Caledonia seeds a new fund

Caledonia Investments PLC
02 September 2003



                   CALEDONIA INVESTMENTS PLC ('CALEDONIA')

                   Caledonia seeds a new fund established by
               Eddington Capital Management Limited ('Eddington')


Caledonia is pleased to announce that it has committed £15m in cash to seed the
first fund launched by Eddington, a 50/50 joint venture established between
Caledonia and Glenn Baggley and Alex Allen to manage a range of
fund-of-hedge-funds products.

The first fund launched on 1 September 2003 and will target the high return end
of the market.


Eddington has been authorised and is regulated by the FSA.

Tim Ingram, Chief Executive of Caledonia, commented:

'Caledonia has a long track record of identifying opportunities to build value
in the financial services sector.  We're delighted to have the opportunity of
backing a talented team and believe there will be considerable interest in the
fund that Eddington has launched.'

Glenn Baggley, Chief Executive of Eddington, commented:


'We are delighted to have the backing of Caledonia and believe that the high
return segment of the market that we are targeting is an area where investors
currently have limited choice.  From conversations we have already had we
believe there will be considerable demand for our fund.'


                                                                2 September 2003

ENQUIRIES:

Caledonia Investments plc                        Tel: [phone]

Tim Ingram
Jamie Cayzer-Colvin

College Hill                                     Tel: [phone]

Tony Friend
Tom Allison

Eddington Capital Management Limited             Tel:  [phone]

Glenn Baggley, CEO
Alex Allen, CIO


Notes to editors:



Glenn Baggley


Glenn began his financial career with Bita Plus Consultants where he developed
risk control, optimization and portfolio management software.


In 1997 he joined Quaestor Investment Management, now a provider of global
market-neutral equity hedge funds to institutional and professional investors.
As Director of Research, Glenn helped spearhead the transformation of the
company from a $1bn traditional long-only active manager into a hedge fund
specialist.  They raised $330m for the hedge fund range.


In 2000 he moved to Attica Asset Management, the London based multi manager, as
Managing Director of the Alternative Products Division, where he helped build
and manage a successful fund of hedge funds business, raising $200m of
alternative assets.


Glenn holds a 1st Class Honours BSc in Astrophysics from Newcastle University
and a DPhil in Astrophysics from St. John's College, Oxford University. He has
also conducted research in Astrophysics at Durham University and Nuclear Physics
at The Daresbury Laboratory.



Alex Allen


Alex began his career at Barclay's Bank in Paris where he was seconded for a one
year placement in 1994. This was followed by an internship program at Morgan
Grenfell Asset Management where he learned portfolio administration.


Alex joined EFG Asset Management in 1997 as a hedge fund analyst, and in 1999 he
became the fund manager for EFG's hedge fund range.


During Alex's tenure the fund range increased from one to five, and assets under
management increased from $13m to in excess of $110m. Alex held a seat on EFG's
Asset Allocation Committee, overseeing both tactical and strategic capital
allocation across alternative and traditional asset classes.


Alex holds a 2:1 BSc (Joint Honours) in International Management and Modern
Languages from the University of Bath where his studies included finance,
economics, management accounting and financial accounting.


NOTES TO EDITORS


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 quartile by reference to one, five and
ten year total shareholder returns for the period to 31 July 2003.  Caledonia's
strategy has delivered outperformance against its benchmark FTSE All-Share Total
Return index of 42% over the five year period to 31 July 2003 and 82% over the
ten year period to 31 July 2003.  Its total shareholder return outperformance
for the 12 months to 31 July 2003 was 32%.  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 31 July 2003, Caledonia had an unaudited Net Asset Value of 1115p per
ordinary share  Based on the share price as at the end of July 2003 the discount
to its Net Asset Value per share was 20.2%.


A final dividend of 18p per share was paid on 31 July 2003 to shareholders on
the register at the close of business on 4 July 2003.  The shares were marked
ex-dividend on 2 July 2003.


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 32% 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 17% of the
total assets includes 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 Amber Industrial;
Property: comprising 10% of the total assets, including the holding in Quintain
Estates; Technology: comprising 2%; and other: comprising 4% of the total
assets.   The percentages of the total assets quoted are as at 31 July 2003.


With investment trust status Caledonia will not be 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.


Caledonia is a member of the Association of Investment Trust Companies (AITC).


For further information please visit www.caledonia.com.


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            The company news service from the London Stock Exchange