princess private equity holding limited prospectus

PRINCESS PRIVATE EQUITY HOLDING LIMITED

PROSPECTUS

Registered Office

Princess Private Equity Holding Limited

Tudor House

Le Bordage

St. Peter Port

Guernsey GY1 1BT

Channel Islands

Tel.: +44 1481 730 946

Fax: +44 1481 730 947

Email: [email protected]

Info: www.princess-privateequity.net

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PROSPECTUS

for the

admission to trading on the official market (Amtlicher Markt), with concurrent admission totrading on the segment of the official market with additional post-admission obligations

(Prime Standard), of the Frankfurt Stock Exchange

of

7,010,000 ordinary registered shares (existing share capital) each with a nominal value of EUR 0.01and with dividend rights as of 1 January 2006 (the ‘‘Ordinary Shares’’),

deliverable in the form of co-ownership interests in a global bearer certificate issued byClearstream Banking AG, Frankfurt (‘‘Clearstream, Frankfurt’’) (the ‘‘Global Bearer Certificate’’)

each representing one Ordinary Share (the ‘‘Co-ownership Interests’’)

International Securities Identification Number (ISIN): DE000A0LBRM2German Securities Identification Number (WKN): A0LBRM

Common Code: 027106633Trading Symbol: PEY1

of

Princess Private Equity Holding LimitedSt Peter Port, Guernsey

8 December, 2006

Global Reports LLC

This document does not constitute an offer to sell or a solicitation of an offer to buy or subscribe forany securities of Princess Private Equity Holding Limited or any Co-ownership Interests in anyjurisdiction. No offer of securities of Princess Private Equity Holding Limited or Co-ownership Interests isbeing, or will be, made to the public in connection with the publication of this document. The distributionof this document may be restricted by law in certain jurisdictions. Persons into whose possession thisdocument comes must inform themselves about, and observe, any such restrictions on the distribution ofthis document. In particular, this document and the information contained therein is not for distribution orpublication, neither directly nor indirectly, in or into the United States of America, Canada, Australia orJapan.

Neither the Ordinary Shares nor the Co-ownership Interests have been and will be registered underthe United States Securities Act of 1933 as amended (the ‘‘Securities Act’’), and, subject to certainexceptions, may not be offered or sold within the United States or to, or for the account or benefit of, USpersons (as such term is defined in the Regulation S under the Securities Act).

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TABLE OF CONTENTS

Page

PROSPECTUS SUMMARY *********************************************************** 1

General information on Princess Group and its Business Activities************************** 1

Summary of Admission ************************************************************* 5

Selected Consolidated Financial Data ************************************************** 6

Summary of Risk Factors *********************************************************** 7

GERMAN SUMMARY TRANSLATION/ZUSAMMENFASSUNG DES PROSPEKTS *********** 11

Allgemeine Informationen uber die Princess-Gruppe und ihre Geschaftstatigkeit *************** 11

Zusammenfassung der Zulassung ***************************************************** 16

Ausgewahlte Konzernfinanzdaten ***************************************************** 17

Zusammenfassung der Risikofaktoren************************************************** 18

RISK FACTORS********************************************************************* 22

Risks Relating to Dependence on Partners Group **************************************** 22

Potential Conflicts of Interest ******************************************************** 24

Risks Related to Princess’ Business *************************************************** 26

Risks Relating to Princess’ Investments ************************************************ 31

Risks Related to the Shares and the Admission to Trading ******************************** 36

GENERAL INFORMATION*********************************************************** 40

Responsibility for the Content of the Prospectus ***************************************** 40

Inspection of Documents ************************************************************ 40

Subject Matter of the Prospectus****************************************************** 40

Notes to the Financial Information **************************************************** 40

Currency Information *************************************************************** 41

Forward-looking Statements********************************************************** 41

Notes on Sources of Sector, Market, Customer and other Numerical Data ******************** 42

ADMISSION *********************************************************************** 43

Admission of Ordinary Shares deliverable in the form of Co-ownership Interests in aGlobal Bearer Certificate ********************************************************** 43

General and Special Information on the Ordinary Shares ********************************** 43

Information on the Co-ownership Interests********************************************** 50

Designated Sponsor **************************************************************** 52

ISIN/Common Code/Stock Exchange Symbol of the Ordinary Shares and theCo-ownership Interest************************************************************* 53

Expected Time Table for Admission*************************************************** 53

LIQUIDITY AND CAPITAL RESOURCES, CAPITALISATION ***************************** 54

SELECTED CONSOLIDATED FINANCIAL DATA**************************************** 56

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS ******************************************************** 58

Basis of the Presentation ************************************************************ 58

Business Overview ***************************************************************** 58

Existing Commitments and Investments ************************************************ 58

Major Factors Influencing Princess Group’s Business and Results of Operations *************** 59

Development of the Net Asset Value of the Portfolio ************************************* 60

Exercise of Mitigation Right and Restructuring of Zero Coupon Bonds ********************** 62

Short Term Investments ************************************************************* 62

Significant Accounting Policies******************************************************* 62

Comparison of Financial Years 2003, 2004 and 2005 (IFRS)******************************* 64

Comparison of the Nine Months ended 30 September 2005 and the Nine Months ended30 September 2006 (IFRS) ******************************************************** 72

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Page

Significant Changes since the End of the Period under Review ***************************** 77

BUSINESS DESCRIPTION *********************************************************** 78

Overview************************************************************************* 78

Private Equity and Private Debt Market ************************************************ 78

Characteristics of Major Investment Types********************************************** 79

Reason for Private Market Investments************************************************* 81

Private Equity and Private Debt Markets: Growth and Outlook ***************************** 81

Investment Strategy prior the Restructuring ********************************************* 82

Investment Strategy upon the Restructuring ********************************************* 82

Investment Objective and Policy after Restructuring ************************************** 83

Value Drivers of Private Market Investments ******************************************** 84

Portfolio Management Strategy ******************************************************* 85

Investment Process ***************************************************************** 85

Current Investments and Commitments************************************************* 88

Competition and Competitive Position of Princess *************************************** 91

Corporate Strategy ***************************************************************** 92

Property, Leases, Tangible Assets ***************************************************** 92

Trademarks and Domains************************************************************ 92

Workforce ************************************************************************ 92

Insurance************************************************************************* 92

Litigation************************************************************************* 92

Investments by Financial Year******************************************************** 92

Regulatory Environment for Private Equity Investments *********************************** 94

ORGANISATIONAL STRUCTURE AND MATERIAL AGREEMENTS *********************** 95

Organisational Structure************************************************************* 95

Restructuring********************************************************************** 96

Material Agreements *************************************************************** 97

GENERAL INFORMATION CONCERNING THE COMPANY****************************** 103

Company History ****************************************************************** 103

Formation, Company Name, Registered Office, Financial Year and Duration of the Company **** 103

Corporate Purpose ***************************************************************** 103

Group Structure ******************************************************************* 105

Earnings and Dividends per Share, Dividend Policy ************************************** 105

Auditors************************************************************************** 106

Paying and Depositary Agent, Registrar ************************************************ 106

Corporate Secretary **************************************************************** 106

Notices ************************************************************************** 106

THE CAPITAL OF THE COMPANY *************************************************** 107

Share Capital and Shares ************************************************************ 107

Evolution of Share Capital*********************************************************** 107

Alteration of Capital**************************************************************** 107

Treasury Shares ******************************************************************* 108

Convertible Bonds ***************************************************************** 108

Shareholding Notification Requirements************************************************ 109

Takeover Law ********************************************************************* 109

Director’s Dealings***************************************************************** 111

THE COMPANY’S BODIES ********************************************************** 112

Board of Directors ***************************************************************** 112

General Meeting ******************************************************************* 117

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Page

Corporate Governance ************************************************************** 119

SHAREHOLDER STRUCTURE******************************************************** 120

RELATED PARTY TRANSACTIONS *************************************************** 121

Investment Arrangements************************************************************ 121

Insurance Arrangements************************************************************* 121

Administration Agreement and other Services ******************************************* 121

Legal Services********************************************************************* 121

Restructuring********************************************************************** 121

CONFLICTS OF INTEREST ********************************************************** 122

TAXATION************************************************************************* 123

Guernsey ************************************************************************* 123

Germany ************************************************************************* 124

Switzerland *********************************************************************** 126

GLOSSARY ************************************************************************ 128

FINANCIAL SECTION*************************************************************** F-1

Princess Private Equity Holding Limited: Consolidated Audited Financial Statements for the yearfrom 1 January 2005 to 31 December 2005 (IFRS) ************************************ F-2



Princess Private Equity Holding Limited: Audited Financial Statements for the year from1 January 2005 to 31 December 2005 (IFRS) ***************************************** F-47

Princess Private Equity Holding Limited: Consolidated Unaudited Financial Statements for theperiod from 1 January 2006 to 30 September 2006 (IFRS) ****************************** F-61

RECENT BUSINESS EVENTS AND OUTLOOK ***************************************** G-1

SIGNATURE PAGE ****************************************************************** U-1

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PROSPECTUS SUMMARY

The following summary is to be considered an introduction to this prospectus (the ‘‘Prospectus’’). Ajudgement with regard to the shares of Princess Private Equity Holding Limited, Tudor House, Le Bordage,St Peter Port, Guernsey GY1 1BT, Channel Islands (hereinafter also referred to as the ‘‘Company’’ and, togetherwith its consolidated subsidiary, collectively referred to as ‘‘Princess’’ or ‘‘Princess Group’’) and the Co-ownership Interests should be based on an examination of this Prospectus as a whole.

The Company and Sal. Oppenheim jr. & Cie. KGaA, Unter Sachsenhausen 4, 50667 Cologne (hereinafterreferred to as ‘‘Sal. Oppenheim’’) assume pursuant to section 5 (2) No. 4 of the German Securities ProspectusAct (Wertpapierprospektgesetz, hereinafter also referred to as ‘‘WpPG’’), responsibility for the content of thissummary. They can only be held liable for the content of this summary, however, if the summary is misleading,incorrect or contradictory when read in conjunction with the other parts of this Prospectus. In the event thatclaims are brought before a court based on the information contained in this Prospectus, application of thenational legislation of countries in the European Economic Area could result in the investor appearing asplaintiff bearing the costs of translating this Prospectus before the start of proceedings.

General information on Princess Group and its Business Activities

Overview of Princess

Princess Private Equity Holding Limited is an investment holding company that was founded on 12 May1999 by Partners Group Holding, Zugerstrasse 57, 6341 Baar-Zug, Switzerland (hereafter referred to as ‘‘PartnersGroup Holding’’) and Swiss Reinsurance Company, 50/60 Mythenquai, 8022 Zurich, Switzerland (hereafterreferred to as ‘‘Swiss Re’’) which held 80.1 and 19.9%, respectively, in the share capital of Princess PrivateEquity Holding Limited issued upon its formation.

The Company is a Guernsey corporation that operates in the private equity and private debt market andinvests directly or through its wholly-owned subsidiary, Princess Private Equity Subholding Limited, in privatemarket investments. Private market investments are investments in private equity and private debt investments.Generally, the terms ‘‘private equity’’ and ‘‘private debt’’ refer to investments that are typically made in non-public companies or assets through privately negotiated transactions.

Private market investments may be structured using the whole range of financial instruments, includingcommon and preferred equity, convertible securities, subordinated debt and warrants or other derivatives,depending on the strategy of the investor and the financing requirements of the company. Private equity andprivate debt funds, often organized as limited partnerships, are the most common vehicles for making privatemarket investments. Investors in such funds (typically including pension funds, banks, insurance companiesand/or wealthy private investors) usually commit to providing up to a specified amount of capital as and whenrequested, or ‘‘drawn down’’, by the fund’s manager or general partner. The capital is then invested by the fund’smanager or general partner on behalf of the fund, typically according to a pre-defined investment strategy. Thefund’s investments are usually realised, or ‘‘exited’’ after a four to seven year holding period through a privatesale, an initial public offering (IPO) or a recapitalisation, and the proceeds are distributed to the fund’s investors.

In order to invest in private equity, the Company issued zero coupon convertible bonds due 2010 (the‘‘Bonds’’) in 1999. The USD 700,000,000 of funds raised by the issue of the Bonds have been invested in privateequity and private debt funds, and Princess had an aggregate portfolio of over 100 fund investments and indirectinterests in over 1800 operating companies by 30 September 2006.

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Funds Portfolio

As of 30 September 2006 Princess held investments in 113 private equity and private debt funds which maybe classified as follows:

Number of Aggregateunderlying commitments

Investment Type funds (in USD)

Primary InvestmentsEurope — Buyout ***************************************************** 20 304,216,935Europe — Venture Capital ********************************************** 11 89,806,100Europe — Special Situations ******************************************** 5 59,518,413North America — Buyout*********************************************** 19 256,880,028North America — Venture Capital**************************************** 31 313,251,911North America — Special Situations ************************************** 10 110,000,000Rest of World — Buyout *********************************************** 5 25,503,264Rest of World — Venture Capital **************************************** 5 42,000,000Secondary InvestmentsSecondary Investments ************************************************* 7 130,886,282

(Table as of 30 September 2006)

The net asset value of Princess’ portfolio was USD 816,575,136 (representing USD 116.4872 per share afterconversion assuming that the conversion has taken place at 30 September 2006) as of 30 September 2006. The netasset value per share is calculated by dividing the net asset value of Princess’ portfolio by the number of shares inissue (7,010,000). The 700,000 convertible bonds at a par value of USD 1,000 each, if converted at USD 100 pershare would result in 7,000,000 shares, whilst 10,000 shares were already outstanding at 30 September 2006.

Organisational Structure

Princess does not currently have any employees, except one part time employee, and does not own anyfacilities. Princess’ investments are managed and administered on a discretionary basis by Princess Management& Insurance Limited, Tudor House, Le Bordage, St Peter Port, Guernsey GY1 1BT, Channel Islands (the name ofwhich will be Princess Management Limited), (hereinafter the ‘‘Investment Manager’’ or ‘‘Princess ManagementLimited’’), a company incorporated in Guernsey. The Investment Manager is responsible for, amongst otherthings, selecting, acquiring and disposing of investments and carrying out financing and cash managementservices.

Princess Management Limited is advised by Partners Group, Zugerstrasse 57, 6341 Baar-Zug, Switzerland(hereinafter also referred to as ‘‘Partners Group (Zug)’’ or the ‘‘Investment Adviser’’) in accordance with aninvestment advisory agreement (the ‘‘Investment Advisory Agreement’’). The Investment Adviser’s duties are toprovide asset allocation, commercial due diligence reviews, investment and disposition proposals andperformance monitoring.

In addition, Partners Group (Guernsey) Limited (the ‘‘Administrator’’) provides Princess with variousadministrative, financial and accounting services under an administration agreement (the ‘‘AdministrationAgreement’’).

The Investment Manager, the Investment Adviser and the Administrator are each wholly-owned subsidiariesof Partners Group Holding, an independent alternative asset manager with a public market capitalisation of aboutCHF 2.1 billion and approximately CHF 14 billion in assets under management as of 30 June 2006. The firm hasbuilt a strong performance track record in private equity and private debt and serves an international clientele oflarge institutional investors, asset managers, private banks and high net worth individuals. Hereinafter the term‘‘Partners Group’’ refers to the Investment Manager, the Investment Adviser and/or the Administrator and itsrespective affiliates as the respective context requires.

Restructuring

On or immediately following the business day on which approval for admission to trading of the OrdinaryShares deliverable in the form of Co-ownership Interests on the official market (Amtlicher Markt), withconcurrent admission to trading on the segment of the official market with additional post-admission obligations(Prime Standard) of the Frankfurt Stock Exchange is granted by the Frankfurt Stock Exchange (the

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‘‘Restructuring Completion Date’’), the Company has or will complete, as the case may be, the followingrestructuring.

Before the Restructuring Completion Date the Investment Manager, the shares of which are held by PartnersGroup Holding and Swiss Re, was acting on the basis of an investment management agreement (the ‘‘OldInvestment Management Agreement’’) and investment guidelines (the ‘‘Investment Guidelines’’). At that time,Princess Management Limited (i) was advised by its Investment Adviser, and its other advisers Hamilton Laneand Invesco and (ii) entered into service agreements with Swiss Re and the Investment Adviser which weredesigned to ensure compliance with the Investment Guidelines and avoid risk concentrations.

In order to limit the bondholders’ risks, the Company in 1999 had entered into an insurance agreement withPrincess Management Limited (the ‘‘Insurance Policy’’) according to which the Company could claim theamounts due under the Bonds in 2010. In return, Princess Management Limited was granted the right to direct theCompany to mitigate the likelihood of a loss in cases where certain financial criteria were not met (the‘‘Mitigation Right’’). The Investment Manager assigned this right to the reinsurer, Swiss Re. In addition, theCompany, the Investment Manager, Swiss Re and Carey Langlois Trust Company Limited, the Bonds trustee,(the name of which is now Carey Commercial Limited) entered into an insurance trust agreement whereby certaincash amounts were placed into the trust to cover any potential payment obligations under the insurancearrangements (the ‘‘Insurance Trust’’). Furthermore Princess, the Investment Manager and the Administratorentered into the Administration Agreement, pursuant to which the Administrator provides Princess with variousadministrative, financial and accounting services in relation to the Old Investment Management Agreement.

In February 2006, Swiss Re, exercised the Mitigation Right and directed the Company not to make anyfurther commitments. Therefore, the Company proposed to its bondholders a mandatory early conversion of theBonds into Ordinary Shares of the Company (deliverable in the form of Co-ownership Interests) (the ‘‘MandatoryEarly Conversion’’). As per the Mandatory Early Conversion, bondholders have agreed to convert Bonds intoOrdinary Shares of the Company (deliverable in the form of Co-ownership Interests) on the RestructuringCompletion Date. Subsequently to the bondholders’ decision, the Company, Swiss Re, the Investment Manager,the Investment Adviser and Carey Commercial Limited entered into various agreements in order to change theorganisational structure of Princess as follows (altogether referred to as the ‘‘Restructuring’’):

The insurance and reinsurance arrangements, including any provisions relating to the payments of fees andpremiums payable thereunder, have been terminated with effect from the Restructuring Completion Date. Assoon as practicable after the Restructuring Completion Date, the Insurance Trust will be dissolved and distributedamongst Partners Group Holding and Swiss Re.

Furthermore, Swiss Re has sold its shares in the Company to Partners Group Holding. In addition, Swiss Rehas agreed to sell its shares in the Investment Manager with effect from 1 January 2007 also to Partners GroupHolding. Accordingly, the service agreement with Swiss Re has been terminated with effect from theRestructuring Completion Date. By shareholders’ resolution Partners Group Holding and Swiss Re resolved torename Princess Management & Insurance Limited Princess Management Limited which will take effect shortlyafter the Restructuring Completion Date.

The Old Investment Management Agreement has, with effect from the Restructuring Completion Date, beenreplaced by a new investment management agreement which includes a new management and incentive feestructure (the ‘‘Investment Management Agreement’’) and the Investment Guidelines have been changed to a newinvestment policy.

Finally, the following changes to the corporate structure of the Company were implemented: (a) cancellationof the authorised Class A Share capital of the Company; (b) redesignation of the Class B Shares as unclassifiedordinary shares of the Company; (c) change of the denomination of the issued and authorised share capital fromUS dollars to euros; and (d) restatement of the Memorandum and Articles of Association of the Company.

Corporate Strategy

The Company’s aim is to provide shareholders with long-term capital growth and an attractive dividendyield in the mid- to long-term. In order to achieve this aim, Princess invests in private market investments inaccordance with its investment strategy.

Investment Strategy

Princess seeks to capitalise on the dynamic nature of the private markets through ongoing relative valueanalysis and rigorous investment selection. Based on its top-down analysis, cross-segment comparisons and

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thorough due diligence, Partners Group (Zug) seeks to adjust the allocation of Princess’ investments toward thoseinvestments that it believes are particular attractive at a given point in time.

Princess may invest in a variety of private market segments without limitations as to geographic regions,financing stage, vintage year and industry. Private equity investments are expected to include buyout, venturecapital and/or special situations. Private debt investments are expected to include mezzanine, second lien, and/orsenior debt investments. Princess may make investments of varying types which are expected to include primaryinvestments, secondary investments, direct investments and listed private equity investments.

With the ability to invest in the full range of private equity and private debt investments, Princess believes itis well positioned to achieve attractive returns for investors in a variety of market environments.

Summary of Information Relating to the Company

Incorporation ********************* Princess Private Equity Holding Limited was registered on theRecords of the Island of Guernsey on 12 May 1999.

Company Name ******************* Princess Private Equity Holding Limited

Board of Directors***************** Andreas BillmaierBrian HumanUrs WietlisbachGraham Hall

Managing Director***************** Brian Human

Employees ************************ The Company had no employees as of 30 September 2006. As of theRestructuring Completion Date the Company has one part timeemployee who serves as managing director.

Share Capital ********************* The authorised share capital of the Company amounts toEUR 200,100 divided into 20,010,000 Ordinary Shares of EUR 0.01each, of which 7,010,000 will have been issued and will beoutstanding on the Restructuring Completion Date.

Capitalisation and Indebtedness ***** As of 30 September 2006, the capitalisation of the Companyamounted to USD 821,986,393 and the total debt wasUSD 693,940,789.

Voting Rights ********************* On a show of hands every shareholder present in person or by proxyhas one vote, on a poll every shareholder present in person or byproxy has one vote for each share held by him. Each holder of Co-ownership Interests is entitled to request a voting proxy fromClearstream, Frankfurt with respect to the number of OrdinaryShares represented by the Co-ownership Interests.

Dividend Policy ******************* The Ordinary Shares are eligible for dividends or other distributions,if any, declared in respect of the financial year commencing1 January 2006 and subsequent periods. The Company currentlyintends to distribute a substantial portion of its realised income andgains as dividends, however, there can be no assurance that theCompany will be able to pay dividends.

Current Auditor******************* PricewaterhouseCoopers CI LLP, National Westminster House, StPeter Port, Guernsey

Designated Sponsor **************** Sal. Oppenheim will assume the function of the designated sponsorof the Co-ownership Interests traded on the Frankfurt StockExchange.

Related Party Transactions ********* Under the Old Investment Management Agreement Princess paid toPrincess Management Limited, a wholly owned subsidiary ofPartners Group Holding, an aggregate of USD 47,369,830 infinancial years 2003 to 2005 and in the first nine months of financialyear 2006.

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In the same period of time Princess paid insurance fees under theInsurance Policy to Princess Management Limited in an aggregateamount of USD 31,998,504.

Under the Administration Agreement Princess paid administrationfees and fees for services and facilities provided outside of theAdministration Agreement to Partners Group (Guernsey) Limited, awholly owned subsidiary of Partners Group Holding in an aggregateamount of USD 1,115,306 in financial years 2003 to 2005 and in thefirst nine months of financial year 2006.

Moreover, Princess paid an annual fee of USD 100,000 to PrincessManagement Limited for performed services with respect to IFRSvaluation.

Shareholding NotificationRequirements ********************* Currently, under the German Securities Trading Act (Wertpapier-

handelsgesetz), the Company is required to announce the fact that avoting interest of a shareholder or a holder of Co-ownership Interestsreaches, exceeds or falls below a threshold of 5%, 10%, 25%, 50% or75% of the voting rights as well as the percentage of the voting rightsof such shareholder or holder of Co-ownership Interests at the latestwithin nine days in a nationwide newspaper authorised by the stockexchanges in Germany. The time limit commences with the point oftime in which the Company is aware of the fact that the votinginterest of the shareholder or holder of Co-ownership Interestsamounts, exceeds or falls below of such threshold.

Pursuant to an amendment to the German Securities Trading Act asadopted by the German parliament (Bundestag) on 30 November2006, which is expected to take effect as of 20 January 2007, holdersof the Co-ownership Interests will be obliged to notify the Companyand the German Federal Financial Supervisory Authority in case ofreaching, exceeding or falling below 3%, 5%, 10%, 15%, 20%, 25%,30%, 50% or 75% of the voting rights in the Company of such fact.

Recent Business Developments andOutlook ************************** In the period since the end of September 2006 there have been no

significant developments (other than those relating to the preparatorywork for the admission to trading on the official market of theFrankfurt Stock Exchange) affecting the Company. The portfolio ofprivate market investments has been stable with no newcommitments made. The level of distributions received has continuedto exceed the level of capital calls and the Company has substantialholdings of cash and cash equivalents which will be available to fundfuture commitments. The Company anticipates that it will startmaking new commitments to private equity and private debt fundsshortly after admission.

Summary of Admission

Subject matter of the admission ***** 7,010,000 Ordinary Shares (existing share capital) deliverable in theform of co-ownership interests in a global bearer share certificateissued by Clearstream, Frankfurt, each representing one OrdinaryShare with a nominal value of EUR 0.01 and with dividend rights asof 1 January 2006 of Princess Private Equity Holding Limited.

Admission to trading*************** Application has been made on 17 November 2006 for admission totrading on the official market, with concurrent admission to tradingon the sub-segment of the official market with additional post-admission obligations (Prime Standard) of the Frankfurt StockExchange for all issued and outstanding Ordinary Shares of the

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Company deliverable in the form of co-ownership interests in aglobal bearer share certificate each representing one Ordinary Share.Approval for admission to trading is expected to occur on8 December 2006. Trading is scheduled to commence on or about13 December 2006.

International Securities IdentificationNumber (ISIN) of the OrdinaryShares *************************** GG00B1FGVV74

German Securities IdentificationNumber (WKN) of the OrdinaryShares *************************** A0LBRL

Common Code of the Co-ownershipInterests************************** 027106633

International Securities IdentificationNumber (ISIN) of the Co-ownershipInterests************************** DE000A0LBRM2

German Securities IdentificationNumber (WKN) of the Co-ownershipInterests************************** A0LBRM

Trading symbol of the Co-ownershipInterests************************** PEY1

Selected Consolidated Financial Data

The following selected consolidated financial data present a summary of the audited IFRS consolidatedfinancial statements of the Company as of and for the financial years ended 31 December 2003, 2004 and 2005,and the unaudited interim financial statements of the Company for the nine months ended 30 September 2006including comparative figures for the nine months ended 30 September 2005.

Selected income statement data

Nine months ended30 SeptemberFinancial year ended 31 December

IFRSIFRS(unaudited)(audited)

2003 2004 2005 2005 2006

In USD

Net income from limitedpartnerships and directly heldinvestments*************** 20,391,401 93,196,744 110,274,266 77,483,566 121,910,320

Net income from short-terminvestments*************** — — 150,296 — 3,158,455

Net income from cash and cashequivalents *************** 320,189 145,956 1,323,072 769,120 1,869,136

Operating income *********** 20,711,590 93,342,700 111,747,634 78,252,686 126,937,911Operating expenses ********** (22,530,305) (21,694,543) (21,747,598) (15,936,265) (17,080,739)Financing cost ************** (39,718,664)1 (41,071,011) (42,625,400) (31,779,842) (33,515,394)Surplus/(loss) for the financial

period ******************* (41,537,379)1 30,577,146 47,374,636 30,536,579 76,341,778

1 Figure has been restated in the course of the preparation of the audited consolidated financial statements 2004. According to note 22 to theconsolidated audited financial statements for the financial year from 1 January 2004 to 31 December 2004, Princess early adoptedInternational Financial Reporting Standards (IFRS). IAS 32, Financial Instruments: Disclosure and Presentation, and IAS 39, FinancialInstruments: Recognition and Measurement, requiring the accounting policy for the convertible bond to be changed.

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Selected balance sheet data



2003 2004 2005 2006

In USD

Total assets ************************* 595,973,656 647,005,773 707,388,225 821,986,393Equity and LiabilitiesTotal equity ************************* (26,247,956)1 4,329,190 51,703,826 128,045,604Total liabilities*********************** 622,221,612 642,676,583 655,684,399 693,940,789

Total liabilities & equity************** 595,973,656 647,005,773 707,388,225 821,986,393

1 Figure has been restated in the course of the preparation of the audited consolidated financial statements 2004, see note 22 to the auditedconsolidated financial statements 2004 as explained above.

Selected cash flow data



2003 2004 2005 2005 2006

In USD

Cash flow from operating activitiesNet cash from/(used in) operating

activities ******************* (89,735,822) 17,822,548 42,715,211 67,525,281 81,622,267Cash flow from financing activitiesIncrease/(decrease) in credit

facility ******************** 30,000,000 (20,000,000) (10,000,000) (10,000,000) —Net increase/(decrease) in cash

and cash equivalents ******** (59,735,822) (2,177,452) 32,715,211 57,525,281 81,622,267Cash and cash equivalents at

beginning of reporting period 78,526,819 18,790,091 16,605,856 16,605,856 49,315,979

Cash and cash equivalents atend of reporting period****** 18,790,091 16,605,856 49,315,979 74,318,071 130,974,447

Summary of Risk Factors

Before making a decision to purchase shares of the Company, investors should carefully consider certainrisks. The following is an enumeration of the material risks to which Princess is exposed. The occurrence of oneor more of these risks could have significant adverse effects on Princess’ assets, financial condition and results ofoperations. The occurrence of any of these risks could cause a significant drop in the stock exchange price of theCompany’s shares, and investors could lose all or a part of their investments.

Risks Relating to Dependence on Partners Group

) Princess’ performance is dependent on the experience and network of Partners Group, its affiliates andtheir respective directors, officers and employees.

) The departure or reassignment of some or all of Partners Group’s investment professionals could preventPrincess from achieving its investment objectives.

) Partners Group could transfer its control over Princess Management Limited to a third party who wouldbe able to exercise significant control over investment activities, which could result in a change inPrincess’ investment objectives and cause Princess material harm.

) Princess Management Limited has broad latitude to make investments for Princess. These investmentsmay differ substantially from the type of investments that Princess Management Limited has made ormanaged in the past.

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) Princess’ financial condition and results of operations will depend on Partners Group’s ability toeffectively implement Princess’ investment strategy.

) The Investment Management Agreement between the Company and Princess Management Limited maybe difficult and costly to terminate.

Potential Conflicts of Interest

) Partners Group will be able to pursue other business activities and provide services to third parties thatcompete directly with Princess, which could cause Princess to compete with others for access to PartnersGroup’s investment professionals, information and deal flow.

) Risks of potential conflicts of interest could arise from the involvement of related parties in Princess’business and its organisational, ownership and investment structure.

) Princess’ arrangements with Partners Group were negotiated in the context of an affiliated relationshipand may contain terms that are less favourable than those which otherwise might have been obtainedfrom unrelated parties.

) The liability of Partners Group is limited under the Company’s arrangements with it, and the Companyhas agreed to indemnify Partners Group against claims that it may face in connection with sucharrangements, which may lead it to assume greater risks when making investment related decisions thanthey otherwise would if investments were being made solely for their own account or on behalf of clientsfrom whom they had not received such indemnification.

) Princess Management Limited and Partners Group will not owe shareholders any fiduciary duties underthe Investment Management Agreement and will not owe shareholders any fiduciary duties under theInvestment Advisory Agreement.

) The Investment Management Agreement may create an incentive for Princess Management Limited tomake investments and take other actions that increase or maintain the Company’s equity value over thenear-term when other investments or actions may be more favourable.

) Princess Management Limited will be entitled to share in the returns generated by successful direct andsecondary investments, even if Princess’ investments as a whole do not increase in value or, in fact,decrease in value.

) Princess’ direct investments in companies or assets in which Partners Group funds have invested mayresult in conflicts of interest that may not be resolved in Princess’ favour, and the terms of Princess’investments may not be consistent with what would be obtained in a third-party transaction.

) Shared legal counsel may result in a conflict of interest and/or additional cost.

Risks Related to Princess’ Business

) Princess operates in a highly competitive market for investment opportunities

) Princess’ track record is not indicative of its future performance.

) Princess’ business model depends upon the development of strong referral relationships with privateequity and private debt funds and investment banking firms.

) Risk management activities may adversely affect the return on Princess’ investments.

) Princess cannot assure investors that it will be able to predict accurately or at all, or to react effectivelyto, future changes in the value of investments.

) Princess cannot assure shareholders that the values of investments that the Company reports from time totime will in fact be realised.

) Princess may experience fluctuations in its operating results.

) Princess does not have any operations and its principal source of cash are the investments that it makes.

) Changes in laws or regulations or a failure to comply with laws and regulations, may adversely affectPrincess’ business, investments and results of operations.

) There are risks of adverse changes in Princess’ tax status or applicable tax legislation.

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) There is the risk of adverse tax consequences by reason of having a permanent establishment.

) The investment strategy of Princess could result in Princess qualifying as a foreign collective investmentscheme resulting in the applicability of the German Investment Tax Act. Further, some investments ofPrincess include investments in entities which may qualify as collective investment schemes (as suchterm is used in the German Investment Tax Act).

) German individual and corporate investors may not benefit from the 50% exemptions from Germanincome tax (individual investors) as well as the 95% exemption from German corporation tax (corporateinvestors) on capital gains and dividend payments under the German Legislation on Controlled ForeignCompanies (Außensteuergesetz).

) A portion of Princess’ net income may become subject to US tax.

) Fluctuations and changes in interest rates may cause losses.

Risks Relating to Princess’ Investments

) Private equity and private debt investments are subject to a significant number of risks, which couldresult in a total or partial loss of any such investment by Princess.

) The global nature of Princess’ investment strategy will subject it to a variety of economic, political, legaland accounting risks.

) Princess will not have operating or voting control over funds or investee companies and will depend onthird parties whose interests may not be aligned with those of Princess.

) The structure of Princess’ investments and other transactions to which it is a party may expose it todefault and fraud risks.

) The majority of Princess’ investments will be illiquid.

) Most of Princess’ investments will rank junior to the investments of others.

) Market values of publicly traded securities that are held as investments may be volatile and causePrincess’ net asset value to fluctuate.

) Fund investments entail a number of risks over and above those relating to private equity and private debtinvestments generally.

) Princess is expected to follow an over-commitment approach when making investments in private equityfunds, which may result in contingent commitments exceeding its available capital.

) Acquisitions of outstanding limited partner interests in private equity funds may give rise to contingentliabilities.

) Princess will be limited in its ability to negotiate terms and conditions of secondary investments and suchinvestments may be based on incomplete or imperfect information.

) Princess will invest in highly leveraged companies.

) Princess may invest in consortia, leading to potentially increased risk exposure for shareholders that haveinvestments in other private equity funds.

) Princess is not required to observe specific diversification criteria and will therefore be exposed todefault and concentration risk.

) Princess may make follow-on investments on unfavourable terms.

) Fluctuations in currency values may adversely affect the value of Princess’ investments.

) Economic recessions or downturns could impair the value of Princess’ investments or limit any potentialappreciation in value.

) The due diligence process that Partners Group undertakes in connection with Princess’ investments maynot reveal all facts that may be relevant in connection with an investment.

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Risks Related to the Shares and the Admission to Trading

) The Company’s ability to pay dividends will depend on its profits.

) Additional investment risks may arise from currency exchange rate fluctuations since any dividends willbe paid in euros.

) The rights of the shareholders of the Company and the fiduciary duties owed to shareholders will begoverned by Guernsey law and the Company’s Articles may differ from the rights and duties owed underthe laws of other countries.

) From 1 January 2007 the reporting currency will be euro and financial figures may not be comparable tothose of the past.

) The Company does not know the structure of the holders of Co-ownership Interests.

) No public trading in the Ordinary Shares (or the Co-ownership Interests) has taken place before.

) The stock exchange price of the Co-ownership Interests may be volatile.

) The Co-ownership Interests could trade at a discount to net asset value.

) Sales by a significant holder of Co-ownership Interests might have an impact on the price of the Co-ownership Interests.

) Future issues of Ordinary Shares (including Ordinary Shares deliverable in the form of Co-ownershipInterests) could dilute the interests of existing holders of Co-ownership Interests and lower the price ofthe Co-ownership Interests.

) Repurchases of Ordinary Shares (deliverable in the form of Co-ownership Interests) by the Company,which the Company may undertake from time to time, will increase shareholders’ exposure to Princess’existing investments at the time of such repurchase, which could make a loss of their investment morelikely.

) Third parties may acquire control of the Company and replace the Company’s Directors and officerswithout consent from the minority shareholders, which may cause the Company material harm andchange the Company’s investment objectives.

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GERMAN SUMMARY TRANSLATION/ZUSAMMENFASSUNG DES PROSPEKTS

Die folgende Zusammenfassung ist als Einfuhrung zu diesem Prospekt (der ‘‘Prospekt’’) zu verstehen. EineBeurteilung im Hinblick auf die Aktien der Princess Private Equity Holding Limited, Tudor House, P.O. Box 477,St Peter Port, Guernsey (im Folgenden auch die ‘‘Gesellschaft’’ und gemeinsam mit ihrer Konzern-Tochtergesell-schaft ‘‘Princess’’ oder die ‘‘Princess-Gruppe’’ genannt) und die Miteigentumsanteile sollte auf der Grundlagedes gesamten Prospekts erfolgen.

