Tender Offer

Leo Capital Plc
19 June 2006


19 June 2006


               Leo Capital plc ('Leo Capital' or 'The Company')

      Tender Offer to purchase Shares of Leo Capital up to a maximum value
                                 of £35 million


Leo Capital announces that a tender offer (the 'Tender Offer') document (the 
'Circular') will be posted to shareholders today.


In a document issued on 12 April 2006 in connection with the Company's admission
to trading on AIM, which was completed on Monday 12 June 2006, Leo Capital
announced that it intended to use part of the cash it received pursuant to the
demerger from London Merchant Securities plc to fund a Tender Offer to
repurchase its shares following admission to trading.  Leo Capital also stated
that the aggregate amount of the Tender Offer would be determined by the board
shortly after admission but would not exceed £50 million.


Since admission, the Board has carefully considered market conditions, trading
in the Company's shares, shareholder feedback and alternative investment
opportunities and has decided to:



• utilise an aggregate amount of up to £35 million to purchase shares
pursuant to the Tender Offer; and



• seek authority from shareholders to make general market purchases of
up to 14.99 per cent. of its issued share capital following completion of the
Tender Offer, provided that such authority will not be exercised if the Rayne
Concert Party interests in the share capital of the Company, following such
exercise, exceeds 49.99 per cent.



The Board believes that a combination of these buy back plans will provide the
Company with greater flexibility in managing its investment objectives, cash
balances, shareholder base and, ultimately, maximise shareholder value.



Under the terms of the Tender Offer, shareholders in Leo Capital are invited to
tender shares at a range of discounts to the Company's net asset value ('NAV')
of 20 per cent. to 30 per cent.  The NAV will be recalculated on 12 July in
accordance with the provisions set out in the Circular.



The Tender Offer is subject to, inter alia, shareholder approval, including
approval of the waiver by the Panel of the requirement under Rule 9 of the City
Code for the Concert Party to make a general offer to the shareholders of the
Company, which will be sought at an extraordinary general meeting ('EGM') to be
held on 13 July 2006.  If the Tender Offer is approved at the EGM, settlement of
the Tender Offer is expected to take place on 19 July 2006.



Full details of the Tender Offer timetable, mechanics and settlement procedure,
as well as the authority to make market purchases, are set out in the Circular
which is being posted to shareholders today, together with a notice of the EGM.



At the same time, the Company is filing today initial accounts (within the
meaning of Section 273 of the Companies Act 1985) with the registrar of
companies for the period to 12 June 2006 for the purposes of evidencing that it
has sufficient distributable reserves to implement the Tender Offer.


Enquiries



Leo Capital plc             020 7935 3555
Robbie Rayne                Acting Chief Executive Officer
Tony Sweet                  Chief Financial Officer


JPMorgan Cazenove           020 7588 2828

Michael Wentworth-Stanley

Angus Gordon Lennox

Roger Clarke


Rothschild                  020 7280 5000

Alex Midgen

Duncan Wilmer

Dominic Epton


JPMorgan Cazenove Limited, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting joint financial adviser
and corporate broker to Leo Capital plc and no-one else and will not be
responsible to anyone other than Leo Capital plc for providing the protections
afforded to clients of JPMorgan Cazenove Limited nor for providing advice to any
other person in relation to the Tender Offer nor any other matter referred to in
the Circular.



N M Rothschild & Sons Limited, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting as lead financial adviser
and nominated adviser to Leo Capital plc and no-one else and will not be
responsible to anyone other than Leo Capital plc for providing the protections
afforded to customers of N M Rothschild & Sons Limited nor for providing advice
to any other person in relation to the Tender Offer nor any other matter
referred to in the Circular.



The contents of this announcement which have been prepared by and are the sole
responsibility of Leo Capital have been approved by JPMorgan Cazenove Limited
and by N M Rothschild & Sons Limited solely for the purposes of section 21(2)(b)
of the Financial Services and Markets Act 2000.



The distribution of this announcement in certain jurisdictions may be restricted
by law. No action has been or will be taken by Leo Capital, JPMorgan Cazenove
Limited or N M Rothschild & Sons Limited to permit a public offering of the
shares of Leo Capital or to permit the possession or distribution of this
announcement in any jurisdiction where action for that purpose may be required.
Accordingly, this announcement may not be distributed or published in any
jurisdiction except under circumstances that will result in compliance with any
applicable laws and regulations. Persons into whose possession this announcement
comes should inform themselves about and observe any such restrictions. Any
failure to comply with these restrictions may constitute a violation of the
securities law of any such jurisdictions.



The Tender Offer is not being made directly or indirectly in or into or by use
of mails or by any means or instrumentality (including, without limitation,
facsimile transmission, telex and telephone) of interstate or foreign commerce,
or any facility of a national securities exchange of Australia, and cannot be
accepted by any such use, means, instrumentality or facility or from within
Australia.



Investors should rely only on the information in the Circular. No person has
been authorised to give any information or make any representations other than
those contained in the Circular and, if given or made, such information or
representations must not be relied on as having been authorised by the Company
or JPMorgan Cazenove Limited or N M Rothschild & Sons Limited. The delivery of
this document shall not, under any circumstances, create any implication that
there has been no change in the affairs of the Group since, or that the
information contained herein is correct at any time subsequent to, the date of
the Circular.



