Capital Reorganisation

Bear Stearns Private Equity Limited
11 December 2006


Bear Stearns Private Equity Limited (the 'Company')

11 December 2006

Recommended capital reorganisation involving the creation and issue of Asset
Linked Notes in place of ZDP Shares, renewal of buyback powers, amendments to
the borrowing policy and over-commitment strategy, the utilisation of special
purpose investment vehicles, amendments to the Management Agreement and Articles
of Association


Introduction 

The Board of Bear Stearns Private Equity Limited has today issued a document
with recommended proposals for a reorganisation of the Company's share capital
whereby Zero Dividend Preference Shares in issue will be redeemed and replaced
with Asset Linked Notes.  Terms used in this announcement shall have the same
meaning as set out in the document.

The Proposals are designed to convert the Company's structure from a split
capital investment company into a conventional investment company whilst
retaining the Net Asset Value represented by the ZDP Shares.  It is intended
that ZDP Shareholders will receive one new Asset Linked Note for each ZDP Share
held and that the economic characteristics and, where practicable, the rights of
the ZDP Shares will be maintained as closely as possible within the terms and
conditions of the Asset Linked Notes (having regard to the debt nature of the
ALNs).  The Proposals also involve the renewal of buy back powers, an amendment
to the Company's existing borrowing policy by allowing the Company to borrow
(within the current overall limit) either for long term investment purposes and/
or for short term purposes such as settlement of transactions; to increase the
limit on the Company's over-commitment strategy; to allow the Company to utilise
special purpose investment subsidiaries to facilitate commitments to, or
acquisitions of, investments; to make amendments to the Management Agreement;
and to adopt new Articles to reflect the new capital structure and borrowing
policy.

Implementation of the Proposals requires the approval of Shareholders of the
resolutions to be proposed at the Meetings convened for 11 January 2007 (or at
any adjournment thereof).



The Proposals

The Proposals, in summary, comprise:
     
1.   The redemption of all of the ZDP Shares in issue and the issue of
ALNs to ZDP Shareholders on a one for one basis. The ALNs have been structured
such that the economic characteristics and, where practicable, the rights of the
ZDP Shares will be maintained as closely as possible within the terms and
conditions of the ALNs (having regard to the debt nature of the ALNs). The terms
of the ALNs have also been structured with the aim of achieving the same tax
treatment for certain United Kingdom tax resident holders (United Kingdom
resident individuals, investment trusts, authorised unit trusts and open-ended
investment companies) as would apply in relation to the ZDP Shares.
     
2.   The delisting of the ZDP Shares from the Official List and to trading
on the London Stock Exchange and the admission of the ALNs to the Official List
and to trading on the London Stock Exchange.

3.   Seeking Shareholder authority to make market purchases of ALNs from
time to time and the renewal of the existing general authority to repurchase
Equity Shares.

4.   An amendment to the Company's existing borrowing policy by allowing
the Company to borrow up to 20 per cent. of its adjusted total of capital and
reserves for long term investment purposes and/or for short-term or temporary
purposes and to utilise special purpose investment vehicles (having regard to
the investment restrictions imposed by the Listing Rules from time to time).
Special purpose investment vehicles may be funded by external debt (which debt
would not count towards the borrowing limit described above provided that such
debt is on a non-recourse basis to the Company and/or the Company is not
required to provide any guarantee, pledge, security or other similar charge to
the lender) for the purposes of committing to, or acquiring, investments.

5.   An amendment to the Company's over-commitment strategy such that the
limit on the Company's total exposure to private equity is increased from 130
per cent. to 160 per cent. of the current Total Assets of the Company (as
determined by the Directors and the Managers at the time of acquisition or
commitment);

6.   Adoption of new Articles of Association necessary to reflect and
implement the Proposals.

7.   Amendments to the Management Agreement to allow the Managers to
charge a base annual management fee based on the value of the Company's
investment assets and a performance fee based on the Net Asset Value growth of
the Equity Shares as a class, subject to the existing hurdle rate and high
watermark.  The amendments to the Management Agreement constitute a related
party transaction for the purposes of the Listing Rules and, thus, special steps
will be taken to comply with the relevant provisions of the Listing Rules.

