Update of Investment Strategy

Electra Private Equity PLC
19 September 2006



   This announcement and the information contained herein is not for release,
publication or distribution in whole or in part in or into Canada, Australia or
                                     Japan



Tuesday, 19 September 2006


                           Electra Private Equity PLC
    Update of Investment Strategy, Terms of Appointment of Electra Partners
                              and Related Matters


On 8 June 2006, the Board announced that in order to build on Electra's strong
track record of value creation, the Board was undertaking a review of Electra's
market, its investment manager and its investment strategy. Under the existing 
strategy up to one-third of realisation proceeds from the portfolio as at June 
2001 are made available for re-investment. 

The results of this review are summarised below:

*  The Board considers that Electra has strong potential to continue to create
   significant value for Shareholders

*  The Board is proposing to adopt a new investment strategy whereby Electra
   returns to full investment of its capital resources in private equity

*  The new investment strategy will be complemented by ongoing share buy-backs
   and the active management of its capital position

*  Electra will target a Return on Equity of between 10 and 15 per cent per
   annum over the long-term

*  The Board proposes to appoint Electra Partners as its investment manager as
   it believes that Electra Partners has the best team to maximise returns on
   the existing portfolio and to implement the proposed new investment strategy


Sir Brian Williamson, Chairman of Electra Private Equity, said:

'Electra provides Shareholders with liquid and flexible access to the private
equity market. By returning to full investment, supplemented by a target Return
on Equity of between 10 and 15 per cent per annum over the long term and an
active on-market share buy-back programme, the Board believes that Electra will
continue to deliver value to Shareholders.'


Hugh Mumford, Managing Partner, of Electra Partners, said:

'Private equity is an established and attractive asset class. Electra Partners
strong track record and capabilities, coupled with its differentiated approach
to private equity investing, has created substantial shareholder value'


This summary should be read in conjunction with the full text of the
announcement together with its Appendices. Capitalised terms used in this
summary have the meanings given to them in the full announcement.


Note to Editors

In 1999, EPL's investment professionals were organised as two separate and
distinct teams, one dedicated to managing Electra's assets and the other having
responsibility for managing a new European limited partnership private equity
fund. The team responsible for managing the European limited partnership private
equity fund subsequently left EPL and established a separate and distinct fund
management business called Electra Partners Europe LLP. On 31 August 2006,
Electra Partners Europe LLP changed its name and removed references to Electra
from its business and funds under its management.


Enquiries:

Electra:                                        020 7306 3883

Sir Brian Williamson
Michael Walton


Electra Partners:                               020 7214 4200

Hugh Mumford
Tim Syder
David Symondson


Lazard:                                         020 7187 2000

Jon Hack
Richard Chang


M Communications:                               020 7153 1530

Nick Miles


Lazard & Co., Limited, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting exclusively for Electra and no
one else in connection with the Proposals and will not be responsible to any
other person for providing the protections afforded to its clients, nor for
providing advice in relation to the Proposals or any other matter referred to or
information contained in this document.



   This announcement and the information contained herein is not for release,
publication or distribution in whole or in part in or into Canada, Australia or
                                     Japan





Tuesday, 19 September 2006


    Update of Investment Strategy, Terms of Appointment of Electra Partners
                              and Related Matters


On 8 June 2006, the Board announced that it was finalising a review of Electra's
investment strategy and management arrangements. Having concluded its review the
Board is pleased to make the following announcement.

Since the change of investment strategy in April 1999, Electra has created
significant value for Shareholders. In the period from 1 April 1999 to 31 August
2006, Electra sold 68 investments realising a total of GBP 2.1 billion, invested
GBP 0.6 billion in 52 companies and returned a total of GBP 1.2 billion in cash
to Shareholders through tender offers and on-market share buybacks. During this
period, Electra's Net Asset Value increased by 89 per cent which compares with a
rise in the FTSE All-Share Index of 1 per cent over the same period.

In order to build on this strong track record of value creation, the Board has
undertaken a review of Electra's market, its investment manager and its
investment strategy. Following this review, the Board considers that Electra has
strong potential to continue to create significant value for Shareholders. In
order to best achieve this potential, the Board is proposing to adopt a new
investment strategy whereby Electra returns to full investment of its capital
resources in private equity, complemented by ongoing share buy-backs and the
active management of its capital position.