The Tender Offer is being made for securities of an English company, and
Shareholders in the United States should be aware that the disclosure documents
relating to the Tender Offer have been prepared in accordance with the
disclosure requirements for an AIM listed company and the City Code in respect
of the Resolutions to approve the waivers granted by the Panel under Rule 9 of
the City Code, the format and style, all of which differ from those in the
United States.



In addition, the financial information relating to the Investment Division
reproduced in this document is presented in pounds sterling and has been
prepared in accordance with United Kingdom generally accepted accounting
principles and thus may not be comparable to financial statements of United
States companies or companies whose financial statements are prepared in
accordance with United States generally accepted accounting principles.  Also,
the settlement procedures with respect to the Tender Offer will differ from US
domestic tender offer procedures in certain material respects, particularly with
regard to the date of payment.



Leo Capital is organised under the laws of England and Wales.  All or
substantially all of its directors are residents of countries other than the
United States.  As a result, it may not be possible for Shareholders in the
United States to effect service of process within the United States upon Leo
Capital or such directors or to enforce against any of them judgements of the
United States predicated upon the civil liability provisions of the federal
securities laws of the United States.



Shareholders in the United States are urged to consult their own tax advisers
before tendering their Shares under the Tender Offer.



Shareholders should be aware that, in accordance with normal UK practice,
JPMorgan Cazenove will continue to act as a market maker in the Shares on AIM
during the duration of the Tender Offer.  Pursuant to this activity, JPMorgan
Cazenove may effect, or make arrangements to effect, sales and purchases of
Shares during the duration of the Tender Offer, otherwise than pursuant to the
Tender Offer.



Cautionary note regarding forward-looking statements:  The Circular contains
forward-looking statements that involve risks and uncertainties and relate to
the expectations, beliefs, hopes, plans, intentions or strategies regarding the
future of Leo Capital.  Factors that would cause actual results to differ
materially from those described in the Circular include those factors described
in Part 1, Risk Factors.  All forward-looking statements included in the
Circular are based upon information available to the Company as of the date of
this document, and neither the Company, JPMorgan Cazenove Limited nor Cazenove,
Inc., (on behalf of JPMorgan Cazenove Limited), (nor any of their respective
officers, directors, employees or advisers) nor N M Rothschild & Sons Limited
(nor any of their respective officers, directors, employees or advisers) assumes
any obligation to update any such forward-looking statements.  These statements
are not guarantees of future performance.  Actual results could differ
materially from the Company's current expectations.



The Tender Offer will be made to Shareholders outside the United States by
JPMorgan Cazenove Limited and to Shareholders in the United States by Cazenove,
Inc., (on behalf of JPMorgan Cazenove Limited).  Accordingly, in the Circular,
all references to JPMorgan Cazenove Limited in relation to the Tender Offer or
in relation to selling the Shares to the Company pursuant to the Repurchase
Agreement shall, where appropriate, be deemed to be a reference to Cazenove,
Inc., (on behalf of JPMorgan Cazenove Limited).



Any tenders made by a Director and/or a connected person (as defined within Part
X of the Act) shall not be irrevocable and will not bind any such Director and/
or connected person (as defined within Part X of the Act) and shall only
constitute an indication of such persons' intention to tender their Shares and
all references in this announcement to Shares being tendered by any such persons
or to the Tender Offer being made to such persons shall be construed
accordingly.  Upon Resolution 3 being passed JPMorgan Cazenove reserves the
right to treat such indications of intention as binding on such persons unless
prior to the passing of Resolution 3 Capita Registrars has received written
notice from such persons withdrawing their indication(s) of interest.




                Leo Capital plc ('Leo Capital' or 'The Company')

      Tender Offer to purchase Shares of Leo Capital up to a maximum value
                                 of £35 million

1.                  Introduction

On 12 April 2006, the Company issued an admission document relating to the
admission of the Shares to trading on AIM.  The Company was admitted to trading
on AIM on 12 June 2006.

The Board is conscious that certain Shareholders who received Shares pursuant to
the Demerger may wish to sell their Shares following the Demerger, for example,
because they are subject to restrictions regarding the holding of AIM-quoted
shares or because they are specialist investors in property companies.
Accordingly, as noted in the AIM Admission Document, the Board wishes to provide
an opportunity for Shareholders, who so wish, to realise their investment in the
Company.  In addition, this will provide a tangible benefit for those
Shareholders who choose to retain all or any of their Shares by providing a NAV
uplift for such Shareholders.

The Board also stated in the AIM Admission Document that it would make a
decision as to the aggregate amount of the proposed tender offer following
Admission but that the aggregate amount of such tender offer would not exceed
£50 million. The Board has carefully considered the prevailing market
conditions, trading in Shares since Admission, shareholder feedback and
alternative investment opportunities at the current time.

As a result of these considerations, the Board has decided that:

(a)                a tender offer of an aggregate amount of  up to £35 million;
and

(b)                making use of the market purchase authority (assuming that
the general authority being sought at the Extraordinary General Meeting is
granted by Shareholders) to deploy further capital to buy back Shares over time
at the discretion of the Board,

will provide the Company with greater flexibility in managing its investment
objectives, cash balances and shareholder base and, ultimately, will maximise
shareholder value.