Die Gesellschaft und Sal. Oppenheim jr. & Cie. KGaA, Unter Sachsenhausen 4, 50667 Koln (ImFolgenden ‘‘Sal. Oppenheim’’) ubernehmen gemaß § 5 Absatz 2 Nr. 4 Wertpapierprospektgesetz (,,WpPG‘‘) dieVerantwortung fur den Inhalt dieser Zusammenfassung. Sie konnen fur den Inhalt dieser Zusammenfassunghaftbar gemacht werden, jedoch nur fur den Fall, dass die Zusammenfassung irrefuhrend, unrichtig oderwiderspruchlich ist, wenn sie zusammen mit den anderen Teilen dieses Prospekts gelesen wird. Fur den Fall, dassvor einem Gericht Anspruche aufgrund der in diesem Prospekt enthaltenden Informationen geltend gemachtwerden, konnte der als Klager auftretende Anleger in Anwendung der einzelstaatlichen Rechtsvorschriften derStaaten des Europaischen Wirtschaftsraums die Kosten fur die Ubersetzung des Prospekts vor Prozessbeginn zutragen haben.

Allgemeine Informationen uber die Princess-Gruppe und ihre Geschaftstatigkeit

Uberblick

Princess Private Equity Holding ist eine Investment-Holding-Gesellschaft und wurde am 12. Mai 1999 durchPartners Group Holding, Zugerstrasse 57, 6341 Baar-Zug, Schweiz (im Folgenden ‘‘Partners Group Holding’’)und Swiss Reinsurance Company, 50/60 Mythenquai, 8022 Zurich, Switzerland (im Folgenden ‘‘Swiss Re’’), diemit 80,1 und 19,9% an dem zum Zeitpunkt der Grundung ausgegebenen Grundkapital der Princess Private EquityHolding Limited beteiligt waren, gegrundet.

Die Gesellschaft ist ein Unternehmen mit Sitz in Guernsey, das in dem Markt fur Private Equity und PrivateDebt tatig ist und direkt oder uber seine 100%ige Tochtergesellschaft — die Princess Private Equity SubholdingLimited — in Private Market-Anlagen investiert. Private Market-Anlagen sind Anlagen in Private Equity- undPrivate Debt-Anlagen. Allgemein bezeichnet ,,Private Equity‘‘ oder ,,Private Debt‘‘ Vermogensanlagen, dietypischerweise in nicht offentliche Gesellschaften oder in Vermogenswerte durch privat ausgehandelte Geschafteerfolgen.

Private Market-Anlagen konnen unter Ausnutzung der gesamten Palette von Finanzinstrumenten, wiez.B. Vorzugs- und Stammanteile, wandelbare Wertpapiere, nachrangige Verbindlichkeiten und Optionen undandere Derivate, je nach Strategie des Investors und der Finanzierungsnotwendigkeiten der Gesellschaftstrukturiert werden. Private Equity und Privat Debt-Fonds, die oftmals als Personengesellschaften (LimitedPartnerships) organisiert sind, sind die gebrauchlichsten Vehikel fur Investitionen in Private Market-Anlagen.Investoren solcher Fonds (typischerweise Pensionsfonds, Banken, Versicherungsgesellschaften und/oder ver-mogende Privatinvestoren) verpflichten sich dabei ublicherweise, bis zu einem bestimmten Betrag Kapital zurVerfugung zu stellen, bis dieses von dem Fondsmanager oder dem Komplementar (General Partner) abgerufenwird. Das Kapital wird dann durch den Fondsmanager oder den Komplementar auf Rechnung des Fonds,gewohnlich in Ubereinstimmung mit einer vordefinierten Investmentstrategie, investiert. Die Fondsanlagenwerden innerhalb eines Anlagezeitraums von gewohnlich vier bis sieben Jahren durch einen privaten Verkauf, einoffentliches Angebot (IPO) oder eine Umfinanzierung realisiert (,,Exit‘‘). Die Ertrage werden dann an dieFondsinvestoren ausgeschuttet.

Um in Private Equity investieren zu konnen, emittierte die Gesellschaft 1999 Nullkuponwandelanleihen mitFalligkeit 2010 (die ‘‘Anleihen’’). Das mit der Emission der Anleihen erzielte Kapital in Hohe vonUSD 700.000.000 wurde in Private Equity- und Private Debt-Fonds angelegt und bis zum 30. September 2006hatte die Gesellschaft ein Gesamtportfolio von uber 100 Fonds sowie uber 1800 mittelbaren Beteiligungen anoperativ tatigen Gesellschaften aufgebaut.

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Fonds Portfolio

Princess hielt am 30. September 2006 Anteile an 113 Private Equity- und Private Debt-Fonds, die sich wiefolgt verteilten:

Anzahl der InvestitionszusagenArt der Anlage Fonds insgesamt

(in USD)

Primar- InvestitionenBuyout Europa **************************************************** 20 304.216.935Venture Capital Europa********************************************** 11 89.806.100Special Situations Europa******************************************** 5 59.518.413Buyout Nordamerika************************************************ 19 256.880.028Venture Capital Nordamerika***************************************** 31 313.251.911Special Situations Nordamerika *************************************** 10 110.000.000Buyout Restliche Welt ********************************************** 5 25.503.264Venture Capital Restliche Welt *************************************** 5 42.000.000Sekundar InvestitionenSekundar Investitionen ********************************************** 7 130.886.282

(Stand: 30. September 2006)

Der Nettovermogenswert des Portfolios von Princess betrug zum 30. September 2006 816.575.136 US Dol-lar (das sind USD 116,4872 pro Aktie nach Wandlung unter der Annahme, dass die Wandlung am 30. September2006 stattgefunden hat). Der Nettovermogenswert pro Aktie ergibt sich aus der Division desNettovermogenswertes des Portfolios von Princess durch die Anzahl der ausstehenden Aktien (7.010.000). Die700.000 Anleihen, je mit einem Nennwert von 1.000 US Dollar, wurden bei einer Wandlung zu 100 US Dollarpro Aktie in 7.000.000 Aktien resultieren, wahrend 10.000 Aktien zum 30. September 2006 bereits ausstehendsind.

Organisationsstruktur

Princess hat, bis auf einen Teilzeitangestellten, keine Mitarbeiter und auch keine eigenen Raumlichkeiten.Die Anlagen von Princess werden von der Princess Management & Insurance Limited, Tudor House, LeBordage, St. Peter Port, Guernsey GY1 1 BT, Channel Islands, zukunftig firmierend unter Princess ManagementLimited, mit Sitz auf Guernsey, (im Folgenden der ‘‘Investmentmanager’’ oder ,,Princess Management Limited‘‘)nach freiem Ermessen gesteuert und verwaltet. Der Investment Manager ist unter anderem fur die Auswahl, denErwerb und den Verkauf von Anlagen sowie das Erbringen von Finanzierungs- und Cash-Management-Leistungen verantwortlich.

Princess Management Limited wird auf Grundlage eines Investment-Beratungs-Vertrages von PartnersGroup, Zugerstrasse 57, 6341 Baar-Zug, Schweiz (im Folgenden ‘‘Partners Group (Zug)’’ oder der‘‘Investmentberater’’) beraten. Der Investmentberater erbringt die folgenden Tatigkeiten: Asset-Allokation,kaufmannische Due Diligence-Prufungen, Erwerbs- und Veraußerungsvorschlage und die Wertentwicklungs-uberwachung.

Ferner erbringt die Partners Group (Guernsey) Limited (der ‘‘Administrator’’) aufgrund einesVerwaltungsvertrages (der ,,Verwaltungsvertrag‘‘) fur Princess verschiedene Verwaltungs- und Finanzdienstleis-tungen sowie Aufgaben im Bereich des Rechnungswesens.

Der Investmentmanager, der Investmentberater und der Administrator sind jeweils 100%ige Tochtergesell-schaften der Partners Group Holding, einer unabhangigen Gesellschaft, die in der Verwaltung im BereichAlternative Asset Management tatig ist und eine Marktkapitalisierung von rd. 2,1 Milliarden Schweizer Frankenhat und ca. 14 Milliarden an Vermogen verwaltet (Stand 30. Juni 2006). Sie verfugt uber eine erfolgreicheUnternehmensgeschichte im Bereich Private Equity und Private Debt und ist fur einen internationalen Kunden-kreis von großen institutionellen Investoren, Vermogensverwaltern, Privatbanken und vermogenden Privatperso-nen tatig. Im Folgenden bezieht sich der Begriff ‘‘Partners Group’’ je nach Zusammenhang auf denInvestmentmanager, den Investmentberater und/oder den Administrator sowie deren jeweilige verbundenenUnternehmen.

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Restrukturierung

Am oder unmittelbar nach dem Geschaftstag, an dem die Zulassung der Aktien der Gesellschaft lieferbar inMiteigentumsanteilen an einem Inhabersammelzertifikat zum amtlichen Markt mit gleichzeitiger Zulassung zumMarktsegment mit erweiterten Zulassungsfolgepflichten (Prime Standard) der Frankfurter Wertpapierborse durchdie Frankfurter Wertpapierborse erfolgt (der ‘‘Restrukturierungsstichtag’’), hat bzw. wird die Gesellschaft dienachfolgende Restrukturierung abschließen.

Vor dem Restrukturierungsstichtag war der Investmentmanager, dessen Anteile von Partners Group Holdingund Swiss Re gemeinsam gehalten werden, auf der Grundlage eines Investment-Management-Vertrages (der‘‘Alt-Investment-Management-Vertrag’’) und von Anlagerichtlinien (die ‘‘Anlagerichtlinien’’) tatig. PrincessManagement Limited wurde zu diesem Zeitpunkt (i) von ihrem Investmentberater und den weiteren BeraternHamilton Lane und Invesco beraten und (ii) hat mit Swiss Re und dem Investmentberater Servicevereinbarungengetroffen, deren Zweck die Einhaltung der Anlagerichtlinien und die Vermeidung von Risikokonzentrationen war.

Um das Risiko fur die Inhaber der Anleihen zu verringern, hat die Gesellschaft im Jahr 1999 mit PrincessManagement Limited einen Versicherungsvertrag geschlossen (der ‘‘Versicherungsvertrag’’), aus dem dieGesellschaft die aus den Anleihen falligen Betrage der 2010 falligen Anleihen hatte beanspruchen konnen. ImGegenzug hierzu wurde der Princess Management Limited das Recht eingeraumt, die Gesellschaft anzuweisen,die Wahrscheinlichkeit eines Verlusts im Falle des Nichterreichens verschiedener Finanzzahlen zu verringern (das‘‘Mitigation Right’’). Der Investment Manager hatte dieses Recht auf den Ruckversicherer, Swiss Re, ubertragen.Daruber hinaus hatten die Gesellschaft, der Investmentmanager, Swiss Re und Carey Langlois Trust CompanyLimited (die heute als Carey Commercial Limited firmiert) einen Versicherungstreuhandvertrag geschlossen (der‘‘Insurance Trust’’) gemaß dessen verschiedene Geldbetrage in den Insurance Trust eingezahlt wurden, umeventuelle Zahlungsverpflichtungen aus dem Versicherungsvertrag zu besichern. Ferner haben Princess, derInvestmentmanager und der Administrator den Verwaltungsvertrag geschlossen, wonach der Administrator inBezug auf den Alt-Investment-Management-Vertrag verschiedene Verwaltungs- und Finanzdienstleistungenerbrachte und verschiedene Aufgaben im Bereich des Rechnungswesens wahrnahm.

Im Februar 2006 ubte Swiss Re das Mitigation Right aus und wies die Gesellschaft an, keine weiterenInvestitionszusagen abzugeben. Aus diesem Grunde schlug die Gesellschaft den Inhabern der Anleihen einevorzeitige Pflichtwandlung der Anleihen in Aktien der Gesellschaft (lieferbar in Miteigentumsanteilen an einemInhabersammelzertifikat) (die ‘‘Vorzeitige Pflichtwandlung’’) vor. Mit der vorzeitigen Pflichtwandlung haben sichdie Inhaber der Anleihen bereit erklart, Anleihen in Aktien der Gesellschaft (lieferbar in Miteigentumsanteilen aneinem Inhabersammelzertifikat) am Restrukturierungsstichtag umzuwandeln. Im Anschluss haben die Gesell-schaft, Swiss Re, der Investmentmanager, der Investmentberater und Carey Commercial Limited verschiedeneVereinbarungen getroffen, um die Organisationsstruktur von Princess wie folgt zu andern (im Folgenden die‘‘Restrukturierung’’):

Die Versicherungs- und Ruckversicherungsvereinbarungen, einschließlich etwaiger Regelungen bezuglichder Bezahlung von Entgelten und nach diesen Vereinbarungen zu zahlender Pramien wurden mit Wirkung zumRestrukturierungsstichtag beendet. Sobald wie dies praktikabel erscheint, wird der Insurance Trust aufgelost undliquidiert und der Liquidationserlos an Partners Group Holding und Swiss Re verteilt werden.

Ferner hat Swiss Re ihre Anteile an der Gesellschaft an die Partners Group Holding verkauft. Zusatzlich hatSwiss Re ebenso zugestimmt, ihre Anteile am Investmentmanager mit Wirkung zum 1. Januar 2007 auf diePartners Group Holding zu ubertragen. Dementsprechend wurde die Servicevereinbarung mit Swiss Re mitWirkung zum Restrukturierungsstichtag beendet. Aufgrund eines Gesellschafterbeschlusses haben PartnersGroup Holding und Swiss Re die Umfirmierung der Princess Management & Insurance Limited zu PrincessManagement Limited beschlossen. Dies wird kurz nach dem Restrukturierungsstichtag wirksam werden.

Der Alt-Investment-Management-Vertrag wurde mit Wirkung zum Restrukturierungsstichtag durch eineneue Investmentmanagementvereinbarung ersetzt, die eine neue Management- und Anreizvergutungsstrukturenthalt (der ‘‘Investment-Management-Vertrag’’), und die Anlagerichtlinien wurden in neueInvestmentgrundsatze (die ‘‘Investmentgrundsatze’’) geandert.

Schließlich wurden die folgenden Anderungen in der Organisationsstruktur der Gesellschaft vorgenommen:(a) Abschaffung der A-Klasse Aktien des genehmigten Kapitals der Gesellschaft, (b) Umstellung des Nennwertsder Aktien der Klasse B der Gesellschaft auf nicht klassifizierte Stammaktien der Gesellschaft, (c) Umstellungdes Nennwerts des ausgegebenen Stammaktien und des genehmigten Kapitals von US-Dollar auf Euro,(d) Neuformulierung der Grundungsurkunde und der Satzung der Gesellschaft.

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Unternehmensstrategie

Nach der Restrukturierung ist das Ziel der Gesellschaft, langfristiges Kapitalwachstum und mittel- bislangfristig eine attraktive Dividendenrendite fur den Aktionar zu ermoglichen. Um dieses Ziel zu erreichen, tatigtPrincess entsprechend ihrer Anlagestrategie Private Market-Anlagen.

Anlagestrategie

Princess strebt danach, durch eine laufende Relative-Value-Analyse sowie einen strengen Investment-Auswahlprozess aus der dynamischen Natur der nicht offentlichen Markte Nutzen zu ziehen. Auf der Grundlageihrer Top-Down-Analyse, marktsegmentubergreifender Vergleiche und sorgfaltiger Due Diligence-Prufungenversucht Partners Group (Zug) die Allokationen der Investments von Princess an solche Investments anzupassen,die nach Meinung von Partners Group (Zug) zu einem bestimmten Zeitpunkt besonders attraktiv sind.

Princess kann in eine Vielzahl von Private Market-Anlagen ohne Begrenzung auf geographische Regionen,Finanzierungsstadien, Lancierungsjahr und Branchen investieren. Private Equity-Anlagen werden voraussichtlichBuyout-, Venture Capital- und Special Situations-Anlagen sein. Private Debt-Anlagen, werden voraussichtlichMezzanine-Anlagen, nachrangige Pfandrechte oder erstrangige Schuldtitel beinhalten. Princess kann Anlagenverschiedener Art tatigen, die voraussichtlich Primaranlagen (primary investments), Sekundar-Anlagen(secondary investments) Direktinvestments und borsennotierte Private Equity-Anlagen umfassen werden.

Princess ist der Auffassung, dass sie durch ihre Fahigkeit, Investments in alle Arten von Private Equity- undPrivate Debt-Anlagen zu tatigen, gut positioniert ist, um fur Investoren unter einer Vielfalt von Marktbedingun-gen attraktive Renditen zu erzielen.

Zusammenfassung der Informationen zur Gesellschaft

Grundung ************************ Princess Private Equity Holding Limited wurde am 12. Mai 1999 indas Register der Insel Guernsey eingetragen.

Firma**************************** Princess Private Equity Holding Limited

Verwaltungsrat(Board of Directors) *************** Andreas Billmaier

Brian HumanUrs WietlisbachGraham Hall

Managing Director***************** Brian Human

Mitarbeiter *********************** Am 30. September 2006 hatte die Gesellschaft keine Mitarbeiter. Abdem Restrukturierungsstichtag beschaftigt die Gesellschaft einenMitarbeiter in Teilzeit in der Funktion als Managing Director.

Grundkapital ********************* Das genehmigte Grundkapital der Gesellschaft betragt EUR 200.100,aufgeteilt in 20.010.000 Stammaktien zu einem Nominalwert von jeEUR 0.01, von denen 7.010.000 am Restrukturierungsstichtag ausge-geben worden sein werden.

Kapitalisierung und Verschuldung *** Am 30. September 2006, betrug die Kapitalisierung der GesellschaftUSD 821.986.393 und die Gesamtverschuldung USD 693.940.789.

Stimmrechte ********************** Bei der Abstimmung durch Handzeichen hat jeder anwesende oderdurch Stimmrechtsvertreter vertretene Aktionar eine Stimme, beieiner Wahl verfugt jeder anwesende oder durch Stimmrechtsvertretervertretene Aktionar uber ein Stimmrecht pro gehaltener Aktie. JederInhaber von Miteigentumsanteilen ist berechtigt, im Hinblick auf dieAnzahl der den Stammaktien entsprechenden Miteigentumsanteilevon Clearstream, Frankfurt die Ausstellung einerStimmrechtsvollmacht fur die Ausubung der Stimmrechte zu verlan-gen.

Dividendenpolitik****************** Die Stammaktien sind ab dem Geschaftsjahr, das am 1. Januar 2006begonnen hat, zu Dividenden und gegebenenfalls sonstigen Aus-schuttungen berechtigt. Die Gesellschaft beabsichtigt derzeit, einen

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signifikanten Anteil ihrer realisierten Einkunfte und Einnahmen inForm von Dividenden auszuschutten. Allerdings gibt es keine Ge-wahr dafur, dass die Gesellschaft in der Lage sein wird, Dividendenauszuschutten.

Abschlussprufer ******************* PricewaterhouseCoopers CI LLP, National Westminster House,St Peter Port, Guernsey

Designated Sponsor **************** Sal. Oppenheim ubernimmt die Funktion des Designated Sponsorsfur die an der Frankfurter Wertpapierborse gehandelten Miteigen-tumsanteile.

Geschafte und Rechtsbeziehungen mitnahe stehenden Personen *********** Im Rahmen des Alt-Investment-Management-Vertrages leistete

Princess in den Geschaftsjahren 2003-2005 sowie in den ersten neunMonaten des Geschaftsjahres 2006 Zahlungen in Hohe von insge-samt USD 47.369.830 an Princess Management Limited, eine100%ige Tochtergesellschaft von Partners Group Holding.

In demselben Zeitraum zahlte Princess im Rahmen des Versiche-rungsvertrags Versicherungsentgelte in Hohe von insgesamtUSD 31.998.504 an Princess Management Limited.

Princess zahlte im Rahmen des VerwaltungsvertragesVerwaltungsentgelte sowie weitere Entgelte außerhalb desVerwaltungsvertrages fur Dienstleistungen und Raumlichkeiten inHohe von insgesamt USD 1.115.306 an die Partners Group(Guernsey) Limited, einer 100%igen Tochtergesellschaft der PartnersGroup den Geschaftsjahren 2003-2005 sowie in den ersten neunMonaten des Geschaftsjahres 2006.

Princess zahlte an Princess Management Limited eine Jahresgebuhrin Hohe von USD 100.000 fur erbrachte Leistungen im Rahmen derBewertung nach IFRS.

Mitteilungspflichten uberStimmrechtsanteile***************** Nach dem deutschen Wertpapierhandelsgesetzbuch ist die Gesell-

schaft verpflichtet, die Tatsache, dass der Stimmrechtsanteil einesAktionars oder eine Inhabers von Miteigentumsanteilen 5%, 10%,25%, 50% oder 75% der Stimmrechtsanteile an der Gesellschafterreicht, ubersteigt oder unterschreitet sowie den Stimmrechtsanteildieses Aktionars oder Inhabers von Miteigentumsanteilen spatestensinnerhalb von neun Kalendertagen in einem uberregionalen Borsen-pflichtblatt zu veroffentlichen. Die Frist beginnt mit dem Zeitpunkt,zu dem die Gesellschaft Kenntnis hat, dass der Stimmrechtsanteil desAktionars oder des Inhabers von Miteigentumsanteilen diese Schwel-len erreicht, uberschreitet oder unterschreitet.

Aufgrund einer vom Deutschen Bundestag am 30. November be-schlossenen Anderung des Wertpapierhandelsgesetzes, die voraus-sichtlich am 20. Januar 2007 wirksam wird, werden die Inhaber derMiteigentumsanteile verpflichtet sein, im Falle des Erreichens,Uberschreitens oder Unterschreitens von 3%, 5%, 10%, 15%, 20%,25%, 30%, 50% or 75% der Stimmrechte an der Gesellschaft diesder Gesellschaft und der Bundesanstalt fur Finanzdienstleistungsauf-sicht mitzuteilen.

Jungste Entwicklung und Ausblick*** Seit Ende September gab es keine wesentlichen die Gesellschaftbeeinflussenden Entwicklungen (außer der vorbereitenden Maßnah-men fur die Zulassung zum Handel am amtlichen Markt der Frank-furter Wertpapierborse). Das Portfolio der Private Market-Anlagenblieb unverandert, neue Zahlungsversprechen wurden nicht abgege-ben. Die erhaltenen Ausschuttungen waren weiterhin hoher als die

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Kapitalabrufe. Die Gesellschaft hat erhebliche Bestande anBarmitteln und Zahlungsmittelaquivalenten, die fur zukunftigeZahlungsversprechen abrufbar sein werden. Die Gesellschaft gehtdavon aus, dass sie neue Zahlungsversprechen an Private Equity- undPrivate Debt-Fonds unmittelbar nach der Zulassung abgeben wird.

Zusammenfassung der Zulassung

Gegenstand der Zulassung ********** 7.010.000 Stammaktien (bestehendes Grundkapital) der PrincessPrivate Equity Holding Limited, lieferbar in Form vonMiteigentumsanteilen an einem von Clearstream, Frankfurtausgestellten Inhabersammelzertifikat, die jeweils eine Stammaktiemit einem Nennbetrag von EUR 0,01 mit Dividendenrechten ab dem1. Januar 2006 reprasentieren.

Zulassung zum Handel ************* Am 17. November 2006 wurde ein Antrag auf Zulassung zumHandel am amtlichen Markt bei gleichzeitiger Zulassung zumTeilbereich des amtlichen Marktes mit zusatzlichenZulassungsfolgepflichten (Prime Standard) der Frankfurter Borse fursamtliche ausgegebenen und ausstehenden Stammaktien derGesellschaft, lieferbar in Miteigentumsanteilen an einemInhabersammelzertifikat, die jeweils eine Stammaktie reprasentieren,gestellt. Die Zulassung zum Handel wird fur den 8. Dezember 2006erwartet. Beginn des Handels ist fur den 13. Dezember 2006vorgesehen.

Internationale Wertpapier-Identifikations-Nummer (ISIN)der Stammaktien ****************** GG00B1FGVV74

Wertpapierkennnummer derStammaktien********************** A0LBRL

Common Code derMiteigentumsanteile**************** 027106633

Internationale Wertpapier-Identifikations-Nummer (ISIN) derMiteigentumsanteile**************** DE000A0LBRM2

Wertpapierkennnummer derMiteigentumsanteile**************** A0LBRM

Borsenkurzel derMiteigentumsanteile**************** PEY1

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Ausgewahlte Konzernfinanzdaten

Die folgenden ausgewahlten Konzernfinanzdaten stellen eine Zusammenfassung der gepruften IFRSKonzernjahresabschlusse der Gesellschaft fur das Geschaftsjahr endend am 31. Dezember 2003, 2004 und 2005sowie der ungeprufte Zwischenabschluss der Gesellschaft fur die Neun-Monats-Periode endend am 30. Septem-ber 2006 mit Vergleichszahlen fur die Neun-Monats-Periode endend am 30. September 2005 dar.

Ausgewahlte Daten der Gewinn- und Verlustrechnung:

Neun Monate endend amGeschaftsjahr endend am30. September31. Dezember

IFRSIFRS(ungepruft)(gepruft)

2003 2004 2005 2005 2006

In US Dollar

Nettoerlose vonKommanditgesellschaften unddirekt gehaltenen Anlagen *** 20.391.401 93.196.744 110.274.266 77.483.566 121.910.320

Nettoerlose aus kurzfristigenVermogensanlagen ********* — — 150.296 — 3.158.455

Nettoertrage aus Barmitteln undZahlungsmittelaquivalenten ** 320.189 145.956 1.323.072 769.120 1.869.136

Erlose aus betrieblicher Tatigkeit 20.711.590 93.342.700 111.747.634 78.252.686 126.937.911Betrieblicher Aufwand ******** –22.530.305 –21.694.543 –21.747.598 –15.936.265 –17.080.739Finanzierungsaufwand********* –39.718.6641 –41.071.011 –42.625.400 –31.779.842 –33.515.394Gewinn/Verlust fur die Periode –41.537.3791 30.577.146 47.374.636 30.536.579 76.341.778

1 Die Zahl wurde im Zuge der Prufung des Konzernjahresabschlusses 2004 berichtigt. Gemaß Ziffer 22 des Anhangs zumKonzernjahresabschluss fur das Geschaftsjahr vom 1. Januar 2004 bis zum 31. Dezember 2004, hat Princess vorzeitig IFRS IAS 32,Finanzinstrumente: Darstellung und IAS 39 Finanzinstrumente: Ansatz und Bewertung angewandt, die es erforderlich machten, dieBilanzierung der Anleihe zu andern.

Ausgewahlte Bilanzdaten:

Neun Monate endendam 30 SeptemberGeschaftsjahr endend am 31 Dezember


2003 2004 2005 2006

In US Dollar

Summe Aktiva ********************* 595.973.656 647.005.773 707.388.225 821.986.393Eigenkapital and VerbindlichkeitenSumme Eigenkapital ***************** –26.247.9561 4.329.190 51.703.826 128.045.604Summe Verbindlichkeiten ************* 622.221.612 642.676.583 655.684.399 693.940.789Bilanzsumme ********************** 595.973.656 647.005.773 707.388.225 821.986.393

1 Die Finanzzahlen aus 2003, wie sie in dieser Tabelle wiedergegeben sind, wurden im Zuge der Prufung des Konzernjahresabschlusses 2004berichtigt, siehe dazu obige Erlauterung zu Ziffer 22 des gepruften Konzernjahresabschlusses 2004.

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Ausgewahlte Angaben der Kapitalflussrechnung:

Neun Monate endend am30 SeptemberGeschaftsjahr endend am 31 Dezember


2003 2004 2005 2005 2006

In US Dollar

Cash Flow aus operativerGeschaftstatigkeit

Netto Zufluss/Abfluss aus operativeGeschaftstatigkeit ************** 89.735.822 17.822.548 42.715.211 67.525.281 81.622.267

Cash Flow ausFinanzierungstatigkeiten

Anstieg/Verringerung vonDarlehensverbindlichkeiten******* 30.000.000 –20.000.000 –10.000.000 –10.000.000 —

Netto Anstieg/Verringerung vonBarmitteln undZahlungsmittelaquivalenten***** 59.735.822 –2.177.452 32.715.211 57.525.281 81.622.267

Barmittel undZahlungsmittelaquivalente amBeginn der Berichtsperiode ***** 78.526.819 18.790.091 16.605.856 16.605.856 49.315.979

Barmittel undZahlungsmittelaquivalente amEnde der Berichtsperiode ****** 18.790.091 16.605.856 49.315.979 74.318.071 130.974.447

Zusammenfassung der Risikofaktoren

Bevor Anleger die Entscheidung treffen, Aktien der Gesellschaft zu kaufen, sollten sie sorgfaltig verschie-dene Risiken beachten. Das Folgende ist eine Aufzahlung der wesentlichen Risiken, denen Princess unterliegt.Der Eintritt eines oder mehrerer dieser Risiken konnte wesentlich nachteilige Auswirkungen auf die Vermogens-,Finanz- und Ertragslage der Gesellschaft haben. Der Eintritt dieser Risiken kann einen erheblichen Fall desAktienpreises der Aktien der Gesellschaft mit sich bringen und Anleger konnen ihre gesamte Anlage oder Teiledavon verlieren.

Risiken bezuglich der Abhangigkeit von Partners Group

) Die Wertentwicklung von Princess hangt von der Erfahrung und dem Netzwerk von Partners Group,ihren verbundenen Unternehmen, ihren Vorstandsmitgliedern und Angestellten ab.

) Der Weggang oder die Versetzung von einigen oder allen Investment Experten von Partners Groupkonnte Princess daran hindern, ihre Anlageziele zu erreichen.

) Partners Group konnte ihre Kontrolle uber Princess Management Limited an einen Dritten ubertragen,der erheblichen Einfluss auf die Investmentaktivitaten ausuben konnte, was eine Anderung derInvestmentziele von Princess haben konnte und Princess erheblichen Schaden zufugen konnte.

) Princess Management Limited hat weitreichende Freiheiten bei der Durchfuhrung der Investments furPrincess. Diese Investments konnen erheblich von den Investments abweichen, die Princess ManagementLimited in der Vergangenheit getatigt oder verwaltet hat.

) Die Vermogens- Finanz-, und Ertragslage von Princess wird von der Fahigkeit von Partners Groupabhangen, die Investmentstrategie von Princess effektiv umzusetzen.

) Es kann schwer und teuer sein, den Investment-Management-Vertrag zwischen der Gesellschaft undPrincess Management Limited zu beenden.

Potentielle Interessenkonflikte

) Partners Group wird es moglich sein, anderen Geschaften nachzugehen und Leistungen Drittenanzubieten, die direkt mit Princess im Wettbewerb stehen, was dazu fuhren kann, dass Princess um denZugang zu den Investmentexperten, Informationen und Deal-Flow von Partners Group mit Drittenkonkurrieren muss.

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) Risiken von potentiellen Interessenkonflikten konnten aufgrund der Einbeziehung von nahe stehendenPersonen in das Geschaft von Princess sowie ihrer Organisations-, Eigentumer- und Beteiligungsstrukturentstehen.

) Die Vereinbarungen der Princess mit der Princess Management Limited und Partners Group wurden imHinblick auf eine Beziehung wie zwischen verbundenen Unternehmen ausgehandelt und konnenBestimmungen enthalten, die weniger vorteilhaft sind, als solche die zwischen Parteien vereinbartworden waren, die sich nicht nahe stehen.

) Die Haftung von Partners Group ist gemaß den Vereinbarungen der Gesellschaft mit Partners Groupbegrenzt und die Gesellschaft hat sich verpflichtet, Partners Group gegenuber Anspruchen freizustellen,denen Partners Group in Zusammenhang mit diesen Vereinbarungen ausgesetzt sein konnte, was PartnersGroup dazu veranlassen konnte, großere Risiken bei den Anlagen einzugehen, als Partners Group diesansonsten getan hatte, wenn diese Anlagen ausschließlich auf eigene Rechnung oder fur Kunden getatigtworden waren, die Partners Group nicht von der Haftung freigestellt hatten.

) Princess Management Limited und Partners Group werden Aktionaren weder aus dem Investment-Management-Vertrag noch aus dem Investment-Beratungs-Vertrag zu Treuepflichten verpflichtet sein.

) Der Investment-Management-Vertrag konnte fur Princess Management Limited Anreiz bieten, ungun-stige Anlagen zu tatigen oder andere Maßnahmen zu veranlassen, welche den Wert des Eigenkapitals derGesellschaft kurzfristig steigen lassen, wahrend andere Anlagen oder Maßnahmen gunstiger gewesenwaren.

) Princess Management Limited wird dazu berechtigt sein, an Einnahmen aus direkten undSekundaranlagen (secondary investments) zu partizipieren, auch wenn der Wert der Investments vonPrincess im Ganzen sich nicht erhoht oder sogar verringert.

) Die von Princess getatigten Investitionen in direkte Anlagen oder in Anlagen in denen Partners Group-Fonds investiert haben, konnten zu einem Interessenkonflikt fuhren, der nicht zum Vorteil von Princessgelost werden konnte, und die Klauseln der Anlage von Princess konnten nicht mit solchen ubereinstim-men, die gegenuber Dritten getatigt worden waren.

) Ein gemeinsamer Rechtsberater konnte zu einem Interessenkonflikt bzw. zu zusatzlichen Kosten fuhren.

Risiken im Zusammenhang mit der Geschaftstatigkeit von Princess

) Princess ist in einem sehr wettbewerbsintensiven Markt fur Investmentmoglichkeiten tatig.

) Die Entwicklung von Princess ist nicht indikativ fur die Wertentwicklung von Princess in der Zukunft.

) Das Geschaftsmodell von Princess hangt von dem Ausbau enger Beziehungen zu Private Equity undPrivate Debt Fonds und Investmentbanken ab.

) Risikomanagementmaßnahmen konnen den Erlos aus Anlagen von Princess nachteilig beeinflussen.

) Princess kann Aktionaren nicht zusichern, dass sie in der Lage sein wird, ordnungsgemaß, uberhauptoder angemessen auf zukunftige Veranderungen im Wert der Anlagen zu reagieren.

) Princess kann Aktionaren nicht zusichern, dass die Bewertung der Anlagen, die Princess von Zeit zu Zeitberichtet, tatsachlich realisiert werden kann.

) Princess kann Schwankungen im operativen Ergebnis ausgesetzt sein.

) Princess hat keinerlei operatives Geschaft und die wesentliche Quelle fur Geldmittel sind die Anlagen,die sie tatigt.

) Anderungen der Gesetze und Vorschriften oder die Nichtbeachtung dieser kann sich nachteilig auf dieVermogens- Finanz- und Ertragslage von Princess auswirken.

) Es bestehen Risiken im Zusammenhang mit nachteiligen Veranderungen im Status der Besteuerung vonPrincess oder im anwendbaren Steuerrecht.

) Es bestehen Risiken von nachteiligen Steuerfolgen aufgrund des Vorhandenseins eines dauerhaftenGeschafts.

) Die Anlagestrategie von Princess konnte dazu fuhren, dass Princess als ein Fonds oder als einauslandisches Investmentvermogen betrachtet wird, was dazu fuhren wurde, dass das

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Investmentsteuergesetz Anwendung finden wurde. Daruber hinaus konnten einige von Princess Anlagenals auslandische Investmentanteile (im Sinne des Investmentsteuergesetzes) qualifiziert werden.

) Deutsche Individualpersonen und gewerbliche Investoren konnten aufgrund der Anwendbarkeit desAußensteuergesetzes nicht von der 50%igen Befreiung von der Einkommensteuer (Individualpersonen)und der 95% Befreiung von der Korperschaftssteuer (gewerbliche Investoren) auf Kapitalertrage undDividendenzahlungen profitieren.

) Ein Teil der Nettoerlose von Princess konnten US Steuern unterfallen.

) Schwankungen und Veranderungen in den Zinsen konnten Verluste hervorrufen.

Risiken im Zusammenhang mit den Investments von Princess

) Private Equity- und Private Debt-Anlagen unterliegen einer Vielzahl von Risiken, die zu einem Total-oder teilweisen Verlust einer solchen Anlage von Princess fuhren kann.

) Das Wesen der Investmentstrategie von Princess wird dazu fuhren, dass Princess verschiedenenwirtschaftlichen, politischen und rechtlichen und Bilanzierungsrisiken ausgesetzt sein wird.

) Princess wird keine geschaftliche oder stimmrechtliche Kontrolle uber die Fonds oder Beteiligungsge-sellschaften haben und wird von Dritten abhangig sein, deren Interessen kontrar zu denen von Princesssein konnen.

) Die Struktur der Investments von Princess und von anderen Transaktionen, bei denen Princess beteiligtist, kann Princess Ausfall- oder Betrugsrisiken aussetzen.

) Die meisten der Anlagen von Princess werden nicht liquide sein.

) Die meisten der Investments von Princess werden gegenuber Investments anderer nachrangig sein.

) Die Marktbewertung von offentlich gehandelten Wertpapieren, die als Anlagen gehalten werden, konnenvolatil sein und zu Schwankungen im Nettovermogenswert von Princess fuhren.

) Investments in Fonds haben eine uber die im Zusammenhang mit Private Equity und Private DebtInvestments bestehenden Risiken hinaus eine Vielzahl von weiteren Risiken zur Folge.

) Princess beabsichtigt, einen ‘‘Overcommitment-Ansatz’’ zu verfolgen, wenn sie in Private Equity Fondsinvestiert, was zu Verbindlichkeiten fuhren kann, die ihr vorhandenes Kapital ubersteigen.

) Der Erwerb von ausstehenden Gesellschaftsanteilen an Private Equity Fonds kann mogliche Verpflich-tungen mit sich bringen.

) Princess wird nur begrenzt fahig sein, die Bedingungen von Sekundaranlagen auszuhandeln und solcheAnlagen konnen auf unvollstandigen oder mangelhaften Informationen beruhen.