Background to and reasons for the Proposals

The Directors have closely monitored the level at which the Equity Shares have
been trading on the London Stock Exchange relative to the underlying net assets
attributable to them together with the Company's ability to raise additional
funds for investment.  The Directors also believe that potential investors are
wary of investing in split capital structures which may also be more appropriate
for companies targeting a higher yield to investors.

The Directors, in conjunction with the Company's financial adviser, JPMorgan
Cazenove, and the Managers, have considered various ways in which this situation
might be remedied.  They have concluded that it would not be desirable to repay
the ZDP Shares ahead of their Final Capital Entitlement Date without
compromising the quality and growth prospects of the Company Portfolio.

The Directors have, accordingly, decided to put forward the Proposals which
involve, among others, a reorganisation of the Company's share capital by way of
an issue of Asset Linked Notes in substitution for the ZDP Shares in issue.

The Directors believe that conversion of the ZDP Shares into ALNs will preserve
the net assets of the Company attributable to them which would allow the Company
Portfolio to remain invested in its current manner which the Directors believe
has performed well relative to other private equity fund of funds.  In addition,
the Directors believe that the Company will no longer be regarded as a split
capital fund, but rather, as a conventionally structured investment company and
this should make the Company more attractive to a wider range of investors and
improve the liquidity of the Company's Equity Shares in the market.  The average
discount to Net Asset Value of the Company's Equity Shares over the six months
to 7 December 2006 has been 5.2 per cent., whilst the ordinary shares of other
conventionally structured private equity fund of funds have traded at a premium
over the same period.

As at 31 October 2006, the net assets of the Company were approximately US$172.7
million (equivalent to approximately £90.9 million) (source: management
accounts, unaudited).

Equity Shares were first issued at US$1.02 per share (net of issue expenses)
and, since launch, have traded at an average premium of 9.6 per cent. over their
issue price.  As at 31 October 2006, the NAV per Equity Share was US$1.26 and
the market price as at 7 December 2006 was US$1.22 per share representing a
discount of approximately 3.2 per cent.  The ZDP Shares were first issued at
42.5p per share and, as at 7 December 2006, the NAV per ZDP Share was 45.94p and
the market price as at 7 December was 48.50p per share representing a premium of
approximately 5.6 per cent. (source: management accounts, unaudited).

Effect and Benefits of the Proposals 

Following the implementation of the Proposals, the Company's issued share
capital will comprise approximately 88.2 million Equity Shares (the same as the
number of Equity Shares in issue as at 7 December 2006 taking account of the
proposed redemption of 7,628,577 Equity Shares based on the NAV as at 31
December 2006 under the redemption facility), and current holders of ZDP Shares
will have received, credited as fully paid, the same number of Asset Linked
Notes as the number of ZDP Shares held by them on a one for one basis. The
redemption value of the ZDP Shares will be equal to the accrued NAV of the
existing ZDP Shares as at the Effective Date (namely, 46.25p per ZDP Share on 11
January 2007) and the Final Accrued Redemption Value of the Asset Linked Notes
following their issue will be the same as the Final Capital Entitlement of the
existing ZDP Shares (expected to be 73.0p per Asset Linked Note on 28 June 2013
subject to the Company having sufficient assets) as it is the intention of the
Board to preserve the rights and characteristics of the existing ZDP Shares as
much as practicable in the form of ALNs.

The Directors believe that the benefits of the Proposals will be that:
     
•    Current ZDP Shareholders whose interests are converted to Asset Linked 
     Notes will retain the same economic return and, save as set out below, have 
     similar rights on their investment as they currently have (having regard to 
     the debt nature of the ALNs).

•    The Company's market rating should improve if it is no longer perceived as 
     a split capital fund and, instead as a conventional investment company, and 
     correspondingly, the market rating of the Equity Shares should improve as 
     the Company appeals to a broader investor audience.

•    The ability of the Company to borrow for long term investment purposes in 
     addition to short term temporary purposes (albeit within the existing limit 
     of 20 per cent. of adjusted total of capital and reserves) will allow the 
     Managers to utilise external debt where such debt is available at 
     attractive rates and terms and, thereby, seek to leverage the Company 
     Portfolio in order to enhance returns.

•    The ability of the Company to utilise special purpose investment vehicles 
     which may be funded by external debt would allow the Company greater 
     flexibility in committing to, or acquiring, investments and to warehouse
     investments.