The Tender Offer will be made by JPMorgan Cazenove and, in the United States, by
Cazenove, Inc. (on behalf of JPMorgan Cazenove), and will be open to all
Shareholders (except for those Overseas Shareholders in a Restricted Territory).
JPMorgan Cazenove (and, as the case may be, Cazenove Inc. (on behalf of JPMorgan
Cazenove)) will acquire the Shares from Shareholders pursuant to the Tender
Offer and then sell such Shares to Leo Capital for cancellation.

2.                  Information on the Group

The Group's portfolio, investment objectives and strategy

The Group's portfolio is diversified, both in relation to investment type and in
relation to geography, with holdings in both quoted and unquoted companies and
fund investments in the UK and the US. Furthermore, it is spread across
different sectors (primarily the applied technology, energy and industrial,
healthcare and medical, media and leisure and financial services sectors).

As at 31 March 2006, the value of the portfolio of the Investment Division was
£226.6 million (audited under UK GAAP).

The objective of the Company is to achieve medium-to-long-term growth through a
diversified portfolio of investments in public and private companies and funds.

In order to implement this objective, the Company's strategy is to maintain and
build on the existing portfolio by investing in and actively managing
significant stakes in a diversified range of investments.

In pursuing its strategy, the Company will continue to act as a supportive
long-term investor, seek opportunities to obtain significant interests in
portfolio companies, use investments in funds to complement the Company's core
direct investment focus and to explore new markets and use quoted securities to
maintain investment exposure whilst providing liquidity and as a means of
identifying more substantial direct investments.

Due to the non-income-producing nature of current investments, the Group relies
on proceeds from realisations to generate cash flow and profits. The Company
does not currently intend to use debt as part of its permanent capital
structure. However, the Board retains the flexibility to utilise gearing in
circumstances considered beneficial to Shareholders.

As at the date of this announcement, the Company does not have any employees
since services are secured through certain secondment and transitional services
arrangements with London Merchant Securities ('LMS').

Market opportunity, prospects, competition and trends

The Group currently invests in the UK and the US through quoted securities,
unquoted companies and funds.

Although the Group is a relatively small player in each of these areas, the
Company believes that it has the following competitive strengths:

(a)                the Group's expertise and experience in the energy and
industrial markets: it is a strategic investor in the energy and industrial
sector with current holdings in Energy Cranes International Limited, Weatherford
International Ltd, ITS Engineered Systems, Inc. and Grant Prideco, Inc.;

(b)                in small cap public equity investing in the US, the Group
leverages its small company experience and its knowledge of venture capital
backed companies to identify and evaluate growth stocks; and

(c)                in the US and the UK, the Group participates in the broader
venture and private equity markets in a diversified way, through its investments
in 35 funds (30 in the US and 5 in the UK).

The Company will compete with both private equity groups and strategic investors
in specific sectors, many or most of whom may be larger than the Company.
However, the Company believes that in pursuing its investment strategy, a key
competitive advantage that will drive performance is the Company's strategy to
be a long-term supportive investor.

The Company is seeing and expects to continue to review a good pipeline of
investment opportunities consistent with the Company's strategy.

In the short-to-medium-term, the Company will have funding flexibility to invest
in attractive investment opportunities by utilising a combination of its cash
balances and proceeds from realisations of existing investments.

3.                  The Tender Offer

Full details of the Tender Offer, including the terms and conditions on which it
is made, are set out in the Circular and also, in the case of certificated
Shares only, in the Tender Form.  Shareholders do not have to tender any Shares
if they do not wish to do so but once submitted, subject to the provisions set
out in the Circular a Tender Form or TTE instruction cannot be withdrawn and is
irrevocable. Accordingly, such Shares may not be sold, transferred, charged or
otherwise disposed of.

The Tender Offer is conditional, amongst other things, on the passing of
Resolutions 1, 2 and 3 set out in the notice of EGM, on the receipt of valid
tenders in respect of 3,290,015 Shares (representing 1 per cent. of the issued
share capital of the Company as at close of business on 15 June 2006) by the
Closing Date and on the other conditions specified in the Circular.  The Tender
Offer is only available to Shareholders (other than certain Overseas
Shareholders in a Restricted Territory) on the Register on the Record Date and
in respect of their Shares held on the Record Date.

The Tender Offer involves the following:

(a)                JPMorgan Cazenove will purchase the maximum number of Shares
having a total value not exceeding £35 million (based on the Strike Price) or
such lesser number of Shares as are validly tendered pursuant to the Tender
Offer and then sell such Shares to Leo Capital for cancellation.

(b)                All Shareholders (other than certain Overseas Shareholders in
a Restricted Territory) are being given the opportunity to participate in the
Tender Offer.

(c)                If valid, tenders will be accepted at discounts to the Tender
NAV per Share in the range of 20 per cent. to 30 per cent. in increments of 1
per cent., as set out in the Tender Form, in the case of certificated Shares
only.