) Princess wird in Anlagen investieren, die einen hohen Verschuldungsgrad aufweisen.

) Princess kann in Konsortien investieren, was unter Umstanden zu erhohten Risiken fur Aktionare fuhrenkann, die in anderen Private Equity Fonds investiert sind.

) Princess ist nicht verpflichtet, bestimmte Diversifikationskriterien zu beachten und kann daher Ausfall-und Konzentrationsrisiken ausgesetzt sein.

) Princess kann Nachfolge-Investments zu ungunstigen Konditionen eingehen.

) Wechselkursschwankungen konnen den Wert der Investments von Princess nachteilig beeinflussen.

) Wirtschaftliche Abschwunge oder Rezessionen konnten den Wert der Investments von Princess verrin-gern oder Aufwertungen begrenzen.

) Das Due Diligence Verfahren, das Partners Group (Zug) im Zusammenhang mit den Investments vonPrincess durchfuhrt, konnte nicht alle Fakten offen legen, die wesentlich fur ein Investment sein konnten.

Risiken im Zusammenhang mit den Aktien und der Zulassung zum Handel

) Die Fahigkeit der Gesellschaft, Dividenden zu zahlen, hangt von ihrem Gewinn ab.

) Es konnen zusatzliche Anlagerisiken aufgrund von Wahrungsschwankungen bestehen, da Dividenden inEuro gezahlt werden.

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) Die Rechte der Aktionare der Gesellschaft und die Treuepflichten gegenuber Aktionaren werden sichnach dem Recht von Guernsey bestimmen und die Satzung der Gesellschaft kann von den Rechten undPflichten abweichen, die unter anderen Rechtsordnungen zu erbringen sind.

) Ab 1. Januar 2007 wird die Berichtswahrung der Euro sein, so dass Finanzzahlen mit Zahlen derVergangenheit nicht vergleichbar sein konnten.

) Die Gesellschaft kennt die Struktur der Inhaber der Miteigentumsanteile nicht.

) Ein offentlicher Handel der Stammaktien (bzw. der Miteigentumsanteile) hat bisher nicht stattgefunden.

) Der Kurs der Miteigentumsanteile kann volatil sein.

) Die Miteigentumsanteile konnten mit einem Abschlag zum Nettovermogenswert gehandelt werden.

) Verkaufe von bedeutenden Inhabern von Miteigentumsanteilen konnten den Preis der Miteigentumsan-teile beeinflussen.

) Die zukunftige Ausgabe von Stammaktien (sowie von Stammaktien lieferbar in Miteigentumsanteilen)konnte die Anteile bestehender Inhaber von Miteigentumsanteilen verwassern und den Preis derMiteigentumsanteile verringern.

) Der Ruckkauf von Stammaktien (lieferbar in Form von Miteigentumsanteilen) durch die Gesellschaft,den die Gesellschaft von Zeit zu Zeit tatigen darf, wird das Engagement der Aktionare hinsichtlich derbestehenden Anlagen von Princess im Zeitpunkt des Kaufs erhohen, was einen Verlust ihrer Investmentswahrscheinlicher machen kann.

) Ein neuer Eigentumer konnte die Kontrolle uber die Gesellschaft erlangen und die Direktoren undAngestellten der Gesellschaft ohne Zustimmung der Minderheitsaktionare ersetzen, was bei derGesellschaft erheblichen Schaden verursachen konnte und die Investmentziele der Gesellschaft andernkonnte.

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RISK FACTORS

Investors should carefully read and consider the following information on material risk factors inconjunction with the other information contained in this Prospectus when making a share purchase decision. Theoccurrence of one or more of the events described below could have significant adverse effects on Princess’assets, financial condition and results of operations. The occurrence of any of these risks could cause asignificant drop in the stock exchange price of the Company’s Ordinary Shares, and investors could lose all or apart of their investments. The risks described below are not the only risks that the Company and its subsidiary areexposed to. Other risks and uncertainties which are presently unknown to the Company could also impair thebusiness operations of the Company and its affiliated companies and have significant adverse effects on its assets,financial condition and results of operations. The order in which the following risks are presented is no indicationof the probability of their occurrence or the magnitude of their potential impact on the assets, financial conditionand results of operations of Princess.

Risks Relating to Dependence on Partners Group

Princess’ performance is dependent on the experience and network of Partners Group, its affiliates andtheir respective directors, officers and employees

Princess does not currently have any employees, except one part time employee, and does not own anyfacilities. Princess has appointed Princess Management Limited to provide certain services to assist with themanagement of Princess’ investments. Under the Investment Management Agreement, Princess ManagementLimited is responsible for, amongst other things, selecting, acquiring and disposing of investments and carryingout financing and cash management services. Princess Management Limited has appointed Partners Group (Zug)as its Investment Adviser under the Investment Advisory Agreement and has entered into the AdministrationAgreement with Partners Group (Guernsey) Limited. As a result, Princess’ performance is dependent on theexperience and network of Partners Group, its affiliates and their respective directors, officers and employees.

If Princess Management Limited, Partners Group (Zug) or Partners Group (Guernsey) Limited were to ceaseto provide services under the Investment Management Agreement, the Investment Advisory Agreement or theAdministration Agreement for any reason, and no suitable replacement were to be found, Princess couldexperience difficulty in making new and/or in managing its existing investments, its business and prospects wouldbe materially harmed and its results of operations and financial condition would be likely to suffer materially.

The departure or reassignment of some or all of Partners Group’s investment professionals couldprevent Princess from achieving its investment objectives

Princess depends on the diligence, skill and business contacts of Partners Group, and their respectivedirectors, officers and employees and the information and deal flow they generate during the normal course oftheir activities. Princess’ future success will depend on the continued service of these individuals, who are notobligated to remain employed with Partners Group. Partners Group has experienced departures of key investmentprofessionals in the past and may do so in the future, and Princess cannot predict the impact that any suchdepartures will have on Princess’ ability to achieve its investment objectives. Neither the Investment ManagementAgreement, the Investment Advisory Agreement nor the Administration Agreement require Partners Group tomaintain the employment of any investment professionals or to cause any particular investment professionals toprovide services to Princess or on Princess’ behalf. The departure of any of Partners Group’s investmentprofessionals for any reason, or the failure to appoint qualified or effective successors in the event of suchdepartures, could have a material adverse effect on Princess’ ability to achieve its investment objectives and on itsbusiness results of operations and financial condition.

Partners Group Holding could transfer its control over Princess Management Limited to a third partywho would be able to exercise significant control over investment activities, which could result in achange in Princess’ investment objectives and cause Princess material harm

Princess believes that its future success will depend on the experience of Partners Group and its continuedinvolvement in Princess’ business and investments. However, Princess does not have the right to prevent PartnersGroup Holding from transferring its control over Princess Management Limited to a third party. If Partners GroupHolding were to transfer its control over Princess Management Limited, the new owner would control the serviceprovider under the Investment Management Agreement, which in turn would provide the new owner withsubstantial discretion over Princess’ business and the making of investments with Princess’ capital. A new ownercould invest Princess’ capital in investments that have investment objectives and governing terms that differmaterially from those that Princess Management Limited would otherwise have made. A new owner could also

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have a different investment philosophy, employ investment professionals who are less experienced, beunsuccessful in identifying investment opportunities or does not have a successful track record. If any of theforegoing were to occur, Princess could experience difficulty in making new investments or achieving acomparable level of return and income on investments and the value of Princess’ investments, results ofoperations and financial condition could materially suffer.

Princess Management Limited has broad latitude to make investments for Princess. These investmentsmay differ substantially from the type of investments that Princess Management Limited has made ormanaged in the past

In the course of the Restructuring, the Company’s board of directors (hereinafter also referred to as the‘‘Board’’ or the ‘‘Board of Directors’’) has established very broad investment objectives and an investment policyfor Princess’ investments. The policy and objectives will provide Princess Management Limited with substantialdiscretion when selecting, acquiring and disposing of investments, including determining the types of investmentsthat it deems appropriate (including structuring investments and determining suitable counterparties), theinvestment approach that it follows when making investments and the timing of investments.

In addition, Princess Management Limited will be permitted to cause Princess to make, or to exclude it frommaking, investments (other than in Partners Group-sponsored vehicles) without obtaining the approval of theCompany’s Board of Directors. While the Board of Directors will periodically review Princess ManagementLimited’s compliance with Princess’ strategy and investment policy, it is generally not expected to review orapprove individual investment decisions. It may be difficult or impossible to unwind investments that are notconsistent with Princess’ investment policy and procedures by the time they are reviewed by the Board ofDirectors.

In addition, Princess’ investment policy and procedures do not impose any limitations on the terms or typesof funds through which Princess may make investments, including with respect to partnership size, affiliation,geographic concentration, investment parameters and industry focus. The policies also do not restrict thepercentage of capital invested in any particular type of investment. While Princess’ strategy currently is to investapproximately 40 to 80% of its capital over time in primary investments, approximately 0 to 30% of its capital insecondary investments, approximately 0 to 20% in direct investments and the remainder in listed private equity,Princess Management Limited has no obligation to invest in accordance with these specific ratios and these ratiosmay change.

Princess’ financial condition and results of operations will depend on Partners Group’s ability toeffectively implement Princess’ investment strategy

Princess’ ability to achieve its investment objectives will depend on Partners Group’s ability to identify,invest in and monitor a suitable number of investments and implement the various aspects of Princess’ investmentstrategy. Achieving growth and returns on a cost-effective basis will be largely a function of Partners Group’s orits affiliates structuring of the investment process, their ability to provide competent, attentive and efficientservices under the Investment Management Agreement and the Investment Advisory Agreement and Princess’ability to reinvest Princess’ capital and to obtain additional capital on acceptable terms. Any failure by PartnersGroup to do so may have a material adverse effect on Princess’ business, financial condition and results ofoperations.

The Investment Management Agreement between the Company and Princess Management Limited maybe difficult and costly to terminate

The Investment Management Agreement between the Company and Princess Management Limited willremain in effect for a period of ten years from its date, i.e. the Restructuring Completion Date, and will remain ineffect for further consecutive periods of ten years thereafter until terminated. Either party may terminate theInvestment Management Agreement at the end of the initial term of ten years and of each additional term of tenyears subject to a three calendar years’ prior written notice to the other party.

Should the Company in the future be of the opinion that, although within the agreed investment policy, therisks taken by Princess Management Limited are too high or the performance is too low or if, for any otherreason, it is not satisfied with the services provided by Princess Management Limited under the InvestmentManagement Agreement it would still be bound to Princess Management Limited as investment manager for aperiod of up to ten years. Any appointment of any other investment manager would result in Princess still havingto pay management fees to Princess Management Limited as well as the fees of any newly appointed investmentmanager.

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Following any termination of the Investment Management Agreement, the Company must continue to payboth the management fee and performance fee components of the Investment Manager’s fee to the InvestmentManager for as long as those investments that were held in the portfolio are the date of termination continue to beheld in the portfolio. Such payments could, therefore, continue for an indefinite period of time. These provisionsmay increase significantly the effective cost to the Company of terminating the Investment ManagementAgreement.

Potential Conflicts of Interest

Partners Group will be able to pursue other business activities and provide services to third parties thatcompete directly with Princess, which could cause Princess to compete with others for access to PartnersGroup’s investment professionals, information and deal flow

Partners Group will be able to pursue other business activities and provide services to third parties thatcompete directly with Princess, including sponsoring or managing investment funds that makes investments thatare the same as or similar to the types of investments that Princess makes. In addition to Princess and the PartnersGroup-sponsored funds through which Princess may make investments, Partners Group has established oradvises, and may continue to establish or advise, other investment entities that rely on the diligence, skill andbusiness contacts of Partners Group’s investment professionals, and the information and deal flow they generateduring the normal course of their activities. The requirements of these entities may be substantial and may causePartners Group to divert some of the resources and professionals that would otherwise be made available underthe Investment Advisory Agreement. Some of these entities may also have investment objectives that overlap withPrincess’ investment objectives and Partners Group may have financial incentives to assist those other entities to agreater extent than Princess. Under the Investment Advisory Agreement, Partners Group (Zug) will be permittedto allocate resources and personnel to those entities in a manner that it deems appropriate. To the extent thatPartners Group engages in activities for itself or others, those activities may be detrimental to Princess’ businessand adverse to the interests of shareholders and may, in some cases, lead to the allocation of investmentopportunities to others. Princess’ right to invest in any other forms of investment or types of investment funds thatPartners Group may make, manage or sponsor from time to time will be determined at the sole discretion ofPartners Group.

Due to the foregoing, Princess expects to compete with Partners Group’s clients and/or affiliates for accessto the benefits that Princess expects to realise from Partners Group’s involvement in Princess’ business.

Risks of potential conflicts of interest could arise from the involvement of related parties in Princess’business and its organisational, ownership and investment structure

Princess’ organisational, ownership and investment structure involves a number of relationships that maygive rise to conflicts of interest between Princess and shareholders, on the one hand, and Princess and PartnersGroup, on the other hand. In certain instances, the interests of Partners Group may differ from the interests ofPrincess, including with respect to the types of investments made, the timing and amount of distributions to bemade by Princess, the reinvestment of returns generated by investments, valuations of unrealised investments, theuse of leverage when making investments and the appointment of outside advisers and service providers.

Furthermore, the Directors of Princess and/or Princess Management Limited may be directors of, or beaffiliated with Partners Group, other service providers and/or entities in which Princess invests. As at the datehereof, (i) all of the Directors of Princess and Princess Management Limited have been appointed by PartnersGroup Holding (whereby three of them have been appointed in consent with Swiss Re), and (ii) one of theDirectors of the Company and all of the directors of Princess Management Limited are employees of PartnersGroup. This may cause conflicts of interests in particular in the case of decisions effecting both Princess andPartners Group Holding as well as Partners Group.

Princess’ arrangements with Partners Group were negotiated in the context of an affiliated relationshipand may contain terms that are less favourable than those which otherwise might have been obtainedfrom unrelated parties

The Articles of the Company, the Investment Advisory Agreement, the Investment Management Agreement,the Administration Agreement, the Company’s investment policy and procedures and other arrangements withPartners Group were negotiated in the context of Princess’ formation and the Restructuring by persons who were,at the time of negotiation, affiliates of Partners Group. While the Company’s directors are aware of the terms ofthese arrangements, they did not participate in the negotiation of such terms. As these arrangements werenegotiated between related parties, their terms, including terms relating to compensation, contractual or fiduciary

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duties, conflicts of interest Partners Group’s ability to engage in outside activities (including activities thatcompete with the Company), Princess’ activities, and limitations on liability and indemnification, may be lessfavourable than otherwise might have resulted if the negotiations had involved unrelated parties.

The liability of Partners Group is limited under the Company’s arrangements with it, and the Companyhas agreed to indemnify Partners Group against claims that it may face in connection with sucharrangements, which may lead them to assume greater risks when making investment related decisionsthan they otherwise would if investments were being made solely for their own account or on behalf ofclients from whom they had not received such indemnification

Under the Investment Management Agreement, Princess Management Limited has not assumed anyresponsibility other than to render the services described in such agreement in good faith and is not liable for anyloss to the Company or any of its subsidiaries, however arising, except to the extent that such loss is due to thewilful misfeasance, bad faith or gross negligence of Princess Management Limited, its directors or its employeesas finally determined by a court of competent jurisdiction. In addition, the Company has agreed to indemnifyPrincess Management Limited, its affiliates, partners, employees; agents and each other person who representsPrincess Management Limited or is a director or officer of a company in which Princess Management Limitedinvests from and against all liabilities and expenses (including, without limitation, judgments, fines, penalties,amounts paid in settlement, lawyers’ fees and costs of investigation) incurred in connection with the defence ofany claim, demand, suit, proceeding or action, whether civil, criminal, administrative or investigative, in which anindemnified person is involved, as a party or otherwise, or with which the indemnified person may be threatened,either during the indemnified person’s incumbency or thereafter, by reason of having been Princess ManagementLimited or such a director, employee and agent of Princess Management Limited or officer or director of anycompany in which Princess Management Limited invests. Expenses incurred by an indemnified person in defenceor settlement of any claim that may be subject to a right of indemnification under the Investment ManagementAgreement must be advanced by the Company prior to the final disposition thereof, but only upon receipt of anundertaking by or on behalf of such indemnified person to repay such amount if it shall be determined finally by acourt of competent jurisdiction that such indemnified person is not entitled to be indemnified hereunder.

The liability of Partners Group (Zug) under the Investment Advisory Agreement is limited, to the fullestextent permitted by law, to conduct involving (i) fraud, gross negligence or wilful misconduct, (ii) a breach of amaterial term of the Investment Advisory Agreement or (iii) material violation of any applicable laws or (iv) anyother intentional or criminal wrongdoing. These protections may result in Princess Management Limited andPartners Group (Zug) tolerating greater risks when making investment-related decisions than otherwise would bethe case. The indemnification arrangements to which such persons are a party may give rise to legal claims forindemnification that are adverse to Princess and shareholders.

Princess Management Limited and Partners Group (Zug) will not owe shareholders any fiduciary dutiesunder the Investment Management Agreement and will not owe shareholders any fiduciary duties underthe Investment Advisory Agreement

The obligations of Princess Management Limited and Partners Group (Zug) under the Investment AdvisoryAgreement or the Investment Management Agreement will be contractual rather than fiduciary in nature. As aresult, the Board will have sole authority and discretion to enforce the terms of the agreements and to consent toany waiver, modification or amendment of their provisions. Whilst it is possible that shareholders could bring aderivative action under Guernsey law to cause the Company to enforce its rights under the agreements, suchactions may be difficult, time consuming, costly and ultimately unsuccessful, particularly given that thepermission of a Guernsey court would be required to commence such an action and the defences afforded to theCompany’s Directors under Guernsey law.

The Investment Management Agreement may create an incentive for Princess Management Limited tomake investments and take other actions that increase or maintain the Company’s equity value over thenear-term when other investments or actions may be more favourable

Princess Management Limited will be entitled to receive a management fee under the InvestmentManagement Agreement based on certain factors including the value of Princess’ assets and the value of itsunfunded commitments to make investments. This fee, which will be payable irrespective of PrincessManagement Limited’s operating performance under the Investment Management Agreement, may create anincentive for Princess Management Limited to make investments and take other actions that increase or maintainthe value of Princess’ investments and commitments over the short-term when other investments or actions maybe more favourable to the Company or shareholders over a longer period.

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In addition, because the amount of the management fee will be increased by future equity issues by theCompany, the fee structure may create an incentive for Princess Management Limited’s affiliates to use theirinfluence over the Company to cause it to issue additional Ordinary Shares from time to time in a manner that isdilutive to the Company’s existing shareholders.

Princess Management Limited will be entitled to share in the returns generated by successful direct andsecondary investments, even if Princess’ investments as a whole do not increase in value or, in fact,decrease in value

Princess Management Limited will be entitled to receive a performance fee under the InvestmentManagement Agreement based on the realised value of each of Princess’ direct investments and secondaryinvestments, on a deal-by-deal basis, in respect of which Princess achieves an IRR of a least 8%. This fee will bepayable in respect of each such investment (if any) irrespective of the overall performance of Princess’investments in aggregate or the period over which any particular shareholder has held Ordinary Shares. Thus, incertain circumstances, Princess Management Limited could be entitled to receive performance fees despite adecline in the value of the Ordinary Shares and/or Princess’ net asset value over any particular period. This couldinduce Princess Management Limited to take greater risks and make investments that bear larger upside (but alsodownside) potential than an average investment in order to increase the likelihood of obtaining a performance fee.

Princess’ direct investments in companies or assets in which Partners Group funds have invested mayresult in conflicts of interest that may not be resolved in Princess’ favour, and the terms of Princess’investments may not be consistent with what would be obtained in a third-party transaction

Princess’ investments in a company or an asset in which a Partners Group-sponsored fund has directly orindirectly invested may result in conflicts of interest between Princess and an affiliate of Partners Group or withinvestors in a Partners Group fund. For example, if Princess provided debt to a company owned by a fund inwhich a Partners Group-sponsored fund had invested, Princess might have interests and incentives that differ fromthose of equity holders or such Partners Group-sponsored fund. Similarly, Princess’ investment could besubordinated in right of payment or otherwise to the investments of other Partners Group funds or investors. AsPartners Group has broad discretion to direct Princess’ investments, the conflicts associated with making differentinvestments in the same entity may not be resolved in Princess’ favour. Partners Group has no obligation to avoidsuch conflicts of interest or to act in Princess’ interest when potential conflicts arise. In addition, the terms of anyinvestment that Princess makes may not be consistent with what would result from a negotiated third partytransaction. As a result, Princess’ returns or recoveries may differ from those that a third party investor wouldreceive, and Princess’ results may suffer.

Shared legal counsel may result in a conflict of interest and/or additional cost

Princess and other Partners Group entities will generally engage common legal counsel to represent them intransactions in which they each participate, including transactions in which they may have conflicting interestsresulting from investments in different securities of a single company. Although separate counsel may beengaged, the time and cost savings and other efficiencies and advantages of using common counsel are expectedgenerally to outweigh the disadvantages. In the event of a significant dispute or divergence of interests, typicallyin a distressed situation, separate representation may become desirable, and in litigation and other circumstances,separate representation may be necessary. This would result in an additional cost burden on Princess or mightresult in Princess being unable to engage the counsel of its choice.

Risks Related to Princess’ Business

Princess operates in a highly competitive market for investment opportunities

Princess operates as an investment company for the purpose of investing in private equity and private debt. Anumber of other entities compete with Princess to make such investments. With respect to its private equityinvestments, depending on the investment, it expects to face competition primarily from large private equityinvestors that also seek to invest in private equity funds or direct investment opportunities. With respect to privatedebt investments, Princess expects to face competition from banks, business development companies and hedgefunds, among others. In addition, Princess will be indirectly exposed to competition for investment opportunitiesbetween the private equity or private debt funds with which it invests, which could drive up the cost of Princess’investments and consequently reduce its potential returns.

Many of these competitors may be substantially larger and have considerably greater financial, technical andmarketing resources than are available to Princess. Several of these competitors may have significant amounts of

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available capital, and may have similar investment objectives, which may create additional competition forinvestment opportunities. Some of these competitors may also have a lower cost of capital and access to fundingsources that are not available to Princess, which may create competitive disadvantages for Princess with respectto investment opportunities. In addition, some of these competitors may have higher risk tolerances or differentrisk assessments, which could allow them to consider a wider variety of investments and establish a broadernetwork of business relationships. A failure by Princess to compete effectively with other entities operating in thisenvironment may result in the loss of investment opportunities, which could have a material adverse effect onPrincess’ business, results of operations and/or financial condition.

Princess may lose investment opportunities in the future if Princess and the general partners with which itco-invests do not match investment prices, structures and terms offered by competitors. Alternatively, Princessmay experience decreased rates of return and increased risks of loss if Princess or such general partners match theinvestment prices, structures and terms offered by competitors.

Princess’ track record is not indicative of its future performance

When considering the historical performance of Princess’ investments investors should bear in mind thatsuch historical results are not indicative of the future results that investors should expect from Princess and thatthe historical results presented include unrealised values of investments that may not be realised in the future.Moreover, upon completion of the Restructuring, Princess broadened its investment strategy, enabling it to pursuedifferent types of investments pursuant to a relative value strategy. In particular, Princess’ results are expected todiffer substantially from the historical results achieved by it due to the fact that:

) new investments by Princess may be subject to different tax treatments, structural constraints and otherfactors that were not relevant for Princess’ historical investments or may differ in other regards;

) Princess as well as its advisers have historically not made certain types of investments that Princess ispermitted to make (for example, direct investments, listed private equity and investments in residualincome participations of securitization vehicles such as CDOs or CLOs) which will subject thoseinvestments to additional risks;

) the rates of return of private equity investments can be impacted by a change in the average holdingperiod for investments. Princess has no way of predicting whether recent trends toward a decrease inaverage holding period (and its corresponding increase in returns) will continue and, as a result, averageholding periods and returns (and trends in respect of these) relating to Princess’ investments may differfrom those relating to existing investments made or managed by Princess Management Limited.

Princess’ business model depends upon the development of strong referral relationships with privateequity and private debt funds and investment banking firms

Princess’ investment strategy will rely, in particular with respect to direct investments, to a very significantextent on Princess Management Limited and Partners Group (Zug) maintaining active communication withprivate equity and private debt funds and investment banking firms in order to provide Princess with opportunitiesfor investments. If Princess Management Limited or Partners Group (Zug), fail to maintain relationships with keyfirms, or Princess fails to establish strong referral relationships with other firms or other sources of investmentopportunities, or if the industry changes so that the relevant private equity and private debt funds and investmentbanking firms no longer have the same ability or desire to offer investment opportunities compatible withPrincess’ investment strategy, Princess may not be able to grow its portfolio and achieve its investment objective.In such circumstances, Princess could be required to change its investment strategy, the future of Princess wouldbe uncertain and the value of Princess’ investments, results of operations and financial condition could materiallysuffer.

In addition, persons with whom Princess, Partners Group (Zug), Princess Management Limited haveinformal relationships are not obliged to provide Princess with investment opportunities and, therefore, there is noassurance that such relationships will lead to the origination of investments.

Further, Princess has incorporated into its business model the fact that the persons who may provide Princesswith co-investment opportunities generally do not currently charge a fee for the opportunity to invest. Were thissituation to change and such persons to charge management and/or performance fees in respect of investmentopportunities which they might provide to Princess, Princess’ results of operations and financial condition wouldbe likely to suffer.

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Risk management activities may adversely affect the return on Princess’ investments

Princess may use forward contracts, options, swaps, caps, collars and floors or pursue other strategies or useother forms of derivative instruments to limit its exposure to changes in the relative values of investments thatmay result from market developments, including changes in prevailing interest rates and currency exchange rates.Princess will not be required to hedge any position but may undertake risk management activities depending onthe level and volatility of interest rates, prevailing foreign currency exchange rates, the types of investments thatare made and other changing market conditions. The use of hedging transactions and other derivative instrumentsto reduce the effects of a decline in the value of a position does not eliminate the possibility of fluctuations in thevalue of the position or prevent losses if the value of the position declines. However, such activities can establishother positions designed to gain from those same developments, thereby offsetting the decline in the value of theposition. Such transactions may also limit the opportunity for gain if the value of a position increases. Moreover,it may not be possible to limit the exposure to a market development that is so generally anticipated that ahedging or other derivative transaction cannot be entered into at an acceptable price.

Furthermore, unanticipated market changes may result in poorer overall investment performance than ifhedging or derivative transactions have not been executed. In addition, the degree of correlation between pricemovements of the instruments used in connection with hedging activities and price movements in a position beinghedged may vary. Moreover, for a variety of reasons, Princess may not seek or be successful in establishing aperfect correlation between the instruments used in a hedging or other derivative transactions and the positionbeing hedged. An imperfect correlation could prevent Princess from achieving the intended result and could giverise to a loss. In addition, it may not be possible to limit, fully or perfectly, Princess’ exposure against all changesin the value of its investments, because the value of investments are likely to fluctuate as a result of a number offactors, some of which will be beyond its control.

Princess cannot assure investors that it will be able to predict accurately or at all, or to react effectivelyto, future changes in the value of investments

Princess’ ability to generate attractive returns for shareholders depends upon Partners Group’s ability tomake a correct assessment as to future values that can be realised in connection with investments. The ability toaccurately assess future investment values, whether in connection with the making of an investment or the exitingof an investment, may be particularly important in the case of investments over which Princess, PrincessManagement Limited or Partners Group (Zug) have relatively limited or no control. The securities markets havein recent years been characterised by a high degree of volatility and unpredictability and Princess cannot assureshareholders that Princess Management Limited or Partners Group (Zug) will be successful in making accurateassessments regarding future trends in prices, including the timing of any price changes, that it will be able toeffectively react to any such changes or that Princess will generate gains on investments. Any failure to makecorrect assessments may have a material adverse effect on the business, financial condition and results ofoperations of Princess.

Princess cannot assure shareholders that the values of investments that the Company reports from timeto time will in fact be realised

Market quotations are not readily available for a substantial portion of the investments that Princess makes.Princess Management Limited and Partners Group (Zug) are required to make good faith determinations as to thefair value of these investments on a quarterly basis in connection with the preparation of Princess’ financialstatements. There is no single standard for determining fair value and, in many cases, fair value is best expressedas a range of fair values from which a single estimate may be derived; with respect to a majority of its portfolio,Princess determines fair value based on valuations provided by the general partners or managers with which itinvests and there is no guarantee that such valuations will be realised. The types of factors that may be consideredwhen applying fair value pricing to an investment in a particular company include the historical and projectedfinancial data for the company, valuations given to comparable companies, the size and scope of the company’soperations, the strengths and weaknesses of the company, expectations relating to investors’ receptivity to anoffering of the company’s securities, the size of the holding in the company and any control associated therewith,information with respect to transactions or offers for the portfolio company’s securities (including the transactionpursuant to which the investment was made and the period of time that has elapsed from the date of theinvestment to the valuation date), applicable restrictions on transfer, industry information and assumptions,general economic and market conditions, the nature and realisable value of any collateral or credit support andother relevant factors. Fair values may be established using a market multiple approach that is based on a specificfinancial measure (such as EBITDA, cash flow, net income, revenues or net asset value) or, in some cases, a costbasis or a discounted cash flow or liquidation analysis. As valuations, and in particular valuations of investments

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for which market quotations are not readily available, are inherently uncertain, may fluctuate over short periods oftime and may be based on estimates, determinations of fair value may differ materially from the values that wouldhave resulted if a ready market had existed. Even if market quotations are available for Princess’ investments,such quotations may not reflect the value that Princess would actually be able to realise because of variousfactors, including the possible illiquidity associated with a large ownership position, subsequent illiquidity in themarket for a company’s securities, future market price volatility or the potential for a future loss in market valuebased on poor industry conditions or the market’s view of overall company and management performance.

Princess’ net asset value could be adversely affected if the values of investments that Princess records arematerially higher than the values that are ultimately realised upon the disposal of the investments and changes invalues attributed to investments from period to period may result in volatility in the net asset values and results ofoperations that Princess reports from period to period. Princess cannot assure shareholders that the investmentvalues that the Company reports from time to time will ultimately be realised.

Princess may experience fluctuations in its operating results

Princess may experience fluctuations in its operating results from period to period due to a number offactors, including changes in the values of investments that Princess makes, which in turn could be due tochanges in values of its investments, changes in the amount of distributions, dividends or interest paid in respectof investments, changes in Princess’ operating expenses, variations in and the timing of the recognition ofrealised and unrealised gains or losses, the degree to which Princess or the general partners with which it investsencounter competition and general economic and market conditions. Accordingly, Princess cannot assureshareholders that its investments will generate gains or income or that any gains or income that may be generatedwill be sufficient to offset any losses that may be sustained. Furthermore, such variability in the value of theinvestments may lead to volatility in the trading price of the Co-ownership Interests and cause Princess’ resultsfor a particular period not to be indicative of its performance in a future period.

Princess does not have any operations and its principal source of cash is the investments that it makes

The Company’s ability to pay dividends will depend on a number of factors including, among others, theactual results of operations and financial condition of its investments, restrictions on cash distributions imposedby contract, laws and constitutional documents applicable to the funds or the companies in which it invests andthe timing and amount of cash generated by its investments. In particular, highly leveraged companies aretypically subject to significant payment restrictions under the terms of their financing documents. If Princess isunable to receive cash distributions from its investments, it may not be able to meet its expenses when theybecome due and the Company may be required to delay or cancel dividends that it intends to make to itsshareholders pursuant to its dividend policy or may be required to disinvest from some investments. This maymaterially influence Princess’ business results of operations and financial condition.

Changes in laws or regulations or a failure to comply with laws and regulations, may adversely affectPrincess’ business, investments and results of operations

Princess and Princess Management Limited are subject to laws and regulations enacted by national, regionaland local governments. In particular, the Company and the Investment Manager will be required to comply withcertain licensing and regulatory requirements that are applicable to a Guernsey investment company, includinglaws and regulations supervised by the Guernsey Financial Services Commission. Compliance with, andmonitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws andregulations and their interpretation and application may also change from time to time and those changes couldhave a material adverse effect on Princess’ business, investments and results of operations. In addition, a failure tocomply with applicable laws or regulations, as interpreted and applied, by any of the persons referred to abovecould have a material adverse effect on Princess’ business, results of operations and financial condition.

There are risks of adverse changes in Princess’ tax status or applicable tax legislation

Any change in Princess’ tax status or in taxation legislation in Guernsey, Germany or any other taxjurisdiction affecting the Company, its investment portfolios or a shareholder could affect the value of theinvestments held by Princess or affect the Company’s ability to achieve its investment objective or alter the posttax returns to shareholders. In the event that any withholding obligation is imposed on payments by Princess,Princess will not make any additional payments to compensate the relevant payee on account of suchwithholding. Details in this document concerning the taxation of shareholders are based upon current tax law and

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practice which is in principle subject to change (possibly with retrospective effect). Any such change couldadversely affect the gross or net amount of any dividends payable to shareholders.

There is the risk of adverse tax consequences by reason of having a permanent establishment

If Princess were treated as having a permanent establishment, or as otherwise being engaged in a trade orbusiness in any country in which it invests, income attributable to such permanent establishment or trade orbusiness may be subject to local taxation. Any such tax could adversely affect Princess’ net income andaccordingly may reduce the Company’s ability to pay dividends.

The investment strategy of Princess could result in Princess qualifying as a fund or as a foreigncollective investment scheme resulting in the applicability of the German Investment Tax Act. Further,some investments of Princess include investments in entities which may qualify as collective investmentschemes (as such term is used in the German Investment Tax Act)

Since 1 January 2004, the newly enacted German Investment Tax Act applies to investments in domestic andforeign collective investment schemes and in this respect the German Investment Tax Act includes tax provisionsthat deviate from and overrule certain general German tax provisions. Princess takes the view that these rulesshould not apply to itself, given that Princess and the underlying funds exercise an entrepreneurial influence onthe portfolio companies and provided that other investments except for investments in listed private equityvehicles are undertaken for liquidity purposes only. In particular, the Company is of the opinion that investmentsin other listed private equity vehicles of up to 20% of the Company’s net asset value should not result in theapplicability of the German Investment Tax Act because they do not substantially change the character of theCompany being an active private equity investor. Given that there is no clear guidance under German tax law withregard to: (i) the degree of control to be exercised over portfolio companies; (ii) the functional approach as towhen liquidity management can be attributed to the investments in portfolio companies or whether it must bejudged on a stand-alone basis; and (iii) the amount of risk-diversified investments such as investments in listedprivate equity vehicles that may be undertaken without being qualified as foreign collective investment scheme itcannot be ruled out that the German tax administration takes a different view and applies the rules of the GermanInvestment Tax Act. In this case, a penalty taxation applies to German investors if the Company does not complywith all reporting, information and publication requirements set forth under the German Investment Tax Act. TheCompany may not be able to and currently does not intend to comply with the reporting, information andpublication requirements under the German Investment Tax Act. Under the penalty taxation rule, in general, theGerman resident investor’s tax base for a certain tax year would be the higher of the total amount of thedistributions received by the German resident investor from the investment fund plus (i) 70% of the value increaseof the share price during the respective tax year, or (ii) at least 6% of the latest share price in such tax year.German resident investors which are subject to German tax accounting rules may deduct the amount by whichtheir income was increased under the penalty taxation provision in the event of a disposition.

German individual and corporate investors may not benefit from the 50% exemptions from Germanincome tax (individual investors) as well as the 95% exemption from German corporation tax (corporateinvestors) on capital gains and dividend payments under the German Legislation on Controlled ForeignCompanies (Außensteuergesetz)

To the extent the German Außensteuergesetz applies, the income of a German controlled foreign corporation(the ‘‘German CFC’’) may be allocated to the German resident investor as a deemed dividend payment, regardlessof whether or not any dividend has actually been paid by the German CFC and regardless of whether or not anyshares held in the German CFC have actually been sold. In this situation, the capital gains and the deemeddividends will be fully taxable and the 50% exemption for individual investors from German income tax as wellas the 95% exemption for corporate investors from German corporation tax do not apply. Furthermore, to theextent any passive income has been retained at the level of the German CFC for a period of at least seven years,half of the dividends distributed thereafter and half of the capital gains realised thereafter may again be subject toincome taxation in Germany in the hands of the German resident investor. However, the income realised by theCompany will only be subject to the German CFC regime to the extent that the Company (i) qualifies as aGerman CFC, and (ii) generates passive income. The German Außensteuergesetz should not apply if none of theGerman investors directly or indirectly holds 1% or more of the Ordinary Shares or voting rights of the Companyor if German investors collectively do not hold directly or indirectly more than 50% of the Ordinary Shares orvoting rights of the Company.

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A portion of Princess’ net income may become subject to US tax

Princess intends to operate in a manner such that it will not be treated as being engaged in a US trade orbusiness. However, because the types of activities that a fund may undertake through investment advisers in theUnited States without being treated as being engaged in a financing business or another trade or business in theUS is unclear under the applicable statutes, regulations and court decisions and because the US TreasuryDepartment is currently considering what limits ought to be applicable, there can be no assurance that the USInternal Revenue Service will not contend that Princess is engaged in a trade or business in the United States as aresult of the activities of its other investment activities. Additionally, if any entity in which the Company investsis treated as a partnership for US federal tax purposes and is engaged in a US trade or business, Princess will betreated as being engaged in such trade or business.