The Board also proposes to appoint Electra Partners as its investment manager.
The Board believes that Electra Partners has the best team to maximise returns
on the existing portfolio and to implement the proposed new investment strategy.

The existing management arrangements are with EP Private Equity Limited, a
limited liability company. If the Proposals are approved, the new management
arrangements will be entered into with Electra Partners LLP, a limited liability
partnership. From Electra's perspective, this change in corporate form is not
material to the substance of the Proposals as the individuals comprising the
Senior Management Team who currently manage Electra's assets under the existing
arrangements will be responsible for managing those assets under the new
arrangements.


Electra's Objective

Following implementation of the Proposals, Electra will target a Return on
Equity of between 10 and 15 per cent per annum over the long-term.


Electra will aim to achieve this target Return on Equity by:

*  Exploiting a track record of successful private equity investment

*  Utilising Electra's inherent competitive advantages as an investor

*  Exploiting the proven skills of the Senior Management Team with its strong
   record of deal flow generation and long-term presence in the private equity
   market

*  Investing in a number of value-creating transactions with a balanced risk
   profile across a broad range of investment sectors through a variety of
   financial instruments

*  Effecting ongoing on-market share buy-backs to generate shareholder value

*  Actively managing its total capital position and gearing, in light of
   prevailing market conditions


Background to Changes

In making its decision to adopt a revised investment strategy, the Board has had
regard to the attractiveness of the private equity market and Electra's ability
to exploit the opportunities potentially available in that market, for the
benefit of its Shareholders.

In recent years, private equity has become an increasingly popular and
established asset class, which has resulted in a substantial increase in the
funds being made available for private equity investment opportunities. This
increased flow of funds into the private equity market has led to an upturn in
the number of transactions financed by private equity groups. The Board strongly
believes that in light of these positive market developments, there continues to
be a significant role for Electra, which provides investors with liquid and
flexible access to the private equity market. Through the Senior Management
Team's network and expertise, Electra is able to participate in sizeable
transactions alongside other institutions where control of the investment is
exercised through the collective holdings of the institutions. Furthermore,
unlike many of its competitors who operate within strict investment and
realisation mandates and timescales, Electra is able to adopt a more flexible
approach to investment including the type of financial instrument in which it
invests, its ability to take majority or minority positions in relation to such
instruments, and the timing of realisations, which has enabled shareholder value
to be maximised by holding investments until the Senior Management Team believes
the optimum time for disposal is reached. The Board believes that the benefits
of these advantages have been clearly demonstrated by the out performance of
Electra's Net Asset Value per Share relative to the FTSE All Share Index over
the 15 year period to 31 August 2006.


Investment Strategy and Policy

INVESTMENT STRATEGY

Under the investment strategy approved by Shareholders in June 2001, up to
one-third of realisation proceeds from the portfolio as at June 2001 were made
available for re-investment. The Board considers that this restriction is no
longer appropriate and that shareholder value will be maximised under a strategy
whereby all of Electra's capital resources are available for investment in
private equity and share buy-backs in proportions that reflect market conditions
rather than the fixed proportions described above.

Electra will continue to actively manage its gearing and capital position in
light of prevailing market conditions. The Board believes that an on-market
share buy-back programme is an important element in generating Shareholder
value, and efficiently managing Electra's total capital base and returns. Since
July 2004, Electra has repurchased through its on-market share buy-back
programme 12.1 million Shares at an average price of GBP 9.28, thereby returning
a total of GBP 112.5 million to investors. Since April 1999 Electra has returned
a total of GBP 1.2 billion to its Shareholders.

Electra currently has significant net cash resources available on its balance
sheet. It is the Board's current intention that Electra will engage in an active
on-market share buy-back programme. To this end, a special resolution will be
proposed at the EGM to allow Electra to buy up to an additional 14.99 per cent
of its Shares. In deciding when to buy-back Shares, the Board will take account
of the prospective returns of prevailing investment opportunities and the
discount at which the Shares trade to their Net Asset Value. The Directors do
not intend to use this authority to purchase Shares unless it is judged at the
time that it would result in an increase in Net Asset Value and would be in the
best interests of Shareholders generally. Shares purchased under this authority
would be cancelled.

