The Board of Electra Private Equity PLC (the “Company”) today announces the outcome of the first phase (“Phase I”) of the review announced on 25 January 2016 (“the Review”). The principal object of the Review is to maximise long-term shareholder value by assessing the Company’s investment strategy and policy and its structure.

The key outcomes of Phase I are as follows:

• On 26 May 2016 the Company announced that it had served notice of termination of the contracts under which the Company had wholly and exclusively outsourced all of the Company’s activities to Electra Partners LLP (“Electra Partners”), with termination becoming effective on 31 May 2017
• The Company will create a robust and sustainable corporate governance structure by returning control of all executive and investment functions to the Board from June 2017
• The Company is developing internal resources to assume all operating responsibilities from June 2017
• The Company intends to migrate from a listed investment trust to a “corporate” structure over time as it believes this could result in reduced expenses and reduced discounts to underlying portfolio value
• A review of the Company’s portfolio (“Phase II”) will commence in June 2017, or earlier with the consent of Electra Partners
• Initial £200 million return of capital by way of tender offer launched during Q4 2016, which will be subject to shareholder approval
• The Company will commence a consultation with shareholders on a new capital allocation strategy
• Subsequent shareholder approvals, as required, including for migration to a corporate structure, to be sought during Phase II

Phase I result
The Board has conducted a thorough review of the Company’s investment strategy and policy and its structure. As part of the Review, the Board evaluated a number of possible options to increase shareholder value, including (i) continuing the exclusive delegation of all executive and investment functions to Electra Partners and (ii) returning control of all executive and investment functions to the Board with the migration to a corporate structure and related consolidated financial reporting.

After due consideration, the Board has concluded that significant value can potentially be captured for shareholders by internalising all management functions and by migrating the Company from an investment trust structure to a “corporate” structure.

The Board believes that the above actions would result in:

• Recurring expense savings in excess of £25 million per annum;
• Elimination of carried interest (on investments from June 2017), which totalled £80 million in the last 12 months;
• Reduction of share price discounts to the portfolio’s underlying value;
• A flexible capital allocation policy focused on shareholder returns;
• Improved capability to generate portfolio operating improvements;
• Increased transparency of underlying earnings and dividend paying capability; and,
• improved share liquidity and valuation through a broader shareholder base.

Return of capital
The Company will shortly begin the process for an initial £200 million return of capital to shareholders by way of a tender offer. This return of capital will require shareholder approval and is a first step to improving the Company’s capital allocation policy.

Phase II of the Review
Termination of the contracts with Electra Partners will become effective on 31 May 2017. Phase II of the Review will begin in June 2017, or earlier should Electra Partners agree to grant the Company access to the portfolio companies’ financial information and management teams.

Phase II will maintain the principal objective of maximising long-term shareholder value by, inter alia, undertaking a detailed operating review of the portfolio companies then held, establishing the new capital allocation policy, and implementing a compensation plan to align management interests with the return on shareholders’ capital.

Additionally, the Board will set out a timetable for migration to a new corporate structure. Shareholder approval for this and other items will be sought, as required.

Neil Johnson, Chairman of the Company, said today:

“We have made significant progress in the Review of Electra, and I am delighted that we are now at a point where we can update shareholders on the outcome of Phase I. I believe that by returning control of all functions to the Board we will put in place a more effective, transparent corporate governance structure. A much lower-cost executive team, fully accountable to the Board and shareholders, will then pursue a strategy of portfolio company improvement and value enhancement, creating maximum value for our shareholders.

We believe that it is important that we move investment management responsibilities to the Board, in line with the new strategic direction of the Company, to adopt a corporate structure with more typical financial reporting and transparency.

On behalf of the Board, I would like to thank Electra Partners for the role they have played as investment manager.”

This announcement contains inside information.

- Ends –

Electra Private Equity PLC will host a conference call with investors and analysts at 10:00am BST today. Dial-in details are as follows:

Dial-in (UK): 0800 694 0257
Dial-in (Intl.): +44 (0)1452 555566
Conference ID: 99718831

A Company presentation for investors: Strategic Review – Phase 1, is available at: www.electraequity.com.

For further information:

On behalf of Electra Private Equity PLC

Brunswick Group LLP
020 7404 5959

Gill Ackers/Kim Fletcher
[email protected]

Gavin Manson
Chief Financial Officer
Electra Private Equity PLC