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Monday 29 October, 2012

Tetragon Financial Group Limit

Tetragon Financial Group Limited

    - TFG has acquired Polygon for 11,685,940 TFG non-voting shares
    - The acquisition expedites TFG's growth strategy to diversify and 
      its income streams and to create a broad-based financial services firm
    - The acquisition accelerates TFG's ability to generate asset management fee
      income in addition to capital appreciation and cash flow from investments
    - The acquisition was approved and authorised by the board of TFG following
      consideration by a committee of independent directors which received 
      financial advice from Perella Weinberg Partners UK LLP, independent legal
advice from
      Simpson Thacher &amp; Bartlett LLP and Carey Olsen, and independent due 
diligence, tax and
      accounting advice from PricewaterhouseCoopers LLP
    - TFG expects to repurchase up to $150 million worth of TFG non-voting 
      through a modified Dutch auction tender offer
    - TFG expects that both the acquisition and the share repurchase will be
      accretive to NAV per share
</pre>    TFG today announces that it has acquired Polygon's asset management 
businesses and
infrastructure platform, along with Polygon's interests in LCM Asset Management
("LCM") and GreenOak Real Estate ("GreenOak"), for an aggregate of 11,685,940 
non-voting shares, the substantial majority of which will vest over three to 
five years.

    Commenting on the transaction, Reade Griffith, a Principal of Tetragon 
Management LP ("TFM"), TFG's investment manager, a Director of TFG and Tetragon
Group Master Fund Limited (the "Master Fund"), and a Founder of Polygon, said, 
"This is a
continuation of TFG's strategy to expand its asset management platform and 
diversify and
strengthen its income streams. TFG shareholders will benefit from TFG investing
Polygon's existing and new products on preferred terms, from a new stream of 
asset management fee income and from owning increased stakes in successful 
like LCM and GreenOak."

    David Wishnow, a Principal of TFM, added "As a larger investment manager 
substantial capital, TFG will be well-positioned to develop dynamic new 
products and attract high quality investment talent."

    Rupert Dorey, an Independent Director of TFG, stated on behalf of the 
members of the
independent committee that "The TFG independent committee see this acquisition 
as a
progression of TFG's previously articulated strategy of expanding its asset 
platform and believe that it is an attractive opportunity to create value for

    The Acquisition

    Established in 2002, Polygon is a broad-based asset management business with
objective of providing attractive investment opportunities with superior 
returns in partnership with its investors.

    TFG is acquiring Polygon's asset management businesses based in London and 
New York,
including its infrastructure platform, and Polygon's interests in LCM and 
Polygon's infrastructure is capable of supporting multiple alternative asset 
with a history of handling a wide range of securities across multiple 
geographies. Certain
non-core Polygon assets were not included in the transaction.

    Polygon consists of three main asset management businesses:

    1. Hedge funds: Polygon currently manages approximately $450 million across
three main
strategies - European Event Driven Equities, Convertible and Credit Securities,
and Mining
Equities. Polygon's products are managed by experienced and respected investment
based in London and New York and have strong performance records since launch.

    2. Polygon's 13% stake in GreenOak: GreenOak is a real estate focused 
investing and advisory firm that seeks to create long term value for its 
investors and
provide strategic advice to its clients. Founded in 2010, GreenOak now has total
under management of approximately $1.9 billion. GreenOak has dedicated teams in
New York,
Los Angeles, London, Munich and Tokyo with local knowledge, experience and 
networks in in these markets. TFG acquired a 10% interest in GreenOak in 2010. 
acquisition brings aggregate TFG ownership to 23% and provides GreenOak with a 
external investor with the resources to support strong growth.

    3. Polygon's 25% stake in LCM: Established in 2001, LCM is a specialist in
below-investment-grade, U.S. corporate, broadly-syndicated loans, principally 
through CLO products. LCM currently manages approximately $4.5 billion of loans
with a
team that has extensive experience dating back to the early days of the U.S. 
loan market and an active risk management style. TFG acquired 75% of LCM in 
January 2010.
This acquisition allows TFG to consolidate its ownership in LCM to 100%, 
substantial potential synergy benefits and operational savings.

    Polygon also has approximately $25 million of contracted management fee 
income due
over the next three years associated with one of its other products, which is 
included in
the transaction.