•    An increase in the limit for over-commitments to private equity from 130 
     per cent. of current Total Assets to 160 per cent. will permit the Company 
     to maximise the percentage of Total Assets invested in private equity 
     investments in the Company Portfolio at any given time, thus potentially
     enhancing returns for Shareholders.

The terms of the ALNs have been structured with the aim of achieving the same
tax t4reatment for certain United Kingdom tax resident holders (United Kingdom
resident individuals, authorised investment trusts, authorised unit trusts and
open-ended investment companies) as would apply in relation to the ZDP Shares.

Rights and Characteristics of the Asset Linked Notes 

General

The Accrued Redemption Value of the ALNs will track the value of the Company's
shareholding in the Subsidiary from time to time and subject to there being
sufficient assets of the Company would give an expected Final Accrued Redemption
Value of 73.0p per ALN on 28 June 2013.  The Subsidiary will make a loan to the
Company of an amount equal to the nominal fraction of the aggregate Initial
Issue Price of the ALNs, repayable on 28 June 2013 for an amount equal to the
corresponding nominal fraction of aggregate Final Accrued Redemption Value which
is expected to be 73.0p per ALN but, if the Company has insufficient assets to
repay the ALNs following repayment of all prior charges, their repayment amount
will be reduced accordingly to reflect the shortfall.

The rights of the ALNs have been structured, having regard to their nature as
debt instruments of the Company rather than as share capital in the Company, as
closely as practicable, to the existing rights of the ZDP Shares. However, not
being share capital, the ALNs do not confer on their holders the right to attend
and vote at general meetings of the Shareholders of the Company. ALN Holders
will, however, be entitled to vote at an extraordinary general meeting of ALN
Holders, on matters which affect them.  In addition, due to the current law and
practice regarding eligibility of certain instruments for inclusion in the
stocks and shares component of ISAs and PEPs, the ALNs will cease to be eligible
if they are redeemable at the option of the holders thereof in circumstances
likely to occur at any point prior to their Final Accrued Redemption Date.
Accordingly, the extension of the half-yearly redemption facility currently
available to Equity Shareholders and ZDP Shareholders to ALN Holders would have
the effect that the ALNs will not be eligible instruments for the stocks and
shares component of ISAs and PEPs. On the basis that a number of investors hold
ZDP Shares within the ISAs and PEPs, the Directors consider that it would be
desirable to maintain the eligibility of the ALNs for inclusion in the stocks
and shares component of ISAs and PEPs. Accordingly, the ALNs will not, unlike
the ZDP Shares, be redeemable at the direction of the Directors, on a half
yearly basis.



Basis of issue

Each ZDP Share in issue as at the Conversion Date will be sub-divided into one
New ZDP Share and one Deferred ZDP Share.  The aggregate number of New ZDP
Shares in issue will then be redeemed and the Company's distributable reserves
will be used to fund a bonus issue of ALNs to ZDP Shareholders on a one for one
basis.  The ALNs will be issued, credited as fully paid, at an Initial Issue
Price of 46.25p per ALN (which will be equal to the accrued NAV of the existing
ZDP Shares as at the Effective Date, expected to be 11 January 2007).  As the
ALNs are being issued on a one for one basis for each New ZDP Share held on the
Conversion Date, no fractions of ALNs will arise.  Following the redemption of
the New ZDP Shares and the subsequent issue of ALNs, it is proposed that all of
the Deferred ZDP Shares will be repurchased by the Company for £1 in aggregate
and, following their repurchase, be cancelled.

The ALNs, being debt securities of the Company, do not rank equally with the
Equity Shares, but in priority to them.

Listing of Asset Linked Notes

The Company will use its reasonable endeavours to obtain and, for so long as any
Asset Linked Loan Note remains outstanding, maintain a listing on the London
Stock Exchange for any Asset Linked Note issued as part of the Proposals.  The
Company currently has no intention to make an application to list the Asset
Linked Notes on any other exchange.

Selling and Transfer Restrictions

The Asset Linked Notes will not be registered under the Securities Act and the
Company has not been and will not be registered under the Investment Company
Act.  Accordingly the Asset Linked Notes are subject to selling and transfer
restrictions and each recipient of Asset Linked Notes pursuant to the Proposals
will be required to make certain representations and warranties.