Furthermore, the Board will actively manage its total capital position and
levels of gearing, subject to prevailing market conditions and to the amounts
borrowed by Electra's underlying portfolio companies.


INVESTMENT POLICY

Consistent with its current investment policy, Electra intends to target private
equity opportunities (including direct investment, fund investment and secondary
buyouts of portfolios and funds) so that the risks associated with such
investments are justified by expected returns. Such investments will be made
across a broad range of sectors and types of financial instrument.

Electra will continue to focus principally on Western Europe, with the majority
of investments expected to be made in the United Kingdom which continues to be
the largest private equity market in Western Europe and where historically
Electra has made the majority of its investments. Electra will also continue to
invest across all industry sectors, but would expect there to be an emphasis on
areas where the Senior Management Team has specific knowledge and expertise. In
circumstances where Electra Partners believe that there is merit in gaining
exposure to countries and sectors outside Electra Partners' network and
expertise, Electra will also consider investing in specific funds managed by a
third party with such expertise or co-investing with private equity managers
with whom the Senior Management Team has developed a long-standing relationship.

Electra will also continue to invest in a range of financial instruments such as
equity, senior equity, convertibles and mezzanine debt.


Electra Partners

APPOINTMENT

Following its review of Electra's investment strategy, the Board has concluded
that Electra Partners is the best manager to maximise returns on the existing
portfolio and to implement the revised investment strategy and policy. This is
supported by the successful track record of the Senior Management Team in
managing Electra's assets over the last 15 years as outlined below. Electra
Partners will be appointed for an initial period of three years under new
arrangements, which are summarised below. Electra Partners regards Electra as
its most important client.

Electra Partners is in the process of applying for FSA authorisation and in the
event this authorisation is not received prior to the Effective Date, the
proposed management agreement will be entered into with EPL for an interim
period with such agreement being transferred to Electra Partners once FSA
authorisation is received. The existing management agreement will terminate upon
the proposed management agreement becoming effective.


TEAM

Electra Partners comprises a team of senior partners supported by investment
professionals and administrative staff who together will manage Electra's
business and assets. Following the recruitment of additional investment
executives, the team is expected to total at least 35 in number.


The Senior Management Team are:


Name             Role                            Age    Industry Experience

Hugh Mumford     Investment Professional         60     25 years

Timothy Syder    Investment Professional         48     23 years

David Symondson  Investment Professional         51     24 years

Rhian Davies     Investment Professional         41     14 years

Philip Dyke      Compliance/Company Secretarial  59     36 years

Stephen Ozin     Chief Financial Officer         43     16 years



TRACK RECORD

The members of the Senior Management Team have together built up a strong track
record of successful private equity investment over a period of more than 15
years.

Of the 42 UK investments with investment cost greater than GBP 10 million
arranged and managed by EPL for Electra over the past 15 years (excluding those
made by the Electra European Fund in which Electra has invested but which is
managed independently of EPL), 29 investments were led and subsequently managed
by the Senior Management Team. In terms of investment value (at cost), these
investments amounted to approximately GBP 793 million out of the total
investment of GBP 1,075 million. Over the same period, 9 continental investments
with investment cost greater than GBP 5 million were overseen by the Senior
Management Team. Hugh Mumford has chaired the investment committee of EPL, which
approves all investments made by Electra, for the last 17 years.

The investment track record of the Senior Management Team is outlined in the
table below.

UK Investments Greater than GBP 10m Attributable to the Senior Management Team*

           No.   Capital   Realisation on  Valuation    Total     Gross   Gross
                Invested   Proceeds GBP m      GBP m    GBP m  Multiple     IRR
                  GBP m

Realised   23       633             1,445          -    1,445      2.3x   29.4%

Unrealised  6       160                25        140      165      1.0x    1.0%

Total      29       793             1,470        140    1,610      2.0x   27.2%

* Past performance is not indicative of future performance



THE ELECTRA NAME

In 1999, EPL's investment professionals were organised as two separate and
distinct teams, one dedicated to managing Electra's assets and the other having
responsibility for managing a new European limited partnership private equity
fund. The team responsible for managing the European limited partnership private
equity fund subsequently left EPL and established a separate and distinct fund
management business called Electra Partners Europe LLP. On 31 August 2006,
Electra Partners Europe LLP changed its name and removed references to Electra
from its business and funds under its management.