(d)                Shareholders can tender any or all of their Shares under the
Tender Offer in the following ways:

(i)                  as a Strike Price Tender;

(ii)                as a tender at a single discount to the Tender NAV per
Share, being one of the discounts in the NAV Discount Range; and

(iii)               as a tender at different discounts to the Tender NAV per
Share in the NAV Discount Range (including Strike Price Tenders).

(e)                All Shares will be purchased by JPMorgan Cazenove at the same
price, the 'Strike Price'. The Strike Price will be calculated by reference to
the widest discount to the Tender NAV per Share within the NAV Discount Range
that will enable JPMorgan Cazenove to purchase the maximum number of Shares
having a total value not exceeding £35 million or such lesser number of Shares
as are validly tendered pursuant to the Tender Offer.

(f)                 If the aggregate value of all Shares tendered is £35 million
or less, all Shares validly tendered will be accepted and purchased.

(g)                In the event that the Tender Offer is over-subscribed,
tenders will be accepted in the order set out below:

(i)                  all Shares tendered at a price below the Strike Price will
be accepted in full; and

(ii)                all Shares tendered at the Strike Price (including the
Strike Price Tenders) will be scaled down pro-rata to the number of Shares
tendered at the Strike Price (including the Strike Price Tenders), such that the
total value of Shares purchased pursuant to the Tender Offer does not exceed £35
million in aggregate. If fractions arise from scaling down, the number of Shares
accepted shall be rounded down to the nearest whole Share.

(h)                Shares not validly tendered or tendered above the Strike
Price will not be purchased.

(i)                  Shareholders do not have to tender their Shares if they do
not wish to do so.

(j)                  Any rights of Shareholders who choose not to tender their
Shares will be unaffected.

If, in the Board's opinion, it is no longer in the interests of the Company to
proceed with the Tender Offer, the Tender Offer may be terminated by the Company
in accordance with provisions set out in the Circular.

Shares will be purchased free of commissions and dealing charges.  Successfully
tendered Shares will be purchased by the Company and cancelled and will not rank
for any future dividends.

The Pro Forma NAV per Share as at 31 March 2006 was approximately 90 pence
assuming that the issued share capital of the Company on such date was
329,001,513 (being equal to the issued share capital of the Company on 15 June
2006 (being the latest practicable date prior to the publication of this
announcement)).  The Pro Forma NAV as at 31 March 2006 will be adjusted on the
Calculation Date in accordance with the provisions set out in the Circular and
the adjusted Pro Forma NAV will be the Tender NAV.  If, for example, the Tender
NAV per Share was 90 pence and:

                        the Strike Price were to be 63 pence (reflecting the
widest discount of 30 per cent. to the Tender NAV per Share), the Company would
repurchase up to 55,555,555 Shares, equating to approximately 16.89 per cent. of
the current issued share capital of Leo Capital; or

                        the Strike Price were to be 72 pence (reflecting the
minimum discount to the Tender NAV per Share), the Company would repurchase
48,611,111 million Shares, equating to approximately 14.78 per cent. of the
current issued share capital of Leo Capital.

Implementation of the Tender Offer will require approval by Shareholders of
Resolutions 1, 2 and 3 at the EGM which has been convened for 10.00 a.m. on 13
July 2006 at JPMorgan Cazenove, 20 Moorgate, London, EC2R 2DA.

The Tender Offer will be made to Shareholders outside the United States by
JPMorgan Cazenove and to Shareholders in the United States by Cazenove, Inc. (on
behalf of JPMorgan Cazenove).  Accordingly, in this document, all references to
JPMorgan Cazenove in relation to the Tender Offer or in relation to selling the
Shares to the Company pursuant to the Repurchase Agreement shall, where
appropriate, be deemed to be a reference to Cazenove, Inc (on behalf of JPMorgan
Cazenove).

For the reasons mentioned in paragraph 7(c) of Part 2 of the Circular, any
tenders made by a Director and/or connected person (as defined within Part X of
the Act) shall not be irrevocable and will not bind any such Director and/or
connected person (as defined in Part X of the Act) and shall only constitute an
indication of such person's intention to tender his/her Shares and all
references in this announcement to Shares being tendered by any such persons or
to the Tender Offer being made to such persons shall be construed accordingly.
Upon Resolution 3 being passed, JPMorgan Cazenove reserves the right to treat
such indications of intention as binding on such persons on the terms and
conditions set out in the Circular unless, prior to the passing of Resolution 3,
Capita Registrars has received written notice from such person(s) withdrawing
his/her indication(s) of intention.

Shares will only be purchased pursuant to the Tender Offer if the interests in
Shares of the Concert Party, following any such purchase, do not exceed 46.70
per cent. of the issued share capital of the Company following such a purchase.

4.                  General authority to purchase Shares

The Board is also seeking a general authority at the EGM to make market
purchases of Shares up to a maximum number equal to either (i) 14.99 per cent.
of the issued Shares immediately following completion of the Tender Offer,
provided that the maximum number of Shares to be bought back does not exceed
11,900,000 Shares or (ii) if the Tender Offer lapses, 14.99 per cent. of the
issued Shares on the date of the publication of this document, provided that the
maximum number of Shares to be bought back does not exceed 49,350,000 Shares.