Taxation

The creation and issue of ALNs should not be treated as giving rise to an income
distribution for United Kingdom tax purposes for an individual who is resident
or ordinarily resident in the United Kingdom for taxation purposes. For such
individuals, the sub-division of each existing ZDP Share into one New ZDP Share
and one Deferred ZDP Share, the redemption of the New ZDP Shares and the bonus
issue of the ALNs should be treated as a reorganisation of share capital for the
purposes of the United Kingdom taxation of chargeable gains so that ZDP
Shareholders will not be treated as making any disposal.

The ALNs should be treated as 'excluded indexed securities' so that any gain on
a disposal (including a redemption) by an individual who is resident or
ordinarily resident in the United Kingdom for taxation purposes should not be
subject to income tax.  Instead a disposal (including a redemption) of the ALNs
by any such individual may give rise to tax on any chargeable gain made.

For holders who are investment trusts and hold the ZDP Shares on capital reserve
in accordance with the Statement of Recommended Practice relating to Investment
Trust Companies, the creation and issue of the ALNs should not give rise to any
tax consequences and it is expected that the ALNs can be held on the same basis
that any gain on a disposal (including a redemption) should be exempt from tax.

For holders who are authorised unit trusts or open-ended investment companies
and hold the ZDP Shares such that any gain resulting from a disposal (including
a redemption) would fall to be dealt as a capital gain in accordance with the
Statement of Recommended Practice relating to authorised investment funds, the
creation and issue of the ALNs should not give rise to any tax consequences and
it is expected that the ALNs can be held on the same basis such that any gain on
a disposal (including a redemption) should be exempt from tax.

Shareholders who are in any doubt as to their taxation position, or who are
subject to tax in a jurisdiction other than the United Kingdom, should consult
their professional adviser without delay.

Investment Objective 

The Company will retain its existing objective which is to achieve capital
growth, with income as a secondary objective, by investing in private equity
fund interests in the secondary market and making commitments to newly formed
private equity funds.  The Company also makes investments in individual
companies by co-investing with private equity sponsors.

The Company employs an enhanced cash management strategy for capital awaiting
investment in private equity assets, which may include investments in fixed
income instruments, money market accounts, bank deposits, bank loans, hedge fund
of funds and other instruments.

The Company is considered by the Directors potentially to be attractive to
institutional investors and high net worth individuals who are seeking returns
in the form of capital growth, with income as a secondary objective, from an
exposure to a diversified portfolio of private equity investments, the vast
majority of which are unlisted and unregulated investment vehicles with limited
or no liquidity.

Investment Policy 

The Company will continue to primarily seek to make commitments and investments
in the Company Portfolio consisting of private equity funds, diversified by
manager, industry, geography, asset class, stage and vintage year.  The Managers
seeks to identify opportunities to invest in funds with high quality management
with proven capabilities and performance.  The Managers focus on private equity
sponsors based throughout the world and predominantly in Europe and North
America.

It is anticipated that the majority of the Private Equity Portfolio will be
allocated to buyout funds, and the balance to venture capital, real estate and
multi-style funds.  A buyout fund typically targets the acquisition of a
significant portion or majority control of businesses which normally entails a
change of ownership.  Buyout funds ordinarily invest in more mature companies
with established business plans to finance expansions, consolidations,
turnarounds and sales, or spinouts of divisions or subsidiaries.  A leverage
buyout, commonly referred to as a LBO, is a buyout that uses debt financing to
fund a portion of the purchase price of the targeted business. A multi-style
investment strategy refers to fund managers that make investments in companies
in various stages of development.  A multi-style manager may make investments in
start-up enterprises, later-stage venture companies and established businesses -
all within the same fund.  These investments may involve control positions or
may be minority, passive positions.

By investing in a portfolio of private equity funds, the Company is exposed to
numerous underlying investments in individual companies, ranging from start-up
ventures to large, multi-national enterprises.  The Managers will endeavour to
purchase private equity fund interests in the secondary market and allocate the
Company's assets to new private equity fund interests in order to ensure that
the Private Equity Portfolio contains investments that will be made and exited
in different economic cycles.

The Company's Private Equity Portfolio is constructed by investing in private
equity funds, but occasionally it may hold quoted securities as a result of
distributions from its portfolio of fund investments.  The Managers' normal
policy is to dispose of such assets as soon as practicable.  The Private Equity
Portfolio may also contain direct private equity investments.