In order for Electra Partners to distinguish itself clearly within the private
equity sector and to identify its close association with Electra, Electra
Partners will be granted a licence to use the Electra name for a period of 5
years from the Effective Date.


Management Arrangements

Electra Partners will be appointed under new arrangements to manage the
investments of Electra on a discretionary basis in accordance with Electra's
revised investment strategy. The main commercial terms of the proposed
management agreement are summarised below.


PRIORITY PROFIT SHARE

Consistent with the provisions in the current management agreement, Electra
Partners will receive an annual payment known as the 'priority profit share'
equal to 1.5 per cent on the gross value of Electra's investment portfolio
including cash (but excluding any amounts committed to funds established and
managed by Electra Partners). The priority profit share is payable quarterly and
is calculated on the valuation of investments at the quarter end (as is the
current practice).


INCENTIVE ARRANGEMENTS

The current incentive arrangements are structured through a co-investment scheme
such that 8 per cent of profits realised on unquoted investments are allocated
to former and current executives of EPL on a deal by deal basis. These
arrangements will remain in place for the Existing Portfolio, but will be
supplemented by the new arrangements, summarised below.


NEW ARRANGEMENTS

Under the proposed incentive arrangements, Direct Investments made in the three
financial years to 30 September 2009 will be treated as a separate pool of
investments. The members of Electra Partners will receive a carried interest of
18 per cent of net profits (which means profits remaining after deduction of the
related priority profit share of 1.5 per cent) on that pool subject to a
performance hurdle being achieved and Electra receiving back the aggregate
amounts advanced to finance investments in that pool. The performance hurdle
requires net profits (as described above) to be not less than a return of 8 per
cent per annum compounded annually on the amounts advanced by Electra to finance
the acquisition of investments (including related priority profit share) and
outstanding from time to time.

Direct Investments made between 1 April 2006 and 30 September 2006 will be
deemed to be included in this first three year pool. There are currently 3
assets costing GBP 44 million, in aggregate, in this category.

Similar carried interest arrangements are proposed to be put in place for Fund
Investments save that the members of Electra Partners will only be entitled to
receive a carried interest of 9 per cent of net profits (as described above).


The Board expects that investment pools will be for periods of three years,
although the Board may, from time to time, approve a shorter period in
exceptional circumstances. Realisations in respect of investments in each pool
may be made during or after expiry of the end of the three year investment pool
term.


EXISTING PORTFOLIO

The members of Electra Partners will also be entitled to receive a 10 per cent
carried interest on net profits (which means, in respect of the Existing
Portfolio, profits remaining after the deduction of the related priority profit
share of 1.5 per cent) of the Existing Portfolio subject to Electra receiving
back aggregate cash equal to the opening value of the Existing Portfolio (being
approximately GBP 160 million at 31 March 2006) and a performance hurdle being
achieved. The performance hurdle requires net profits (which means in this
instance the profits remaining after deduction of the related priority profit
share of 1.5 per cent and payments made under the existing 8 per cent
co-investment scheme) to be not less than a return of 15 per cent per annum
(compounded annually) on the opening value of the Existing Portfolio including
any related priority profit share outstanding from time to time.


MANAGEMENT AGREEMENT TERM AND TERMINATION

The new management agreement will run for an initial three year term commencing
as of the Effective Date with a 12 month rolling notice period. Neither party
may serve notice to terminate during the first two years of the agreement.


LOAN NOTE

In June 2001, Shareholders approved a transaction between Electra and EPL
whereby a GBP 7 million Fixed Rate Unsecured Loan Note ('Loan Note') was issued
by Kingsway Holdings Jersey Limited (and guaranteed by EPL) to Electra. The Loan
Note does not bear interest and is redeemed over time from the annual priority
profit share (in excess of GBP 9 million) paid by Electra to EPL.

Since June 2001, EPL has made GBP 0.5 million in repayments in accordance with
the terms of the Loan Note. Given the uncertainty around the quantum and timing
of future repayments, the Board has made a series of provisions in Electra's
accounts such that by 31 March 2006 the carrying value of the Loan Note had been
reduced to zero.