The minimum price per Share which may be paid for any such market purchase will
be 10 pence. The maximum price will not exceed the higher of (i) 105 per cent.
of the average middle market quotations for such Shares taken from the Daily
Official List of the London Stock Exchange for the previous five business days
before the repurchase is made, (ii) the price of the last independent trade and
(iii) the highest current independent bid on the trading venues where the
purchase is carried out.

The authority will expire at the conclusion of the Annual General Meeting to be
held in 2007 or 15 months from the passing of the resolution and will only be
exercised provided that the interests in Shares of the Concert Party, following
any such exercise, do not exceed 49.99 per cent. of the issued share capital of
the Company if the Tender Offer completes or, if it does not complete, the
interests of the Concert Party, following any such exercise, do not exceed 44.63
per cent. of the issued share capital of the Company.

The authority to make market purchases of Shares is subject to the passing of
Resolutions 4, 5 and 6.  The Tender Offer is not conditional upon the passing of
Resolutions 4, 5 or 6.

5.                  Intentions of the Directors

5.1               The Directors intend to continue to conduct the business of
the Company in the same manner as it is currently conducted and there are no
plans to introduce any substantial change in the business of the Group.  As at
the date of this document, the Group does not have any employees.

5.2               Shareholders should note that none of the Directors intend to
tender their Shares pursuant to the Tender Offer.

5.3               Assuming that Resolutions 4, 5 and 6 are duly passed, the
Directors have no immediate intention of exercising the general authority to
make market purchases of Shares granted to the Company and would only do so if
the Board believed that the buy-back of Shares, at the relevant time, would be
in the best interests of the Company and would be likely to result in an
increase in the Net Asset Value per Share of the Company.  The Board will also
only exercise such Market Purchase Authority if, following exercise of such
authority, the interests in Shares of the Concert Party do not exceed 49.99 per
cent. of the issued share capital of the Company following such exercise if the
Tender Offer completes or, if it does not complete, if the interests in Shares
of the Concert Party do not exceed 44.63 per cent. following such exercise.

6.                  Extraordinary General Meeting

The Tender Offer is subject to Shareholder approval of Resolutions 1, 2 and 3
which are to be proposed at an EGM.  The Circular contains a notice convening
the EGM to be held at 10.00 a.m. on 13 July 2006 at JPMorgan Cazenove, 20
Moorgate, London, London EC2R 2DA. Shareholders will be asked to pass the
following Resolutions:

(a)                Resolution 1, which is being proposed as an ordinary
resolution will, if passed, approve the waiver by the Panel of the requirement
for the members of the Concert Party to make a general offer, which would
otherwise be required under Rule 9 of the City Code, for the Shares not owned by
the Concert Party, as a result of the purchase of the Shares by the Company from
JPMorgan Cazenove pursuant to the Tender Offer.  However, the waiver will only
apply if, following any purchase by the Company pursuant to the Tender Offer,
the interests in Shares of the Concert Party do not exceed 46.70 per cent. of
the issued share capital of the Company immediately following such purchase.

All Independent Shareholders are entitled to vote on Resolution 1.  As required
by Rule 9 of the City Code, voting on Resolution 1 will be taken by way of a
poll and will require the approval of more than 50 per cent. of the votes cast
on a poll by the Independent Shareholders.  Further details about Rule 9 of the
City Code and this waiver is set out in the Circular.

(b)                Resolution 2, which is being proposed as a special resolution
will, if passed, approve the Tender Offer.  Resolution 2 specifies the maximum
number of Shares which may be acquired pursuant to this authority and that the
Shares will be purchased pursuant to the Tender Offer at the Strike Price.  The
authority sought will expire at the conclusion of the Annual General Meeting to
be held in 2007 or if earlier on 12 October 2007.  This special resolution will
require the approval of a three-quarters majority of the votes cast at the
meeting in respect of this resolution, whether such votes are cast in person or
by proxy.  Resolution 2 will be conditional upon Resolutions 1 and 3 being
passed.

(c)                Resolution 3, which is being proposed as an ordinary
resolution will, if passed, approve purchases pursuant to the Tender Offer from
a Director or persons connected (within the meaning of Part X of the Act) with
such a Director for the purposes of section 320 of the Act. The Company will not
be able to enter into the Repurchase Agreement until this approval is obtained.
This ordinary resolution will require the approval of more than 50 per cent. of
the votes cast at the meeting in respect of this resolution, whether such votes
are cast in person or by proxy. Resolution 3 will be conditional upon
Resolutions 1 and 2 being passed.

The Tender Offer will not proceed unless Resolutions 1, 2 and 3 are passed.

(d)                Resolution 4, which is being proposed as an ordinary
resolution will, if passed, approve the waiver by the Panel of the requirement
for the members of the Concert Party to make a general offer, which would
otherwise be required under Rule 9 of the City Code, for the Shares not owned by
the Concert Party, as a result of general market purchases of Shares being made
by the Company from Shareholders pursuant to the Market Purchase Authority.
However, the waiver will be subject to the following limitations:

(i)                  in the event that the Tender Offer is completed, the waiver
will only apply provided that the interests in Shares of the Concert Party do
not exceed 49.99 per cent. of the issued share capital of the Company
immediately following any general market purchase of Shares by the Company
pursuant to the Market Purchase Authority; or

(ii)                in the event that the Tender Offer lapses, the waiver will
only apply provided that the interests in Shares of the Concert Party do not
exceed 44.63 per cent. of the issued share capital of the Company immediately
following any general market purchase of Shares pursuant to the Market Purchase
Authority.