Cash held in the Company Portfolio pending investment is invested on an active
basis in accordance with the Enhanced Cash Management Strategy that attempts
both to maximise the Company's returns and to meet liquidity obligations,
including capital calls from private equity sponsors to meet the Company's
obligations to advance further funds in respect of its private equity fund
interests.  The portion of the Company's Total Assets that is not otherwise
invested in the Private Equity Portfolio is allocated to enhanced cash
investment.  BSAM Inc. will continue to endeavour to build an overall portfolio
of investments that in aggregate balances characteristics for potentially above
average returns with manageable levels of volatility.  Investments will continue
to be made in a wide variety of investment types and vehicles at BSAM Inc.'s
discretion including, but not limited to, funds of hedge funds and hedge funds,
fixed income instruments, short dated government bonds, money market
instruments, bank deposits, bank loans and other financial instruments.

The Company will not enter into derivative transactions (such as options,
futures and contracts for differences) other than for the purposes of efficient
portfolio management.

The Company will not take any legal or management control of any underlying
company or fund in the Company Portfolio.

In accordance with the Listing Rules of the UK Listing Authority, any material
changes in the investment policy may only be made with the approval of the
Shareholders at an Extraordinary General Meeting of the Company.

An investment in the Company is only suitable for investors seeking an exposure
to private equity investments diversified across manager, industry, geography,
asset class, stage and vintage year and who understand the potential risk of
capital loss and that there may be limited liquidity in the underlying
investments of the Company and for whom such an investment would be of a long
term nature and constitutes part of a diversified investment portfolio.

Intra-group Arrangements 

The Subsidiary will, following the passing of the resolutions at the Meetings,
be set up as a wholly-owned special purpose subsidiary of the Company.  The
Subsidiary will make a loan to the Company of an amount equal to a nominal
fraction of the aggregate Initial Issue Price of the ALNs.  This loan will be
repayable by the Company on 28 June 2013 for an amount equal to the
corresponding nominal fraction of the aggregate Final Accrued Redemption Value
which is expected to be 73.0p per ALN subject to there being sufficient assets
of the Company or, if the Company has insufficient assets to repay the ALNs
following repayment of all the prior charges, their repayment amount will be
reduced accordingly to reflect the shortfall. The value of the Subsidiary is
expected, therefore, to increase in value until the date of repayment of the
inter-company loan on 28 June 2013.  The Company will issue ALNs to ZDP
Shareholders as at the Effective Date with the Final Accrued Redemption Value of
the ALNs on 28 June 2013 (and their Accrued Redemption Value in the interim
period from the date of issue to 28 June 2013) being linked to the increasing
value of the Company's shareholding in the Subsidiary such that an ALN will have
an Initial Issue Price of 46.25p per ALN (which will be equal to the accrued NAV
of the existing ZDP Shares as at the Effective Date) increasing daily to a Final
Accrued Redemption Value of  73.0p per ALN on 28 June 2013.

The Subsidiary's only asset will be the amount payable to it by the Company
under the terms of the inter-company loan agreement. All liabilities, costs and
expenses of the Subsidiary relating to its establishment, operation and eventual
liquidation will be met by the Company so as to ensure that the value of the
Subsidiary is determined solely by reference to the increasing amount payable to
it by the Company under the terms of the inter-company loan and that such
increasing amount is not affected (positively or negatively) by any assets or
liabilities outside of the inter-company loan.

Amendments to the Management Agreement

Pursuant to the Management Agreement, the Managers are currently entitled to a
base management fee, payable monthly in arrears, of 1.0 per cent. per annum of
the Company's Total Assets.  The Managers may also be entitled to a performance
fee if the aggregate Net Asset Value of the Equity Shares and ZDP Shares at the
end of any Performance Period (having made adjustments for any issue and/or
redemption and/or repurchase of Equity Shares and ZDP Shares or other
distributions made in respect thereof) exceeds (i) the aggregate Net Asset Value
of the Equity Shares and ZDP Shares at the start of the Performance Period by
more than 8 per cent. (the 'Performance Hurdle') and (ii) the highest previously
recorded aggregate Net Asset Value of the Equity Shares and ZDP Shares as at the
end of a Performance Period in respect of which a performance fee was last paid.
  The amount of such performance fee will be 7.5 per cent. of the total increase
in the aggregate Net Asset Value per Equity Share and ZDP Share above the
Performance Hurdle at the end of the relevant Performance Period over the
aggregate Net Asset Value per Equity Share and ZDP Share at the start of the
relevant Performance Period, multiplied by the number of issued and outstanding
Equity Shares and ZDP Shares at the end of the relevant Performance Period,
having made adjustments for the numbers of Equity Shares and ZDP Shares
outstanding as described above.