    Valuation and Ownership

    In order to further align the interests of Polygon's owners and sellers, all
of whom
are principals or employees of Polygon and GreenOak, with those of TFG 
shareholders, the
acquisition will be entirely financed by currently issued and outstanding TFG 
shares. These are subject to vesting and forfeiture conditions: in particular, 
all of the
consideration due to Reade Griffith and Paddy Dear, Founders of Polygon, will 
vest between
2015 and 2017. Messrs. Griffith and Dear have also committed to grow all new 
businesses within and for the benefit of TFG.

    The non-voting shares delivered by TFG as consideration were already held by
TFG in
treasury or in a subsidiary.

    Transaction Approval

    As certain principals of Polygon (Messrs. Griffith and Dear) are also 
members of TFG's
investment manager, TFM, and directors of TFG, in anticipation of the potential
for a
transaction, the boards of directors of TFG and the Master Fund (the "Funds") 
constituted parallel committees composed of the four independent directors with
financial or beneficial interest in Polygon or the transaction (Rupert Dorey, 
Jeffreys, Byron Knief and Greville V.B. Ward) (the "Independent Committee"). The
Independent Committee engaged Simpson Thacher &amp; Bartlett LLP and Carey Olsen
independent outside counsel to them as members of the Independent Committee and
selected and engaged Perella Weinberg Partners UK LLP ("Perella Weinberg 
Partners") as
independent financial advisor to the Funds. The Independent Committee also 
PricewaterhouseCoopers LLP ("PwC") to advise the Funds as to the accounting and
treatment of, and conduct due diligence with respect to, the potential 
transaction. Each
of these advisors acted at the direction of, and reported solely to, the 

    Perella Weinberg Partners, which was compensated on a fixed-fee basis 
without any
success fees, has delivered an opinion which, subject to the limitations, 
assumptions and
qualifications set forth in the opinion, (i) provides that the consideration to
be paid by
the Funds in the transaction is fair to the Funds from a financial point of view
and (ii)
certifies, for purposes of Guernsey law, that such consideration is within a 
range of possible aggregate values for the acquired property.

    This satisfies the Guernsey law requirement that the terms of the 
transaction are at
least as favourable to the Funds as would be any comparable arrangement effected
on normal
commercial terms negotiated at arm's length between the relevant persons and an
independent party.

    Transaction counsel for TFG were Cravath, Swaine &amp; Moore LLP. The 
Committee unanimously approved the transaction, and the full board of TFG has 
endorsed such approval and authorised the transaction.

    The investment committee of TFM, including the members who do not have any 
interest in
Polygon (and who were independently advised by their own counsel, Fried, Frank,
Shriver &amp; Jacobson LLP) unanimously view the Polygon acquisition as being in
the best
interests of the Funds.

    TFM will continue to act as the investment manager of TFG under the terms of
investment management agreement.

    Tender Offer

    TFG also announces its intention to repurchase TFG non-voting shares up to a
value of $150 million. Deutsche Bank will act as dealer manager in the tender 
offer, which
will use a modified Dutch auction structure. Details of this planned tender 
offer will be
announced shortly.


    Conference Call

    TFG will host a conference call to discuss the transaction today, Monday 
October 29,
at 2:00 pm GMT, 10:00 am EDT (please note that there is only a four-hour 
between time zones this week).

    The audio portion of the call may be accessed by dialling +44(0)20-7162-0077

    Please be prepared to provide the following information:

    Event Title: Tetragon Investor Call

    Moderator: Paddy Dear

    Conference ID: 924595

    The call will be accompanied by a live presentation which can be viewed 
online by
registering at the link below. In addition, management will answer questions 
after the
presentation that can be submitted in advance to [email protected] or can be 
online while watching the presentation. You will still need to dial in to the 
portion of the call above if you choose to view the presentation online. We 
encourage you to log in 15 minutes prior to the start of the call.

    Live Presentation and Q&amp;A Link:;s=1&amp;k=653662C696C4AD6A7E1

    David Wishnow/Yuko Thomas
    Investor Relations
    [email protected]

    Press Inquiries:
    Brunswick Group
    Andrew Garfield/Gill Ackers/Brian Buckley
    [email protected]

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