special resolution requiring the approval of 75 per cent. of the
votes cast at the meeting.
EXPECTED TIMETABLE                                                            
                                                                              
Latest time and date for receipt of Forms of          11.30 a.m. on 9 December
Proxy for the Extraordinary General Meeting                                   
                                                                              
Closing Date - latest time and date for                3.00 p.m. on 9 December
receipt of Tender Forms and settlement of TTE                                 
Instruction(s)                                                                
                                                                              
Record Date for Tender Offer                   close of business on 9 December
                                                                              
Extraordinary General Meeting                        11.30 a.m. on 11 December
                                                                              
Calculation Date for Tender Price                                  11 December
                                                                              
Result of Tender Offer and Tender Price                by close of business on
announced                                                          12 December
                                                                              
Completion of purchase of Shares under the                         15 December
Tender Offer                                                                  
                                                                              
Despatch of cheques for Tender Offer                               18 December
consideration in respect of certificated                                      
Shares sold under the Tender Offer and any                                    
balance certificates in respect of any unsold                                 
certificated Shares                                                           
                                                                              
CREST accounts credited with Tender Offer                          18 December
consideration and any unsold uncertificated                                   
Shares                                                                        
ENQUIRIES
Peter Dicks 020 7563 1630
Chairman, Private Equity Investor PLC
Angus Gordon Lennox 020 7588 2828
JPMorgan Cazenove Limited
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