In view of the removal of the ZDP Shares from the Company's capital structure
under the Proposals the Board has, subject to the approval of Shareholders,
agreed with the Managers an alternative basis for calculating management and
performance fees.

On the revised basis, the Managers will be entitled to a base management fee,
payable monthly in arrears, of 1.0 per cent. per annum of the value of the
Company's investments (including any drawn down borrowings, cash and near cash
instruments, less current liabilities (other than the principal amount of monies
borrowed and excluding contingent liabilities) (the 'Investment Assets').

In addition, the Managers will also be entitled to a performance fee if the
aggregate Net Asset Value of the Equity Shares at the end of any Performance
Period (having made adjustments for any issue and/or redemption and/or
repurchase of Equity Shares or other distributions made in respect thereof)
exceeds (i) the aggregate Net Asset Value of the Equity Shares at the start of
the Performance Period by more than 8.0 per cent. (the 'Revised Performance
Hurdle') and (ii) the highest previously recorded aggregate Net Asset Value of
the Equity Shares as at the end of a Performance Period in respect of which a
performance fee was last paid.  The amount of such performance fee will be 7.5
per cent. of the total increase in the aggregate Net Asset Value of the Equity
Shares above the Performance Hurdle at the end of the relevant Performance
Period over the aggregate Net Asset Value of the Equity Shares at the start of
the relevant Performance Period, having made adjustments to the numbers of
Equity Shares outstanding as described above. The Supplemental Management
Agreement will contain provisions allowing a performance fee to be calculated
and charged where there is more than one class of Equity Share, that is, where
there are Equity Shares in issue in different currencies. The basis of
calculation will, however, be the same as that currently in force.

Other provisions of the Management Agreement will remain unchanged and will
continue to be binding on the Company and the Managers.

Related Party Transaction 

In view of the interest of the Managers in the Management Agreement and in the
proposed changes to the management and performance fees, the proposal relating
to these new fee arrangements constitutes a related party transaction for the
purposes of the Listing Rules of the UK Listing Authority.  In accordance with
those Listing Rules, an ordinary resolution will be proposed at the
Extraordinary General Meeting at which Shareholders will be asked to approve
that proposal.

The Manager and its associates (which, for the avoidance of doubt, does not
include employees of the Manager) own, beneficially or otherwise, 16,057,143
Equity Shares.  The Manager will not vote on the second ordinary resolution to
be proposed at the Extraordinary General Meeting.  The Manager has undertaken to
take all reasonable steps to ensure that its associates will not vote on the
second ordinary resolution to be proposed at the Extraordinary General Meeting.
Mr. Sanabria is a Director of the Company and also a director of BSAM Inc.  Mr.
Sanabria did not take part in the Board's consideration of the new management
and performance fee arrangements.

Borrowing Policy 

The Company currently has the ability to borrow up to 20 per cent. of its
adjusted total of capital and reserves for short-term or temporary purposes as
is necessary for settlement of transactions, to facilitate the operation of the
over-commitment policy or to meet ongoing expenses.  Short-term borrowings to
facilitate any redemption of Shares is limited to borrowings that have a
repayment period of 180 days or less.

If the Proposals are approved, the Company's borrowing policy will be revised
such that it may borrow up to 20 per cent. of its adjusted total of capital and
reserves either for short-term or temporary purposes and/or for long-term
investment purposes.

In addition, the Company will be authorised to utilise special purpose
investment vehicles which may be funded by external debt (which debt would not
count towards the borrowing limit described above provided that such debt is on
a non-recourse basis to the Company and/or the Company is not required to
provide any guarantee, pledge, security or other similar charge to the lender)
for the purposes of committing to, or acquiring, investments and to warehouse
investments.

