Quarter End Review - Dec 07

Bear Stearns Private Equity Limited 31 January 2008 Bear Stearns Private Equity Limited ('BSPEL') 31 December 2007 Quarter End Review Objective BSPEL seeks to opportunistically build a well-balanced, diverse, global private equity portfolio through secondary investments, co-investments, and selective primary fund allocations. Launched - 30 June 2005 Company Summary Equity Shares Zero Dividend Packaged Units Preference Shares Net Asset Value ('NAV') US$1.70 49.54p US$2.68 per share No. of shares in issue 285.30 mm 59.47 mm - Currency of Quotation US$ £ Sterling £ Sterling Ticker BPLE BPLZ BPLU Sedol B07V0H2 B07V0R2 B07V102 ISIN GB00B07V0H27 GB00B07V0R25 GB00B07V1026 Market Makers Cazenove ABN Amro Collins Stewart Collins Stewart Cazenove Dresdner Dresdner Collins Stewart HSBC Bank HSBC Bank Dresdner HSBC Bank Winterflood All figures as at 31 December 2007. Company Description Bear Stearns Private Equity Limited ('BSPEL' or the 'Company') is a London Stock Exchange listed investment company that seeks to invest with the world's leading private equity fund managers. BSPEL invests in private equity partnerships and direct investments primarily in Europe, North America, and Asia. BSPEL pursues the following strategies to meet its investment objectives: - Acquires secondary portfolios of direct investments, significantly invested partnership investments, and partially drawn commitments, in order to accelerate NAV development - Obtains exposure to individual companies by co-investing alongside private equity sponsors in companies that offer the potential for substantial equity appreciation - Opportunistically invests in buyout, venture capital, and other special situations funds and investments throughout the world based on attractive transaction values, advantageous market conditions, and compelling risk-adjusted return potential - Diversifies its portfolio by manager, industry, geography, investment stage, and vintage year The Company's capital structure consists of two classes of shares: Equity Shares and Zero Dividend Preference Shares ('ZDP Shares'). Manager's Comments Performance Through 31 December 2007 NAV of the Equity Shares has grown 66.7% since BSPEL's inception on 30 June 2005. The Company's unaudited net asset value ('NAV') per Equity Share increased from $1.65 at the beginning of the quarter to $1.70 as at 31 December, representing an increase in NAV of approximately 3.0% for the quarter. The unaudited NAV of the ZDP Shares also rose during the quarter, improving from 48.65p per share to 49.54p per share. BSPEL's rapid capital deployment since its April 2007 capital raise resulted in capital calls during the quarter of $17.8 million, which outweighed the $11.5 million of distributions from fund investments received over the same period. BSPEL's portfolio benefited during the quarter from strong performance in several special situations funds and co-investments. This was somewhat offset by stalled buyout activity and a sluggish real estate market, which resulted in fewer realisations and valuation upticks among several buyout fund interests. Currency had a muted effect over the quarter, as the Euro appreciated approximately 2.3% against the dollar while the Pound depreciated 3.0% against the Dollar. Consistent with its publicly listed peers, BSPEL's share price closed at a discount to NAV. The Equity Shares closed at $1.49 per share, a 10.2% discount to the quarter-end reported NAV of $1.66 per share (released 14 December 2007). Though market uncertainty continued throughout the quarter, BSPEL's Equity Share price grew 2.8% above the 30 September 2007 close, versus a 9.6% decline in the LPX(R) Europe TR index (an index based on 25 leading listed private equity companies) over the same period. The ZDP shares ended the period trading at 51.75p per share, a 5.1% premium to the quarter-end reported NAV of 49.24p per share (released 14 December 2007). Data as at 31 December 2007 Summary of Portfolio as at 31 December 2007 Number of Funds 81 Buyout Funds 38 Special Situations 23 Venture Capital 14 Real Estate 6 U.S. Funds 45 Non-U.S. Funds 36 Co-investments 7 Source: Manager Fund total includes 34 private equity fund interests (7 of which were already held by BSPEL) indirectly owned through the purchase of secondary interests in Private Equity Access Fund II Ltd., Bear Stearns Global Turnaround Fund, L.P., and BoS Mezzanine Partners Fund, L.P. Balance Sheet Information as at 31 December 2007 Investments at Market Value US$388.8 mm Bank Deposits US$153.4 mm Net Asset Value US$542.1 mm Source: Manager Fund Level - Investment Strategy1 Leveraged Buyout 50.7% Special Situations 33.9% Venture Capital 11.4% Real Estate 4.0% Fund Level - Investment Type1 Secondary 65.0% Co-Investments 15.6% Funded Primary 