Under the new management agreement, Electra has agreed to cancel the Loan Note
in consideration for reducing the amount of priority profit share payable to
Electra Partners (the 'PPS Reduction') by an amount equal to the amount that
would have been payable under the Loan Note to Electra on an annual basis. In
addition, Electra has also agreed to grant to Electra Partners an option
exercisable at any time after the Effective Date to cancel all future PPS
Reductions by paying Electra the equivalent of the net present value of the
remaining expected PPS Reductions. This value will be approved by a qualified
independent third party.


Board's View of New Management Arrangements

Based on the independent advice provided by MM&K, an independent firm of
strategic remuneration consultants with a particular knowledge and focus on the
European private equity industry, the Board of Electra considers that the
proposed management arrangements are fair and reasonable as they are broadly
in-line with management arrangements typically found in private equity fund
management. Furthermore, as incentive payments will be linked to the performance
of an investment pool as a whole, Electra will be able to offset profits and
losses arising from individual investments to determine whether the performance
hurdle has been achieved and whether an incentive becomes payable to members of
Electra Partners.


Approval and Expected Timetable

The Proposals are subject to approval by Electra's Shareholders. A circular in
connection with the Proposals is expected to be despatched on or around 19
September. The EGM is expected to be held on or around 12 October 2006.



Electra:                                        020 7306 3883

Sir Brian Williamson
Michael Walton


Electra Partners:                               020 7214 4200

Hugh Mumford
Tim Syder
David Symondson


Lazard:                                         020 7187 2000

Jon Hack
Richard Chang


M Communications:                               020 7153 1530

Nick Miles


Lazard & Co., Limited, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting exclusively for Electra and no
one else in connection with the Proposals and will not be responsible to any
other person for providing the protections afforded to its clients, nor for
providing advice in relation to the Proposals or any other matter referred to or
information contained in this document.



Appendix 1

                                  DEFINITIONS

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

'Board' or            the directors of Electra
'Directors'

'Direct Investments'  private equity investments in companies and other entities
                      (excluding Fund Investments) whose securities are not
                      listed or traded on an investment exchange

'Effective Date'      the date of the EGM or if the EGM is adjourned, the date
                      on which the EGM is re-convened

'Electra'             Electra Private Equity PLC

'Electra Partners'    Electra Partners LLP, a limited liability partnership
                      constituted under the laws of England and Wales, the
                      proposed new investment manager of Electra (registered no.
                      OC320352)

'EPL'                 EP Private Equity Limited (formerly, Electra Partners
                      Limited), a limited liability company incorporated in
                      England and Wales under the Companies Act, the current
                      investment manager of Electra

'Existing Portfolio'  the Direct Investments owned by Electra as at 1 April 2006

'Extraordinary        the Extraordinary General Meeting of Electra
General Meeting' or
'Meeting' or
'EGM'

'IRR'                 Internal rate of return

'FSA'                 Financial Services Authority

'Fund Investments'    investments in funds managed by parties other than Electra
                      Partners including limited partnership funds and
                      collective investment schemes which will comprise no more
                      than 25 per cent of all investments owned by Electra from
                      time to time

''Lazard''            Lazard & Co., Limited

'MM&K'                MM&K Limited, a firm authorised and regulated by the FSA

'Net Asset Value'     the aggregate value of Electra's net assets or the value
                      of Electra's net assets per Share, as the context requires

'Proposals'           the amendment of Electra's investment strategy and policy,
                      the authority to make market purchases of Shares and the
                      proposed changes to the management contract and revised
                      management incentive arrangements

'Return on Equity'    Total 'Return on Ordinary Activities after Taxation'
or 'ROE'              divided by opening 'Total Equity Shareholders Funds'
                      calculated on an annual basis (as those terms are used in
                      the Report and Accounts for the year ended 30 September
                      2005)

''Senior Management   collectively Hugh Mumford, Timothy Syder, David Symondson,
Team''                Rhian Davies, Philip Dyke, and Stephen Ozin

'Share' or            ordinary shares of 25 pence in Electra
'Shares'   

'Shareholder'         holders of Shares





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