If Princess were engaged in a US trade or business, Princess would be subject to US federal income tax at arate of 35% on the portion of its income that is treated as being effectively connected with that trade or business,to an additional 30% of its after-tax profits for US federal branch profits tax, and possibly to US state and localcorporate income taxes. In addition, penalties may be assessed if Princess fails to file tax returns.

Fluctuations and changes in interest rates may cause losses

Interest rates are highly sensitive to many factors, including governmental monetary and tax policies,domestic and international economic and political conditions and other factors beyond Princess’ control. In theevent of a rising interest rate environment, Princess’ cost of borrowing will also increase. In addition, the amountsof interest payable by investee companies on their mezzanine and other borrowings may also rise, increasing therisk of an investee company defaulting on its borrowings. To the extent Princess’ interest expense on itsborrowing increases to a greater extent than the interest income on its investments, including as a result ofdefaults by investee companies, this may reduce the value of the Ordinary Shares, net asset value and net incomeand accordingly may reduce Princess’ ability to pay dividends.

Changes in interest rates are likely to affect Princess’ net interest income, which is the difference betweenthe interest income earned on Princess’ interest earning investments and the interest expense incurred onPrincess’ interest bearing liabilities. Changes in the level of interest rates may also affect, among other things,Princess’ ability to make investments, the value of its securities and Princess’ ability to realise gains on itsinvestments.

Risks Relating to Princess’ Investments

Private equity and private debt investments are subject to a significant number of risks, which couldresult in a total or partial loss of any such investment by Princess

Princess’ primary purpose is to make private equity and private debt investments. Companies in whichprivate equity and private debt investments are made may (i) be highly leveraged and subject to significant debtservice obligations, stringent operating and financial covenants and risks of default under financing and othercontractual arrangements, which would adversely affect the value of Princess’ investment in such company werea default to occur, (ii) have limited financial resources and be unable to meet their obligations under theirsecurities, which may be accompanied by a deterioration in the value of their equity securities or any collateral orguarantees provided with respect to their debt, (iii) have shorter operating histories, narrower product lines andsmaller market shares than larger businesses, which could render them more vulnerable to competitors’ actionsand market conditions, as well as general economic downturns, (iv) be more likely to depend on the managementtalents and efforts of a small group of persons and, as a result, the death, disability, resignation or termination ofone or more of those persons could have a material adverse impact on their business and prospects and theinvestment made, (v) have limited public information available and (vi) have less predictable operating results, beinvolved in rapidly changing businesses and/or require significant additional capital to support their operations,finance expansion or maintain their competitive position. All these factors could have a material adverse effect onthe value of the Company’s investments, which could reduce the value of the Ordinary Shares, net asset value andnet income and may accordingly reduce Princess’ ability to pay dividends.

The global nature of Princess’ investment strategy will subject it to a variety of economic, political, legaland accounting risks

Princess expects to invest in a number of countries, including less developed countries, exposing investors toa range of potential economic, political and legal risks, which could have an adverse effect on Princess. Thesemay include, but are not limited to, declines in economic growth, higher rates of inflation, deflation, adverse

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fluctuations in currency exchange rates, currency revaluation and exchange controls, nationalisation,expropriation, imposition of taxes imposed by taxing authorities outside the shareholder’s own domicile,confiscatory taxation, adverse regulation, less liquid markets, less available current information about an issuer,higher transaction costs, less government supervision of exchanges, brokers and issuers, difficulty in enforcingcontractual obligations, less stringent requirements relating to fiduciary duties, fewer investor protections, greaterprice volatility, governmental restrictions, negative diplomatic developments, social or political instability,military conflicts and terrorist attacks.

Private equity markets in countries where Princess’ investments may be made may be significantly lessdeveloped than the private equity market in the shareholder’s own domicile. Certain investments may be subjectto extensive regulation by national governments and/or political subdivisions thereof, which could preventPrincess (or funds in which it invests) from making investments they otherwise would make, or to incursubstantial additional costs or delays that they otherwise would not suffer. Such countries may have differentregulatory standards with respect to insider trading rules, restrictions on market manipulation, shareholder proxyrequirements and/or disclosure of information. In addition, the laws of various countries governing businessorganisations, bankruptcy and insolvency may make legal action difficult and provide little, if any, legalprotection for investors, including Princess (or the funds in which it invests). Any such laws or regulations maychange unpredictably based on political, economic, social and/or market developments.

The legal, regulatory, disclosure, accounting, auditing and reporting standards in countries where Princess’investments are made may be less stringent and may not provide the same degree of protection or information toinvestors as would generally apply in the shareholder’s own domicile. Although the Company itself will bepreparing its unaudited quarterly financial statements in accordance with IFRS, the assets, liabilities, profits andlosses appearing in published financial statements of Princess’ investments may not reflect their financial positionor operating results as they would be reflected under IFRS. In addition, Princess may invest in companies that donot maintain internal management accounts or adopt financial budgeting or internal audit procedures to standardsnormally expected of companies in the shareholder’s own domicile. Accordingly, information supplied by suchcompanies may be incomplete, inaccurate and/or significantly delayed.

In addition to the risks specific to Princess’ investment activities in which it is engaged, Princess’ business isalso exposed to general downturns in economic, political and market conditions and natural disasters. Uncertainpolitical or economic prospects or declines in investment markets for whatever reason could result in investorswithdrawing from the markets or decreasing their rate of investment or their allocation to the alternative assetclass as a whole.

The realisation of any or all of the foregoing risks could result in a material adverse effect on the value ofPrincess’ investments, which may have a material adverse effect on the Princess’ business, financial condition andresults of operations.

Princess will not have operating or voting control over funds or investee companies and will depend onthird parties whose interests may not be aligned with those of Princess

Princess expects to have no control over the operations of the funds or companies in which it invests. Theday-to-day operations of each fund or investee company will be the responsibility of the relevant managementteam. Although Princess Management Limited will be responsible for monitoring the performance of eachinvestment and intends to invest in funds and companies operated by management that it considers to be capable,there can be no assurance that any such management team, or any successor, will be able to operate the fund orinvestee company in accordance with their business plans or the expectation of Princess. Those investments willbe subject to the risk that the fund or company in which the investment is made may make business, financial ormanagement decisions with which Princess does not agree or that the majority stakeholders or the management ofthe company may take risks or otherwise act in a manner that does not serve Princess’ interests. Such investmentswill also be subject to the risk of material losses due to fraud or other unauthorised or illegal activity. If any of theforegoing were to occur, the value of Princess’ investments could decrease, which could reduce the value of theOrdinary Shares, net asset value and net income and may accordingly reduce the Company’s ability to paydividends.

In connection with many of its direct investments, Princess will co-invest with third parties and as a resultwill generally not be in a position to protect its investments to the same extent as if such investments were madesolely by Princess. Specifically, decisions relating to investments, including decisions relating to the managementand operation of any company and the timing and nature of any exit, are often made by a majority vote of therelevant equity sponsors or by separate agreements that are reached with respect to individual decisions. Asdecisions of those bodies are generally made by majority or supermajority vote, Princess will generally not have

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the individual power to determine the outcome of matters relating to the investment or individually prevent theother debt or equity investors from taking actions that Princess Management Limited does not approve. Inaddition, Princess Management Limited and Partners Group (Zug) will typically not have the same access toinformation regarding Princess’ investments as majority investors. Accordingly, Princess may not be able torealise some or all of the benefits that might otherwise be associated with such investments, and Princess may beunable to exit any such investment when Princess Management Limited and Partners Group (Zug) believe it isbeneficial to do so.

Although Princess expects that its interests will be aligned with those of third parties with which it co-invests, there is a possibility that such third parties may have economic or business interests or goals that areinconsistent with those of Princess, or that they otherwise desire to take action that is contrary to Princess’investment objectives.

The structure of Princess’ investments and other transactions to which it is a party may expose it todefault and fraud risks of third party entities

Certain of Princess’ investments may be made through third party vehicles and certain of the transactions towhich Princess is a party may be undertaken through third party entities. Certain of Princess’ hedgingtransactions, for example, may be undertaken through local brokers, banks or other organisations. Princess mayalso structure its investments so that it only takes beneficial title to an investment interest, leaving the legal titlewith a third party. In such circumstances, Princess would be subject to the risk of default, insolvency or fraud ofsuch third party entities. There can be no assurance that any monies advanced to such entities would be repaid orthat Princess would have any recourse in the event of default. The realisation of any or all of such risks may havea material adverse effect on the business, results of financial and operations condition of Princess.

The majority of Princess’ investments will be illiquid

The majority of Princess’ investments will be illiquid and have no established trading market. In addition,Princess’ investments might be subject to restrictions on their transfer, sale, pledge or other disposition orPrincess might require the consent of a third party to any such dispositions. As a result, Princess’ ability to varyits portfolio in response to changes in economic and other conditions or to realise investments for other reasonsmight be limited, which may have a material adverse effect on Princess’ business, financial condition and resultsof operations.

Most of Princess’ investments will rank junior to the investments of others

Princess expects to make private equity and private debt investments in companies that have indebtedness orequity securities, or are permitted to incur indebtedness or to issue equity securities, that rank senior to thoserepresenting Princess’ investment. Similarly, Princess expects to make further investments that consist, of loansor other debt instruments that are unsecured and/or contractually or otherwise effectively subordinated in right ofpayment and ranked junior to other debts of the borrowers that are secured and/or unsubordinated. The holders ofdebt or equity that rank senior to the debt or equity of Princess may be secured and may be entitled to receivepayments of dividends, interest or principal on or before the date on which payments are to be made in respect ofPrincess’ investment.

Also, in the event of the insolvency, liquidation, dissolution, reorganisation or bankruptcy of an investeecompany, the holders of debt or equity ranking senior to Princess’ debt or equity will normally have the soleability to control the timing and manner of the disposal of assets and the proceeds of any such disposal will beapplied first to repaying the secured and senior debt or equity. Accordingly, there can be no assurance that theproceeds of any such sale will be adequate to repay, in whole or in part, Princess’ investments. The amount to bereceived upon such a sale would depend upon numerous factors, including, among others, the timing, manner andability to sell such collateral in an orderly sale, the condition of such collateral, the condition of the international,national and local economies, the availability of buyers and similar factors. Portions of the collateral securing aninvestee company’s debt obligations may be illiquid and may have no readily ascertainable market value.Accordingly, there can be no assurance that any collateral could be sold or that the proceeds obtained therefromwould be sufficient to pay all amounts owing under any loans or equity investments that are senior to Princess’investments and, thereafter, Princess’ investments. To the extent such investments are not repaid in full, this mayreduce the value of the Ordinary Shares, net asset value and net income and may, accordingly, reduce Princess’ability to pay dividends.

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Market values of publicly traded securities that are held as investments may be volatile and causePrincess’ net asset value to fluctuate

Princess’ investments are expected to include investments in companies whose securities are publicly tradedor are offered to the public in connection with the process of exiting an investment. The market prices and valuesof publicly traded securities of companies in which Princess has invested may be volatile and are likely tofluctuate due to a number of factors beyond Princess’ control, including actual and anticipated fluctuations in thequarterly and annual results of the companies in which investments are made and other companies in theindustries in which they operate, market perceptions concerning the availability of additional securities for sale,general economic, social or political developments, changes in industry conditions, shortfalls in operating resultsfrom levels forecast by securities analysts, the general state of the securities markets and other material events,such as significant management changes, refinancings, acquisitions and dispositions. Changes in the values ofthese investments may adversely affect Princess’ net asset value and cause the market price of the Co-ownershipInterests to fluctuate.

Fund investments entail a number of risks over and above those relating to private equity and privatedebt investments generally

According to its investment objective, Princess will mainly invest in private equity and private debt fundsand will, therefore, generally have no right to participate in the management, control or operation of the funds inwhich it invests, and will not have the sole authority to remove the manager of any fund investment. In makingcommitments to private equity or private debt funds, Princess will undertake obligations to provide capital forinvestments that have not been specified at the time of its commitment, and which it typically will not be able toevaluate or review in detail.

As a result, when making fund investments, Princess will depend on the information regarding the generalpartners or managers of such funds that is available as of the relevant transaction date, which information may belimited and not verifiable. The past performance of such general partners or managers cannot be relied upon as anindicator of their future performance or success.

General partners of private equity funds in which Princess invests will typically have the power to, amongother things, terminate Princess’ interest in a fund if Princess fails to satisfy any capital call by that fund, or forcewithdrawal from a fund if the continued participation of Princess in such fund would have a material adverseeffect on such fund or its assets. If other investors in one of Princess’ fund investments default on their capitalcalls, or if their participation in such a fund results in adverse taxation or regulation, the value of Princess’investment could be adversely affected.

Princess is expected to follow an over-commitment approach when making investments in private equityfunds, which may result in contingent commitments exceeding its available capital

In accordance with its investment policy, Princess expects to follow an over-commitment approach whenmaking investments in private equity funds in order to maximise the amount of its capital that is invested at anygiven time. When an over-commitment approach is followed, the aggregate amount of capital committed byPrincess to private equity funds at a given time may exceed the aggregate amount of cash that Princess hasavailable for immediate investment. Depending on the circumstances, Princess may need to dispose ofinvestments at unfavourable prices or at times when the holding of the investments would be more advantageousin order to fund capital calls that are made by private equity funds to which it has made commitments. Inaddition, under such circumstances, legal, practical, contractual and other restrictions may limit the flexibility thatPrincess has in selecting investments for disposal. The realisation of any or all of such risks may have materialadverse on the business, results of operations and financial condition of Princess.

Acquisitions of outstanding limited partner interests in private equity funds may give rise to contingentliabilities

The acquisition of fund investments (typically limited partnership interests) in the secondary market willsubject Princess to any contingent liabilities that are attached to the interests acquired. In particular, as the holderof a limited partner interest, Princess will be primarily liable to fund capital calls that may be made by such fundsto recoup past distributions as a result of liabilities incurred in respect of investments that were made before theacquisition of the limited partner interest, including as a result of claims made under indemnificationarrangements with purchasers of portfolio investments. While in certain instances Princess may be in a position tomake a claim against the seller of the limited partner interest for the amount that is required to be contributed onaccount of past investments, there can be no assurance that the seller would be willing or able to satisfy any claim

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that may be brought or that any claim would be successful. This may have a material adverse effect on Princess’business, financial condition and results of operations.

Princess will be limited in its ability to negotiate terms and conditions of secondary investments andsuch investments may be based on incomplete or imperfect information

Princess investment policy also comprises secondary investments, i.e. where Princess acquires an existingfund interest as a secondary investment. Princess will generally have limited or no ability to modify or amendsuch fund’s constitutional documents (e.g. limited partnership agreements) or otherwise negotiate the economicterms of the interests being acquired. Similarly, Princess may purchase certain secondary investments as a groupand Princess may not be able to carve out from such purchases those investments that the Investment Adviserconsiders (for commercial, tax, legal or other reasons) less attractive. This may adversely effect the business,financial condition and results of operations of Princess.

The overall performance of Princess’ secondary investments will depend in large part on the acquisitionprice paid for such secondary investments, which may be negotiated based on incomplete or imperfectinformation. If Princess overpays for such secondary investments, the value of Princess could be adverselyaffected.

Princess will invest in highly leveraged companies

Princess will invest in highly leveraged companies, i.e. in companies with a high degree of indebtedness.These investments in highly leveraged companies may be made either directly or indirectly through CDOs andCLOs (which may invest in sub-investment grade companies). Companies that are highly leveraged and/or sub-investment grade may be at a higher risk of defaulting on their debt than companies with lower leverage and/orthat are rated investment grade, due to greater exposure to adverse economic factors such as rising interest rates,reduced cash flows, fluctuations in exchange rates, inflation, downturns in the economy or deterioration in thecondition of the relevant company or industry. If any of the companies in which Princess has invested restructureor default on their debt, Princess may not recover its investment which may reduce the value of the OrdinaryShares, net asset value and net income and may accordingly reduce Princess’ ability to pay dividends.

Princess may invest in consortia, leading to potentially increased risk exposure for shareholders thathave investments in other private equity funds

When Princess invests as part of a consortium, shareholders in the Company could face significantlyincreased exposure to a risk of loss on that investment if they have also made an investment in another privateequity fund that is involved in the consortium investment. The likelihood that a shareholder will face suchincreased exposure may be greater if it holds limited partner interests in a large number of private equity funds, asis the case with some private equity investors, or if it is a limited partner of a fund that is sponsored by a privateequity firm with whom Partners Group regularly invests.

Princess is not required to observe specific diversification criteria and will therefore be exposed todefault and concentration risk

Whilst Princess intends to diversify its portfolio of investments, Princess is not required to observe specificdiversification criteria, and Princess will generally have no control over the diversification of funds in which itinvests. Princess’ investment activities may result in concentration risk relating to investments to which Princesshas exposure directly and/or through one or more fund investments. To the extent that Princess’ investments areconcentrated in any one industry, region or country, downturns relating generally to such industry, region orcountry may result in a total or partial loss on such investments, which may have a material adverse effect on thePrincess’ business, financial condition and results of operations and reduce the value of the Ordinary Shares, netasset value and net income of Princess and accordingly may reduce Princess’ ability to pay dividends.

Princess may make follow-on investments on unfavourable terms

Once Princess has made an investment in an investee company, it may consider that, in order to protect itsoriginal investment, it should make a further investment in that investee company, for example if the investeecompany is in distress. Such follow-on investment may be on terms that are less favourable than would beavailable in respect of an investment that is not distressed and therefore Princess’ returns in respect of that follow-on investment may be lower than it would otherwise seek. If Princess does not have funds available to make afollow-on investment at the time it is required, it may have to borrow to fund the follow-on investment. There canbe no assurance that Princess will be able to borrow funds on favourable terms in such circumstances. Such

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borrowings may reduce Princess’ net income, and may have a material adverse effect on Princess’ business,financial condition and results of operations and the Company’s ability to pay dividends.

Fluctuations in currency values may adversely affect the value of Princess’ investments

Princess investments may be made (and Princess may incur indebtedness) in a number of differentcurrencies, and the fund and companies in which Princess invests may themselves be exposed to currency risk.Among the factors that may affect currency values are trade balances, levels of short-term interest rates,differences in relative values of similar assets in different currencies, long-term opportunities for investment andcapital appreciation and political developments. Any returns on, and the value of such investments may, therefore,be materially affected by these factors and by exchange rate fluctuations, local exchange control, limited liquidityof the relevant foreign exchange markets, the convertibility of the currencies in question and/or other factors.Accordingly, an increase in the value of the currencies in which Princess’ investments are denominated againstthe euro may adversely affect Princess’ net asset value. In addition, Princess will incur costs in connection withconversion between various currencies, which will reduce its net income and accordingly reduce Princess’ abilityto pay dividends. Princess intends to continue to hedge against currency fluctuations, and even if Princess deemshedging appropriate, it may not be possible or practicable to hedge currency risk exposure partially or fully.

Economic recessions or downturns could impair the value of Princess’ investments or limit any potentialappreciation in value

Princess may make investments, directly or through fund investments, in companies that are susceptible toeconomic recessions or downturns. During periods of adverse economic conditions, these companies mayexperience decreased revenues, financial losses, difficulty in obtaining access to financing and increased fundingcosts. During such periods, these companies may also have difficulty in expanding their businesses and operationsand be unable to meet their debt service obligations or other expenses as they become due. Any of the foregoingcould cause the value of Princess’ investments to decline. In addition, during periods of adverse economicconditions, Princess or the general partners with which it invests may have difficulty accessing financial markets,which could make it more difficult or impossible for Princess or such general partners to obtain funding foradditional investments and harm Princess’ net asset value and operating results.

The due diligence process that Partners Group undertakes in connection with Princess’ investments maynot reveal all facts that may be relevant in connection with an investment

Before Princess makes an investment, Partners Group, conducts due diligence it deems reasonable andappropriate based on the facts and circumstances applicable to each investment. The objective of the duediligence process is to identify attractive investment opportunities based on the facts and circumstancessurrounding an investment. When conducting due diligence, Partners Group will be expected to evaluate anumber of important business, financial, tax, accounting, environmental and/or legal issues in determiningwhether or not to proceed with an investment. Partners Group will be required to rely on resources available to it,including information provided by the general partner or lead investor; material and reports provided in thismanner typically are not addressed to Partners Group or its clients and therefore limited recourse (if any) isavailable against the providers of such information. Because Princess is likely to be a minority investor whenmaking investments in companies, it will also rely on the due diligence undertaken by the lead investor or generalpartner for a particular investment and there is no assurance that the lead investor or general partner will identifyall of the risks associated with each investment. The due diligence process is subjective, particularly with respectto newly organised funds or companies for which only limited information is available. Accordingly, Princesscannot be assured that the due diligence investigation that Partners Group will carry out with respect to anyinvestment opportunity will reveal or highlight all relevant facts that may be necessary or helpful in evaluatingsuch investment opportunity. Princess also cannot be assured that such an investigation will result in aninvestment being successful.

Risks Related to the Shares and the Admission to Trading

The Company’s ability to pay dividends will depend on its profits

No guarantee is given that any dividend on the Ordinary Shares will be paid by the Company. Alldistributions will be made at the discretion of the Company’s Directors and will depend on Princess’ earnings,financial condition and such other factors as the Directors may deem relevant from time to time, includinglimitations under Guernsey company law. There can be no assurances that the Company will be able to paydividends in the future.

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Additional investment risks may arise from currency exchange rate fluctuations since any dividends willbe paid in euros

The Board currently intends to pay future dividends or make future distributions with respect to the OrdinaryShares (deliverable in the form of Co-ownership Interests) in euros. The pound sterling, US dollar or othercurrency equivalent of any dividends or distributions with respect to the Ordinary Shares (deliverable in the formof Co-ownership Interests) will be adversely affected by potential future reductions in the value of the euroagainst the pound sterling, the US dollar or other currencies.

The rights of the shareholders of the Company and the fiduciary duties owed to shareholders will begoverned by Guernsey law and the Company’s Articles may differ from the rights and duties owed underthe laws of other countries

The Company is a limited liability company incorporated under the laws of Guernsey. The rights ofshareholders (and, thus, indirectly the rights of holders of Co-ownership Interests) and the duties that the Boardowes to the Company are governed by Guernsey law and the Company’s Articles. In accordance with Guernseylaw, the Company’s Articles contain various provisions that modify and limit the fiduciary duties that mightotherwise be owed to holders of Ordinary Shares.

The Company’s Articles provide for the following, inter alia:

) With regard to shares not being fully paid the Company has a first and paramount lien extending to anyamounts payable to the shareholders (including future and contingent claims and all dividends payable)and the shares of the shareholder.

) The Company may refuse the registration of a transfer of shares that is necessary to be able to exercisecertain shareholder’s rights under certain circumstances and the transferee needs not be given noticehereof for two months.

) The Board may require the disclosure of a beneficial interest in shares from each shareholder.

) Notices sent to shareholders are deemed as having been received by the shareholder 24 hours uponsending.

) The accidental omission to give notice to a shareholder of a shareholders’ meeting does not invalidateresolutions passed at such shareholders’ meeting.

) The dividend payments may be made in such currency and using such exchange rate as the Board mayselect.

) Dividend payments may be made using cheques that are sent at the risk of the shareholder.

As a result, the rights of shareholders (and, thus, indirectly the rights of holders of Co-ownership Interests)and the fiduciary duties that are owed to them may differ in material respects from the rights and duties thatwould be applicable if the Company were organised under the laws of a different jurisdiction, in particularGermany, or if it were not permitted to vary such rights and duties in the Company’s Articles.

From 1 January 2007 the reporting currency will be euro and financial figures may not be comparableto those of the past

The Company will change its reporting currency from USD to euro from 1 January 2007 onwards.Therefore, any financial figures which will be reported in the future may substantially differ from those reportedin the past. This will have a material effect on Princess’ financial condition and results of operations in financialyear 2006 and the following financial years in comparison to Princess’ financial condition and results ofoperations in the preceding financial years.

The Company does not know the structure of the holders of Co-ownership Interests

Since section 21 of the German Securities Trading Act (Wertpapierhandelsgesetz), is not applicable to theholders of Co-ownership Interests of the Company, significant holders of Co-ownership Interests will currentlynot be compelled by German Law to disclose its voting rights in the Company. The Company therefore will onlybe aware of and required to publish any significant holdings of Co-ownership Interests if such holdings have beenmade aware to it.

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No public trading in the Ordinary Shares or the Co-ownership Interests has taken place before

Although the Bonds have been publicly traded, no public trading has taken place in the Ordinary Shares orthe Co-ownership Interests before the listing. As a result, there is no guarantee that a liquid market will developfollowing the listing or that the stock exchange price will not drop below the listing price. The Company cannotpredict the likelihood that investor interest will lead to a market for trading in the Co-ownership Interests todevelop or how liquid such a market might be. The stock exchange price of the Co-ownership Interests could behighly volatile, which could make the execution of buy and sell orders less efficient. Furthermore, investors mightnot be able to resell their Co-ownership Interests at the price they bought them or at a higher stock exchangeprice, and might not be able to resell them at all.

Each holder of a Co-ownership Interest is entitled to demand, at any time from Clearstream, Frankfurt,delivery of Ordinary Shares of Princess Private Equity Holding Limited transferred to him or a third partydesignated by him in a number corresponding to his Co-ownership Interest. However, the Ordinary Shares willnot be traded on any stock exchange and it might be difficult to sell the Ordinary Shares so acuired.

The stock exchange price of the Co-ownership Interests may be volatile

Following the listing, the stock exchange price of the Ordinary Shares (deliverable in the form of Co-ownership Interests) could fluctuate considerably, in particular as a result of fluctuations in actual or projectedearnings, changes in projected earnings or failure to meet the earnings expectations of securities analysts, andchanges in the market for private equity funds or in other factors. General volatility in stock exchange prices as awhole could also adversely affect the stock exchange price of Co-ownership Interests, without regard to thebusiness activities of the Princess Group, its financial condition and results of operations, or its business outlook.

The Co-ownership Interests could trade at a discount to net asset value

The Co-ownership Interests could trade at a discount to net asset value for a variety of reasons, including dueto market conditions or to the extent investors undervalue Princess Management Limited’s and Partners Group(Zug)’s investment management activities. The Company’s Bonds have historically traded at a discount to netasset value. Additionally, unlike traditional private equity funds which have a limited life-span, the Companyintends to continuously reinvest a substantial proportion of the cash the Company receives, except in limitedcircumstances and subject to its dividend policy in effect from time to time. Therefore, the only way for investorsto realise their investment (other than through dividends, if any, which are paid by the Company) is to sell theirCo-ownership Interests for cash. Accordingly, in the event that a holder of the Co-ownership Interests requiresimmediate liquidity, or otherwise seeks to realise the value of its investment in the Company through a sale of itsCo-ownership Interests, the amount received by the holder upon such sale may be less than the underlying netasset value of the Co-ownership Interests sold.

Sales by a significant holder of Co-ownership Interests might have an impact on the price of the Co-ownership Interests

Immediately following the listing, some holders of Co-ownership Interests may hold a significant amount ofthe Company’s Ordinary Shares (deliverable in the form of Co-ownership Interests), thus, voting rights. Theeffects that any future sales by significant holders of Co-ownership Interests might have on the stock exchange ormarket price of the Co-ownership Interests cannot be predicted. If significant holders of Co-ownership Interestssell all or part of their Co-ownership Interests, this could have a negative effect on the stock exchange or marketprice of the Co-ownership Interests. Such sales could also make it more difficult for the Company to issue newOrdinary Shares (deliverable in the form of Co-ownership Interests) in the future at a date and price that theCompany feels is appropriate.

Future issues of Ordinary Shares (including Ordinary Shares deliverable in the form of Co-ownershipInterests) could dilute the interests of existing holders of Co-ownership Interests and lower the price ofthe Co-ownership Interests

The Company, without consent of the shareholders or the holders of Co-ownership Interests, is permitted toissue additional Ordinary Shares (and deliver them in the form of Co-ownership Interests) in subsequent publicofferings or private placements in order to make new investments, to inject further funds into a distressedinvestment or for other purposes. In particular, the unissued shares (currently 13,000,000) are at the disposal ofthe Board which may allot, grant options over (including, without limitation, by way of granting phantom stock,stock appreciation rights or other similar rights) or otherwise dispose of them to such persons on such terms andconditions and at such times as the Board determines. The Company is not required under Guernsey law to offer

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any such Ordinary Shares to existing shareholders on a pre-emptive basis. Therefore, it may not be possible forexisting holders of Co-ownership Interests to participate in such future issues of Ordinary Shares (includingOrdinary Shares deliverable in the form of Co-ownership Interests), which may dilute the existing holders of Co-ownership Interests’ interests in the Company. The issue of additional Ordinary Shares (including OrdinaryShares deliverable in the form of Co-ownership Interests) by the Company, or the possibility of such issue, maycause the market price of the Co-ownership Interests to decline.

Repurchases of Ordinary Shares (deliverable in the form of Co-ownership Interests) by the Company,which the Company may undertake from time to time, will increase shareholders’ exposure to Princess’existing investments at the time of such repurchase, which could make a loss of their investment morelikely

The Company may, from time to time, subject to the provisions of the Companies law of Guernsey, purchaseits own shares. Any Ordinary Shares (deliverable in the form of Co-ownership Interests) so purchased by theCompany will typically be held as treasury shares and the Company may not exercise any rights in respect ofsuch shares. No dividend may be paid and no other distribution (whether in cash or otherwise) of Princess’ assets(including any distribution of assets to shareholders on a winding-up) may be made to the Company in respect ofthe treasury shares. The effect of this is that, while the Ordinary Shares (deliverable in the form of Co-ownershipInterests) are held as treasury shares, the percentage of the Company’s Ordinary Shares (deliverable in the formof Co-ownership Interests) held by remaining holders of Co-ownership Interests will increase, making eachremaining shareholder more vulnerable to any decline in the value of the Co-ownership Interests or of theCompany’s net asset value. Further, the amount of cash held by the Company will decrease by the amount spentin repurchasing the Ordinary Shares (deliverable in the form of Co-ownership Interests), potentially resulting inthe Company lacking sufficient cash to make the number and type of investments necessary to achieve theCompany’s investment objectives.

Third parties may acquire control of the Company and replace the Company’s Directors and officerswithout consent from the minority shareholders, which may cause the Company material harm andchange the Company’s investment objectives

If a person or entity is to acquire control of the Company and to appoint new directors or officers of its ownchoosing, it would be able to modify the Company’s investment policy and procedures and exercise substantialinfluence over Princess’ management and the types of investments that the Company makes. Such changes couldresult in Princess’ capital being used to make investments in which Princess Management Limited has noinvolvement, or in Princess making investments that are substantially different from the types of investments thatPrincess currently makes. Additionally, Princess cannot predict with any certainty the effect that any change inthe control of the Company would have on the trading price of Co-ownership Interests, because such matterswould depend to a large extent on the identity of the new owner and the new owner’s intentions with regard toPrincess’ business and affairs. As a result, the future of Princess would be uncertain and the value of Princess’investments, its results of operations and financial condition could materially suffer.

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GENERAL INFORMATION

Responsibility for the Content of the Prospectus

Princess Private Equity Holding Limited, with registered office at Tudor House, Le Bordage, St Peter Port,Guernsey GY1 1BT, Channel Islands (hereafter referred to as the ‘‘Company,’’ and, together with its directly heldconsolidated affiliated company, collectively referred to as ‘‘Princess’’ or the ‘‘Princess Group’’) andSal. Oppenheim jr. & Cie. KGaA, Unter Sachsenhausen 4, 50667 Cologne (hereafter referred to as‘‘Sal. Oppenheim’’) assume responsibility for the contents of this Prospectus pursuant to section 5 paragraph 4 ofthe German Securities Prospectus Act (Wertpapierprospektgesetz). They declare that the information contained inthis Prospectus is, to their knowledge, in accordance with the facts and contains no omission likely to affect itsimport, and that they have taken all reasonable care to ensure that the information contained in this Prospectus isin accordance with the facts and contains no omission likely to affect its import.

In the event that claims are brought before a court based on the information contained in this Prospectus,application of the national legislation of countries in the European Economic Area could result in the investorappearing as plaintiff bearing the costs of translating this Prospectus before the start of proceedings.

Inspection of Documents

During the period of validity of this Prospectus, the documents relating to the Company which arementioned in this Prospectus and are to be made public, including in particular:

) the Company’s Articles of Association

) the audited consolidated financial statements (IFRS) of Princess Private Equity Holding Limited as ofand for the year ended 31 December 2005, 31 December 2004 and 31 December 2003

) the annual financial statements (IFRS) of Princess Private Equity Holding Limited as of and for the yearended 31 December 2005

) the unaudited consolidated interim financial statements (IFRS) of Princess Private Equity HoldingLimited as of and for the nine months period ended 30 September 2006

can be inspected at the Company’s offices, located at Tudor House, Le Bordage, St Peter Port, GuernseyGY1 1BT, Channel Islands. Future financial statements and quarterly reports of the Company, which theCompany is obliged to publish according to the Frankfurt Stock Exchange Rules (Borsenordnung der FrankfurterWertpapierborse), will be available from the Company and the paying and depositary agent indicated in thisProspectus (see ‘‘General Information Concerning the Company — Paying and Depositary Agent’’). Such reportsare to be prepared in accordance with IFRS and the annual financial statements are to be audited. The Germanparliament (Bundestag) has adopted an act which, if it becomes law, will change the German Securities TradingAct in order to implement the Directive 2004/109/EG of the European Parliament and the Council of15 December 2004 on the harmonisation of transparency requirements in relation to information about issuerswhose securities are admitted to trading on a regulated market and amending directive 2001/34/EC (the‘‘Transparency Directive’’) into German law. If this change will be effective, the Company will be obliged topublish annual financial reports (Jahresfinanzbericht), half-yearly reports (Halbjahresfinanzbericht) and interimstatements (Zwischenmitteilungen).

Starting on 8 December 2006, this Prospectus will be available at no charge from the Company in hard-copyand via download from the Company’s Internet website (www.princess-privateequity.net), from Sal. Oppenheimas paying and depositary agent as indicated in this Prospectus (see ‘‘General Information Concerning theCompany — Paying and Depositary Agent’’).

Subject Matter of the Prospectus

The subject matter of this Prospectus is a total of 7,010,000 Ordinary Shares of the Company deliverable inthe form of Co-ownership Interests in a global bearer share certificate issued by Clearstream, Frankfurt eachrepresenting one Ordinary Share with a nominal value of EUR 0.01 and with dividend rights as of 1 January2006.

Notes to the Financial Information

If not indicated otherwise, all financial information for the financial years ended 31 December 2003, 2004,2005 and for the nine months ended 30 September 2006 of Princess contained in this Prospectus refer to the

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accounting principles at the time the respective annual financial statements or interim financial statements wereprepared.

Currency Information

The amounts in this Prospectus stated in ‘‘EUR’’ or ‘‘euros’’ refer to the legal currency of the FederalRepublic of Germany. The terms ‘‘USD’’ and ‘‘U.S. dollars’’ refer to the legal currency of the United States ofAmerica (hereinafter also referred to as ‘‘USA’’). The term ‘‘CHF’’ refers to Swiss franc, GBP to the poundsterling, SEK to the Swedish krona, JPY to the Japanese yen.

The following table (source of figures: Federal Reserve Bank of New York;http://www.ny.frb.org/markets /fxrates/historical/home.cfm) sets out historical USD-EUR exchange rates for thepast three years. The rates stated below are provided solely for the convenience of the reader and are notnecessarily the exchange rates (if any) used by Princess in the preparation of its consolidated financial statementsincluded elsewhere in this offering circular. No representation is made that these EUR amounts could have been,or could be, converted into USD at these rates or at any other rates, or at all.

EUR per USD 1.00

Years ended 31 December, 30 September2003 2004 2005 2006

Rate at end of period1 *********************************** 1,2597 1,3538 1,1842 1,2687Average rate for period2 ********************************** 1,1321 1,2438 1,2449 1,2385High for period1 **************************************** 1,2597 1,3623 1,3476 1,2953Low for period1***************************************** 1,0361 1,1802 1,1667 1,1882

1 Based upon the noon buying rate in The City of New York for cable transfers in USD, as certified for customs purposes by the FederalReserve Bank of New York.

2 The average of the noon buying rate on the last business day of each full month during the relevant period.

Forward-looking Statements

This Prospectus contains forward-looking statements, i.e., statements which do not refer to historical factsand occurrences. This applies in particular to statements in the sections entitled ‘‘Prospectus Summary,’’ ‘‘RiskFactors,’’ ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’,‘‘Business Description’’ and ‘‘Recent Business Events and Outlook,’’ as well as in sections of the Prospectuscontaining information on future financial earnings capacity, plans and expectations related to Princess’ business,on growth and profitability, and on the business environment that Princess is exposed to. Such statements areindicated by the use of the words ‘‘should,’’ ‘‘may,’’ ‘‘will,’’ ‘‘believes,’’ ‘‘assumes,’’ ‘‘expects,’’ ‘‘estimates,’’‘‘plans,’’ ‘‘intends,’’ ‘‘takes the view that,’’ ‘‘according to the knowledge of,’’ ‘‘in the estimation of,’’ and the like.Forward-looking statements are based on current assessments made by the Company using the best informationknown to it as of the date hereof. Forward-looking statements such as these are based on assumptions andpresent-day factors, and are subject to risks and uncertainties whose occurrence or non-occurrence can result inthe actual earnings, financial condition and profitability of Princess differing materially or turning out worse thanwhat is expressed or implied in these statements. The sections entitled ‘‘Prospectus Summary’’ ‘‘Risk Factors’’,‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’, ‘‘BusinessDescription’’ and ‘‘Recent Business Events and Outlook’’ should be read, therefore, as they contain a moreextensive discussion of the factors which could affect Princess’ business performance and the sector in whichPrincess operates.