Over-commitment strategy

The Company currently operates an over-commitment strategy whereby the Company's
total exposure to private equity may not exceed 130 per cent. of the current
Total Assets of the Company (as determined by the Directors and the Managers at
the time of acquisition or commitment).  If the Proposals are approved, the
limit on the Company's total exposure to private equity pursuant to the
over-commitment strategy will be increased from 130 per cent. of the current
Total Assets of the Company to 160 per cent. of the current Total Assets of the
Company (as determined by the Directors and the Managers at the time of
acquisition or commitment).



Future Dividends and Interest payments 

It is not anticipated that dividends will be paid in respect of the Equity
Shares.

No interest will be payable in respect of the Asset Linked Notes, however, their
value will increase by reference to the increase in value of the Company's
shareholding in the Subsidiary until such time as they are repaid at their Final
Accrued Redemption Value, expected to be 73.0p per ALN on 28 June 2013.  The
Final Accrued Redemption Value of 73.0p per ALN is not a guaranteed repayment
amount.

The Meetings

Implementation of the Proposals in their entirety requires the approval by
Shareholders of the resolutions to be proposed at the Meetings.

ZDP Share Separate General Meeting

At the ZDP Share Separate General Meeting, a special resolution will be proposed
which, if passed, will sanction the capital organisation through the
sub-division and cancellation of the ZDP Shares in issue as at the Conversion
Date, and the issue of ALNs in place of the ZDP Shares and, more generally, to
sanction and consent to any abrogation or variation of the rights of the ZDP
Shares arising out of, or in connection with, the implementation of the
Proposals.

Extraordinary General Meeting

At the Extraordinary General Meeting, one special resolution and two ordinary
resolutions will be proposed.

The special resolution will, if passed:

(a)    approve the sub-division of the ZDP Shares into New ZDP Shares and
Deferred ZDP Shares;

(b)    authorise the issue of ALNs to the holders of New ZDP Shares, credited as
fully paid, on a one for one basis;

(c)    authorise the Company to purchase off-market, all of the Deferred ZDP
Shares for an aggregate consideration of £1 and their cancellation immediately
following such purchase;

(d)    authorise the Company to make market purchases of ALNs and Equity Shares
in accordance with the prevailing rules and regulations of the UK Listing
Authority and the Prospectus Rules; and

(e)    adoption of new Articles of Association.

The first ordinary resolution will, if passed:

(a)    approve the proposed amendment to the Company's borrowing policy together
with the use of special purpose investment vehicles as described above; and

(b)    approve the proposed increase on the limit to which the Company may
over-commit to private equity as described above.

The second ordinary resolution, which is conditional upon the special resolution
being passed will, if passed, approve the Supplemental Management Agreement to
be entered into between the Company and the Managers.

Purchase of own Shares and ALNs

The Company is currently authorised to make market purchases of its Equity
Shares and ZDP Shares. If the special resolution to be proposed at the EGM is
passed, the Company will be authorised generally to make market purchases of its
ALNs and the current authority to repurchase Equity Shares will be renewed.

Purchases of ALNs and/or Equity Shares will be made with a view to addressing
any imbalance between the supply of and demand for such ALNs and/or Shares, to
increase the Net Asset Value of the Equity Shares and/or to assist in
maintaining a narrow discount to Net Asset Value (in the case of Equity Shares)
or Accrued Redemption Value (in the case of ALNs) at which such Equity Shares or
ALNs may be trading.

The authority will permit the Company to purchase up to 14.99 per cent. of its
own issued Equity Shares and ALNs following the passing of the resolution.
Purchases of Equity Shares and ALNs will be made within guidelines established
from time to time by the Board. The timing of any such purchases will be decided
by the Board. Purchases will only be made in accordance with the Laws, the
Prospectus Rules and the Listing Rules of the UK Listing Authority.

Dealings and Certificates 

ZDP Shares

If the Proposals are approved, each ZDP share in issue as at the Conversion Date
will be sub-divided into one New ZDP Share and one Deferred ZDP Share. ZDP
Shareholders on the Company's register of members at the close of business on 11
January 2007, being the Conversion Date, will, have their New ZDP Shares
cancelled and will receive one Asset Linked Note credited as fully paid in
exchange for each New ZDP Share held on the Effective Date. The Deferred ZDP
Shares, which will be created for technical reasons, will have no economic or
voting rights and will not be listed on any investment exchange. Following their
cancellation, the ZDP Shares will be delisted from the Official List and their
trading on the London Stock Exchange will be cancelled, both of which are
expected to occur on 12 January 2007.