12.0% Primary 7.4% Fund Level - Vintage Year1,2 1997 2.4% 1998 0.1% 1999 6.2% 2000 11.8% 2001 20.8% 2002 2.8% 2003 4.9% 2005 11.8% 2006 29.7% 2007 9.4% Company Level - Geography1 Europe 60.0% North America 28.4% Asia 8.9% Other 2.7% Company Level - Industry Diversification1 Industrial 21.9% Consumer Goods 14.6% Media 13.8% Healthcare 9.4% Real Estate 7.1% Energy 6.6% Technology 6.3% Business Services 5.3% Retail 5.0% Financial Services 3.9% Communications 3.7% Leisure & Gaming 2.4% 1. The diversification charts above are based on Net Asset Value as at 31 December 2007 and use underlying company-level and fund-level values. In addition, they include 34 private equity fund interests indirectly owned through the purchase of secondary interests in Private Equity Access Fund II Ltd, Bear Stearns Global Turnaround Fund, L.P., and BoS Mezzanine Partners Fund, L.P.; BoS company-level exposure includes estimated pro rated fund-level leverage. 2. Excludes co-investments and debt-related strategies. Source: Manager. Investment Activity During the quarter, BSPEL continued to position itself to benefit from macro shifts in the global economy and committed approximately $87.4 million to 17 private equity fund investments. The majority of these commitments were done through a large secondary portfolio purchase of mostly distressed and turnaround funds. The investments made over the quarter were highly funded at close, resulting in $48.9 million drawn at quarter end (56.0% of new commitments). Secondary Commitments BSPEL completed the purchase of a portfolio of 14 private equity funds, including 11 special situations funds, 2 buyout funds, and 1 venture capital fund. The Managers had exclusive insight into the portfolio prior to its purchase, and believe it will provide BSPEL with a unique ability to participate in the distressed, turnaround, and restructuring sectors within the private equity market. The assets were highly invested with approximately 64.9% funded at close, representing BSPEL's continued emphasis on acquiring opportunistic, value investments with near term upside potential and an international focus. Primary Commitments The Company made three primary commitments during the quarter, one of which was a 'funded primary' investment with significant amounts of capital already drawn. In the US, BSPEL completed a $10.0 million funded primary commitment to Guggenheim Aviation Offshore Investment Fund II, L.P. The fund focuses on purchasing, leasing, and converting aircrafts from passenger planes to commercial carriers. The commitment represents BSPEL's pursuit of niche strategies that are projected to benefit in the current investing environment. At quarter end, approximately 43.0% of BSPEL's commitment to Guggenheim was drawn. In Europe, BSPEL committed €5.0 million to Norvestor V L.P., a fund focused on investments in Norway and the broader Nordic region. BSPEL has invested with Norvestor previously in both a separate primary fund and in BSPEL's first co-investment (SCAN Geophysical). Both of these previous investments have performed well for the Company. In addition, BSPEL increased its primary commitment to Realza Capital Fondo FCR by €5.0 million. Realza is a Spanish fund focused on small to mid-sized buyout transactions in Spain and the greater Iberian Peninsula. Market Commentary The quarter ended 31 December 2007 proved to be one of additional uncertainty and dislocation for private equity. Credit issues continued to filter through the financial system and caused a broad pullback in the debt markets. Mega deals, sponsored by well known managers including Blackstone and Cerberus, fell apart amid this uncertainty. In spite of this, buyout activity continued through the quarter, with mid-market deals experiencing less lending-related setbacks. The Managers believe the current market situation has created an attractive investing environment for BSPEL's secondary investment strategy. BSPEL currently has a robust pipeline of investments, and the Managers believe the remainder of the year will offer additional attractive investment opportunities. The Managers also believe that BSPEL's highly diverse portfolio is well positioned to benefit in the current market, and that BSPEL's investment pipeline will enable the Company to continue opportunistically investing in unique, well-priced transactions with attractive risk-adjusted returns. Company Actions Following an Extraordinary General meeting held 28 November 2007, BSPEL's Shareholders approved the following resolutions: (i) to purchase a secondary portfolio of funds from Bear Stearns (a related party transaction), (ii) to increase the authorised share capital of the Company through the creation of 500 million further Unclassified Shares, (iii) to amend the provisions of the Articles to