The future events referred to in this Prospectus with regard to risks, uncertainties and assumptions mightalso not occur. The same applies to the forward-looking statements and projections from third-party studiesreproduced in this Prospectus (see also ‘‘General Information — Notes on Sources of Sector, Market, Customerand other Numerical Data’’).

Therefore, neither the Company nor its management can guarantee the future accuracy of the statementscontained in this Prospectus or the actual occurrence of forecasted developments. It is also noted that neither theCompany nor Sal. Oppenheim assume any obligation above and beyond the legal requirements, in particularpursuant to section 16 German Securities Prospectus Act, of updating such forward-looking statements oradjusting them to account for future occurrences or developments.

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Notes on Sources of Sector, Market, Customer and other Numerical Data

All numerical data relating to market shares and growth rates (not relating exclusively to the PrincessGroup), in this Prospectus are based on publicly available sources, in particular third-party studies, or estimatesmade by the Company, which in turn are predominantly based on published data or numerical data from publiclyavailable sources.

The Company cites market data from the following studies:

) ‘‘Annual Survey of Pan-European Private Equity & Venture Capital Activity’’ EVCA Yearbook 2005

) ‘‘Annual Survey of Pan-European Private Equity & Venture Capital Activity’’ EVCA Yearbook 2006

) Thomson Venture Economics Database, July 2006

) ‘‘Global Private Equity Report 2005’’, PricewaterhouseCoopers, 2005

The Company and Sal. Oppenheim have not verified the underlying numerical data, market data and otherinformation from third-party studies. The Company and Sal. Oppenheim can therefore accept no responsibilityfor the accuracy of information from third-party studies on market shares or growth rates. The Company hasaccurately reproduced this information from the sources and cited the source by indicating the relevant study, andhas not omitted any facts known to the Company and available from the sources whose omission would make thedata inaccurate or misleading.

A glossary containing the specialised terms and abbreviations used can be found at the end of theProspectus.

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ADMISSION

Admission of Ordinary Shares deliverable in the form of Co-ownership Interests in a Global BearerCertificate

The Company and Sal. Oppenheim have applied on 17 November 2006 for admission to trading on theofficial market (Amtlicher Markt), with concurrent admission to trading on the segment of the official market withadditional post-admission obligations (Prime Standard), of the Frankfurt Stock Exchange of the entire issued andoutstanding share capital of the Company consisting of 7,010,000 Ordinary Shares deliverable in the form of Co-ownership Interests in a global bearer certificate issued by Clearstream, Frankfurt, each representing oneOrdinary Share with a nominal value of EUR 0.01 and carrying full dividend rights as of 1 January 2006. Theadmitted shares form the entire issued and outstanding share capital of the Company of EUR 70,100. For moredetails on the Ordinary Shares see ‘‘— General and Special Information on the Ordinary Shares’’ below.

General and Special Information on the Ordinary Shares

Overview

The Company has an authorised share capital of EUR 200,100 divided into 20,010,000 Ordinary Shares ofEUR 0.01 each of which 7,010,000 Ordinary Shares are issued and outstanding on the Restructuring CompletionDate. The Ordinary Shares are registered shares. The Company issued zero coupon convertible bonds with anaggregate nominal value of up to USD 525,000,000 due 2010 under a trust deed dated 30 June 1999 and furtherzero coupon convertible bonds with an aggregate nominal value of up to USD 475,000,000 due 2010 pursuant tothe terms of the first supplemental trust deed dated 5 October 1999, the second supplemental trust deed dated3 November 1999 and the third supplemental trust deed dated 20 December 1999 and raised funds in anaggregate amount of USD 700,000,000 by issuing a total of 700,000 Bonds with a nominal value of USD 1,000each (together the ‘‘Bonds’’). 7,000,000 of the Ordinary Shares result from the conversion of these Bonds intoOrdinary Shares deliverable in the form of Co-ownership Interests of the Company that will take place on theRestructuring Completion Date in connection with the Restructuring.

Classes of Shares

All of the Ordinary Shares are of the same class and confer the same rights to their holders.

If at any time the shares of the Company are divided into different classes, all or any of the rights for thetime being attached to any share or class of shares (and notwithstanding that the Company may or may be aboutto be in liquidation) may be varied or abrogated in such manner (if any) as may be provided by such rights or, inthe absence of any such provision, either with the consent in writing of the holders of not less than three-quartersof the capital committed or agreed to be committed in respect of the issued shares of the class or with the sanctionof an extraordinary resolution passed at a separate general meeting of the holders of shares of the class dulyconvened and held as provided in the Articles of Association, but so that the quorum at such meeting (other thanan adjourned meeting) is two persons holding or representing by proxy at least one third of the capital committedor agreed to be committed in respect of the issued shares of the class in question.

The rights conferred upon the holders of the shares of any class issued with preferred or other rights is not(unless otherwise expressly provided by the terms of issue of the shares of that class) deemed to be varied by(a) the creation or issue of further shares ranking as regards participation in the profits or assets of the Companyin some or all respects pari passu therewith but in no respect in priority thereto or (b) the purchase or redemptionby the Company of any of its own shares.

Certificates and Register

All Ordinary Shares have been issued as certificated shares.

Subject to Guernsey law, the Board may generally issue shares as certificated shares or as uncertificatedshares in its absolute discretion. Subject to this, the Company issues: (a) without payment one certificate to eachperson for all his shares of each class and when part only of the shares comprised in a certificate is sold ortransferred a balance certificate; or (b) upon payment of such sum as the Board may determine several certificateseach for one or more shares of any class.

Any certificate issued specifies the shares to which it relates and the amount paid up and the distinguishingnumbers (if any).

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All forms of certificate for shares or debentures or representing any other form of security (other than lettersof allotment scrip certificates and other like documents) may if determined by the Board be issued under thecommon signature of the Company and may be signed mechanically.

If a share certificate is issued and is defaced, lost or destroyed it may be replaced or renewed without charge(other than exceptional out of pocket expenses) on such terms (if any) as to evidence and indemnity as the Boardthinks fit.

Shares of any class may be traded through an electronic settlement system and held in uncertificated form inaccordance with such arrangements as may from time to time be permitted by any statute, regulation, order,instrument or rule in force affecting the Company. Amendments to the Articles which may be necessary orexpedient for this purpose may be made by special resolution but will not be deemed to vary the rights of anyclass of shares.

The Company keeps the register of shareholders at the registered office of the Company in accordance withGuernsey law. The register of shareholders may be closed during such periods as the Board thinks fit notexceeding in all 30 days in any year.

The Company is not bound to register more than 4 persons as the joint holders of any share or shares. In thecase of a certificated share held jointly by several persons, the Company is not bound to issue more than onecertificate therefore and delivery of a certificate to one of the joint holders is sufficient delivery to all.

Transferability

The Directors have power to implement such arrangements as they may, in their absolute discretion, think fitin order for any class of shares to be admitted to settlement by means of an electronic settlement system.

Subject to such of the restrictions of the Articles as may be applicable:

) any shareholder may transfer all or any of his uncertificated shares by means of a relevant systemauthorised by the Board in such manner provided for, and subject as provided, in any regulations issuedfor this purpose under Guernsey law or such as may otherwise from time to time be adopted by theBoard on behalf of the Company and the rules of any relevant system and accordingly no provision ofthe Articles apply in respect of an uncertificated share to the extent that it requires or contemplates theeffecting of a transfer by an instrument in writing or the production of a certificate for the shares to betransferred;

) any shareholder may transfer all or any of his certificated shares by an instrument of transfer in any usualform or in any other form which the Board may approve; and

) an instrument of transfer of a certificated share is signed by or on behalf of the transferor and, unless theshare is fully paid, by or on behalf of the transferee. An instrument of transfer of a certificated share neednot be under seal.

Every instrument of transfer of a certificated share is left at the registered office of the Company or suchother place as the Board may prescribe with the certificate of every share to be transferred and such otherevidence as the Board may reasonably require to prove the title of the transferor or his right to transfer the shares;and the transfer and certificate (if any) remain in the custody of the Board but are at all reasonable times producedat the request and expense of the transferor or transferee or their respective representatives. A new certificate isdelivered free of charge to the transferee after the transfer is completed and registered on his application andwhen necessary a balance certificate is delivered if required by him in writing.

The Board may, in its absolute discretion and without giving a reason, refuse to register a transfer of anyshare in certificated form or uncertificated form which is not fully paid or on which the Company has a lienprovided, in the case of a listed share, that this would not prevent dealings in the share from taking place on anopen and proper basis on the Frankfurt Stock Exchange. In addition, the Directors may refuse to register atransfer of shares if:

) it is in respect of more than one class of shares;

) it is in favour of more than 4 joint transferees; and/or

) having been delivered for registration to the registered office of the Company or such other place as theBoard may decide, it is not accompanied by the certificate for the shares to which it relates and suchother evidence as the Board may reasonably require to prove title of the transferor and the due execution

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by him of the transfer or, if the transfer is executed by some other person on his behalf, the authority ofthat person to do so.

If the Board refuses to register the transfer of a share it shall, within 2 months after the date on which thetransfer was lodged with the Company, send notice of the refusal to the transferee.

No fee is payable to the Company in respect of the registration of any transfer, probate, letters ofadministration, certificate of marriage or death, power of attorney, instruction or other document relating to oraffecting the title to any shares.

On the death of a shareholder, the survivors where the deceased was a joint holder and the executor oradministrator of the deceased where he was a sole holder are the only persons recognised by the Company ashaving any title to or interest in his shares; but nothing herein releases the estate of a deceased joint holder fromany liability in respect of any share jointly held.

A person so becoming entitled to a share in consequence of the death, bankruptcy or incapacity of ashareholder or otherwise by operation of law (subject as hereinafter provided), upon supplying to the Companysuch evidence as the directors of the Company may reasonably require to show his title to the share, has the rightto receive and may give a discharge for all dividends and other money payable or other advantages due on or inrespect of the share, but he is not entitled to receive notice of or to attend or vote at meetings of the Company, orsave as aforesaid, to any of the rights or privileges of a shareholder unless and until he is registered as ashareholder in respect of the share provided always that the Board may at any time give notice requiring any suchperson to elect either to be registered himself or to transfer the share and if the notice is not complied with within90 days the Board may thereafter withhold all dividends or other monies payable or other advantages due inrespect of the share until the requirements of the notice have been complied with.

Voting Rights

According to the Articles subject to any special rights or restrictions for the time being attached to any classof share, on a show of hands every shareholder present in person or by proxy has one vote, on a poll everyshareholder present in person or by proxy has one vote for each share held by him. In case of an equality of votesthe chairman at the meeting has not a second or casting vote.

Each holder of Co-ownership Interests is entitled to request a voting proxy from Clearstream, Frankfurt withrespect to the number of Ordinary Shares represented by the Co-ownership Interests. As a rule, Clearstream,Frankfurt will not exercise voting rights attaching to the Ordinary Shares. See below ‘‘— Information on the Co-ownership Interests — General Information’’ for further information on the Co-ownership Interests and voting.

Dividend Rights

The Ordinary Shares are eligible for dividends or other distributions, if any, declared in respect of thefinancial year beginning 1 January 2006 and subsequent periods.

The Company may by ordinary resolution declare dividends but no dividend exceeds the amountrecommended by the Board. However, no dividend is paid otherwise than out of the distributable profits of thebusiness of the Company.

Subject to the Articles, unless and to the extent that the rights attached to any shares or the terms of issuethereof otherwise provide, all dividends are declared and paid according to the amounts paid up on the shares inrespect whereof the dividend is paid.

The Board may at any time declare and pay such interim dividends as appear to be justified by the positionof the Company.

Subject to Guernsey law, where any asset, business or property is bought by the Company as from a pastdate, whether such date be before or after the incorporation of the Company profits and losses as from such datemay at the discretion of the Board in whole or in part be carried to revenue account and treated for all purposes asprofits and losses of the Company. Subject as aforesaid, if any shares or securities are purchased cum dividend orinterest such dividend or interest may at the discretion of the Board be treated as revenue and it is not obligatoryto capitalise all or part of the same.

The Board may deduct from any dividend payable to any shareholder on or in respect of a share all sums ofmoney (if any) presently payable by him to the Company on account of calls or otherwise.

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The Board may retain any dividend or other moneys payable on or in respect of a share on which theCompany has a lien and may apply the same in or towards satisfaction of the liabilities or obligations in respect ofwhich the lien exists.

The Board may retain dividends payable upon shares in respect of which any person is entitled to become ashareholder until such person has become a shareholder.

Any dividend or other moneys payable on or in respect of a share is paid to the shareholder or to such otherperson as the shareholder (or, in the case of joint holders of a share, all of them) may in writing direct. Suchdividend or other moneys may be paid (i) by cheque sent by post to the payee or, where there is more than onepayee, to any one of them, or (ii) by inter-bank transfer to such account as the payee or payees shall in writingdirect, or (iii) by such other method of payment as the shareholder (or in the case of joint holders of a share, all ofthem) may agree to. Every such cheque is sent at the risk of the person or persons entitled to the moneyrepresented thereby, and payment of a cheque by the banker upon whom it is drawn, and any transfer or paymentwithin (ii) or (iii) above, is a good discharge to the Company.

No dividend or other moneys payable on or in respect of a share bear interest against the Company.

All unclaimed dividends may be invested or otherwise made use of by the Board for the benefit of theCompany until claimed and the Company is not constituted a trustee in respect thereof. All dividends unclaimedfor a period of twelve years after having been declared or became due for payment will be forfeited and revertedto the Company.

Subject to the provisions of the Articles and to the rights attaching to any shares, any dividend or othermoneys payable on or in respect of a share may be paid in such currency as the Board may determine, using suchexchange rate for currency conversions as the Board may select.

The Company may cease to send any cheque, warrant or order by post for any dividend on any shares whichis normally paid in that manner if in respect of at least two consecutive dividends payable on those shares thecheque, warrant or order has been returned undelivered or remains uncashed but, subject to the provisions of theArticles, recommence sending cheques, warrants or orders in respect of the dividends payable on those shares ifthe holder or person entitled by transmission claims the arrears of dividend and does not instruct the Company topay future dividends in some other way.

If two or more persons are registered as joint holders of any share, or are entitled jointly to a share inconsequence of the death or bankruptcy of the holder or otherwise by operation of law, any one of them may giveeffectual receipts for any dividend or other moneys payable or property distributable on or in respect of the share.

Any resolution for the declaration or payment of a dividend on shares of any class, whether a resolution ofthe Company in general meeting or a resolution of the Board, may specify that the same is payable to the personsregistered as the holders of such shares at the close of business on a particular date, notwithstanding that it maybe a date prior to that on which the resolution is passed, and thereupon the dividend is payable to them inaccordance with their respective holdings so registered, but without prejudice to the rights inter se in respect ofsuch dividend of transferors and transferees of any such shares.

The waiver in whole or in part of any dividend on any share is effective only if such waiver is in writingsigned by the shareholder (or the person entitled to the share in consequence of the death or bankruptcy of theholder or otherwise by operation of law) and delivered to the Company and if or to the extent that the same isaccepted as such or acted upon by the Company.

With the authority of an ordinary resolution of the Company and on the recommendation of the Board,payment of any dividend may be satisfied wholly or in part by the distribution of specific assets and in particularof paid up shares or debentures of any other company. Where any difficulty arises with the distribution, the Boardmay settle the difficulty as it thinks fit and, in particular, may issue fractional certificates (or ignore fractions), fixthe value for distribution of the specific assets or any part of them, determine that cash payments be made to anyshareholders on the basis of the value so fixed in order to secure equality of distribution and vest any of thespecific assets in trustees on such trusts for the persons entitled to the dividend as the Board may think fit.

The Board may, with the authority of an ordinary resolution of the Company, offer any holders of shares theright to elect to receive further shares, credited as fully paid, instead of cash in respect of all (or some part) of anydividend specified by the ordinary resolution (as ‘‘scrip dividend’’) in accordance with the following provisions:

The ordinary resolution may specify a particular dividend (whether or not already declared) or may specifyall or any dividends declared within a specified period but such period may not end later than five years after thedate of the meeting at which the ordinary resolution is passed;

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The basis of allotment is decided by the Board so that, as nearly as may be considered convenient, the valueof the further shares, including any fractional entitlement, is equal to the amount of the cash dividend whichwould otherwise have been paid;

For the purposes of the scrip dividend, the value of the further shares is (a) equal to the average middle-market quotation for (i) a fully paid share of the relevant class or (ii) a Co-ownership Interest representing oneshare, in each case, adjusted if necessary for the proposed dividend, as quoted by the Frankfurt Stock Exchangeor as established from such other source as the Board considers appropriate for the five business daysimmediately preceding or following the announcement of the cash dividend to which the scrip dividend relates, asthe Board may decide; or (b) calculated in such manner as may be determined by or in accordance with theordinary resolution;

The Board gives notice to the holders of shares of their rights of election in respect of the scrip dividend andspecify the procedure to be followed in order to make an election;

The dividend or that part of it in respect of which an election for the scrip dividend is made will not be paidand instead further shares of the relevant class are allotted in accordance with elections duly made and the Boardcapitalises a sum equal to the value of the shares to be allotted (as determined for the basis of any scrip dividend)out of such sums available for the purpose as the Board may consider appropriate;

The further shares so allotted rank pari passu in all respects with the fully paid shares of the same class thenin issue except as regards participation in the relevant dividend;

The Board may decide that the right to elect for any scrip dividend is not made available to shareholdersresident in any territory where, in the opinion of the Board, compliance with local laws or regulations would beunduly onerous;

The Board may do all acts and things as it considers necessary or expedient to give effect to the provisions ofa scrip dividend election and the issue of any shares in accordance with the provisions on scrip dividends, andmay make such provisions as it thinks fit for the case of shares becoming distributable in fractions (includingprovisions under which, in whole or in part, the benefit of fractional entitlements accrues to the Company ratherthan to the members concerned). To the extent that the entitlement of any holder of shares in respect of anydividend is less than the value of one new share (as determined for the basis of any scrip dividend) the Board mayalso from time to time establish or vary a procedure for such entitlement to be accrued and aggregated with anysimilar entitlement for the purposes of any subsequent scrip dividend;

The Board may from time to time establish or vary a procedure for election mandates, under which a holderof shares may, in respect of any further dividends for which a right of election pursuant to this article is offered,elect to receive shares in lieu of such dividend on the terms of such mandate;

The Board does not make a scrip dividend available unless the Company has sufficient unissued shares andundistributed profits or reserves to give effect to elections which could be made to receive that scrip dividend.

Pursuant to the terms and conditions of the Global Bearer Certificate, Clearstream, Frankfurt, will forward tothe holders of Co-ownership Interests cash dividends. Stock dividends, shares from stock splits as well ascapitalisation issues will be credited to the holder of a Co-ownership Interest in the form of additional Co-ownership Interests in the Global Bearer Certificate. If a proportionate distribution to the holder of Co-ownershipInterests is not possible, Clearstream, Frankfurt will seek to dispose of the relevant rights at the best possibleprice, and will hold the proceeds to the holder of such Co-ownership Interests’ order.

Right to Liquidation Proceeds

If the Company is wound up, the surplus assets remaining after payment of all creditors, including therepayment of bank borrowings, will be divided pari passu among the shareholders pro rata to their holdings ofthose shares which are subject to the rights of any shares which may be issued with special rights or privileges.

If the Company is wound up the liquidator may with the authority of a special resolution divide among theshareholders in specie the whole or any part of the assets of the Company and whether or not the assets consist ofproperty of a single kind and may for such purposes set such value as he deems fair upon any one or more classor classes or property and may determine how such division is carried out as between the shareholders ordifferent classes of shareholders. The liquidator may with the like authority vest any part of the assets in trusteesupon such trusts for the benefit of shareholders as the liquidator with the like authority thinks fit and theliquidation of the Company may be closed and the Company dissolved but so that no shareholder is compelled toaccept any shares or other assets in respect of which there is any outstanding liability.

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Where the Company is proposed to be or is in course of being wound up and the whole or part of itsbusiness or property is proposed to be transferred or sold to another company (the ‘‘transferee’’) the Liquidatormay, with the sanction of an ordinary resolution, conferring either a general authority on the Liquidator or anauthority in respect of any particular arrangement, receive in compensation or part compensation for the transferor sale, shares, policies or other like interests in the transferee for distribution among the shareholders or mayenter into any other arrangement whereby the shareholders may, in lieu of receiving cash, shares, policies or otherlike interests, or in addition thereto, participate in the profits of or receive any other benefits from the transferee.

Clearstream, Frankfurt will convey to the holder of a Co-ownership Interest, through the intermediary of hisdepository bank and in proportion to his share in the Global Bearer Certificate, all proceeds from a liquidation.

Recognition of Interests in Shares

Except as ordered by a court of competent jurisdiction or as required by law the Company is not affected orbound by or compelled in any way to recognise (even when having notice) any equitable contingent future orpartial interest in any share or fraction or (except only as by the Articles or by law otherwise provided) any otherrights in respect of any share except an absolute right to the entirety in the registered holder and whether or notsuch share is entered in the Company’s register as held in trust, nor is the Company bound to see to the executionof any trust to which any share may be subject.

Power to Require Disclosure of Beneficial Interest

The Board has power by notice in writing to require any shareholder to disclose to the Company the identityof any person other than the shareholder (an ‘‘interested party’’) who has any interest in the shares held by theshareholder and the nature of such interest.

Calls on Shares

The Board may at any time make calls upon the shareholders in respect of any moneys unpaid on theirshares (whether on account of the nominal value or by way of premium and not by the conditions of allotmentmade payable at fixed times) and each shareholder pays to the Company at the time and place appointed theamount called. A call may be revoked or postponed.

Joint holders are jointly and severally liable to pay calls.

If a sum called in respect of a share is not paid before or on the day appointed, the person from whom thesum is due shall pay interest from the day appointed to the time of actual payment at such rate (not exceeding15 % per annum) as the Board may determine but the Board is at liberty in any case or cases to waive payment ofsuch interest wholly or in part.

Any sum which by the terms of issue of a share becomes payable on allotment or at any fixed date is for thepurposes of the Articles deemed to be a call duly made and payable on the date on which by the terms of issue thesame becomes payable and in the case of non-payment all the relevant provisions of the Articles as to payment ofinterest and expenses forfeiture or otherwise apply as if such sum had become payable by virtue of a call dulymade and notified.

The Board may, if it thinks fit, receive from any shareholder willing to advance the same all or any part ofthe money uncalled and unpaid upon the shares held by him beyond the sums actually called up thereon aspayment in advance of calls, and such payment in advance of calls extinguishes, so far as the same extends, theliability upon the shares in respect of which it is advanced, and upon the money so received or so much thereof asfrom time to time exceeds the amount of the calls then made upon the shares in respect of which it has beenreceived, the Company may (until the same would, but for such advance, become presently payable) pay interestat such rate as the shareholder paying such sum and the Board agrees upon provided that any amount paid up inadvance of calls do not entitle the holder of the shares upon which such amount is paid to participate in respectthereof in any dividend until the same would but for such advance become presently payable.

The Board may on an issue of shares differentiate between holders as to amount of calls and times ofpayment.

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Lien

All issued and outstanding Ordinary Shares are fully paid up.

With regard to shares not being fully paid the Company, according to its Articles, has a first and paramountlien (extending to all dividends payable) for all moneys whether presently payable or not called or payable at afixed time in respect of those shares and for all the debts and liabilities of the holder to the Company and thatwhether the same has been incurred before or after notice to the Company of any equitable or other interest of anyperson (other than such holder) and whether the time for payment or discharge has arrived or not andnotwithstanding that the same are joint debts or liabilities of such holder and any other person (whether ashareholder or not).

For the purpose of enforcing such lien, the Company may sell, in such manner as the Board thinks fit, anyshares on which the Company has a lien, but no sale is be made unless some sum in respect of which the lienexists is presently payable, nor until the expiration of 14 days after a notice in writing, stating and demandingpayment of the sum presently payable, and giving notice of intention to sell in default, has been served on theholder for the time being of the shares or the person entitled by reason of his death or bankruptcy to the shares.For the purpose of giving effect to any such sale the Board may authorise some person to transfer to the purchaserthereof the shares so sold.

The net proceeds of such sale, after payment of the costs of such sale, is applied in or towards payment orsatisfaction of the debt or liability in respect whereof the lien exists, so far as the same is presently payable andany residue (subject to a like lien for debts or liabilities not presently payable as existed upon the shares prior tothe sale) is paid to the person entitled to the shares at the time of the sale. The purchaser is registered as theholder of the shares so transferred and he is not bound to see to the application of the purchase money, nor is histitle to the shares affected by any irregularity or invalidity in the proceedings in relation to the sale.

Forfeiture and Surrender of Shares

If a shareholder fails to pay any call or instalment on the day appointed, the Board may at any time duringsuch period as any part remains unpaid serve notice requiring payment of so much of the call or instalment as isunpaid together with any interest which may have accrued and any expenses which may have been incurred bythe Company by reason of non-payment.

The notice states a further day on or before which the payment required by the notice is to be made and theplace where the payment is to be made and that in the event of non-payment the shares in respect of which thecall was made or instalment is payable will be liable to be forfeited. If the requirements of any such notice are notcomplied with any share in respect of which the notice has been given may at any time before payment has beenmade be forfeited by a resolution of the Board to that effect. Such forfeiture includes all dividends declared inrespect of the forfeited share and not actually paid before the forfeiture.

Notice of forfeiture is forthwith given to the former holder and an entry of such notice and forfeiture isforthwith made and dated in the register opposite the entry of the share; but no forfeiture is in any manner invalidby any omission or neglect to give notice or to make entry.

A forfeited share is deemed to be the property of the Company and may be sold re-allotted or otherwisedisposed of on such terms as the Board thinks fit with or without all or any part of the amount previously paid onthe share being credited as paid and at any time before a sale or disposition the forfeiture may be cancelled.

A person whose shares have been forfeited ceases to be a shareholder in respect of the forfeited shares, butnotwithstanding the forfeiture remains liable to pay to the Company all monies which at the date of forfeiturewere presently payable by him to the Company in respect of the shares with interest thereon from the date offorfeiture until payment at such rate (not exceeding 15% per annum) as the Board may determine and the Boardmay enforce payment without any allowance for the value of the shares at the time of forfeiture.

The Board may accept from any shareholder on such terms as is agreed a surrender of any shares in respectof which there is a liability for calls. Any surrendered share may be disposed of in the same manner as a forfeitedshare.

A declaration in writing by a Director or the Secretary of the Company that a share has been duly forfeitedor surrendered or sold to satisfy a lien of the Company on the date stated in the declaration is conclusive evidenceof the facts therein as against all persons claiming to be entitled to the shares.

The Company may receive the consideration given for any share on any sale or disposition and may executea transfer of the share in favour of the person to whom the same is sold or disposed of and he is thereupon

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registered as the holder and is not bound to see to the application of the purchase money nor is his title affectedby any irregularity or invalidity in forfeiture, sale, re-allotment or disposal.

Information on the Co-ownership Interests

General Information

The Ordinary Shares will be delivered in the form of Co-ownership Interests in a global bearer certificate(the ‘‘Global Bearer Certificate’’) issued by Clearstream Banking AG, Neue Borsenstraße 1, 60485 Frankfurt amMain (‘‘Clearstream, Frankfurt’’). Each Co-ownership Interest will represent one Ordinary Share and holders ofthe Co-ownership Interests will be entitled to substantially the same rights as holders of the Ordinary Shares.

Delivery of the Co-ownership Interests will be made in book-entry form through Clearstream, Frankfurt.

The Ordinary Shares deliverable in the form of Co-ownership Interests will be held in a special custodyaccount established at Citibank N.A., London, as custodian for Clearstream, Frankfurt (the ‘‘Custodian’’), onbehalf of holders of the Co-ownership Interests. Each holder of a Co-ownership Interest is entitled to demand inits name or a name designated by it, in exchange for its Co-ownership Interests, at any time from Clearstream,Frankfurt, delivery of Ordinary Shares transferred to an account at the Custodian. Holders of the Co-ownershipInterests must be aware that the transferred Ordinary Shares will not be admitted to trading on any stockexchange.

The Co-ownership Interests represent co-ownership in the Global Bearer Certificate. Pursuant to the termsand conditions of the Global Bearer Certificate, Clearstream, Frankfurt, will forward to the holders of Co-ownership Interests, dividends, other distributions, bonus shares, subscription rights and proxies. In the case ofnon-cash distributions, such as share dividends, shares from stock splits and bonus shares, if a pro rata allocationis not possible, Clearstream, Frankfurt, will endeavour to dispose of the corresponding rights, at the best pricepossible and make the proceeds from such disposition available to the holders of Co-ownership Interests.

In the event that on a request of a holder of Co-ownership Interests such Co-ownership Interests will betransferred to an account at the Custodian, Clearstream, Frankfurt’s holding of Ordinary Shares will be reducedto the extent Ordinary Shares have been transferred. Simultaneously, Clearstream, Frankfurt, will reduce thenumber of Ordinary Shares evidenced by the Global Bearer Certificate by the relevant number of Ordinary Sharestransferred.

For each such transfer, Clearstream, Frankfurt, will charge a reasonable fee. In addition to such transfer fee,the holder of Co-ownership Interests shall bear any other costs, taxes, fees or charges incurred in connection withthe transfer.

Each shareholder is entitled to one vote for each Ordinary Share he or she owns at the time of any generalmeeting. Each holder of Co-ownership Interests is entitled to request a voting proxy from Clearstream, Frankfurt,with respect to the number of Ordinary Shares represented by the Co-ownership Interests.

Global Bearer Certificate

The following is a translation of the form of the Global Bearer Certificate which will be issued byClearstream, Frankfurt, and represents the 7,010,000 Ordinary Shares that are the subject of this Prospectus. TheGlobal Bearer Certificate will be issued in the German language.

Global Bearer Certificatefor fully paid Ordinary Shares

with a nominal value of EUR 0.01 eachof

Princess Private Equity Holding LimitedSt Peter Port, Guernsey

As cover for this Global Bearer Certificate, Clearstream Banking Aktiengesellschaft with its registered seatin Frankfurt/Main, Germany, holding ordinary registered shares, fully paid and with a nominal value ofEUR 0.01 each of Princess Private Equity Holding Limited, Guernsey, registered for Vidacos Nominees Ltd.,London, England, in a special safe custody account with Citibank N.A. London. Each holder of a co-ownershipinterest in this global bearer certificate is entitled to demand, at any time from Clearstream BankingAktiengesellschaft with its registered seat in Frankfurt/Main, Germany, delivery and transfer of ordinaryregistered shares of Princess Private Equity Holding Limited, Guernsey, in his or a name of a third party

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nominated by him in a number corresponding to his co-ownership interest to the register of Princess PrivateEquity Holding Limited, Guernsey.

The Conditions attached to this Global Bearer Certificate form an integral part hereof.

Frankfurt am Main,

Clearstream Banking Aktiengesellschaft

Terms and Conditions of the Global Bearer Certificate

1. The Global Bearer Certificate bears the signatures of two managing directors, or one managing directorand one holder of procuration, of Clearstream Banking Aktiengesellschaft, Frankfurt am Main, Federal Republicof Germany, (hereinafter referred to as ‘‘Clearstream’’).

2. Each co-owner of this Global Bearer Certificate is entitled to demand at any time from Clearstream, thedelivery and the registration in the Register of Members of Princess Private Equity Holding Limited, Guernsey, inhis name or in the name of a third party designated by him of such number of Ordinary Registered Shares fullypaid and with par value of EUR 0.01 (hereinafter referred to as ‘‘Shares’’) of Princess Private Equity HoldingLimited, Guernsey, (hereinafter referred to as ‘‘Company’’) as corresponds to his co-ownership share in thisGlobal Bearer Certificate. Such demand shall be made by the co-owner through his depositary bank toClearstream, stating to whom the Shares shall be delivered, respectively, the address to which the certificateevidencing the registration shall be mailed by the Registrar.

In addition to the delivery, respectively, transfer fee determined by Clearstream pursuant to section 315 ofGerman Civil Code, the co-owner shall bear any expenses, taxes, fees or duties, arising from such delivery resp.transfer and registration.

The co-owners of this Global Bearer Certificate are not entitled to demand delivery of individual bearercertificates out of this Global Bearer Certificate.

3. As a rule, Clearstream shall convey to the co-owner, through his depository bank and in proportion to hisshare in the Global Bearer Certificate, all rights arising from the Shares.

Cash dividends will be passed on by Clearstream to the co-owner. Stock dividends of at least one Share,Shares from stock splits as well as any bonus shares will be credited to the co-owner in the form of additional co-ownership shares in the Global Bearer Certificate. If a proportionate distribution to the co-owners should not bepossible, Clearstream shall seek to dispose of the relevant rights at the best possible price and shall hold theproceeds at the co-owner’s disposal.

Whenever subscription rights are granted, Clearstream shall provide as far as possible an opportunityfor the co-owner to exercise such rights. If a subscription right is not exercised within the prescribed period,Clearstream shall seek to dispose of such right at the best possible price; Clearstream shall hold theproceeds at the co-owner’s disposal.

Clearstream may dispose at the best possible price of new Shares, subscription rights, fractional rightsand other rights arising from the Shares if it deems this advisable in the interest of all co-owners or if in itsopinion a proportionate distribution to the co-owners is not possible;Clearstream shall hold the proceeds atthe co-owners’ disposal.

Furthermore, any terms and conditions announced by Clearstream shall apply.

All payments to the co-owner shall be made in Euro, respectively, in accordance with the foreignexchange control regulations prevailing at the time, unless the co-owner has in time before the due datedemanded payment in Pound Sterling.

4. As a rule, Clearstream shall not exercise voting rights arising from the Shares. On demand it shall causea voting proxy to be issued to the co-owner or a third party indicated by him.

The Company has undertaken to publish the agenda of any shareholder meeting as well as theconditions for participating in the meeting and exercising the voting rights before each meeting.

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5. Should the issuance of the Global Bearer Certificate be subject at any time to any taxes, fees or duties inthe Federal Republic of Germany or in the United Kingdom of Great Britain and Northern Ireland, the co-ownersshall bear such taxes, fees or duties in proportion to their shares in the Global Bearer Certificate.

Clearstream is entitled to divide among all co-owners in proportion to their co-ownership shares in theGlobal Bearer Certificate all taxes, fees and duties to which it may at any time be subject in the Federal Republicof Germany or in the United Kingdom of Great Britain and Northern Ireland by the mere fact that it is holdingthe Shares.

6. If pursuant to a change of capital, a merger, a change in the nature or name of the Company or for anyother reason the Shares should be replaced by other shares or some other valuable, the co-owner’s right to theShares shall convert into a right to the relevant substitutes. In such event these Conditions shall apply mutatismutandis.

7. Clearstream is entitled to substitute another entity for Citibank N. A., London, England (hereinafterreferred to as ‘‘Custodian’’) in its function as Custodian or Vidacos Nominees, London, England, (hereinafterreferred to as ‘‘Nominee’’) in its function as Nominee. In such event, Clearstream shall not be responsible formore than careful selection. This does not affect Clearstream’s right to assume itself the functions of theCustodian or the Nominee. In the case where the Custodian or the Nominee are replaced, any reference to theCustodian resp. the Nominee in these Conditions shall be deemed to refer to the new Custodian resp. Nominee.

8. Should the Shares become good for delivery on German stock exchanges in a way which would notrequire Clearstream’s assistance in the present form or should the admission of the Shares in the form of co-ownership shares in the Global Bearer Certificate to trading and official quotation on German stock exchangesbe withdrawn, Clearstream shall request from the co-owners instructions as provided for in Clause 2 paragraph 1above. Should such instruction not be given within 3 months from the publication of the relevant request,Clearstream shall be entitled at its discretion to arrange for registration of the Shares in the name of the co-owner or a third party designated in its request and to deposit the relevant Shares at the co-owners’s risk andexpense with a depositary designated in its request. All obligations of Clearstream arising from the GlobalBearer Certificate shall cease therewith.

9. All notices concerning the Global Bearer Certificate shall be published in at least one supraregionalnewspaper designated by the German stock exchanges to publish obligatory notices of each German stockexchange on which the Shares in form of co-ownership shares in the Global Bearer Certificate are traded andofficially quoted.

10. The co-owners shall bear proportionately any prejudice or damage, whether economic or legal, whichmay affect the Shares held as underlying stock for the Global Bearer Certificate in consequence of force majeure,governmental decrees, war, riots, official action at home or abroad or any other circumstances beyondClearstream’s or the Custodian’s control.

Clearstream shall perform all its obligations arising from the Global Bearer Certificate with the due care ofa proper merchant. If by reason of force majeure, governmental decrees, war, riots, official action at home orabroad or by any other circumstances beyond its control it is prevented from performing its obligations, it shallnot be responsible.

The Custodian and the Nominee are responsible towards Clearstream for the due performance of theirfunctions. Any claims against the Custodian or the Nominee shall be pursued by Clearstream on the co-owners’behalf of the holders of co-ownership interests’. Beyond that Clearstream shall only be responsible for carefulselection of the Custodian and the Nominee.