All Independent Shareholders are entitled to vote on Resolution 4.  As required
by Rule 9 of the City Code, voting on Resolution 4 will be taken by way of a
poll and will require the approval of more than 50 per cent. of the votes cast
on a poll by the Independent Shareholders.  Further details about Rule 9 of the
City Code and this waiver are set out in the Circular.

(e)                Resolution 5, which is being proposed as a special resolution
will, if passed, give the Company the general authority to make market purchases
of Shares up to a maximum number equal to either (i) 14.99 per cent. of the
issued Shares immediately following completion of the Tender Offer, provided
that the maximum number of Shares to be bought back by the Company shall not
exceed 11,900,000 or (ii) if the Tender Offer lapses, 14.99 per cent. of the
issued Shares on the date of the publication of this document, provided that the
maximum number of Shares to be bought back by the Company shall not exceed
49,350,000.  Any such repurchases would be at prices to be determined by the
Directors although the terms of the resolution provide that such prices may not
exceed the higher of (i) 105 per cent. of the average middle market quotations
for such Shares taken from the Daily Official List of the London Stock Exchange
for the previous five business days before the repurchase is made, (ii) the
price of the last independent trade and (iii) the highest current independent
bid on the trading venues where the purchase is carried out and the minimum
price must not be less than 10 pence per Share (being the nominal value of a
Share).  The authority will expire at the conclusion of the Annual General
Meeting to be held in 2007 or, if earlier, on 12 October 2007.  This authority
shall be in addition to the authority conferred by Resolution 2.  Resolution 5
will be conditional upon Resolutions 4 and 6 being passed.

(f)                 Resolution 6, which is being proposed as an ordinary
resolution will, if passed, approve purchases pursuant to the exercise of the
Market Purchase Authority from a Director and persons connected (within the
meaning of Part X of the Act) with such a Director for the purposes of section
320 of the Act. This ordinary resolution will require the approval of more than
50 per cent. of the votes cast at the meeting in respect of this resolution,
whether such votes are cast in person or by proxy. Resolution 6 will be
conditional upon Resolutions 4 and 5 being passed.

The Market Purchase Authority will not proceed unless Resolutions 4, 5 and 6 are
passed.


DEFINITIONS 

The following definitions apply throughout this announcement unless the context
requires otherwise.

Act                                                         the Companies Act 1985, as amended

Admission                                                   the admission to trading on AIM of the Shares which became
                                                            effective on 12 June 2006

AIM                                                         the Alternative Investment Market of the London Stock
                                                            Exchange

AIM Admission Document                                      the AIM admission document of the Company issued on 12
                                                            April 2006

AIM Rules                                                   the rules for companies whose securities are traded on AIM
                                                            and their nominated advisers published by the London Stock
                                                            Exchange as amended from time to time

ARAN message                                                a registrar's adjustment message (as defined in the CREST
                                                            manual issued by CRESTCo)

Board or Directors                                          the board of directors of Leo Capital

Business Day                                                any day other than a Saturday, Sunday or public holiday in
                                                            England and Wales

Calculation Date                                            12 July 2006
certificated or in certificated form                        not in uncertificated form

City Code                                                   The Takeover Code

Closing Date                                                3.00 p.m. on 11 July 2006, the time and date on which the
                                                            Tender Offer closes

Combined Code                                               The corporate governance code issued by The Financial
                                                            Reporting Council

Concert Party                                               that group of Shareholders whom the Panel has confirmed are
                                                            deemed to act in concert for the purposes of the City Code,
                                                            details of which are set out in the Circular

CREST                                                       the relevant system (as defined in the CREST Regulations)
                                                            in respect of which CRESTCo is the Operator (as defined in
                                                            the CREST Regulations)

CRESTCo                                                     CRESTCo Limited

CREST member                                                a person who has been admitted by CRESTCo as a
                                                            system-member (as defined in the CREST Regulations)

CREST participant                                           a person who is, in relation to CREST, a system participant
                                                            (as defined in the CREST Regulations)

CREST proxy instruction                                     has the meaning given to it in the notice of the EGM at the
                                                            end of the Circular

CREST Regulations                                           the Uncertificated Securities Regulations 2001 (SI 2001 No.
                                                            3755)

CREST sponsor                                               a CREST participant admitted to CREST as a CREST sponsor
                                                            being a sponsoring system-participant (as defined in the
                                                            CREST Regulations)

CREST sponsored member                                      a CREST member admitted to CREST as a sponsored member

Demerger                                                    the demerger of the Investment Division from the LMS Group
                                                            to the Group that became effective on 12 June 2006

Demerger Agreement                                          The demerger agreement entered into on 12 April 2006
                                                            between LMS, Leo Capital and Leo Holdings

derivatives                                                 includes any financial product whose value, in whole or in
                                                            part, is determined directly or indirectly by reference to
                                                            the price of an underlying security but which does not
                                                            include the possibility of delivery of such underlying
                                                            security