restructure the semi-annual redemption facility as a tender offer facility, (iv) to amend the Company's Articles to allow the Company to hold Treasury Shares, and (v) to grant authority for the Company to make future purchases of its own Shares by way of tender offer in accordance with the Listing Rules. At BSPEL's 2007 Annual General Meeting held 20 December 2007, the Shareholders resolved that the Company be authorised to make market purchases of equity shares and zero dividend preference shares of up to 14.99% of the issued Shares as at 20 December 2007. Contacts - Investment Manager Troy Duncan US (212) 272-9959 tduncan@bear.com Rosemary DeRise US (212) 272-8756 rderise@bear.com Bear Stearns Asset Management Limited Authorised and Regulated by FSA 45 Old Bond Street London W1S 4QT UK Bear Stearns Asset Management Inc. 237 Park Avenue New York, NY 10017 USA BSPEL is managed by Bear Stearns Asset Management Inc. ('BSAM Inc.') and Bear Stearns Asset Management Limited ('BSAM Ltd.'), each a wholly-owned subsidiary of The Bear Stearns Companies Inc. BSAM Inc. currently manages private equity portfolios that include over 175 separate private equity funds with total commitments of approximately US $1.8 billion. The Bear Stearns Companies Inc. is a publicly listed company on the New York Stock Exchange under the symbol BSC. The Bear Stearns Companies Inc., through its subsidiaries and affiliates, employs approximately 14,000 individuals and has 19 offices worldwide. The Bear Stearns Companies Inc. had approximately US $80.3 billion in total capital as at 30 November 2007, making it among the top ten largest US securities firms in terms of total capital. Board of Directors Chairman Trevor Ash (Guernsey Resident) Members John Loudon (UK Resident) Troy Duncan (US Resident) Christopher Paul Spencer (Guernsey Resident) All of whom may be contacted through St Martin's House Le Bordage St. Peter Port Guernsey GY1 4AU SECRETARY, ADMINISTRATOR AND REGISTERED OFFICE HSBC Management (Guernsey) Limited St Martin's House Le Bordage St. Peter Port Guernsey GY1 4AU AUDITOR KPMG Channel Islands Limited 2 Grange Place PO Box 235 St. Peter Port Guernsey GY1 4LD SOLICITOR Herbert Smith LLP Exchange House Primrose Street London EC2A 2HS UK REGISTRAR Capita IRG (CI) Limited 1 Le Truchot, 2nd Floor St. Peter Port Guernsey GY1 4AE This document may only be issued to or passed on to persons to whom it may be lawfully communicated pursuant to the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, or otherwise only to professional clients and eligible counterparties and should not be used for the purpose of an offer or solicitation in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or unauthorised. In addition, this document may not be given to a U.S. citizen or resident who is not a 'Qualified Purchaser' within the meaning of the U.S. securities laws. This document is issued on behalf of BSPEL and has been approved by Bear Stearns Asset Management Limited, which is Authorised and Regulated by the Financial Services Authority ('FSA') in the United Kingdom. The information in this document is provided solely for information, does not constitute investment advice or personal investment recommendations, and is neither an offer to buy or sell, nor a solicitation to buy or sell, any investments or units or shares in BSPEL. To the extent that this document is issued in the United Kingdom, it is being issued to persons who are professional clients or eligible counterparties for the purposes of the FSA's rules. Past performance is not necessarily a guide to future performance. Some information contained in this document may have been received from third party or publicly available sources that we believe to be reliable. We have not verified any such information and assume no responsibility for the accuracy or completeness thereof. The information stated and opinions expressed constitute best judgment at the time of publication, and are subject to change without prior notification. The price of units or shares (and the income from them) can go down as well as up and may be affected by changes in rates of exchange. An investor may not receive back the amount invested. Current tax levels and reliefs are liable to change and their value will depend on individual circumstances. The market prices of units and shares in BSPEL do not necessarily reflect their underlying net asset value. (c) 2008 Bear Stearns Asset Management Limited. All rights reserved. No information in this document may be reproduced or distributed in whole or in part without the express written prior consent of Bear Stearns Asset Management Limited. END This information is provided by RNS The company news service from the London Stock Exchange

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