11. Should any of these conditions be or become fully or partly invalid or impracticable, the otherconditions shall remain unaffected. Any such invalid or impracticable condition shall be replaced in accordancewith the intent and purpose of this contractual agreement.

12. All legal relations between the co-owner and Clearstream shall be governed by the laws of the FederalRepublic of Germany. The exclusive court of venue shall be Frankfurt am Main.

13. Except where required by law or the Company’s articles of incorporation or by-laws, an alteration ofthese Conditions shall be permitted only insofar as it does not impair the rights of the co-owners.

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Designated Sponsor

Sal. Oppenheim assumes the function of the designated sponsor of the Co-ownership Interests traded on theFrankfurt Stock Exchange. Pursuant to the designated sponsor agreement between Sal. Oppenheim and theCompany, Sal. Oppenheim will, inter alia, place limited purchase and sale orders for the Co-ownership Interestsin the electronic trading system of the Frankfurt Stock Exchange during the daily trading time. Thereby, thedesignated sponsor is expected but not obliged to improve liquidity of the market for the Co-ownership Interests.

ISIN/Common Code/Stock Exchange Symbol of the Ordinary Shares and the Co-ownership Interest

International Securities Identification Number (ISIN) of the Ordinary Shares *********** GG00B1FGVV74German Securities Identification Number (WKN) of the Ordinary Shares ************** A0LBRLInternational Securities Identification Number (ISIN) of the Co-ownership Interests****** DE000A0LBRM2German Securities Identification Number (WKN) of the Co-ownership Interests********* A0LBRMCommon Code of the Co-ownership Interests************************************* 027106633Trading symbol of the Co-ownership Interests ************************************ PEY1

Expected Time Table for Admission

17 November 2006************* Application for admission to trading of Ordinary Shares deliverable in theform of Co-ownership Interests with the Frankfurt Stock Exchange

8 December 2006************** Approval of Prospectus by the German Federal Financial SupervisoryAuthority (BaFin)

8 December 2006************** Publication of Prospectus via Internet

8 December 2006************** Admission to trading of the Ordinary Shares deliverable in the form of Co-ownership Interests by the Frankfurt Stock Exchange

9 December 2006************** Publication of notice announcing the Prospectus is being made available

9 December 2006************** Publication of admission to trading

13 December 2006************* Commencement of trading on the Frankfurt Stock Exchange

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LIQUIDITY AND CAPITAL RESOURCES, CAPITALISATION

The following table provides an overview of the capitalisation and debt of Princess as of 30 September 2006on an actual basis and adjusted as if the conversion had taken place on 30 September 2006. Further details of theconversion are described under ‘‘The Capital of the Company — Convertible Bonds’’. The information containedin the table is based on the unaudited IFRS consolidated interim financial statements as of 30 September 2006,which are printed in the Financial Section of this Prospectus. This table should be read in conjunction with theseunaudited IFRS consolidated interim financial statements (see ‘‘Financial Section’’) as well as with the section‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operation’’:

As of 30 September 2006 As of 30 September 2006(actual) (adjusted)1

— unaudited — — unaudited —

Figures in USD (rounded off)

Short-term liabilities (excluding provisions) ************* 693,940,789 5,411,257of which guaranteed ********************************** N/A N/Aof which secured************************************* N/A N/Aof which unsecured/not guaranteed ********************** 693,940,789 5,411,257Long-term liabilities (excluding provisions) ************* 0 0of which guaranteed ********************************** 0 0of which secured************************************* 0 0of which unsecured/not guaranteed ********************** 0 0Shareholders’ equity********************************* 128,045,604 816,575,136of which subscribed capital **************************** 100 70,100of which capital reserves ****************************** 128,045,504 816,505,036of which revenue reserves ***************************** N/A N/Aof which reserves for currency conversion **************** N/A N/ASub-total******************************************* 128,045,604 816,575,136of which minority interests **************************** N/A N/ATotal ********************************************** 821,986,393 821,986,393

1 Based on the assumption that the conversion has taken place on 30 September 2006, but without taking into consideration the conversion ofthe share capital into euros.

Princess had neither indirect nor contingent liabilities as of 30 September 2006.

The Company entered into a revolving credit facility with Bank of Scotland on 30 December 2002 for amaximum of USD 130,000,000. Security is granted, inter alia, by way of a security interest over the entire issuedshare capital of Princess Private Equity Subholding Limited, the Company’s wholly-owned subsidiary. The creditfacility has been reduced to USD 50,000,000 in the meantime. As of 30 September 2006, the amount drawnunder the credit facility was nil.

The following table provides an overview of the liquid assets of Princess as of 30 September 2006(information based on the unaudited IFRS consolidated interim financial statements as of 30 September 2006):

As of 30 September 2006— unaudited —

Figures in USD(rounded off)

Cash and cash equivalents************************************************** 130,974,447Short-term investments **************************************************** 111,406,541Other short-term receivables ************************************************ 2,554,634Current assets*********************************************************** 244,935,622Short-term liabilities to banks*********************************************** N/AOther short-term financial liabilities ****************************************** 1,442,703Short-term financial liabilities (hedging liabilities) ****************************** 3,968,555Convertible Bonds ******************************************************** 688,529,532Short-term net financial liabilities******************************************** 449,005,167Long-term liabilities to banks *********************************************** N/AOther long-term financial liabilities ****************************************** N/ALong-term financial liabilities *********************************************** N/ANet financial liabilities**************************************************** 449,005,167

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The Company believes that its working capital is sufficient to cover its current needs for the 12 monthsfollowing the date of this Prospectus.

For further information on liquidity and capital resources, see ‘‘Management’s Discussion and Analysis ofFinancial Condition and Results of Operations.’’

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SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data only present a summary of the consolidated IFRSfinancial statements of Princess Private Equity Holding Limited for financial years 2003, 2004 and 2005, and thefirst nine months of financial year 2006 and the comparative figures for the nine months period ended30 September 2005. These data are to be read in conjunction with the section entitled ‘‘Management’s Discussionand Analysis of Financial Condition and Results of Operations,’’ including associated notes.

Selected income statement data

Financial year ended Nine months ended31 December 30 September

IFRS IFRS(audited) (unaudited)

2003 2004 2005 2005 2006

In USD

Net income from limitedpartnerships and directly heldinvestments *************** 20,391,401 93,196,744 110,274,266 77,483,566 121,910,320

Net income from short-terminvestments *************** — — 150,296 — 3,158,455

Net income from cash and cashequivalents**************** 320,189 145,956 1,323,072 769,120 1,869,136

Operating income ************ 20,711,590 93,342,700 111,747,634 78,252,686 126,937,911Operating expenses *********** (22,530,305) (21,694,543) (21,747,598) 15,936,265 17,080,739Financing cost*************** (39,718,664)1 (41,071,011) (42,625,400) 31,779,842 33,515,394Surplus/(loss) for the period *** (41,537,379)1 30,577,146 47,374,636 30,536,579 76,341,778

1 Figure has been restated in the course of the preparation of the audited consolidated financial statements 2004, see note 22 to the auditedconsolidated financial statements 2004.

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Selected balance sheet data:

Nine months ended31 December 30 September


2003 2004 2005 2006

In USD

Non-current assetsInvestments in limited partnership and

directly held investments ************** 577,115,116 629,976,924 595,273,964 577,050,771Current assetsShort-term investments ***************** — — 59,463,335 111,406,541Other short-term receivables ************* 68,449 422,993 421,528 2,554,634Hedging assets ************************ — — 2,913,419 —Cash and cash equivalents*************** 18,790,091 16,605,856 49,315,979 130,974,447

18,858,540 17,028,849 112,114,261 244,935,622Total assets ************************** 595,973,656 647,005,773 707,388,225 821,986,393Equity and LiabilitiesCapital and reservesIssued capital ************************* 100 100 100 100Reserves ***************************** 6,248,0561 4,329,090 51,703,726 128,045,504Total equity ************************** (26,247,956)1 4,329,190 51,703,826 128,045,604Liabilities falling due after more than

one yearConvertible bond ********************** 573,378,8191 613,012,186 655,163,727 —Liabilities falling due within one yearConvertible bond ********************** 688,529,532Hedging liabilities ********************* 17,777,313 18,704,616 — 3,968,555Other short-term payables *************** 1,065,480 959,782 520,670 1,442,703Credit facility ************************* 30,000,000 10,000,000 — —Rounding **************************** — (1) 2 (1)

48,842,793 29,664,397 520,672 693,940,789Total liabilities & equity *************** 595,973,656 647,005,773 707,388,225 821,986,393


Selected cash flow data:

Financial year ended Nine months ended31 December 30 September


2003 2004 2005 2005 2006

In USD

Cash flow from operating activitiesNet cash from/(used in) operating

activities ************************ (89,735,822) 17,822,548 42,715,211 67,525,281 81,622,267Cash flow from financing activitiesIncrease/(decrease) in credit facility**** 30,000,000 (20,000,000) (10,000,000) (10,000,000) —Net increase/(decrease) in cash and

cash equivalents ***************** (59,735,822) (2,177,452) 32,715,211 57,525,281 81,622,267Cash and cash equivalents at

beginning of reporting period ***** 78,526,819 18,790,091 16,605,856 16,605,856 49,315,979Cash and cash equivalents at end of

reporting period***************** 18,790,091 16,605,856 49,315,979 74,318,071 130,974,447

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations of Princess Group isbased on and should be read in conjunction with the audited IFRS consolidated financial statements as at and forthe financial years ended 31 December 2003, 31 December 2004 and 31 December 2005 of the Company(hereinafter referred to as ‘‘Consolidated Financial Statements’’) and the unaudited IFRS consolidated interimfinancial statements as at and for the nine months ended 30 September 2006 of the Company (including thecomparative figures as at and for the nine months ended 30 September 2005, hereinafter referred to as‘‘Consolidated Interim Financial Statements’’), including the respective notes thereto, as well as the otherfinancial information contained elsewhere in this Prospectus. The audited Consolidated Financial Statements andthe unaudited Consolidated Interim Financial Statements are included in the financial part of this Prospectus,commencing on page F-1. The Consolidated Financial Statements have been audited by PricewaterhouseCoopersCI LLP, National Westminster House, St Peter Port, Guernsey and have been certified with an unqualifiedauditor’s report.

The Consolidated Financial Statements and the Consolidated Interim Financial Statements contain forward-looking statements based on assumptions about the future development of the business. The actual results ofPrincess Group and the expectation contained in these forward-looking statements could prove to be inaccurate.See ‘‘General Information — Forward-looking Statements’’.

Basis of the Presentation

Unless otherwise stated, the following presentation and analysis is based on the Consolidated FinancialStatements and the Consolidated Interim Financial Statements of the Company. It covers the period from1 January 2003 to 30 September 2006 (hereinafter referred to as ‘‘Period under Review’’). The financialstatements were prepared in accordance with the International Financial Reporting Standards (‘‘IFRS’’) issued bythe International Accounting Standards Board.

The group of consolidated companies for the purpose of the Company’s Consolidated Financial Statementsand the Consolidated Interim Financial Statements included the fully consolidated Princess Private EquitySubholding Limited, registered with the Records of the Island of Guernsey. Since the following presentation andanalysis is based on the Consolidated Financial Statements and the Consolidated Interim Financial Statements ofthe Company, the restructuring of the zero coupon bonds issued by the Company in the aggregate nominalamount of USD 700,000,000 is generally not reflected. See section ‘‘— Significant Changes since the End of thePeriod under Review’’ for the expected major effects of the restructuring on the financial position, net assets andresults of operations of Princess Group.

Business Overview

Princess Group operates as an investment company, investing directly or through its wholly-ownedsubsidiary, Princess Private Equity Subholding Limited, in private equity and private debt (see ‘‘BusinessDescription — Private Equity and Private Debt Market’’). Its aim is to provide shareholders with long-termcapital growth in the mid- to long-term by investing in private equity, thus in investments that are typically madein non-public companies through privately negotiated transactions. Princess has made investments in privateequity and private debt vehicles (underlying funds) which in turn have made direct investments in businessenterprises requiring venture capital, private capital, mezzanine financing, etc.

The Company has been registered with the Records of the Island of Guernsey on 12 May 1999. In order toinvest in private equity, the Company initially raised capital by issuing convertible bonds in 1999, raisingUSD 700,000,000 in total.

Existing Commitments and Investments

Princess Group’s portfolio comprised interest in and commitments to 113 underlying funds by 30 September2006. The funds, in turn, have built up their own portfolios of direct investments in typically unlisted companies.These portfolios generally contain between 15 and 30 holdings. In this way, an aggregate portfolio of over1800 active operating companies had been created by 30 September 2006.

Commitments made by Princess Group to underlying funds are certain as to amount but funds are onlydrawn down by the underlying funds when specific investment opportunities have been identified and requirefunding (capital calls). Funds are also drawn down to fund agreed underlying funds expenses. As at 30 September2006 Princess Group had made total commitments to underlying funds of USD 1,332,942,434, translated at the

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exchange rate prevailing at the balance sheet date. Of this total, USD 233,659,822 was unutilized at the30 September 2006 (unfunded commitments). These unfunded commitments will be drawn down as furthercapital calls made by the underlying funds are funded by Princess Group.

The underlying funds to which Princess Group has made commitments are diversified in terms of vintageyears, financing stage, industrial sector and geography. This diversification ensures that the portfolio is notunduly exposed to adverse developments in any one region or sector.

The net asset value of the portfolio as at 30 September 2006 was USD 816,575,136. Investments in limitedpartnerships and directly held investments were valued at USD 577,050,771, while short term investments, cashand equivalents and other short term assets were valued at USD 244,935,622. Liabilities falling due within oneyear totalled USD 693,940,789, of which USD 688,529,532 relates to the convertible bond. The net assets arecalculated by deducting the liabilities falling due within one year (not taking into account the convertible bonds)from the total assets.

Major Factors Influencing Princess Group’s Business and Results of Operations

Market Factors

By virtue of the size of the existing portfolio and its diversified nature, the portfolio is affected by both thepositive and negative factors impacting the private equity and private debt market as a whole. These factorsinclude macro economic events, which are important as private equity is not, in general, counter cyclical to theglobal economy. The performance of the portfolio is therefore linked to the performance of the global economy,and especially the US and the major European economies. Continued economic growth, a stable interest rateenvironment and a lack of global instability will all be to the benefit of the portfolio. In contrast, generaldownturns in economic, political and market conditions and natural disasters as well as uncertain political oreconomic prospects or declines in investment markets for whatever reason could have a negative impact on theportfolio. Moreover, Princess invests in a number of countries, including less developed countries, exposing it toa range of additional potential economic, political and legal factors, including strong declines in economicgrowth, higher rates of inflation, deflation, adverse fluctuations in currency exchange rates, currency revaluationand exchange controls.

The relationship to global stock markets is more complex, as early stage venture funds will, in mostinstances, have a low correlation to public markets while the performance of buyout funds will be more closelylinked. The closer an investment is to realisation through a listing on a public market, the more closely itsvaluation will be tied to the performance of the public markets. In general, the portfolio benefits from activepublic equity markets with a high level of merger and acquisition activity and a steady flow of successful initialpublic offerings (‘‘IPOs’’).

Companies in which the underlying funds have invested cover a wide spectrum, from major quotedcompanies to small start-up ventures. However a number of companies in which private equity and private debtinvestments have been made may:

(i) be highly leveraged and subject to significant debt service obligations, stringent operating andfinancial covenants and risks of default under financing and other contractual arrangements, which wouldadversely affect the value of the investment in such company were a default to occur,

(ii) have limited financial resources and be unable to meet their obligations under their securities,which may be accompanied by a deterioration in the value of their equity securities or any collateral orguarantees provided with respect to their debt,

(iii) have shorter operating histories, narrower product lines and smaller market shares than largerbusinesses, which could render them more vulnerable to competitors’ actions and market conditions, as wellas general economic downturns,

(iv) be more likely to depend on the management talents and efforts of a small group of persons and, asa result, the death, disability, resignation or termination of one or more of those persons could have amaterial adverse impact on their business and prospects and the investment made,

(v) have limited public information available, and

(vi) have less predictable operating results, be involved in rapidly changing businesses and/or requiresignificant additional capital to support their operations, finance expansion or maintain their competitiveposition.

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Valuation of Private Equity Investments

The bulk of the portfolio comprises investment in unlisted funds. Princess, through its Investment Managerand the Investment Adviser, is required to make good faith determinations as to the fair value of theseinvestments on a quarterly basis in connection with the preparation of its statements. There is an inherentuncertainty associated with the valuation of such investments given the absence of a liquid market, and therealised value of an investment can differ materially from their stated fair value.

There are numerous factors that have to be taken into account when valuing a particular investment, the mostbasic of which is the success or failure of the company in which an investment has been made. The expertise ofthe manager of the underlying funds in identifying investments with the potential for delivering above averagereturns with below average risk is crucial. Further factors that may be considered when applying fair value pricingto an investment in a particular company include the historical and projected financial data for the company,valuations given to comparable companies, the size and scope of the company’s operations, the strengths andweaknesses of the company, expectations relating to investors’ receptivity to an offering of the company’ssecurities, the size of the holding in the company and any control associated therewith, information with respectto transactions or offers for the portfolio company’s securities (including the transaction pursuant to which theinvestment was made and the period of time that has elapsed from the date of the investment to the valuationdate), applicable restrictions on transfer, industry information and assumptions, general economic and marketconditions, the nature and realisable value of any collateral or credit support and other relevant factors.

Furthermore, there is no single standard for determining fair value and, in many cases, fair value is bestexpressed as a range of fair values from which a single estimate may be derived; with respect to a majority of itsportfolio, Princess determines fair value based on valuations provided by the general partners or managers withwhich it invests and there is no guarantee that such valuations will be realised. The types of fair values may beestablished using a market multiple approach that is based on a specific financial measure (such as EBITDA, cashflow, net income, revenues or net asset value) or, in some cases, a cost basis or a discounted cash flow orliquidation analysis. As valuations, and in particular valuations of investments for which market quotations arenot readily available, are inherently uncertain, may fluctuate over short periods of time and may be based onestimates, determinations of fair value may differ materially from the values that would have resulted if a readymarket had existed.

Even if market quotations are available for Princess’ investments, such quotations may not reflect the valuethat Princess would actually be able to realise because of various factors, including the possible illiquidityassociated with a large ownership position, subsequent illiquidity in the market for a company’s securities, futuremarket price volatility or the potential for a future loss in market value based on poor industry conditions or themarket’s view of overall company and management performance.

Continued Access to Attractive Funds

The ability of Princess to secure participations in funds managed by leading private equity fund managershas enhanced the long term performance of the portfolio. To date, despite the fact that many of these funds areoversubscribed, Princess, through its Investment Manager, Princess Management Limited, and the InvestmentAdvisor, Partners Group (Zug), has been able to build a portfolio of investments that includes exposure to anumber of the most regarded fund managers in the private equity industry. Achieving growth and returns on acost-effective basis is dependent on the structuring of the investment process by the Investment Manager and theInvestment Advisor, their ability to provide competent, attentive and efficient services under the InvestmentManagement Agreement and the Investment Advisory Agreement and Princess’ ability to reinvest its and toobtain additional capital on acceptable terms.

Continued access to new funds launched by highly regarded fund managers is important in ensuring thequality of the portfolio going forward. Moreover, Princess’ success relies to a very significant extent on PrincessManagement Limited and Partners Group maintaining active communication with private equity and private debtfunds and investment banking firms in order to provide Princess with opportunities for such investments.

Development of the Net Asset Value of the Portfolio

The net asset value is calculated by deducting the liabilities falling due in one year from the total assets inrelation to the net asset value as of 30 September 2006, excluding the liabilities in relation to the Bonds for thispurpose, since due to the Restructuring and the conversion of the Bonds the Bonds are to be accounted asliabilities due within one year. The 700,000 convertible bonds at a par value of USD 1,000 each would, ifconverted at USD 100 per share, result in 7,000,000 shares. The net asset value is expressed either in terms of

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USD or for comparative purposes as a percentage of the net asset value divided by the number of shares afterassumed conversion.

In the period immediately after the first investments of Princess Group in 1999 the trend in the net assetvalue of the portfolio was generally positive, given the initial negative impact of the start up costs, and at the endof financial year 2000 the net asset value was USD 721,317,578, as compared to USD 694,637,386 at the end of1999. The modest upward trend was evident through to April 2001 but there then followed a prolonged period ofdecline through July 2003. The net asset value at the end of financial year 2001 was USD 654,842,078, fallingfurther to USD 551,397,111 at the end of financial year 2002. This decline was a consequence of the difficulttimes for the world economy and the financial markets during this period. The poor performance of public equitymarkets combined with the low level of activity regarding initial public offerings and merger & acquisitionsspilled over to the private equity industry, causing additional adjustments to portfolio company valuations andreducing the distribution activity. Investments in the venture investments made at the height of the market in 1999and 2000 were particularly affected and numerous investments were written down or written off.

In early 2003, after three years of decline, stock markets finally picked up which resulted in a very positiveyear for global public equity markets. While private equity markets are less volatile and react more slowly tochanges in the economy than public markets, the first signs of a turnaround emerged in the second six months of2003. Investment activity, after a slow start, gradually picked up during the course of the year. The exitenvironment continued to be difficult at the beginning of the year, but showed signs of recovery in the second sixmonths, when conditions for realisations via the ‘‘traditional’’ exit routes such as IPOs and trade sales improved.Since the IPO window had been largely closed and only started to open in the fourth quarter and trade buyers hadalso remained on the sidelines for several months, alternative exit routes such as secondary buyouts andrecapitalisations were important exit channels throughout the year.

In common with the private equity industry as a whole, starting in the summer of 2003 the Companyexperienced a turnaround. Although the net asset value of the portfolio declined marginally fromUSD 551,397,111 at the end of financial year 2002 to a net asset value of USD 547,130,863 at the end offinancial year 2003, an upward trend was evident. After bottoming out in July 2003, the net asset value profitedfrom the overall positive market sentiment, increased exit activity and rising valuations for portfolio companies.

The world economy expanded at a robust pace in 2004, aided by the highly supportive stance ofmacroeconomic policy in the major economies. Private equity markets are correlated with real economic activityand thus benefited in 2004 from the prevailing macroeconomic conditions. In addition, while the world’s stockmarkets tended to drift sideways during the year, the recovery of the global IPO market and the significantlyhigher level of merger and acquisition activity created favourable market conditions for private equity and a muchimproved exit environment in particular.

The recovery in the Princess net asset value, which has been evident since the summer of 2003, continuedthrough 2004. By the end of financial year 2004, the net asset value stood at USD 617,341,367 which representedan annual increase of 12.83%. The net asset value showed a steady rise throughout the year, with Princessbenefiting from the more buoyant conditions in the key exit markets, i.e. IPOs and mergers and acquisitions, andwhich flowed through into the valuations of the underlying investments in the portfolio companies. With amaturing portfolio, the Company’s portfolio benefited from the closer correlation between private and publicmarkets that is evident when investments are realized through IPOs in particular. The venture sector, after severaldifficult years, showed a significant improvement, whereby in terms of vintage the 1999 and 2000 years recordedthe largest gains.

The recovery gained momentum in 2005. As a result, at the end of financial year 2005 the net asset valuestood at USD 706,867,553. This represents an annual increase of 14.50%. The high level of distributions had avery beneficial impact on the net asset value, which now included significant holdings of cash and short-terminvestments. Although a substantial number of investments had now been realized, the portfolio benefited from asubstantial number of revaluations of underlying investments. This positive trend was evident across all vintagesand stages in the portfolio. All of the pre-2004 vintage funds made a positive contribution to the net asset value,with the largest revaluations being seen in the 1999 vintage funds. By financing stage, the biggest contributioncame from the buyout sector. Noteworthy, was that the venture stage continued the upward trend that had beenevident in more recent years and made a significant contribution in 2005. Strong corporate earnings andsupportive financial markets benefited the private equity sector.

Similar conditions prevailed through the first nine months of 2006 and by 30 September 2006 the net assetvalue had reached USD 816,575,136, an increase of 15.5% in the year and a 20.2178% increase in the previous12 months. Funds in the buyout sector performed particularly well, but all stages made a positive contribution.

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The value of distributions received continued to exceed capital calls, a trend evident since the first quarter of2004, and cash and cash equivalents comprised a significant part of the portfolio by end of September 2006.

Exercise of Mitigation Right and Restructuring of Zero Coupon Bonds

In February 2006 the Board of Princess Private Equity Holding Limited was informed by Swiss Re, beingthe reinsurer of Princess Management Limited , that Swiss Re was exercising the Mitigation Right of PrincessManagement under the Insurance Policy, assigned to Swiss Re under the Reinsurance Agreement, so as tomitigate the likelihood of an outstanding bond loss (see ‘‘Organisational Structure and Material Agreements —Organisational Structure and Restructuring’’). The Mitigation Right, which is further described in Section‘‘Organisational Structure and Material Agreements — Organisational Structure and Restructuring’’, includes theright to amend the investment guidelines and to limit or exclude new commitments. Pursuant to the MitigationRight, Swiss Re has directed Princess not to make any further investment commitments in private equity assets,and Princess instructed the Investment Manager accordingly.

As a result of the direction to the Investment Manager, no new commitment to underlying funds could bemade, although capital calls under existing commitments continued to be met. Princess Group had made newcommitments of USD 160,000,000 to 2005 and 2006 vintage funds prior to the exercise of the mitigation right asdescribed above.

Short Term Investments

The portfolio includes substantial holdings of cash and other short term investments which have beenaccumulated as distributions received and have exceeded funded capital calls. These balances have furtherincreased following the exercise of the Mitigation Right as no new commitments have been made. The balancesare available to fund capital calls from existing commitments to underlying funds and will be available fordeployment into new private equity investments when the restriction on making new commitments is lifted. Untilthen, the income from these investments is dependent on the prevailing interest rates in the market.

Significant Accounting Policies

The significant accounting policies are described in the notes to the Consolidated Financial Statements. Theapplication of these policies requires estimates and assumptions that have an influence on the presentation ofassets and liabilities, the disclosure of contingent liabilities at the balance sheet date, and the presentation ofincome and expenses. The amounts actually arising in the future may differ from the amounts recognized in thefinancial statements resulting from estimates and assumptions.

In the Consolidated Financial Statements and the Consolidated Interim Financial Statements, the followingsignificant accounting policies have been applied:

Net income from short-term investments and cash and cash equivalents

Income from bank deposits is included on an accruals basis. Gains and losses from short-term investmentsand gains and losses from cash and cash equivalents also include the increase in value of bonds purchased at adiscount. All realized and unrealized surpluses and losses are recognized in the income statement.

Expenditure

The expenditure is included in the financial statements on an accruals basis.

Functional and presentation currency

Items included in the Princess Group’s financial statements are measured using the currency of the primaryeconomic environment in which it operates (the functional currency). This is the US dollar, which reflects theGroup’s primary activity of investing in US dollar limited partnerships and private equity. The Group has alsoadopted the US dollar as its presentation currency. However, in the course of the Restructuring, the functionalcurrency of the Company will be changed to euros.

Transactions in foreign currencies are translated into US dollars at the exchange rate prevailing at the date ofthe transaction. Monetary assets and liabilities denominated in foreign currencies are translated into US dollars atthe exchange rate prevailing at the balance sheet date. Exchange gains and losses are included in the incomestatement.

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Investments in limited partnerships and directly held investments

International Financial Reporting Standards, ‘‘International Accounting Standard 39 (IAS 39 (revised2004)), Financial Instruments: Recognition and Measurement’’, requires investments treated as ‘‘financial assetsat fair value through profit or loss’’ to be held at fair value. Fair value is the amount for which an asset could beexchanged between knowledgeable willing parties in an arms length transaction.

Investments in limited partnerships are being treated as ‘‘financial assets at fair value through profit or loss’’and therefore disclosed at fair value. Initially they are valued at fair value. For the ongoing valuation of suchinvestments the directors review information provided by underlying funds and other business partners and applywidely recognized valuation methods to estimate a fair value as at the balance sheet date.

In selecting investments the Directors have taken into consideration the accounting and valuation basis of theunderlying funds and select only those investments, which adopt an internationally recognized standard.

The Directors also review management information provided by underlying funds on a regular basis. Inthose cases where the management information is limited, the Directors work with the underlying funds in anattempt to obtain more meaningful information.

Notwithstanding the above, the variety of valuation bases adopted and quality of management informationprovided by the underlying funds and the lack of liquid markets for the investments held mean that there areinherent difficulties in determining the fair values of these investments that cannot be eliminated.

Amounts realized on the sale of investments will differ from the fair values reflected in these financialstatements and the differences may be significant.

The directly held investments are being treated as ‘‘financial assets at fair value through profit or loss’’ andare therefore disclosed at fair value. Initially they are valued at fair value. For determining the fair value, theDirectors refer to the most recent available information provided by the lead investor of the investment with anychanges resulting from additional financing rounds or a diminution in value.

Any changes in the fair value of the investments are shown within ‘‘Net income from limited partnershipsand directly held investments — Revaluation’’.

Any distributions, including return of principal of investment, received from the underlying limitedpartnerships and directly held investments are recognized on the distribution date.

All transactions relating to investments in limited partnerships and directly held investments are recognizedon the settlement date.

Short-term investments

Short-term investments are defined as investments with maturity between three and twelve months from thedate of purchase and are being treated as ‘‘financial assets at fair value through profit or loss’’.

The short-term investments purchased at par are included in the balance sheet at market values ruling at thebalance sheet date. The changes in the fair value are included within ‘‘Net income from short-term investments —Gains and losses’’.

The short-term investments purchased at a discount are included in the balance sheet at market values rulingat the balance sheet date. The changes in the fair value and the interest received at maturity are included within‘‘Net income from short-term investments — Gains and losses’’. Upon maturity of the short-term investmentspurchased at a discount the difference between the last reported fair value and the maturity amount are includedwithin ‘‘Realized gains and losses’’.

All transactions relating to short-term investments are recognized on the settlement date.

Cash and cash equivalents

Cash and cash equivalents consist of cash at bank and cash invested in money market instruments with amaturity of up to three months from the date of purchase. The cash equivalent investments purchased at adiscount are included in the balance sheet at market values ruling at the balance sheet date. The changes in thefair value and the interest received at maturity are included within ‘‘Net income from cash and cash equivalents’’.

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Accounting for derivative financial instruments and hedging activities

Princess Group’s policy of hedging the value of non-US dollar investments against the US dollar does notqualify as hedge accounting as defined in IAS 39 (revised 2004). Derivative financial instruments are initiallyrecognized in the balance sheet at cost and subsequently are remeasured at their fair value. As a result theunrealized changes in the fair value of these derivatives and the realized net gains/losses on the derivatives thatmatured during the year are recognized in the income statement under the heading of ‘‘Net income from limitedpartnerships and directly held investments — foreign exchange gains and losses’’.

Consolidation

Subsidiary undertakings, which are those companies in which the Princess Group, directly or indirectly, hasan interest of more than one half of the voting rights or otherwise has the power to exercise control over theoperations, have been consolidated. All inter-company transactions, balances and unrealized surpluses and losseson transactions between group companies have been eliminated.

Comparison of Financial Years 2003, 2004 and 2005 (IFRS)

Results of operations

The following table contains details from the consolidated income statement of Princess for the financialyears ended 31 December 2003, 2004 and 2005.

Financial year ended 31 December (audited)

2003 2004 2005

In USD

Net income from limited partnerships and directly heldinvestments**************************************** 20,391,401 93,196,744 110,274,266

Dividend and interest income**************************** 4,858,192 9,370,958 15,018,766Revaluation ****************************************** 17,199,710 88,553,138 95,766,450Foreign exchange gains & losses************************* (1,666,501) (4,727,352) (510,950)Net income from short-term investments **************** — — 150,296Gains and losses ************************************** — — 150,296Net income from cash and cash equivalents ************** 320,189 145,956 1,323,072Interest income *************************************** 160,077 152,739 1,328,159Gains and losses ************************************** 161,017 — —Foreign exchange gains and losses *********************** (905) (6,783) (5,087)Operating income ************************************ 20,711,590 93,342,700 111,747,634Operating expenses*********************************** (22,530,305) (21,694,543) (21,747,598)Management fee ************************************** (13,566,546) (12,739,586) (11,852,212)Insurance fee***************************************** (8,130,720) (8,235,584) (9,114,500)Administration fee ************************************ (271,025) (274,519) (303,817)Tax exemption fee************************************* (1,847) (2,243) (2,179)Other foreign exchange gains & losses ******************** — — (52,503)Other operating expenses ******************************* (560,167) (442,611) (422,387)Financing cost *************************************** (39,718,664)1 (41,071,011) (42,625,400)Finance cost on convertible bond ************************ (35,783,619)1 (38,145,853) (40,664,029)Amortization of transaction costs ************************ (1,487,513)1 (1,487,513) (1,487,513)Interest Expense ************************************** (895,271) (1,437,645) (473,858)Other finance costs ************************************ (1,552,261) — —

Surplus/(loss) for the financial year ********************* (41,537,379)1 30,577,146 47,374,636

1 Figures have been restated in the course of the preparation of the audited consolidated financial statements 2004, see note 22 to the auditedconsolidated financial statements 2004.

The net income from limited partnerships and directly held investments rose from USD 20,391,401 infinancial year 2003 by USD 72,805,343 (357.0%) to USD 93,196,744 in financial year 2004 and by a furtherUSD 17,077,522 to USD 110,274,266 in financial year 2005, representing a further increase of 18.3%. This was aresult of an increase in realized and unrealized revaluations, reflecting the higher values attributed to portfoliocompanies by the general partners, and an increase in dividend and interest income received from limitedpartnerships.

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The dividends and interest income from limited partnerships and direct investments increased fromUSD 4,858,192 in financial year 2003 by USD 4,512,766 (92.9%) to USD 9,370,958 in financial year 2004 andby a further USD 5,647,808 to USD 15,018,766 in financial year 2005, representing a further increase of 60.3%.This reflects the ability of companies within the underlying funds to declare dividends either as a result ofrefinancing or through internal cash generation.

The following table contains the dividends and interest income from limited partnerships for the financialyears 2003, 2004 and 2005:


2003 2004 2005

In USD

Dividend income:— Dividend and interest income from limited partnerships and

directly held investments*********************************** 4,858,192 9,370,958 15,018,766— Interest income from cash and cash equivalents *************** 160,077 152,739 1,328,159Total dividend and interest income***************************** 5,018,269 9,523,697 16,346,925Total interest expense *************************************** (895,271) (1,437,645) (473,858)

Revaluation rose from USD 17,199,710 in financial year 2003 by USD 71,353,428 (414.8%) toUSD 88,553,138 in financial year 2004. In 2005 the revaluation rose by USD 7,213,312 (8.1%) toUSD 95,766,450. This was due to the more buoyant conditions in the key exit markets, which flowed through intohigher valuations of the underlying investments in the portfolio companies.

The following table contains details with respect to the foreign exchange, gains and losses for financialyears 2003, 2004 and 2005:


2003 2004 2005

In USD

Foreign exchange revaluation****************************** 27,511,932 15,071,749 (23,323,399)Revaluation of foreign exchange hedges relating to investments

in limited partnerships and directly held investments********* (9,260,832) (927,303) 21,618,035Realized gains/(losses) from foreign exchange hedges relating to

investments in limited partnerships and directly heldinvestments ****************************************** (19,917,601) (18,871,798) 1,194,415

Rounding ********************************************** (—) — (1)(1,666,501) (4,727,352) (510,950)

The portfolio consists of USD and non USD dominated assets and these non USD assets are hedged backinto USD. Hedging is not used as part of an investment strategy. The foreign exchange gains and losses within thenet income from partnerships and directly held investments reflect the difference between the foreign exchangerevaluation of the investment portfolio and the revaluated and realized gain or losses from the hedges. Themagnitude of the numbers is a reflection of the extent of foreign currency movements, rather than any view takenby the Investment Manager on likely currency movements.

The foreign exchange revaluation will be positive when the USD has weakened in the period against thehedged currencies, which is seen in financial years 2003 and 2004 when the foreign exchange revaluation fellfrom USD 27,511,932 by USD 12,440,183 (45.2%) to USD 15,071,749. With the USD strengthening in financialyear 2005 the foreign exchange revaluation became negative USD 23,323,399, a movement of USD –38,395,148(254.7%).

The realized gains and revaluation of foreign exchange hedges will move in the opposite direction. Therevaluation loss declined from USD 9,260,832 in financial year 2003 by USD 8,333,529 (90.0%) toUSD 927,303. In financial year 2005 the revaluation rose by USD 20,690,732 (2,231.2%) to USD 21,618,035,again as a result of the strengthening of the USD. The realized loss in financial year 2003 was USD 19,917,601and there was a further realised loss of USD 18,871,798 in financial year 2004.

The net income from short-term investments amounted to a total of USD 150,296 in financial year 2005being realised and unrealised gains from short term investments. There were no short-term investments in 2003and 2004 as no surplus funds were held. As a result of a high level of distributions received from limitedpartnerships in financial year 2005 Princess held cash in excess of its immediate requirements which it investedinto short-term bonds with a maturity of less than one year and rated AA- by Standard & Poor’s Rating Service.

