Baidu.com

PEI is pleased to report the IPO on 5 August 2005 of Baidu.com, a portfolio company held through its investment in Draper Fisher Jurvetson ePlanet Ventures LP (“DFJ”). Baidu is considered to be the leading Chinese language Internet search provider.

The shares in Baidu that are attributable to the Company are retained in DFJ which, after the offering, holds more than 25% of the share capital of Baidu. The shares are subject to complex and lengthy “lock-up” restrictions on sale. In particular, the principal shareholders have agreed to a lock-up period of 180 days and DFJ and others have agreed to a further such period of up to an additional 540 days. During the latter period, up to 25% of holdings may be sold at the beginning of each 180 day period.

The effect of these lock-up arrangements is that the value of PEI’s investment is difficult to estimate. In addition, the value may be reduced by the General Partner’s “carried interest” of up to 25% of gains made by DFJ as a whole.

Shareholders should note, however, that the maximum number of shares in Baidu attributable to the Company is 371,000 which, at the IPO price of $27 would be valued at $10.02 million (compared with a carrying value of $2.47 million) before making any adjustment for the lock-up or the carried interest. The share price of Baidu, which is quoted on NASDAQ under the symbol BIDU, rose significantly after the IPO and currently stands at approximately $115.

At a price of $27 per share and before applying any discount for illiquidity or providing for carried interest, the additional NAV attributable to PEI would be 15.1 cents (8.5p) per share. At the closing price of $115.95 on 8 August, this would increase to 81.1 cents (46.1p) on the same basis.

Exchange rate £=US$1.7606.

Private Equity Investor Plc
Tel: 020 7930 5600