Private Equity Investor PLC – Rejection of indicative offer

The Company announces that it has received an indicative offer for the Company which, if made, would represent a modest premium to the current share price but a substantial discount to the net asset value, which as of 31 March 2004 was £63.23m or 126.46p per share.*

The Company has considered this indicative offer carefully but believes that an offer on the terms indicated would not even reflect the current reported value of the underlying portfolio or indeed its potential for substantial growth. This opportunistic indicative offer has been rejected as shareholders should not be denied the opportunity to achieve full value in the future by accepting such a discounted value for their assets now.

Private equity investments in venture capital funds typically have three phases: investment, holding and realisation. It is in this last phase when substantial returns are normally achieved. The Company is now only part of the way through its planned life and realisations are already being achieved. Furthermore, following the severe recession in venture capital markets, the Company believes that the venture capital industry is currently at the bottom of its investment cycle and is likely to recover strongly from this point.

As stated in the Company’s last annual report on 16 July 2003:

‘We consider the Company’s venture portfolio to be well diversified across a variety of sectors that are exhibiting promising growth. Companies developing and building wireless platform services, wireless gateways and networks, medical devices, and certain Internet services are doing particularly well.

‘The financing environment at present enables the Company’s venture partnerships to obtain favourable pricing for both new and follow-on investments, resulting in larger equity stakes in their investee companies, at much lower prices than when the Company commenced investing. We believe that many of our portfolio companies are well-positioned and making steady progress.

‘Venture capital is largely about picking winners and, increased time horizons aside, our venture partnerships are generally predicting healthy returns on our investments. They are focused on taking advantage of what they perceive to be exceptional investment opportunities at the low point in the cycle, as well as working with their existing investee companies in order to build sustainable enterprise value.’

As of 31 March 2004 the Company’s portfolio, including investments in 20 funds, was as follows:

	$m
Amount committed to funds	207.25
Amount drawndown	137.92
	£m
Value of existing investment portfolio *	37.89
Value of cash and equivalent investments	24.30

No action is required by shareholders.

* based on the Individual Venture Fund Investment revaluations as at 31 December 2003.

Enquiries:

• Tim Childs: 020 79305600
  Private Equity Investor PLC
• Julian Cazalet/Angus Gordon Lennox: 020 7588 2828
  Cazenove & Co. Ltd
• Jeremy King: 020 7377 6161
  Insinger de Beaufort

Cazenove & Co. Ltd (‘Cazenove’) and Insinger de Beaufort (‘Insinger’), which are regulated and authorised by The Financial Services Authority Limited, are acting exclusively for Private Equity Investor PLC and will not be responsible to any other person for providing protections afforded to customers of Cazenove or Insinger or for advising any other person. Cazenove and Insinger have approved this announcement as an investment advertisement solely for the purpose of section 21 of the Financial Services and Markets Act 2000.