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The net income from cash and cash equivalents decreased from USD 320,189 in financial year 2003 byUSD 174,233 (54.4%) to USD 145,956 in financial year 2004 and rose by USD 1,177,116 (806.5%) toUSD 1,323,072 in financial year 2005. The sharp increase in financial year 2005 was mainly based on an increaseof interest income which rose from USD 152,739 in financial year 2004 by USD 1,175,420 (769.6%) toUSD 1,328,159 in financial year 2005. The interest income increased as Princess accumulated substantial cashbalances given the high level of distributions received from limited partnerships in financial year 2005.

The loss on foreign exchange gains and losses on cash and cash equivalents decreased from USD (905) infinancial year 2003 by USD (5,878) (649.5%) to USD (6,783) in financial year 2004 and rose by USD 1,690(24.9%) to USD (5,087) in financial year 2005 but were not significant over the three years.

As a result of the foregoing, the operating income rose from USD 20,711,590 in financial year 2003 byUSD 72,631,110 (350.7%) to USD 93,342,700 in financial year 2004. In 2005 the operating income rose byUSD 18,404,934 (19.7%) to USD 111,747,634 in comparison to the prior financial year.

Operating Expenses

The operating expenses during the financial years 2003, 2004 and 2005 were almost constant and fell fromUSD 22,530,305 in financial year 2003 by USD 835,762 (3.8%) to USD 21,694,543 in financial year 2004 androse by USD 53,055 (0.3%) to USD 21,747,598 in financial year 2005.

Operating expenses comprise in particular the fees payable by Princess. The management fee due toPrincess Management Limited is calculated quarterly as 0.375% of the higher of the sum of private equity netassets and undrawn commitments or the net assets of the Company and amounted to USD 13,566,546 in financialyear 2003, USD 12,739,586 in financial year 2004, down by 6.1% and USD 11,852,212 down by 7.5% infinancial year 2005, while the insurance fee is calculated quarterly as 0.375% of net assets and amounted toUSD 8,130,720 in financial year 2003, USD 8,235,584 in financial year 2004 and USD 9,114,500 in financialyear 2005.

The administration fee is paid quarterly to Partners Group (Guernsey) Limited and is calculated as0.0125% of the net assets and amounted to USD 271,025 in financial year 2003, USD 274,519 in financial year2004 and USD 303,817 in financial year 2005. A tax exemption fee of GBP 600 per annum is paid by each ofthe Princess companies. This has not changed over the three years and the reported cost of USD 1,847,USD 2,243 and USD 2,179 in financial years 2003, 2004 and 2005 respectively reflect the USD exchange rate atthe balance sheet date.

Other foreign exchange gains and losses amounted to USD (52,503) in 2005. In 2003 and 2004 no suchlosses occurred.

Other operating expenses fell from USD 560,167 in 2003 by USD 117,556 (21.0%) to USD 442,611 in2004 and fell by a further USD 20, 224 (4.65%) to USD 422,387 in 2005.

Financing costs increased from USD 39,718,664 in financial year 2003 by USD 1,352,347 (3.4%) toUSD 41,071,011 in financial year 2004 and by a further USD 1,554,389 to USD 42,625,400 in financial year2005, representing a further increase of 3.8%. In the financial years 2003, 2004 and 2005, the major portion offinance cost related to the finance cost on the convertible bond.

In accordance with IAS 32, Financial Instruments: Disclosure and Presentation, the net proceeds of the bondhave been split between the liability and equity option components. The fair value of the equity component hasbeen calculated as USD 264,834,825 using cash flows discounted at market interest rates for an equivalent year.This amount is classified as share premium and will remain part of the permanent equity of the Group. Theremaining net proceeds, after the allocation of the liability related transaction costs, of USD 424,077,733 areallocated to the liability component. The liability, including transaction costs, is therefore stated at a discount of1.6110% per quarter to the maturity value.

The result of this technical requirement in IAS 32 is that the discount is amortized through the incomestatement as a finance cost, on a yield to maturity basis, over the 7.5-year life of the bonds until the firstconversion at 1 January 2007. This accounting treatment has no effect on either the economic position or the netasset value of the Group. The cumulative finance cost in retained earnings is offset by an equivalent credit inshare premium. However, the required treatment clearly does have a significant impact on the net surplus or lossreported in the income statement over the year to the conversion of the bond.

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These costs increased from USD 35,783,619 in financial year 2003 by USD 2,362,234 (6.6%) toUSD 38,145,853 in financial year 2004 and increased by a further USD 2,518,176 (6.6%) to USD 40,664,029 infinancial year 2005.

During the financial years 2003 through 2005 the amortisation of transaction costs was stable andamounted to USD 1,487,513. Amortisation of transaction costs comprises initial start up costs which have beenamortised over the anticipated life of the Bond.

In comparison to financial year 2003 (USD 895,271) the interest expenses rose by USD 542,374 (60.6%) toUSD 1,437,645 in financial year 2004 as the credit facility was more fully utilized. However, in financial year2005 the interest expenses reduced by USD 963,787 (67.0%) to USD 473,858 as drawings under the facility wereprogressively reduced.

Other finance costs comprise costs in relation to the establishment of the credit facility and occurred only in2003 when they amounted to USD 1,552,261.

The surplus/(loss) for the financial year has been developing similarly to the operating income. Thesurplus/(loss) for the financial year moved from a loss of USD 41,537,379 in financial year 2003 to a surplus ofUSD 30,577,146 in financial year 2004, an increase of USD 72,114,525 (173.6%), and by a further increase byUSD16,797,490 ( 54.9%) to a surplus of USD 47,374,636 in financial year 2005.

Financial condition: Cash Flow statement

The following table contains details on the consolidated cash flow of Princess for the financial years 2003,2004 and 2005.


2003 2004 2005

In USD

Cash flow from operating activitiesManagement fee ************************************** (13,566,546) (12,739,586) (11,852,212)Administration fee ************************************ (271,025) (274,519) (303,817)Insurance fee***************************************** (8,130,720) (8,235,584) (9,114,500)Tax exemption fee************************************* (1,847) (2,243) (2,179)Other operating expenses ******************************* (560,167) (442,611) (422,387)Proceeds from/(costs of) hedging activities***************** (19,917,601) (18,871,798) 1,194,415(Increase)/decrease in other short-term receivables*********** 21,612 (354,544) (51,038)Increase/(decrease) in other short-term payables ************ (60,139) 18,125 (116,322)Dividends received from limited partnerships and directly held

investments **************************************** 2,330,371 6,170,064 11,954,949Interest received from limited partnerships and directly held

investments **************************************** 2,527,822 3,200,894 3,063,817Purchase of limited partnerships and directly held investments (116,287,455) (113,750,668) (98,252,399)Distributions by limited partnerships and directly held

investments **************************************** 65,411,041 164,513,747 205,398,410Purchase of short-term investments *********************** — — (59,313,038)Cash inflow from cash and cash equivalents**************** 321,094 152,739 1,328,159Financing cost/credit line charges ************************ (1,552,261) (1,561,468) (796,647)Net cash from/(used in) operating activities ************** (89,735,822) 17,822,548 42,715,211Cash flow from financing activitiesIncrease/(decrease) in credit facility ********************** 30,000,000 (20,000,000) (10,000,000)Net increase/(decrease) in cash and cash equivalents ****** (59,735,822) (2,177,452) 32,715,211Cash and cash equivalents at beginning of reporting year** 78,526,819 18,790,091 16,605,856Effects on cash and cash equivalents**********************Movement in exchange rates **************************** (905) (6,784) (5,087)Rounding ******************************************** (1) 1 (1)Cash and cash equivalents at end of reporting year ******* 18,790,091 16,605,856 49,315,979

The net cash from/(used in) operating activities was USD (89,735,822) in financial year 2003 but the netcash from operations turned positive in financial year 2004, an improvement of USD 107,558,370 (119.9%) toUSD 17,822,548 in 2004 and rose by a further USD 24,892,663 (139.7%) to USD 42,715,211 in financial year2005.

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The most significant factor behind this change was the increase in distributions by limited partnershipsand directly held investments which increased from USD 65,411,041 in financial year 2003 by USD 99,102,706(151.5%) to USD 164,513,747 in financial year 2004 and by USD 40,884,663 (24.9%) to USD 205,398,410 infinancial year 2005. This reflects the growing maturity of the portfolio, with an increasing number of underlyinginvestments being realised in whole or in part, and the proceeds returned to the Company by the underlyingfunds.

Purchases of limited partnerships reflect the value of capital calls funded by the company in the year.These remain substantial but have decreased from USD 116,287,455 in financial year 2003 by USD 2,536,787(2.2%) to USD 113,750,668 in financial year 2004 and by USD 15,498,269 (13.6%) to USD 98,252,399 infinancial year 2005 as the earlier vintage funds to which the Company has made commitments approach the endof their investment periods.

Hedging activities resulted in a net cash outflow of USD 19,917,601 in financial year 2003 and a furtheroutflow of USD 18,871,798 in financial year 2004, while proceeds in an amount of USD 1,194,415 were receivedin financial year 2005. The net cash inflows or outflows as a result of hedging are a function of movements in thehedged (non USD) currency.

Dividends received from limited partnerships and directly held investments increased fromUSD 4,858,192 in financial year 2003 by USD 3,839,693 (79.0%) to USD 6,170,064 in financial year 2004 andby USD 5,784,885 (93.7%) to USD 11,954,949 in financial year 2005. This was due to the increased ability ofthe companies that constitute the underlying investment to declare dividends.

In financial year 2005 short term investments consisting of bonds with a maturity of less than one year andamounting to USD 59,313,038 were purchased.

In financial year 2003 the cash flow from financing activities amounted to USD 30,000,000, as the creditfacility was utilised and fell to USD (20,000,000) in financial year 2004 and USD (10,000,000) in financial year2005 as the facility was fully repaid from surplus cash flow generated by operating activities.

The net increase/(decrease) in cash and cash equivalents moved from a decrease of USD 59,735,822 infinancial year 2003 to a decrease of USD 2,177,452 in financial year 2004 and to USD 32,715,211 net increase infinancial year 2005.

The cash and cash equivalents at beginning of reporting year amounted to USD 78,526,819 at the start ofthe financial year 2003 and decreased by USD 59,736,728 to USD 18,790,091 at the end of financial year2003/beginning of financial year 2004. This was mainly because of the net cash used in operating activities, asdetailed above. At the end of financial year 2004 the cash and cash equivalents totaled USD 16,605,856, adecrease of USD 2,184,235 in the financial year. The decrease in holdings of cash and cash equivalents, despiteoperating activities generating as cash surplus, is attributable to the repayment of drawn credit facilities. At theend of financial year 2005 the cash and cash equivalents amounted to USD 49,315,979. This increase byUSD 32,710,123 in comparison to the beginning of financial year 2005 was mainly due to the surplus net cashgenerated from operating activities.

Balance Sheet

Assets

The following table shows the assets of Princess Group based on the consolidated balance sheet of theCompany as at 31 December 2003, 2004 and 2005.


2003 2004 2005

In USD

Non-current assetsInvestments in limited partnerships and directly held

investments ***************************************** 577,115,116 629,976,924 595,273,964Current assetsShort-term investments ********************************** — — 59,463,335Other short-term receivables****************************** 68,449 422,993 421,528Hedging assets **************************************** — — 2,913,419Cash and cash equivalents ******************************* 18,790,091 16,605,856 49,315,979Total current assets************************************ 18,858,540 17,028,849 112,114,261Total assets******************************************* 595,973,656 647,005,773 707,388,225

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Total assets increased from USD 595,973,655 as of 31 December 2003 by USD 51,032,117 (8.6%) toUSD 647,005,773 as of 31 December 2004 and by USD 60,382,452 (9.3%) to USD 707,388,225 as of31 December 2005. This was mainly based on an increase in the value of investments in limited and directly heldinvestments in financial year 2004 and to an increase in short term investments and of cash and cash equivalentsin financial year 2005.

Investments in limited partnerships and directly held investments increased by USD 52,861,808 (9.2%)from USD 577,115,116 as of 31 December 2003 to USD 629,976,924 as of 31 December 2004 and decreased byUSD 87,564,768 (5.8%) to USD 595,273,964 as of 31 December 2005.

The following table contains details with respect to Investments in limited partnerships and directly heldinvestments:


2003 2004 2005

In USD

Balance at beginning of reporting year ***************** 481,572,060 577,115,116 629,976,924Capital activity recorded at the transaction rate************* 116,287,455 113,750,668 98,252,399Distribution****************************************** (65,411,041) (164,513,747) (205,398,410)Revaluation ****************************************** 17,199,710 88,553,138 95,766,450Foreign exchange gains (losses) ************************* 27,511,932 15,071,749 (23,323,399)

Balance at end of reporting year *********************** 577,115,116 629,976,924 595,273,964

The change in the value of investments is a function of the level of capital calls and distributions, togetherwith revaluation and foreign exchange gains and losses. The value of investments in limited partnerships anddirectly held investments increase in financial year 2003 as the level of capital activity (capital calls) exceed thelevel of distributions, while revaluations also made a positive contribution. Foreign exchange gains were recordedas the dollar weakened against the other currencies in the portfolio. In financial year 2004 the level ofdistributions exceeded the value of capital calls, but this negative impact on the value of limited partnerships anddirectly held investments was more than offset by revaluation gains and foreign exchange gains. The value ofinvestments in limited partnerships and directly held investments at the end of financial year 2004 wasUSD 629,976,924, an increase of USD 52,861,808 (9.2%). The decline in the value of investments in limitedpartnerships in 2005 reflects the high level of distributions, which in turn are shown in the value of cash and shortterm investments, and foreign exchange losses as the dollar appreciated. The value of investments in limitedpartnerships and directly held investments at the end of financial year 2005 was USD 595,273,964, an decrease ofUSD 34,702,960 (5.8%). The increase in revaluations has made a positive contribution to the value of investmentsin limited partnerships, especially in 2004 and 2005, as the private equity sector has experienced a period ofstrong growth.

Current assets fell from USD 18,858,540 in financial year 2003 by USD 1,829,691 (10.7%) toUSD 17,028,849 in financial year 2004. They then rose significantly by USD 95,085,412 (558.1%) toUSD 112,114,261 in financial year 2005. This was mainly due to short term investments, which were nil infinancial years 2003 and 2004 but totaled USD 59,463,335 in financial year 2005.

Hedging assets amounted to USD 2,913,419 in financial year 2005 which did not arise in financial years2003 and 2004.

The hedging assets in financial year 2005 in an amount of USD 2,913,419 resulted from forward exchangecontracts which are shown in the following table:

Surplus/(loss)31 December

USD Rate Value date 2005

Sell GBP against USD ************************ 36,799,770 1.7524 20. April 2006 679,602Sell EUR against USD ************************ 91,254,375 1.2167 20. April 2006 1,959,825Sell SEK against USD ************************ 9,777,083 7.6710 20. April 2006 273,992

2,913,419

Cash and cash equivalents fell from USD 18,790,091 in financial year 2003 by USD 2,184,235 (13.2%) toUSD 16,605,856 in financial year 2004. They rose significantly by USD 32,710,120 (197.0%) toUSD 49,315,979 in financial year 2005. This reflects the strong cash inflow from operating activities in financialyear 2005.

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Other short term receivables increased from USD 68,449 as of 31 December 2003 by USD 354,544(518.0%) to USD 422,993 as of 31 December 2004, which was mainly due to an increase in distributionsreceivable. As of 31 December 2005 short term receivables were stable in comparison to financial year 2004 andamounted to USD 421,528.

Equity and Liabilities

The following table shows the equity and liabilities of Princess Group based on the consolidated balancesheet of the Company as at 31 December 2003, 2004 and 2005.

As at 31 December (audited)

2003 2004 2005

In USD

Equity and LiabilitiesCapital and reservesIssued capital **************************************** 100 100 100Reserves ******************************************** (26,248,056)1 4,329,090 51,703,726Total equity ***************************************** (26,247,956)1 4,329,190 51,703,826Liabilities falling due after more than one yearConvertible bond ************************************* 573,378,8191 613,012,186 655,163,727Liabilities falling due within one yearHedging liabilities ************************************ 17,777,313 18,704,616 —Other short-term payables ****************************** 1,065,480 959,782 520,670Credit facility **************************************** 30,000,000 10,000,000 —Rounding ******************************************* — (1) 2

48,842,793 29,664,397 520,672

Total liabilities and equity***************************** 595,973,656 647,005,773 707,388,225


The total equity increased from a negative USD 26,248,956 at the end of financial year 2003 byUSD 30,577,146 (116.5%) to USD 4,329,190 at the end of financial year 2004 and increased further byUSD 47,374,636 (1,094.3%) to USD 51,703,826 at the end of the financial year 2005. This was due to changes inthe reserves.

In the financial years 2003, 2004 and 2005, there were no changes in the issued capital of the Company.The following table gives an overview of the share capital of Princess Group:


2003 2004 2005

In USD

Authorized20,000,000 Class A shares of USD 0.01 each************************** 200,000 200,000 200,00010,000 Class B shares of USD 0.01 each ***************************** 100 100 100

200,100 200,100 200,100Issued an fully paid 10,000 Class B shares of USD 0.01 each ************ 100 100 100

The reserves amounted to a negative USD 26,248,056 in financial year 2003 and increased byUSD 30,577,146 (116.5%) to USD 4,329,090 in financial year 2004 and increased by USD 47,374,636(1,094.3%) to USD 51,703,726 in financial year 2005 due to the surplus recorded in the relevant financial years.

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The following table shows the liabilities with respect to the convertible bond.


2003 2004 2005

In USD

Balance at beginning of reporting year ****************** 536,107,687 573,378,819 613,012,186Amortization of transaction costs ************************ 1,487,5131 1,487,513 1,487,513Finance cost on convertible bond ************************ 35,783,6191 38,145,853 40,664,029Rounding ******************************************** (1) 1 (1)Balance at end of reporting year *********************** 573,378,8191 613,012,186 655,163,727

1 Figure has been restated in the course of the preparation of the consolidated financial statements 2004, see note 22 to the auditedconsolidated financial statements 2004.

The liabilities falling due after more than one year consisted of liabilities with respect to the convertiblebond and increased from USD 573,378,819 in financial year 2003 by USD 39,633,367 (6.9%) toUSD 613,012,186 in financial year 2004 and by USD 42,151,541 (6.9%) to USD 655,163,727 in financial year2005, which was due to the increase of finance costs from USD 35,783,619 in financial year 2003 toUSD 38,145,853 in financial year 2004 and to USD 40,664,029 in financial year 2005. The calculation of thefinancing cost of the bond is explained more fully in ‘‘operation expenses’’.

Liabilities falling due within one year fell from USD 48,842,793 as at 31 December 2003 byUSD 19,178,396 (39.3%) to USD 29,664,397 as at 31 December 2004 and by a further USD 29,143,725 (98.2%)to USD 520,672 as at 31 December 2005.

In the following table the hedging liabilities for the financial years 2003 to 2005 are shown in detail:

Surplus/(loss)USD Rate Value date 31 December 2003

Sell GBP against USD ******************* 87,000,000 1.6397 25 March 2004 (7,072,190)Sell EUR against USD ******************* 89,000,000 1.1410 25 March 2004 (9,057,313)Sell CHF against USD ******************* 3,000,000 1.3373 25 March 2004 (244,039)Sell SEK against USD ******************* 14,000,000 7.8764 25 March 2004 (1,285,911)Sell JPY against USD******************** 3,000,000 111.4325 25 March 2004 (117,860)

Total ********************************* (17,777,313)

Surplus/(loss)USD Rate Value date 31 December 2004

Sell GBP against USD ******************* 77,990,000 1.7725 15. April 2005 (5,949,724)Sell EUR against USD ******************* 97,170,000 1.2300 15. April 2005 (10,052,750)Sell CHF against USD ******************* 4,331,782 1.2466 15. April 2005 (431,987)Sell SEK against USD******************** 19,924,099 7.3780 15. April 2005 (2,191,997)Sell JPY against USD ******************** 1,031,398 109.5600 15. April 2005 (78,158)

Total ********************************** (18,704,616)

In 2005 there were no hedging liabilities.

The other short term payables decreased constantly. While they amounted to USD 1,065,480 as at31 December 2003, they decreased by USD 105,698 ( 9.9%) to USD 959,782 as at 31 December 2004 and byUSD 439,112 (45.8%) to USD 520,670 as at 31 December 2005.

The following table shows details of the liabilities with respect to other short term payables:


2003 2004 2005

In USD

Accrued interest ************************************************ 895,271 771,447 448,658Other accruals ************************************************** 170,209 188,334 72,012Rounding ****************************************************** — 1 —

1,065,480 959,782 520,670

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Accrued interest for the credit facility decreased from USD 895,271 in financial year 2003 byUSD 123,824 (13.8%) to USD 771,447 in financial year 2004 and further decreased by USD 322,789 (41.8%) toUSD 448,658 in financial year 2005.

In financial year 2003 Princess had a credit facility of USD 130,000,000 available. This was drawn in anamount of USD 30,000,000 for cash management at the end of the year and is therefore shown in the balancesheet as at 31 December 2003. Further drawings were made in 2004 but these were subsequently repaid asscheduled which reduced the utilization of the credit facilities to USD 10,000,000 at 31 December 2004 and to nilat 31 December 2005. The credit facility was reduced to USD 50,000,000 in late 2005.

Total liabilities and equity increased from USD 595,973,656 in financial year 2003 by USD 51,032,117(8.6%) to USD 647,005,773 in financial year 2004 and by USD 60,382,482 (9.3%) to USD 707,388,255 infinancial year 2005, which was mainly due to an increase in liabilities with respect to the bond.

Comparison of the Nine Months ended 30 September 2005 and the Nine Months ended 30 September2006 (IFRS)

Results of operations

The following table contains details from the interim consolidated income statement of Princess for the ninemonths ended 30 September 2005 and the nine months ended 30 September 2006 in accordance with IFRS.

Nine months ended30 September (unaudited)

2005 2006

In USD

Net income from limited partnerships and directly held investments ******* 77,483,566 121,910,320Dividend and interest income ****************************************** 13,540,676 5,249,879Revaluation ******************************************************** 64,569,043 112,014,724Foreign exchange gains & losses *************************************** (626,153) 4,645,717Net income from short-term investments******************************* — 3,158,455Gains and losses **************************************************** — 3,047,875Interest on short-term investments ************************************** — 110,580Net income from cash & cash equivalents****************************** 769,120 1,869,136Interest income ***************************************************** 582,185 1,832,935Foreign exchange gains & losses *************************************** 186,935 36,201Operating income ************************************************** 78,252,686 126,937,911Operating expenses ************************************************* (15,936,265) (17,080,739)Management fee **************************************************** (8,825,883) (9,211,486)Insurance fee ******************************************************* (6,662,614) (6,517,700)Administration fee*************************************************** (222,087) (265,918)Tax exemption fee *************************************************** (2,179) (2,181)Other foreign exchange gains & losses ********************************** (50,234) (707,193)Other operating expenses ********************************************* (173,268) (376,261)Financing cost ***************************************************** (31,779,842) (33,515,394)Finance cost on convertible bond *************************************** (30,253,034) (32,250,170)Amortization of transaction costs *************************************** (1,115,635) (1,115,635)Interest expense ***************************************************** (411,173) (149,589)Surplus/(loss) for the financial period ********************************* 30,536,579 76,341,778

In the nine months ended 30 September 2006 the operating income amounted to USD 126,937,911, anincrease of USD 48,685,225 or 62.2% in comparison to nine months ended 30 September 2005, where theoperating income amounted to USD 78,252,686.

Income from limited partnerships and directly held investments rose from USD 77,483,566 in the ninemonths ended 30 September 2005 by USD 44,426,754 (57.3%) to USD 121,910,320 in the nine months ended30 September 2006. This increase was mainly due to the net increase in revaluations, which rose fromUSD 64,569,043 in the nine months ended 30 September 2005 by USD 47,445,681 (73.5%) to USD 112,014,724in the nine months ended 30 September 2006 and which accounted for over 80% of the income from limitedpartnerships and directly held investments in both periods. The increased valuations reflected the generallybuoyant conditions in the private equity market in the nine months ended 30 September 2006, with favorable exitmarkets in particular sustaining higher valuations of portfolio companies. During the nine months periods ended

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30 September 2005 and 30 September 2006, due to its investment policy, Princess Group did not hold any directinvestments in portfolio companies but only indirect investments via funds.

The following table contains the dividends and interest income from limited partnerships for the nine monthsended 30 September 2005 and the nine months ended 30 September 2006:

Nine months ended30 September(unaudited)

2005 2006

In USD

Dividends************************************************************* 10,955,482 1,630,030Interest income ******************************************************** 2,585,194 3,619,849

13,540,676 5,249,879

The decrease of dividends by USD 9,325,452 or 85% from the nine months ended 30 September 2005 to thenine months ended 30 September 2006 was mainly a result of fewer companies within the portfolio distributingincome by way of dividends.

The following table contains details of foreign exchange gains and losses for the nine months ended30 September 2005 and nine months ended 30 September 2006:


2005 2006

In USD

Foreign exchange revaluation ******************************************* (20,223,591) 13,177,690Revaluation of foreign exchange hedges relating to investments in limited

partnerships and directly held investments******************************* 30,952,251 (6,881,974)Realized gains/(losses) from foreign exchange hedges relating to investments in

limited an directly held investments************************************ (11,354,813) (1,650,000)Rounding *********************************************************** — 1

(626,153) 4,645,717

The foreign exchange gains/(losses) and with regard to income from limited partnerships and directly heldinvestments increased from a loss of USD (626,153) in the nine months ended 30 September 2005 to a gain ofUSD 4,645,717 in the nine months ended 30 September 2006, which represented an increase of USD 5,271,870.The main reason for this was a strengthening of the US dollar in 2005 and a weakening of the US dollar in 2006.

In the nine months ended 30 September 2006 Princess had a net income from short-term investments inan amount of USD 3,158,455 as opposed to USD nil in the nine months ended 30 September 2005 as cash onhand exceeded that required to fund capital calls and the surplus was placed in a portfolio of short term notes andbonds. In the nine months ended 30 September 2005 there was no income from short-term investments.

The net income from cash and cash equivalents rose from USD 769,120 in the nine months ended30 September 2005 by USD 1,100,016 (143%) to USD 1,869,136 in nine months ended 30 September 2006. Inaddition to investing in short term assets, Princess held substantial cash balances during the nine months ended30 September 2006.

In comparison to the nine months ended 30 September 2005 where the interest income was USD 582,185and the foreign exchange gains amounted to USD 186,935, the interest income in the nine months ended30 September 2006 amounted to 1,832,935 and there were foreign exchange gains in an amount of USD 36,201.The increase in interest income in the nine months period ended 30 September 2006 was in particular owed tohigher cash balances being maintained.

The operating expenses in the nine months ended 30 September 2005 amounted to USD 15,936,265 whilein the nine months ended 30 September 2006, they increased by USD 1,144,474 or 7.2% to USD 17,080,739. Theexpense for management, insurance, administration fee and tax exemption fee rose only slightly, but therewere other foreign exchange gains & losses of USD (707,193) in the nine months ended 30 September 2006 incomparison to USD (50,234) other foreign exchange gains & losses in the nine months ended 30 September 2005which was the main reason for a rise in the operating expenses in the nine months ended 30 September 2006. Inaddition, other operating expenses, consisting mainly of legal and restructuring costs, rose from USD 173,268

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in the nine months ended 30 September 2005 by USD 202,993 or 117 % to USD 376,261 in the nine monthsended 30 September 2006.

In the nine months ended 30 Septembers 2005 and 2006 the major portion of finance cost related to thefinance cost on the convertible bond. These costs rose from USD 30,253,034 in the nine months ended30 September 2005 by USD 1,997,136 (6,6%) to USD 32,250,170 in the nine months ended 30 September 2006.

Amortization of transactions costs, which comprises the initial cots in relation to the launch of thePrincess bond remained stable at USD 1,115,635 in each of the nine month periods ended 30 Septembers 2005and 2006 whereas interest expense fell from USD (411,173) in the nine months ended 30 September 2005 byUSD 261,584 (63.6%) to USD (149,589) in the nine months ended 30 September 2006.

As a result, the surplus for the period in the nine months ended 30 September 2006 rose significantly fromUSD 30,536,579 in the nine months ended 30 September 2005 by USD 45,805,199(150%) to USD 76,341,778 inthe nine months ended 30 September 2006, which was owed in particular to the revaluation of Princess’investments.

Financial Condition

The following table contains details on the cash flows of Princess for the nine months ended 30 Septembers2005 and 2006.


2005 2006

In USD

Cash flow from operating activitiesManagement fee**************************************************** (8,825,883) (9,211,486)Administration fee ************************************************** (222,087) (265,918)Insurance fee ****************************************************** (6,662,614) (6,517,700)Tax exemption fee ************************************************** (2,179) (2,181)Other operating expenses********************************************* (173,268) (376,261)Proceeds from/(costs of) hedging activities ****************************** (11,354,813) (1,650,000)(Increase)/decrease in other short-term receivables ************************ (1,159,215) (2,840,299)Increase/(decrease) in other short-term payables ************************** (188,334) 1,221,102Dividends received from limited partnerships and directly held investments**** 10,955,482 1,630,030Interest received from limited partnerships and directly held investments ****** 2,585,194 3,619,849Purchase of limited partnerships and directly held investments ************** (72,258,071) (57,487,609)Distributions by limited partnerships and directly held investments*********** 155,045,531 200,903,216Net purchase of short-term investments ********************************* — (177,417,619)Redemptions of short-term investments ********************************* — 128,522,286Interest on short-term investments************************************** — 110,580Interest from cash and cash equivalents ********************************* 582,185 1,832,935Financing cost/credit line charges ************************************** (796,647) (448,658)Net cash from/(used in) operating activities**************************** 67,525,281 81,622,267Cash flow from financing activitiesIncrease/(decrease) in credit facility ************************************ (10,000,000) —Net increase/(decrease) in cash and cash equivalents ******************** 57,525,281 81,622,267Cash and cash equivalents at beginning of reporting period ************* 16,605,856 49,315,979Effects on cash and cash equivalents ***********************************Movement in exchange rates ****************************************** 186,935 36,201Rounding ********************************************************* (1) —Cash and cash equivalents at end of reporting year********************* 74,318,071 130,974,447

In comparison to the nine months ended 30 September 2005, the cash flows from operating activitiesincreased in the nine months ended 30 September 2006 from USD 67,525,281 by USD 14,096,986 (20.9%) toUSD 81,622,267. This increase in the cash flows from operating activities in the nine months ended30 September 2006 resulted mainly from the increase in distributions from limited partnerships as well as adecrease in the costs of hedging activities and the decrease in purchases of limited partnerships and directly heldinvestments.

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Cash outflows relating to management, administration, insurance and tax exemption fees were largelyunchanged in the two periods, while the net cash outflow from hedging activities decreased significantly fromUSD (11,354,813) in the nine months ended 30 September 2005 by USD 9,704,813 (85,5%) to USD (1,650,000)in the nine months ended 30 September 2006.

Dividends received from limited partnerships and directly held investments fell from USD 10,955,482in the nine months ended 30 September 2005 by USD 9,325,452 (85%) to USD 1,630,030 in the nine monthsended 30 September 2006 which was due to a lower level of dividends declared by portfolio companies.

Cash outflows to fund purchases of limited partnerships and directly held investments fell fromUSD (72,258,071) by USD 14,770,462 (20.4%) to USD (57,487,609) as some of the earlier vintage partnershipsneared the end of their investment periods and due to the exercise of the Mitigation Right by Swiss Re inFebruary 2006, Princess was directed not to make further commitments.

Distributions received from limited partnerships and directly held investments increased fromUSD 155,045,531 in the nine months ended 30 September 2005 by USD 45,857,685 (29.6%) toUSD 200,903,216 in the same period of 2006. Distributions received increased substantially as more portfoliocompanies within the limited partnerships approached maturity and the general partners were able to benefit fromthe favourable exit environment and achieved either partial or full realisation of their investments.

While no such investments were made in nine months ended 30 September 2005, funds not required to meetcapital calls were placed into short term investments in the nine months ended 30 September 2006.USD (48,895,333) (net of redemptions of short-term investments) was placed into short term investments in thenine months ended 30 September 2006.

The cash and cash equivalents at the beginning of the nine months ended 30 September 2005 amounted toUSD 16,605,856 and at the end of the nine months ended 30 September 2005, after repayment of USD 10 millionoutstanding under the credit facility, these amounted to USD 74,318,071. The cash and cash equivalentsamounted to USD 49,315,979 at the beginning of the nine months ended 30 September 2006 and toUSD 130,974,447 at the end of the nine months ended 30 September 2006.

Net assets

Assets

The following table shows the assets of Princess Group based on the consolidated balance sheet of theCompany as at 31 December 2005 and 30 September 2006.

As at 31 December As at 30 September(audited) (unaudited)

2005 2006

In USD

Non-current assetsInvestments in limited partnerships and directly held investments ***** 595,273,964 577,050,771Current assetsShort-term investments **************************************** 59,463,335 111,406,541Other short-term receivables *********************************** 421,528 2,554,634Hedging assets ********************************************** 2,913,419 —Cash and cash equivalents ************************************* 49,315,979 130,974,447

112,114,261 244,935,622

Total assets************************************************* 707,388,225 821,986,393

Total assets increased from USD 707,388,225 as of 31 December 2005 by USD 114,598,168 (16.2%) toUSD 821,986,393 as of 30 September 2006. This was mainly based on the increase in short-term investments andcash and cash equivalents.

Investments in limited partnerships and directly held investments fell from USD 595,273,964 as of31 December 2005 by USD 18,223,193 (3.1%) to USD 577,050,771 as of 30 September 2006. As shown in thetable below, the trends evident in 2005 have continued into 2006. While capital activity (being the funding ofcapital calls by limited partnerships) continues to be significant the level of distributions received continues togain pace. While a high level of distributions may be expected to diminish the value of investments to limitedpartnerships this has been in part offset by the increase in revaluation.

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The following table shows the balances of investments in limited partnerships and directly held investmentsas of 30 September 2006.


2006

In USD

Investments in limited partnerships and directly held investmentsBalance at beginning of reporting year **************************************** 595,273,964Capital activity recorded at the transaction rate************************************ 57,487,609Distribution***************************************************************** (200,903,216)Revaluation***************************************************************** 112,014,724Foreign exchange gains ( losses) *********************************************** 13,177,690

Balance at end of reporting year********************************************** 577,050,771

Short term investments rose from USD 59,463,335 as of 31 December 2005 by USD 51,943,206 (87.4%)to USD 111,406,541 as of 30 September 2006 as the inflow from distribution continued to exceed the funding ofcapital calls and surplus funds were accumulated.

Other short term receivables increased from USD 421,528 as of 31 December 2005 by USD 2,133,106(506%) to USD 2,554,634 as of 30 September 2006 due to an increase in distributions receivable.

The hedging assets as at 31 December 2005 in an amount of USD 2,913,419 resulted from forwardexchange contracts which are shown in the following table. There were no hedging assets as at 30 September2006.

While cash surplus to immediate requirements were placed in a portfolio of short term bonds and notes,substantial cash balances were also accumulated and these amounted to USD 130,974,447 as at 30 September2006, against USD 49,315,979 as at 31 December 2005. These balances will be available to fund new investmentswhen Princess resumes making new commitments.

Equity and Liabilities

The following table shows the equity and liabilities of Princess Group based on the consolidated balancesheet of the Company as at 31 December 2005 and 30 September 2006.


2005 2006

In USD

Equity and LiabilitiesCapital and reservesIssued capital *********************************************** 100 100Reserves *************************************************** 51,703,725 128,045,504Total equity ************************************************* 51,703,825 128,045,604Liabilities falling due after more than one yearConvertible bond********************************************* 655,163,727 —Liabilities falling due within one yearConvertible bond********************************************* — 688,529,532Hedging liabilities******************************************** — 3,968,555Other short-term payables ************************************* 520,670 1,442,703Rounding*************************************************** 3 (1)

520,673 693,940,789

Total liabilities and equity ************************************ 707,388,225 821,986,393

The total equity increased from USD 51,703,825 as of 31 December 2005 by USD 76,341,779 (147.7%) toUSD 128,045,604 as of 30 September 2006 which was due to the strong an increase in reserves which amountedto USD 51,703,725 as of 31 December 2005 and USD 128,045,504 as of 30 September 2006, an increase ofUSD 76,341,779 (147.7%). This increase was a result of the continued surplus on the income account.

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Liabilities falling due after more than one year as at 31 December 2005 consisted of liabilities withrespect to the convertible bond amounting to USD 655,163,727. Due to the different accounting treatment of theconvertible bond in light of the commencement of the conversion period on 1 January 2007 and the anticipatedmandatory conversion as adopted by the bondholders’ meeting as short term liability there were no liabilitiesfalling due after more than one year on 30 September 2006.

Liabilities falling due within one year as at 30 September 2006 comprised liabilities with respect to theconvertible bond amounting to USD 688,529,532 as well as hedging liabilities amounting to USD 3,968,555.There were no such liabilities as at 31 December 2005.

The following table shows the liabilities with respect to the convertible bond as at 31 December 2005 and30 September 2006.