Asset Linked Notes

Subject to the Proposals being approved, dealings in the Asset Linked Notes are
expected to commence on 12 January 2007.  The Company will announce, through a
regulatory information service provider, the results of the Meetings and the
aggregate number of ALNs to be issued.  Asset Linked Notes in certificated form
are expected to be despatched in the week commencing 15 January 2007.  Pending
receipt of definitive certificates, transfers will be certified against the
register at the risk of the transferor.  All documents will be sent by post at
the risk of the persons entitled thereto.  ZDP Shareholders who receive ALNs in
certificated form will receive a new certificate detailing the number of ALNs
allotted to them and ZDP Shareholders who receive ALNs in uncertificated form
will have their stock accounts credited with the number of ALNs allotted to them
in accordance with relevant CREST procedures.  Pending notification, dealings
may be made at the risk of the transferor and transferee and transfers will be
certified against the register at the risk of the transferor.

The ISIN number for the ALNs is GG00B1KVNY42

De-coupling of Packaged Units

Equity Shares and ZDP Shares may currently be held by investors in the form of
Packaged Units with one Packaged Unit comprising one Equity Share and one ZDP
Share.  Shareholders may, if they hold Equity Shares and ZDP Shares, hold such
Shares in the form of Packaged Units.  They may also, by written notice to the
Company's Registrars, opt to hold, free of charge, Packaged Units currently held
by them in the form of their component Shares.  The Board has noted that an
extremely small number of Shareholders, comprising approximately 1 per cent. of
the total issued share capital of the Company, hold their Shares in the form of
Packaged Units.  In addition, purchasers of Equity Shares and ZDP Shares in the
market have not elected to hold such Shares in the form of Packaged Units.

As a result, the Board has resolved that it would be in the best interests of
the Company and its Shareholders as a whole to reduce administrative costs
associated with maintaining and administering the Packaged Units and,
accordingly, have put in place arrangements for those Shareholders holding
Packaged Units to receive the component Equity Shares and ZDP Shares and for
such Shareholders to hold such Shares directly as individual holdings and not as
Packaged Units.  The Company will also cease to make available in the future,
the facility for Shareholders to hold Equity Shares and ZDP Shares in the form
of Packaged Units.  Accordingly, references to Packaged Units in prospectuses,
circulars and other literature published by the Company and in the Articles of
Association will be omitted or deleted, as the case may be.

Costs of the Proposals

The costs of the Proposals are estimated to be £410,000 (exclusive of applicable
VAT), equivalent to approximately 0.6 per cent. of the NAV of the Equity Shares
(on the basis of the Equity Shares having a Net Asset Value of £63.7 million in
aggregate as at 31 October 2006).  These costs will be borne by the Company.


EXPECTED TIMETABLE:

                                                                   (London time)
Latest date for dealings in ZDP Shares for normal settlement                             8 January 2007
(T+3)                                                           
Latest time and date for receipt of Proxies for the ZDP Share              10.00 a.m. on 9 January 2007
Separate General Meeting
Latest time and date for receipt of Proxies for the                        10.05 a.m. on 9 January 2007
Extraordinary General Meeting
ZDP Share Separate General Meeting                                        10.00 a.m. on 11 January 2007
Extraordinary General Meeting                                             10.05 a.m. on 11 January 2007
Record Date and Conversion Date for the purposes of the ZDP                             11 January 2007
Share conversion into ALNs
Effective Date of the ZDP Share Conversion                                              11 January 2007
De-listing of the Zero Dividend Preference Shares from the                 8.00 a.m. on 12 January 2007
London Stock Exchange
Admission to Official List of Asset Linked Notes                           8.00 a.m. on 12 January 2007
Dealings in Asset Linked Notes expected to commence on the                 8.00 a.m. on 12 January 2007
London Stock Exchange
Despatch of Asset Linked Loan Note certificates                                         Week commencing
                                                                                        15 January 2007



Enquiries:

Greg Getschow, Troy Duncan - Bear Stearns Asset Management - 020 7659 5100

Angus Gordon Lennox - JPMorgan Cazenove - 020 7588 2828

Paul Wrench - HSBC Management (Guernsey) Limited - 01481 709 581



END




                      This information is provided by RNS
            The company news service from the London Stock Exchange