Directors                                                   the directors of the Company

Electronic Tender                                           shall have the meaning ascribed to it in paragraph 4.3 of
                                                            Part 4 of the Circular

Extraordinary General Meeting or EGM                        the Extraordinary General Meeting of Leo Capital convened
                                                            for 10.00 a.m. on 13 July 2006 (or any adjournment
                                                            thereof), notice of which is set out at the end of the
                                                            Circular

Form of Proxy                                               the form of proxy accompanying the Circular for use by
                                                            Shareholders in connection with the EGM

Group                                                       the Company and its subsidiaries and subsidiary
                                                            undertakings from time to time

HMRC                                                        Her Majesty's Revenue & Customs

ICTA                                                        Income and Corporation Taxes Act 1988

Independent Directors                                       Jonathan Agnew, Tony Sweet, John Barnsley, Bernard
                                                            Duroc-Danner and Richard Christou

Independent Shareholders                                    the Shareholders other than any shareholder who is a member
                                                            of the Concert Party

Inflexion                                                   Inflexion plc, a company registered in England and Wales
                                                            with company number 3918793 and registered address at 43
                                                            Welbeck Street, London W1G 8DX (currently in members'
                                                            voluntary liquidation)

Investment Division                                         LMS Capital Limited and each of its subsidiaries and
                                                            subsidiary undertakings and its direct or indirect
                                                            interests in quoted and unquoted companies and funds

JPMorgan Cazenove                                           JPMorgan Cazenove Limited

KPMG                                                        KPMG Audit Plc

Leo Capital or the Company                                  Leo Capital plc, a company registered in England and Wales
                                                            with company number 5746555 and registered address at
                                                            Carlton House, 33 Robert Adam Street, London W1U 3HR

Leo Facility Agreement                                      the US$53 million revolving facility agreement entered into
                                                            on 11 April 2006 between the Company, LMS Capital Limited,
                                                            Westpool Investment Trust plc, LMS Capital (Bermuda)
                                                            Limited and The Royal Bank of Scotland plc

Leo Holdings                                                Leo Capital Holdings Limited, a company registered in
                                                            England and Wales with company number 5663657 and
                                                            registered address at Carlton House, 33 Robert Adam Street,
                                                            London W1U 3HR

Listing Rules                                               the listing rules of the Financial Services Authority
                                                            acting in its capacity as the competent authority for
                                                            listing under Part VI of the Financial Services and Markets
                                                            Act 2000

LMS                                                         London Merchant Securities plc, a company registered in
                                                            England and Wales with company number 7064 and registered
                                                            address Carlton House, 33 Robert Adam Street, London W1U
                                                            3HR

LMS Circular                                                the circular of LMS issued on 12 April 2006

LMS Carried Interest Plan                                   the LMS Carried Interest Plan approved by shareholders of
                                                            LMS on 26 July 2001

LMS Group                                                   LMS and its subsidiary undertakings from time to time

London Stock Exchange                                       London Stock Exchange plc

Market Purchase Authority                                   the authority to make general market purchases of Shares to
                                                            be sought by the Company pursuant to Resolution 5 set out
                                                            in the notice contained in the Circular

member account ID                                           the identification code or number attached to any member
                                                            account in CREST

NAV Discount Range                                          the range of discounts to the Tender NAV per Share from
                                                            which the Strike Price will be determined

Net Asset Value                                             the aggregate value of the Company's net assets from time
                                                            to time

Official List                                               the Official List of the UK Listing Authority, a division
                                                            of the Financial Services Authority, acting as competent
                                                            authority for the purpose of the Part VI of the Financial
                                                            Services and Markets Act 2000

Ordinary Shareholder or Shareholder                         a holder of Shares

Overseas Shareholder                                        an Ordinary Shareholder who is a resident in, or citizen
                                                            of, a jurisdiction outside the United Kingdom

Panel                                                       The Panel on Takeovers and Mergers

participant ID                                              the identification code or membership number used in CREST
                                                            to identify a particular CREST member or other CREST
                                                            participant

Pro Forma NAV                                               the pro forma net assets of the Group on demerger (as set
                                                            out in the Pro Forma Balance Sheet as at 31 March 2006 in
                                                            the Circular) being £295.5 million

Property Division                                           (in respect of the period prior to the Demerger becoming
                                                            effective) LMS and each of its subsidiaries and subsidiary
                                                            undertakings other than the Investment Division or (in
                                                            respect of the period after the Demerger becoming
                                                            effective) LMS and each of its subsidiaries and subsidiary
                                                            undertakings

Proposals                                                   the Tender Offer, the Market Purchase Authority and the
                                                            related waivers granted by the Panel of the obligation to
                                                            make an offer under Rule 9 of the City Code as result of
                                                            the Tender Offer and/or the exercise of the Market Purchase
                                                            Authority and the authorities being sought to buyback
                                                            Shares pursuant to the Tender Offer and/or the Market
                                                            Purchase Authority from Directors and/or connected persons
                                                            (as defined within Part X of the Act).

