Acquisition

Caledonia Investments PLC
20 October 2003





                           CALEDONIA INVESTMENTS PLC
                                 'Caledonia'


             CALEDONIA BACKS OVAL  -  A NEW INSURANCE BROKING GROUP



Caledonia Investments plc ('Caledonia') is pleased to announce that it has
agreed to invest up to £15m in Oval Limited ('Oval'), which aims to become a new
force in UK insurance broking and financial services.



The Oval concept is to bring together a growing number of the UK's best regional
commercial insurance broking businesses, with the aim of creating one of the
UK's foremost national broking groups.  Oval will make possible the economies of
scale and efficiencies needed to deliver high quality customer service and
compliance in this increasingly regulated sector.  Companies joining Oval will
retain their local relationships and identities.  Their owners will realise part
of their investment for cash and the balance for shares in Oval, thus allowing
them to participate in future growth.  Supporting this growth is consistent with
Caledonia's stance as a long-term investing partner.



Oval's first step has been to agree to acquire, for a mixture of cash and Oval
shares, 100% of R.P. Hodson Holdings Ltd ('RPH'), a highly successful insurance
broking and financial services business with offices in Yorkshire and London.
RPH has already successfully integrated a number of acquisitions.  RPH is
substantially owned by Phillip Hodson and his family.  In addition, Royal & Sun
Alliance Insurance Group plc ('RSA') holds a 12.5% stake, all of which it is
exchanging for shares in Oval.  The acquisition is subject inter alia to
regulatory approval.



Caledonia's investment will be through a combination of equity and convertible
loan notes, which will be drawn down when needed by Oval to fund acquisitions.
Caledonia will initially hold a 34% stake in Oval following completion of its
acquisition of RPH, but expects to be diluted as further acquisitions are made.



Phillip Hodson will become Group Chief Executive of Oval and Lochie Spearman
will become Acquisitions Director.  Antony Pinsent joins the Oval Board as
Chairman with Ben Thomson of Noble & Co, who advised Oval on the transaction, as
non-executive director.  Two representatives of Caledonia will also join the
Oval Board as non-executive directors.





Tim Ingram, Chief Executive of Caledonia, commented:



'Caledonia is delighted to be investing in Oval.  Commercial insurance broking
in the UK is entering a period of increasing change and substantial scale will
be necessary to continue to provide the level of service and security which
corporate insurance buyers expect.'





Antony Pinsent, Chairman of Oval, said:



'We are delighted to have the backing and support of such strong shareholders as
Caledonia and RSA. We believe that the Oval proposition, combining the strength
of local relationships with the service resources of a national network, is a
compelling one for both potential members and customers'


                                                               20th October 2003




ENQUIRIES:

Caledonia Investments plc                               Tel: [phone]
Tim Ingram
Tom Hambro

College Hill                                            Tel: [phone]
Tony Friend
Caroline Wagstaff



NOTES TO EDITORS



Caledonia

Caledonia is a long established investment company with international scope
listed on the London Stock Exchange.  Since April 2003 Caledonia has been
classified in the AITC Global Growth sector of investment trusts where its
investment performance puts it in the top decile over 1 year, 3 years, and 5
years and top quartile over 10 years (to 30 September 2003 - the most recent
date for which AITC data is available).  Caledonia's strategy has delivered
outperformance against its benchmark FTSE All-Share Total Return index of 60%
over the five year period to 30 September 2003 and 75% over the ten year period
to 30 September 2003.  Its total shareholder return outperformance for the 12
months to 30 September 2003 was 37%.  Caledonia has a policy of delivering
progressive annual dividends with a 36-year record of unbroken annual dividend
increases.  Through holding a diversified portfolio, Caledonia aims to maintain
a medium overall risk position.



At 30 September 2003, Caledonia had an unaudited Net Asset Value of 1161p per
ordinary share.  Based on the share price as at the end of September 2003 the
discount to its Net Asset Value per share was 21.4%.



Caledonia's strategy is to focus on a portfolio of around 30 to 40 principal
investments where it has significant and influential stakes, with a policy that
at least 50% of the total portfolio should be in quoted securities or other
liquid assets.  New investments will typically be in the range £10 million to
£25 million.  Careful control is exercised over costs, notwithstanding
Caledonia's active and participative management style.  The Board believes that
Caledonia has a long established and valuable reputation for being a supportive
long term investor, which brings a strong deal flow of opportunities not always
available to others.



Caledonia's investments are focused on a selected range of sectors where it has
good in-house knowledge that can add value to management of investee companies.
Where particular expertise is not held in-house, investments may be made through
third party managed funds where Caledonia will often seek a significant stake in
the management company.



Caledonia's selected sectors are: Financial: comprising 30% of total assets,
including holdings in Close Brothers, ICAP and Rathbone Brothers; Leisure and
Media: comprising 20% of the total assets, including holdings in Kerzner
International and The Sloane Club; Managed General Funds: comprising 19% of the
total assets including holdings in British Empire Securities and a fund managed
by Aberforth Partners; Industrial and Services: comprising 15% of the total
assets, including investments in Offshore Logistics and Paladin Resources;
Property: comprising 10% of the total assets, including a holding in Quintain
Estates; and Other: comprising 6% of the total assets.   The percentages of the
total assets quoted are as at 30 September 2003.



As an investment trust Caledonia is not subject in the future to liability for
corporation tax on chargeable gains.  As a result, Caledonia believes it will be
able to build greater value for shareholders and be more appealing to retail
shareholders which ultimately should contribute towards a lower discount of
Caledonia's share price to Net Asset Value per share.



Shown below is a table# illustrating how the value of £100 invested in Caledonia
over a period of 1 year, 3 years, 5 years and 10 years to 30 September 2003 (the
latest date for which all comparative data is available) compares with an
equivalent theoretical investment in:



(i)                  The Association of Investment Trust Companies ('AITC')
Global Growth weighted average index

(ii)                The FTSE All-Share Total Return Index, and

(iii)               UK Savings 25,000*





Period invested to 30 September 2003


                                                1yr           3yr           5yr          10yr

                                                 £             £             £             £
Caledonia                                      153.8         126.8         159.5         263.6

AITC Global Growth                             118.6          66.7         110.0         161.4

FTSE All-Share Total Return Index              116.7          73.2          99.1         186.2

UK Savings 25,000*                             102.0         108.0         116.6         145.8





As can be seen in the table above, £100 invested in Caledonia shares would have
generated a significantly higher return over 1 year, 3 years, 5 years and 10
years than alternative investments in either the overall AITC Global Growth
Investment Trust sector, the FTSE All-Share Total Return Index or an index
representative of the building society industry.



# Source data prepared by Fundamental Data Limited on behalf of AITC Services
Limited.



* UK Savings 25,000 is an index compiled from an aggregate of 20 bank building
society rates to represent the industry, for a deposit of £25,000 up to 90-day
notice accounts.



Caledonia is a member of the AITC.



For further information please visit www.caledonia.com



Oval



Oval believes that there is an opportunity to take advantage of the economies of
scale available from consolidation that is inevitable amongst the 4,800
insurance brokers in the UK. Companies joining Oval will be able to benefit from
the group's increased leverage with insurers and levels of technological support
allowing more effective handling of business, while also assisting with the
impending increase in FSA regulations.



Consideration given for any acquisitions will be in the form of ordinary shares
in Oval and cash, the proportion depending in each case on the size and kind of
business acquired. Owner/managers of companies or businesses acquired by Oval
will continue to be motivated by their continuing shareholding in the Group.



Antony Pinsent



Antony Pinsent (57) has been in the insurance market since 1966 principally in
the broking field. He was chairman of Leslie & Godwin before joining the board
of Aon Group Ltd.  He left Aon in 1999 and is currently a non-executive director
of Sompo Japan Insurance Company of Europe Ltd and ATL Software Ltd.  He was
Chairman of the Lloyd's Insurance Brokers Committee in 1993 and 1994.



Phillip Hodson

Phillip Hodson (52) is Chairman of R.P. Hodson Group.  He joined the group in
1977, having formerly worked for Anglo America Plc in South Africa, and has
guided the group to its current level by overviewing a strategic acquisition
policy. Phillip played cricket for Yorkshire C.C. and Western Transvaal and has
been made a member of the M.C.C. main committee.






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