Record Date                                                 5.00 p.m. on 11 July 2006

Register                                                    the register of members of Leo Capital

Registrars or Capita Registrars                              Capita IRG Plc trading as Capita Registrars

Regulatory Information Service                              a regulatory information service approved by the London
                                                            Stock Exchange for the distribution to the public of AIM
                                                            announcements

relevant securities                                         Shares and securities convertible into, or exchangeable
                                                            for, rights to subscribe for, options in respect of, and
                                                            derivatives to, Shares and 'interests in relevant
                                                            securities' shall have the meaning set out in the City Code

Repurchase Agreement                                        the agreement to be entered between the Company and
                                                            JPMorgan Cazenove regarding the purchase of the Shares,
                                                            acquired by JPMorgan Cazenove and Cazenove, Inc. (on behalf
                                                            of JPMorgan Cazenove) from Shareholders pursuant to the
                                                            Tender Offer, by the Company

Resolutions                                                 the resolutions to be proposed at the EGM to approve the
                                                            Proposals

Resolution 1                                                the ordinary resolution to be proposed at the EGM to
                                                            approve the waiver granted by the Panel, in respect of the
                                                            Tender Offer, of the obligation to make an offer under Rule
                                                            9 of the City Code

Resolution 2                                                the special resolution to be proposed at the EGM to
                                                            authorise, subject to the passing of Resolution 1 and 3,
                                                            the purchase of Shares pursuant to the Tender Offer

Resolution 3                                                the ordinary resolution to be proposed at the EGM to
                                                            approve, subject to the passing of Resolutions 1 and 2,
                                                            purchases pursuant to the Tender Offer from a Director or
                                                            persons connected (for the purposes of Part X of the Act)
                                                            with such a Director for the purposes of section 320 of the
                                                            Act

Resolution 4                                                the ordinary resolution to be proposed at the EGM to
                                                            approve the waiver granted by the Panel of the obligation
                                                            to make an offer under Rule 9 of the City Code as a result
                                                            of any exercise of the Market Purchase Authority

Resolution 5                                                the special resolution, to be proposed at the EGM, to
                                                            authorise, subject to the passing of Resolution 4 and 6,
                                                            the making by the Company of market purchases of Shares

Resolution 6                                                the ordinary resolution to be proposed at the EGM to
                                                            approve, subject to the passing of Resolutions 4 and 5,
                                                            purchases pursuant to the exercise of the Market Purchase
                                                            Authority from a Director and persons connected (for the
                                                            purposes of Part X of the Act) with such a Director for the
                                                            purposes of section 320 of the Act.

Restricted Territory                                        Australia or any state thereof as relevant

Rothschild                                                  N M Rothschild & Sons Limited

Secondment Agreements                                       the agreements between (i) LMS Services Limited and (ii)
                                                            the Company to second Robert Rayne, Tony Sweet and Martin
                                                            Pexton to the Company

Secondment Letters                                          the letters between (i) LMS Services Limited, the Company
                                                            and Robert Rayne; (ii) LMS Services Limited, the Company
                                                            and Tony Sweet and (iii) LMS Services Limited, the Company
                                                            and Martin Pexton, in each case setting out the personal
                                                            terms relating to the secondment of Robert Rayne, Tony
                                                            Sweet or Martin Pexton as relevant

Shares                                                      ordinary shares of 10 pence each in the share capital of
                                                            the Company

Sterling or £                                               the legal currency of England and Wales

Strike Price                                                the price at which JPMorgan Cazenove will purchase Shares
                                                            pursuant to the Tender Offer, determined according to the
                                                            provisions set out in the Circular

Strike Price Tender                                         a tender of Shares for sale at the Strike Price

Tender Form                                                 the tender form accompanying this document for use in
                                                            connection with the Tender Offer by Shareholders who hold
                                                            Shares in certificated form

Tender NAV                                                  the Pro Forma NAV as at 31 March 2006, as adjusted to the
                                                            Calculation Date in accordance with paragraph 3 of Part 4
                                                            of the Circular

Tender Offer                                                the invitation by JPMorgan Cazenove (outside the US) and
                                                            Cazenove, Inc. (on behalf of JPMorgan Cazenove) (in the US)
                                                            to Shareholders (other than certain Overseas Shareholders)
                                                            to tender Shares on the terms and subject to the conditions
                                                            set out in the Circular and also, in the case of
                                                            certificated Shares, the Tender Form

TFE instruction                                             a transfer from escrow instruction (as defined by the CREST
                                                            manual issued by CRESTCo)

TTE instruction                                             a transfer to escrow instruction (as defined by the CREST
                                                            manual issued by CRESTCo)

Transitional Services Agreement                             the transitional services agreement dated 12 June 2006
                                                            between LMS, LMS Services Limited and the Company

UK GAAP                                                     generally accepted accounting principles in the United
                                                            Kingdom

uncertificated or in uncertificated form                    recorded on the Register as being held in uncertificated
                                                            form in CREST and title to which, by virtue of the CREST
                                                            Regulations, may be transferred by means of CREST

United Kingdom or UK                                        the United Kingdom of Great Britain and Northern Ireland

United States or US                                         the United States of America, its territories and
                                                            possessions, any state of the United States of America and
                                                            the District of Columbia.



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