2005 2006

In USD

Balance at beginning of reporting period *********************** 613,012,186 655,163,727Amortization of transaction costs ******************************* 1,487,513 1,115,635Finance cost on convertible bond ******************************* 40,664,029 32,250,170Rounding*************************************************** (1) —Balance at end of reporting period **************************** 655,163,727 688,529,532

In the following table the hedging liabilities as of 30 September 2006 are shown in detail:

Surplus/(loss) Surplus/(loss)31 December 30 September

USD Rate Value date 2005 2006

Sell GBP against USD ************** 36,799,770 1.7524 20.04.2006 679,602 —Sell EUR against USD ************** 91,254,375 1.2167 20.04.2006 1,959,825 —Sell SEK against USD ************** 9,777,083 7.6710 20.04.2006 273,992 —Sell GBP against USD ************** 35,670,000 1.7835 20.10.2006 — (1,775,940)Sell EUR against USD ************** 90,790,100 1.2437 20.10.2006 — (1,904,789)Sell SEK against USD ************** 13,386,881 7.4700 20.10.2006 — (287,826)

2,913,419 (3,968,555)

The following table shows the liabilities with respect to other short term payables:


2005 2006

in USD

Accrued interest ********************************************* 448,658 149,589Other accruals *********************************************** 72,012 1,293,114

520,670 1,442,703

The other short term payables increased from USD 520,670 as of 31 December 2005 to USD 1,442,703 as at30 September 2006, mainly due to the rise in other accruals.

Total liabilities and equity increased from USD 707,388,225 as of 31 December 2005 to USD 821,986,393as of 30 September 2006 which was mainly due to an increase in liabilities with respect to the convertible bondand to hedging liabilities.

Significant Changes since the End of the Period under Review

Due to the conversion of the Bonds the liabilities under the Bonds are expected to drop to nil and short-termliabilities are expected to be reduced significantly in the financial statements as of 31 December 2006, whilst theissued share capital is expected to increase to USD 70,100 (without taking into consideration the conversion intoeuros) and the capital reserves are expected to increase significantly. Further details of the conversion aredescribed under ‘‘The Capital of the Company — Convertible Bonds’’.

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BUSINESS DESCRIPTION

Overview

Princess Private Equity Holding Limited is a Guernsey corporation that invests directly or through itswholly-owned subsidiary, Princess Private Equity Subholding Limited, in private equity and private debt, whichmay be classified as private market investments (see ‘‘— Private Equity and Private Debt Market’’).

Princess’ investments are managed and administered on a discretionary basis by Princess ManagementLimited (the ‘‘Investment Manager’’), a company incorporated in Guernsey. Princess Management is advised byPartners Group (Zug) (the ‘‘Investment Adviser’’) which conducts due diligence reviews and performs otherinvestment management services (see ‘‘Organisational Structure and Material Agreements — MaterialAgreements — Investment Management Arrangements — Investment Management Agreement’’ and‘‘Organisational Structure and Material Agreements — Material Agreements — Investment Arrangements —Sub-Management Agreements and Sub-Adviser Agreement’’). In addition, Partners Group (Guernsey) Limitedprovides Princess with various administrative, financial and accounting services (the ‘‘Administrator’’).

The Investment Manager, the Investment Adviser and the Administrator are each wholly-owned subsidiariesof Partners Group Holding, an independent alternative assets manager with a public market capitalisation of aboutCHF 2.1 billion and approximately CHF 14 billion in assets under management as of 30 June 2006. The firm hasbuilt a strong performance track record in private equity and private debt and serves an international clientele oflarge institutional investors, asset managers, private banks and high net worth individuals.

Private Equity and Private Debt Market

Princess operates in the private equity and private debt market and invests in private market investments.Private market investments are investments in private equity or private debt investments. Generally, the terms‘‘private equity’’ and ‘‘private debt’’ refer to investments that are typically made in non-public companies orassets through privately negotiated transactions. Such investments may be structured using the whole range offinancial instruments, including common and preferred equity, convertible securities, subordinated debt andwarrants or other derivatives, depending on the strategy of the investor and the financing requirements of thecompany. Private equity and private debt funds, often organized as limited partnerships, are the most commonvehicles for making private market investments. Investors in such funds (typically including pension funds, banks,insurance companies and/or wealthy private investors) usually commit to providing up to a specified amount ofcapital as and when requested, or ‘‘drawn down’’, by the fund’s manager or general partner. The capital will beinvested by the fund’s manager or general partner on behalf of the fund, typically according to a pre-definedinvestment strategy. The fund’s investments are usually realized, or ‘‘exited’’ after a four to seven year holdingperiod through a private sale, an initial public offering (IPO) or a recapitalisation, and the proceeds are distributedto the fund’s investors.

Direct investments alongside private equity or mezzanine funds, also known as co-investments, are analternative to traditional fund investments. Direct investments involve taking an interest in securities issued by anoperating company and, in the case of direct equity investments, are often structured such that the lead and co-investors collectively hold a controlling interest. Investors benefit from the sourcing, negotiation and structuringskills of the lead investor, while maintaining the ability to perform independent due diligence.

Private equity and private debt investments (whether undertaken directly or through funds) are frequentlygrouped into various segments, each of which carries distinct risk, return and correlation characteristics. Thesesegments are described below.

Private Equity Market Segments

Private equity investments are frequently classified according to financing stage, which refers to the stage ofdevelopment of a company at the time of investment. According to categories commonly used in the industry, theprincipal financing stages for private equity investments include buyouts, venture capital and special situations.

) Buyouts. Buyouts generally refer to investments seeking to acquire influential or often controllinginterests in established, typically cash flow positive companies. The use of significant amounts of debtfinancing, or leverage, is often prevalent in buyout transactions and, as a result, buyout transactions arealso a major source of private debt investment opportunities. Buyout investments can further be dividedinto small-, mid- and large-cap sub-categories.

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) Venture capital. Venture capital generally refers to investments in new and emerging companies.Companies financed by venture capital are generally not cash flow positive at the time of investment andmay require several rounds of financing before the company can be sold privately or taken public.Venture capital investments can further be divided into seed, early and later stage sub-categories.

) Special situations. Special situations refer to a broad range of investments outside the scope of venturecapital and buyouts, such as, for example, distressed or turn-around situations, private equity real estate,private infrastructure investments, PIPE (private investments in public equity) transactions and leverageddebt.

Because of their unique characteristics, the relative attractiveness of investing in different financing stagescan vary substantially over time depending on various value drivers, which can be analysed in relation to currentor expected market conditions. These value drivers include, among others, access to general and limited partners,relative industry trends, corporate performance, credit market conditions and varying economic conditions indifferent geographic regions. While Princess may make investments in various financing stages, it currentlyexpects to invest predominantly in buyouts, as they currently represent a majority of the worldwide private equitymarket.

Private Debt Market Segments

Private debt investments are generally classified by their position in the target company’s capital structure.More senior claims are frequently secured by specific assets, while more junior claims are typically unsecuredand are based on cash flow. Major categories of private debt investments include mezzanine, second lien andsenior debt.

) Mezzanine. Mezzanine debt is a hybrid financial instrument often employed in buyouts and otherprivate equity transactions. In a company’s capital structure, mezzanine is subordinated to senior debt,but ranks ahead of equity. It carries a higher rate of interest than senior debt, and may be bundled with anequity participation such as warrants or common stock. Mezzanine securities can be designed to meet abroad range of financing needs and risk/return targets by combining various structural features. Forexample, interest payments can be broken down into current coupons, which are paid on a periodic basis,and accrued or ‘‘payment-in-kind’’ interest, which is added to the principal amount of the loan.Contingent coupons can link interest payments to the fulfilment of operational milestones or otherconditions.

) Second lien. Second lien debt is a second priority claim on the assets used to secure senior loans. Incontrast to some mezzanine investments, there is typically no equity component. Second lien financingcan offer certain advantages to borrowers, in that it is typically less expensive than mezzanine and canusually be prepaid without penalty.

) Senior debt. Banks are the traditional originators of senior debt, which may include revolving creditfacilities and term loans. After origination, such loans are often syndicated and (in the case of non-investment grade borrowers) are also known as leveraged loans. Buyers of these loans includesecuritisation vehicles (collateralised loan obligations, or CLOs), which offer various tranches of debtand a residual participation security, generally backed by a diversified pool of senior debt.

As the above discussion makes clear, the private debt universe is quite heterogeneous in nature, reflecting thediffering goals of various providers and their respective investors. Mezzanine is often similar to private equity, inthat it may be provided by a small group of professional investors, or by a single provider, often in connectionwith a buyout transaction. Mezzanine providers can be quite involved with the company being financed and maycustomise the loan terms to accommodate the particular needs and cash flow characteristics of the borrower. Theyoften serve as observers on the borrower’s board of directors, and can be a valuable liaison between equityholders and senior lenders. While Princess may make various types of private debt investments, it currentlyexpects that mezzanine will represent a majority of its private debt investments due to its structural similaritiesand connection to private equity.

Characteristics of Major Investment Types

Within a given market segment, various investment types offer different ways to gain a desired exposure.Similar to private equity financing stages and different categories of private debt, each investment type has uniquecharacteristics and may be more or less attractive at different points in time. Pursuant to its strategy, the Companyexpects to invest using the full range of available investment types based on their relative value and overallportfolio fit.

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Fund Investments

Fund investments may be classified as primaries, manager secondaries or financial secondaries.

) Primary investments. Primary investments are investments in newly established private equity funds.The investments of the fund are usually unknown at the time of commitment, and investors typicallyhave very little or no ability to influence the investments that are made during the fund’s life.Accordingly, an accurate assessment of the manager’s capabilities is essential for investment success. Onthe other hand, primary fund investors receive the full upside of gains that may be achieved during thelife of the fund. Primary funds usually have a contractual duration of between 10 and 15 years, with themoney being deployed over a time period of typically four to six years.

) Manager secondary investments. Secondary investments (secondaries) are interests in existingprivate equity funds that are acquired in the secondary market, typically after the end of the relevantfund’s capital raising period. Manager secondaries are secondary investments in funds that are generallytwo to five years old and less than 70% invested, where the fund manager is still making newinvestments and cultivating existing investments. As a result, and similar to primaries, the manager’sability to create value remains a key to investment success. Manager secondaries allow investors to avoidmanagement fees paid early in the fund’s existence, while the expectation of absolute returns on exit(multiples) is similar to that of primary investments. Manager secondaries usually have a remainingcontractual duration of between seven and 10 years with the majority of funds typically being investedwithin two to four years.

) Financial secondary investments. Financial secondaries are secondary investments in funds that aregenerally more than five years old and more than 70% invested. In contrast to manager secondaries,funds purchased as financial secondaries typically hold several mature portfolio companies and expect tomake few or no new investments. Instead, the general partner focuses primarily on exiting existinginvestments. Thus, success in financial secondaries investing is driven mostly by the financial analysis ofthe existing portfolio, the price paid and the exit environment, rather than on the general partner’s abilityto create additional value. Relative to primaries and manager secondaries, financial secondaries canprovide investors with faster cash distributions, attractive internal rates of return and the ability to avoidthe early losses frequently experienced in a private equity portfolio’s development. Absolute returns onexit (multiples), however, are typically lower than those of primaries and manager secondaries. Financialsecondaries usually have a remaining contractual duration of less than seven years, with the majority offunds typically being invested within four years.

Direct Investments

Direct investments involve taking an interest in equity or debt securities issued by an operating company,typically in transactions led by the general partner of a private equity or mezzanine fund. Private equity fundmanagers usually offer such opportunities when a particular transaction is large relative to their available capital,or to involve new investors that have particular skills or contacts. Unlike most fund investments, the fundamentalsof each direct investment opportunity are known and can be analysed in detail before the transaction is executed.The ability to perform independent due diligence enables investors to identify and invest only in deals that theybelieve offer superior relative value and portfolio fit. Direct investments can also represent excellent value forinvestors due to their reduced cost — when offering direct investment opportunities, general partners typically donot charge the management fees or carried interest that would be assessed if the investments were made through afund. Direct investments may vary in duration, but usually are exited within four to seven years of the initialinvestment.

Listed Private Equity

Listed private equity (‘‘LPE’’) companies are typically listed vehicles that invest in private equitytransactions or funds. Such vehicles may take the form of corporations, unit trusts, publicly traded partnerships,or other structures, and may focus on buyout, venture capital or mezzanine investments. Listed private equity mayalso include investments in publicly listed companies in connection with a privately negotiated financing or anattempt to exercise significant influence on the subject of the investment. LPE investments can provide investorswith greater liquidity, and also offer for attractive relative value opportunities arising from significant marketinefficiencies due to limited coverage by analysts and experienced private equity investors.

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Reason for Private Market Investments

Investments in private equity have increased significantly in the last 20 years, primarily due to professionalUS institutional investors, endowments and high net worth individuals seeking greater returns than available inthe public markets. In the early 1990s, an increasing number of non-US investors began investing in privateequity, accompanied by a rising number of non-US general partners and funds based in Europe and around theglobe. Private debt investments have increased in line with the private equity market, driven largely by buyoutactivity.

Partners Group believes that the overall growth in private market investments has been primarily spurred bythe superior risk-adjusted performance and diversification benefits that historically have been achieved by privateequity.

Attractive Returns

Based on data provided by Thompson Venture Economics, the Investment Adviser believes as an asset class,private equity has consistently outperformed public equity benchmarks over the long term (such as the MSCIWorld Index). While performance varies across segments of the private equity market, various studies suggestthat on average private equity has rewarded investors with long-term returns approximately 300 - 500 basis pointsabove comparable public equity benchmarks. Several structural features of private equity have contributed to thisperformance record, the most important of which are the relative inefficiency of private markets and theconcentrated ownership typical of private equity-financed companies.

In comparison to public companies, private firms are bought and sold in a relatively undefined environmentnoted for scarce information and lower competition. As a result, the private equity market remains relativelyinefficient. As such, private equity fund managers can more easily identify undervalued assets and may evendevelop proprietary sources of investment opportunities, which can contribute to excess returns.

The ownership structure of private equity can also contribute to superior economic performance. In contrastto the broad shareholder base of most large public companies, ownership of private companies is typically highlyconcentrated. Moreover, public company shareholders are typically passive investors, whereas private equityinvestors are generally proactive participants in a company’s development. As such, they often serve as corporatedirectors, and advise management on strategy, operations, corporate finance, recruiting and other key aspects ofthe business. They typically establish strict milestones and may exercise other positive and negative controls(including replacement of the management team) if operational goals are not achieved. This focus onmanagement and execution helps to explain the superior performance typical of private equity investments inaggregate. However, there might be several risks which could influence the performance of any investment inprivate equity, see ‘‘Risk Factors — Risks Relating to Princess’ Investments’’.

Diversification Benefits

Adding private equity to an investment portfolio can also improve portfolio efficiency by reducing riskthrough diversification. Performance analysis indicates that diversified private equity portfolios have been lessvolatile than public equities, and less susceptible to negative market conditions.

The Investment Adviser believes that the correlation characteristics of private equity demonstrate itsdiversification potential and private equity has a moderate long-term correlation to public equities and a negativecorrelation to bonds. In addition, there is a low correlation between different segments of the private equitymarket. The distinct sources of value creation in private equity help to maintain this diversification benefit overtime, despite occasional periods of higher correlation.

Private Equity and Private Debt Markets: Growth and Outlook

The market for private investments has grown notably in recent years. According to the European PrivateEquity and Venture Capital Association (EVCA Yearbook 2006) investments reached another record level in2005, at EUR 47.0 billion. This represented a 27% increase compared to the amount invested in 2004(EUR 36.9 billion). Based on data provided by Thompson Venture Economics Database, the Company estimatesthat there are now approximately 4,000 general partners worldwide, and large institutional investors oftendedicate several percentage points of their portfolios to private investments. As the capital allocated to privatemarkets has increased, concerns over potential ‘‘capital overhang’’ have been expressed by some industryparticipants. The Company believes, however, that while capital flows to the industry have increased, privateequity transactions have simultaneously increased in size and the market has broadened geographically withhigher activity in Europe and Asia. Moreover, general partners, and buyout managers in particular, have

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broadened the scope of their investment activities from a focus on industrial companies to a wide range ofpotential investments including, for example, service companies, utilities and technology companies, resulting ina significantly higher overall investment volume. The Company believes this trend will continue and is likely toresult in a variety of investment opportunities being made available to the Company.

Even so, driven by the low level of interest rates and the increased availability of capital, pricing levels ofcertain large buyout transactions have been at historically high levels over the last two years and have given riseto concerns that the large buyout market might be in a cyclical peak. On the other hand, investing in companieswith valuations based on higher EBITDA multiples might be justified in the current financial environment, whichis characterised by unusually efficient capital structures resulting from the current interest rate and creditenvironment and the generally improved quality of buyout assets. The Company believes that in such anenvironment, its Investment Manager’s broad market overview and relative value judgment are particularlyimportant in filtering the overall deal flow and identifying investments that can offer superior risk-adjusted returnpotential.

Despite recent growth, private investment markets are still small compared to public equity markets. Privateequity investment is estimated to be a low single digit percentage of the GDP of the United States and WesternEurope, respectively. For example, according to a joint research study of TVE, European Private Equity andVenture Capital Association and PricewaterhouseCoopers (EVCA Yearbook 2005), private equity investmentsaccount for slightly more than 1% of GDP in the United Kingdom and less than 1% in other European countries.As a result, the Company believes the market for private equity investments is poised for further long term growth(particularly in Europe and Asia) and that the Company can benefit from the resulting opportunities.

Investment Strategy prior the Restructuring

The Company initially raised investment capital by issuing convertible bonds with an aggregate value ofUSD 700,000,000 in 1999 (see ‘‘The Capital of the Company — Convertible Bonds’’). Until the RestructuringCompletion Date (see ‘‘Organisational Structure and Material Agreements — Organisational Structure andRestructuring’’) the Company invested exclusively in private equity and private debt funds (see ‘‘— Value Driversof Private Market Investments — Investment Process’’) which, in turn, assembled portfolios of direct investmentsin typically unlisted companies. In this way, Princess built up an aggregate portfolio of over 113 fund investmentsand indirect interests in over 1,800 operating companies by 30 September 2006.

In making its investments prior to the Restructuring Princess followed an investment strategy with threemain elements, namely the top-down approach, the bottom-up approach and the over-commitment strategy.

The top-down approach involved ongoing monitoring and analysis of Princess’ investments using cash flow,risk/return and portfolio optimisation models to create a regularly updated, forward-looking investment strategy.The principal objective was to maximise return while minimising both short-term and long-term volatility,reducing correlation to public markets and achieving a high investment level as soon as reasonably practicable.

The bottom-up approach involved selecting those vehicles available at a particular time which theInvestment Manager considered to be top performing. In implementing the bottom-up approach, the InvestmentManager was required, pursuant to the Company’s insurance arrangements, to follow detailed InvestmentGuidelines which included restrictions such as minimum and maximum allocation by region, financing stages andinvestment types.

Finally, Princess pursued an over-commitment strategy in an effort to achieve and maintain a full investmentlevel. Cash and cash equivalents were held in short-term (less than 12 months to maturity) and medium-term (notgreater than five years to maturity) investment grade debt securities or in cash with prime banks.

Investment Strategy upon the Restructuring

Effect of the Restructuring

Prior to the Restructuring (see ‘‘Organisational Structure and Material Agreements — OrganisationalStructure and Restructuring’’) Princess followed the strategy (see ‘‘— Investment Strategy prior to theRestructuring’’) to invest in private equity while seeking to minimise both short-term and long-term volatility.Princess invested exclusively in private equity funds (both as primary and secondary investments) pursuant to itstop-down and bottom-up approach and its over-commitment and cash management strategies. Other thanpursuant to a temporary liquidity facility, the Company did not borrow for investment purposes.

Following the Restructuring (see ‘‘Organisational Structure and Material Agreements — OrganisationalStructure and Restructuring’’), the termination of the insurance arrangements enabled Princess to pursue a

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broader ‘‘relative value’’ investment strategy characterized by periodic adjustments in the allocation of thePrincess’ investments toward those investments that Princess believes are particular attractive at a given point intime according to its criteria.

Relative Value Investment Strategy

The global private equity and private debt markets are diverse and can be divided into several differentsegments, each of which may exhibit distinct characteristics based on combinations of various factors. Segmentsmay be defined by, among other things, the type of investment (equity versus debt, direct versus fund), financingstage, and geographic region. Princess’ relative value strategy recognises that the attractiveness of investing in agiven segment can vary substantially over time as economic and industry conditions change.

In addition to macro-level factors affecting particular segments, each individual investment has particularcharacteristics which may be more or less attractive than available alternatives. By understanding the key valuedrivers and risks of each opportunity, the relative value of different options can be assessed.

Accordingly, Princess seeks to capitalise on the dynamic nature of the private markets through ongoingrelative value analysis and rigorous investment selection. Based on its top-down analysis, cross-segmentcomparisons and thorough due diligence, Partners Group (Zug), as Investment Adviser of the InvestmentManager, seeks to adjust the allocation of Princess’ investments toward those investments that it believes areparticular attractive at a given point in time. With the ability to invest in the full range of private equity andprivate debt investments, Princess believes it is well positioned to achieve attractive returns for investors in avariety of market environments.

While investment decisions are made based on the Investment Adviser’s relative value assessment, Princesscurrently intends to focus on fund investments, and currently expects that such investments will represent morethan 50 % of its capital over time; direct investments are currently expected to represent approximately 0 to 30 %of the Company’s capital over time. Listed private equity investments are expected to represent less than 20 % ofthe Company’s capital.

Investment Objective and Policy after Restructuring

The investment objective adopted by the Board after the Restructuring (see ‘‘Organisational Structure andMaterial Agreements — Organisational Structure and Restructuring’’) is to provide shareholders with long-termcapital growth and an attractive dividend yield in the mid- to long-term. To achieve this objective, Princessintends to pursue a relative value investment strategy (see above ‘‘ — Relative Value Investment Strategy’’), thegoal of which is to systematically identify and invest in private equity and private debt investments that theInvestment Adviser believes are particularly attractive at a given point in time based on its global scale, broadmarket overview, insight and strong deal flow. However, there can be no assurance that Princess will meet itsinvestment objective.

According to the adopted investment policy, investments may include, inter alia:

) Fund investments: interests in private equity funds acquired from other investors (secondaryinvestments) or through a commitment to a new fund (primary investments). Private equity funds mayinclude vehicles focusing on buyouts, mezzanine funding, venture capital and special situations such asdistressed or turnaround situations, private equity real estate, private infrastructure investments, PIPE(private investments in public equity) transactions and leveraged debt).

) Direct investments: interests in (typically unlisted) assets and operating companies (whether helddirectly or indirectly) and may include equity, debt or other kinds of securities.

) Listed private equity: interests in vehicles listed on a public stock exchange that invest in privateequity transactions or funds.

In making investments, the Investment Adviser will consider macro value drivers (industry trends, regional,economic conditions, etc) and deal-specific factors (management quality, firm strategy, financial analysis, etc) todetermine the investments that it believes offer superior risk-adjusted return potential.

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Currently, Princess intends to focus on fund investments in North America and Europe, and currently aimsto allocate its investments approximately as set out below.

Geography ********** 35% – 65% North America30% – 65% Europe5% – 30% Asia and Rest of World

Financing Stage****** 70% – 90% buyout/special situations10% – 30% venture capital

Investment Type ***** 40% – 80% primary investments0% – 30% secondary investments0% – 30% direct investments0% – 20% listed private equity

Notwithstanding, Princess’ currently anticipated allocation of capital between different categories ofinvestments is expected to change from time to time as the Board, in consultation with the Investment Managerand based on the Investment Adviser’s relative value assessment at the relevant time, believes that such changewould be advisable in the light of economic and market conditions prevailing at that time.

Pursuant to the Investment Management Agreement, the Investment Manager is not allowed, without thewritten consent of the Company’s Board, to invest more than 10% of the value of the Company’s assets in anysingle investment (disregarding for these purposes investments in any collective investment scheme or otherpooled investments vehicle (i) that is established, managed and/or advised by Partners Group or any affiliatethereof, typically to indirectly access direct investments, secondary investments or primary investments, and(ii) which the Board has designated as Pooling Vehicles and approved for investment for the Company (‘‘PoolingVehicles’’)).

Princess’ investments take many different forms and may include, without limitation, limited partnershipinterests, common or preference shares, warrants, subordinated loans or bonds, mortgage early redemptioncertificates, deferred purchase proceeds, residual income positions, or the right to receive certain cash reserves, orlimited partnership interests. Princess may also invest indirectly through funds organised by the InvestmentAdviser or any of its affiliates. In such cases, management fees or incentive fees charged by the underlying fundsin respect of Princess’ investment are generally waived or rebated.

Value Drivers of Private Market Investments

The private markets in which Princess invests are composed of various sectors, which can be defined bycombinations of different market segments, investment types and geographic regions. As noted above, theattractiveness of investing in a given sector can vary substantially over time — there is no ‘‘all-weather’’investment strategy. Rather, performance in each sector, and of each specific investment, is linked to differentvalue drivers, which can be analysed in relation to current and/or expected market conditions. These value driversinclude, among others:

) Access and availability. In many segments of the private equity and private debt markets, it is notenough to identify promising investments — access is required. For example, successful funds may beclosed to new investors. Similarly, the attractiveness of direct investments and secondary investments canvary dramatically depending on the opportunities sourced by or otherwise available to the manager.

) Industry trends. Specialised industry knowledge of a general partner or management team canenhance the ability to generate significant returns. Where such skills can be combined with a healthyindustry structure, relative value increases. Industries with slowing growth and/or declining profitabilityare generally less attractive, notwithstanding the skills of the general partner or management team.

) Corporate performance. Strong economic performance lifts corporate earnings and equity marketsand fuels M&A activity — each of which tends to increase exit values. Accordingly, when corporateearnings are strong, investments close to exit (e.g. from a financial secondary) are often attractive. Inperiods of weak economic performance, turnarounds or other special situations are often attractive.

) Credit markets. The availability of debt is crucial for most large buyout transactions, which oftenrequire over 50% leverage to achieve their desired returns. As the availability of bank financing or high-yield bond offerings decreases or the cost of such funding increases, large buyout transactions canbecome less attractive. In contrast, as banks tighten lending practices, opportunities often appear formezzanine firms.

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) Geography. Political, legal and economic conditions can vary greatly between regions. Propertyrights, economic growth, currency valuations, demographic trends and other factors particular to certaincountries or regions can significantly impact the relative attractiveness of private equity and private debtinvestments.

In connection with Princess’ relative value investment strategy, Partners Group will consider these and otherrelevant factors and how they affect different sectors and investments, and then systematically overweight thoseareas that it believes will offer superior value. Princess will seek to capitalise on what it considers to be the bestprivate investment opportunities in the marketplace by implementing this relative value approach.

Portfolio Management Strategy

Investment Level Steering

In traditional private equity and private debt funds, the net investment level of a partnership typicallyrepresents only a portion (approximately 65% on average for a diversified portfolio) of its total commitments.This occurs because commitments are generally made at the time of the initial fundraising, whereas draw-downsfor investment purposes are typically made during a period of up to six years. After an initial period of typicallytwo to three years, distributions associated with liquidity events in the portfolio begin to reduce the fund’s netinvestment level. The gap between committed and invested amounts can lead to return dilution and presents achallenge for investors that seek to maintain a targeted investment level.

In contrast, Princess seeks to achieve and maintain a substantially full investment level over time throughactive investment level steering. This involves a quarterly estimate of the timing of future investments, draw-downs and liquidity events in Princess’ portfolio, based on Partners Group’s portfolio insights, statistical modelsusing historic data and its forecasts regarding the future development of the market in general and Princess’portfolio in particular. With this estimate, Partners Group determines the amount of investments andcommitments to be made by Princess seeks on a rolling 12-month basis in order to approximate the desiredinvestment level. Princess’ relative value investment strategy will be implemented within this context.

This investment level steering process specifically considers the different characteristics of variousinvestment types when developing an investment and commitment plan. In particular, Princess expects tocontinue the over-commitment strategy it has historically followed. Pursuant to this strategy, Princess’outstanding commitments will exceed the funds available as of the commitment date and draw-downs will bepartially funded through distributions and/or temporary liquidity facilities.

Financing and Leverage

Where it considers it to be appropriate, Princess may (i) utilise leverage for the purpose of financing itsportfolio and enhancing returns to shareholders and (ii) enter into derivative transactions, for example in seekingto manage its exposure to interest rate and currency fluctuations through the use of currency and interest ratehedging arrangements or for purposes of efficient portfolio management. There are no strict limitations onPrincess’ use of leverage; depending on circumstances, however, the use of leverage could be substantial.However, Princess does not currently intend in general to borrow against its private equity investments, other thanfor temporary bridging or liquidity purposes, or in connection with hedging arrangements.

Investment Process

Relative Value Assessment

Partners Group (Zug) as Investment Adviser implements Princess’ relative value strategy on an ongoingbasis, beginning with a semi-annual review of market conditions and their effect on the value drivers for differentprivate equity and debt investments. This review generally considers (i) macro-level factors such as businesscycles, interest rates, credit spreads, and equity multiples; (ii) variables related to private equity and debt markets,such as buyout, mezzanine and leveraged loan volume, leverage ratios, IPO opportunities, private equity capitalraised and the quality of available primary, secondary and direct investments; (iii) current information andhistorical data from Partners Group’s investment portfolios; and (iv) qualitative input from Partners Group’sinvestment professionals, based on their experience and discussions with general partners and investors aroundthe globe. Based on this analysis, Partners Group allocates capital to various sectors, overweighting those sectorsthat it judges to offer superior risk-adjusted return potential.

In the second step of the investment process, Partners Group seeks to invest the capital allocated to eachsector in what it considers to be the highest quality investments available, once again applying the relative value

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approach. Partners Group typically evaluates investments in relation to comparable opportunities, historicalbenchmarks and other relevant factors. This comparative analysis allows Partners Group to quickly identify andfocus its resources on the most promising opportunities.

Rigorous Independent Analysis

Finally, Partners Group performs a detailed analysis of the specific investment opportunity. Partners Group’sstructured investment selection process demonstrates its disciplined approach to investing, as shown below:

MonitoringDue Diligence II

Due Diligence I

Pre-Selection

Deal Generation

Global Partnership Forecast

� Forward planning� Transaction analysis� Country studies� Active partnering

with existing portfolio funds / companies

� Quantitative market research

First Check

� Investment concept� Team� Track record� Balance of above� Market positioning

Preliminary Inv. Recommendation

Investment Recommendation

Monitoring Check

� Advisory Board participation

� Quarterly performance assessment

� Updates on team development

� Monitoring through Partners Group’s database and action lists

Continuous involvement of Investment Committee

� Team, strategy, style, market, deal flow, investment process, value add, affiliations, reporting, etc.

� On-site visits (manager and portfolio companies)

� Due diligence calls (supplied and independent)

After legal and tax due diligence by external experts the Partners Group team leads:

� Negotiations on terms and conditions

MonitoringDue Diligence II

Due Diligence I

Pre-Selection

Deal Generation

Continuous involvement of Investment CommitteeContinuous involvement of Investment Committee

Based on a valuation tool and network Partners Group strives to identify attractive investment opportunitieswhich are then evaluated in Partners Group’s investment selection process which comprises several due diligencephases addressing business, legal and tax due diligence. Once an investment is made, it is monitored regularly byPartners Group.

While all investments are subject to this general investment selection process, specific activities typicallyvary and additional steps may be added for certain types of investments. Depending on the investment type, keyelements of Partners Group’s analysis include the following:

) General partner evaluation: This generally includes an analysis of the relevant track record, interviewswith managers, on-site visits, numerous reference calls and other investigations. Key points of enquiryinclude issues such as working capacity, hierarchy and incentive structures, dependence on keyindividuals, succession, staff turnover and other matters relating to management capability and resources.In each case, Partners Group seeks to understand the sponsoring firm’s people, network, relationshipsand track record in the relevant market space. To proceed with an investment, Partners Group must besatisfied with the skills, diligence and experience that the sponsoring general partner brings to theinvestment opportunity.

) Business analysis: For direct investments, Partners Group’s professionals critically evaluate the businesscase for the transaction. First, the investment team performs a detailed quantitative and qualitativeanalysis, generally based on information prepared by the sponsoring general partner, meetings withcompany management or on-site visits, reference calls and other investigations. Key points of enquirygenerally include industry structure, management quality, firm strategy, financial analysis, transactionand financing structure, exit strategy, etc. Through this analysis, Partners Group seeks to develop adetailed understanding of the investment thesis, the key value drivers of the transaction, whetherassumptions and projections are reasonable, and if the management team has the skills to successfullyexecute the business strategy. Partners Group’s investment process as applied to direct investments isshown below.

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Inv. Committee -

Final Decision

Investment Committee


Pre-Selection

First Check

Business model &strategy overview

Market dynamics

Management team overview

Financial overview

Exit scenarios / return potential

Preliminary Inv. Recommendation (PIR)

Bus. model / strategy analysis

Products and services analysis

Market analysis

Competitive landscape

Management meeting

Assessment of management team

Financial projections

Deal structure / sources and uses

Exit strategies

IRR / sensitivity analysis

Investment rationale

Key risk factors

Summary

Inv. Recommendation (IR)

Legal due diligence

Negotiations on terms and conditions

Third-party / external advisors

Tax due diligence

Inv. Committee -

Final Decision



Pre-Selection

First Check

Business model &strategy overview

Market dynamics

Management team overview

Financial overview

Exit scenarios / return potential




Market analysis


Management meeting




Exit strategies



Key risk factors




Market analysis


Management meeting




Exit strategies



Key risk factors

Summary


Legal due diligence



Tax due diligence


Legal due diligence



Tax due diligence

Once the value drivers of the transaction are understood, Partners Group runs scenario-based sensitivityanalyses. Based on inputs of the company’s earnings, growth rate, debt levels, multiples and other factors,Partners Group can determine likely outcomes and assess both upside potential and downside risk and ispositioned to select those transactions that it believes offer the greatest value.

) Portfolio analysis: For secondary investments, key determinants of value generally include company-level fundamentals, industry trends, exit prospects and timing, the effect of fund-level fees and carriedinterest and the manager’s ability to execute its strategy successfully. To quantify these factors, PartnersGroup uses a combination of techniques and typically performs a company-by-company review of therelevant fund’s holdings. Valuations prepared by the investment team are run through various analyticaltests and bench-marked against net asset value, cost and projected exit value. If Partners Group issatisfied that the underlying funds have good potential to achieve an attractive risk-adjusted return giventhe prices it is willing to pay, it develops a bidding strategy and proceeds to the execution phase of theinvestment process.

) Tax and legal: Partners Group co-ordinates a comprehensive tax and legal assessment relating toproposed investments. This work is typically based on a detailed questionnaire, analysis of relevantdocumentation, and the input of professional legal and tax advisers. Based on Partners Group’s ownanalysis and the findings of its external advisers, the firm’s internal legal counsel and a senior investmentprofessional negotiate the terms and conditions of the relevant investment.

Deal Allocation Methodology

As Partners Group identifies investment opportunities that it intends to recommend to the Company and itsother clients (including investment funds or mandates that it manages), it typically allocates availableopportunities pursuant to a pre-defined policy that is currently based on a ‘‘pro rata’’ principle relating to eachclient’s demand for investment opportunities of different types.

Accordingly, allocation is based on Partners Group’s rolling estimate of its clients’ demand for investmentopportunities in various market segments, based on its overall market outlook and client-specific criteria. In eachcase, the total demand is primarily determined by the typical investment size (which is established to ensureappropriate diversification) of each client with demand in the relevant market segment; however, it also takes intoaccount each client’s investment guidelines, strategy, portfolio composition, diversification, tax and legalconsequences, and the overall suitability of the investment. If the total demand of all Partners Group clientsexceeds the size of the investment opportunity, allocations are reduced, substantially on a pro rata basis (i.e.allocations may be rounded and must meet a minimum threshold designed to avoid over-diversification).

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To facilitate pro rata allocation among all clients, Partners Group may form investment vehicles that focuson particular market segments — typically, those where access to investment opportunities is relatively scarce.Such vehicles have priority with relation to investment opportunities within their investment focus and aregenerally guaranteed to receive at least a pre-defined minimum percentage of all such opportunities. To aligninterests, Princess may invest through such investment vehicles (on a no-fee basis (see ‘‘— Fees in underlyinginvestments organised by Partners Group’’)) to the extent possible given Princess’ overall investment strategy andits portfolio composition at the relevant point in time. Where Princess invests through such vehicles, it receivespriority access to Partners Group’s deal flow in the relevant segment. However, Princess anticipates that it will notinvest in all such vehicles due to differing investment and portfolio management objectives. In such cases,investment opportunities will typically be available to Princess in parallel with the relevant access vehicle subjectto the minimum percentage allocated to such access vehicle. Therefore, investment opportunities within the scopeof such vehicle may be limited.

Fees in Underlying Investments Organised by Partners Group

Princess may make private equity or private debt investments indirectly through underlying funds or specialpurpose vehicles organised by Partners Group. Such investments are typically made to facilitate the making of aninvestment or the allocation among Partners Group’s clients. In such cases, management and performance feescharged by the pooling vehicle in question in respect of Princess’ investment will be waived or rebated (for theavoidance of doubt, excluding administration fees, service fees, and organisational costs).

Current Investments and Commitments

Partnership Portfolio

Princess currently holds investments in the following private equity and private debt funds, diversified bygeographical region, industry sector, financing stage and vintage year.

(as of 30 September 2006)

AmountPrimary Investments Fund Size Committed % Drawn VintageManager Partnership (in USD) (in USD) % owned Down Year

Europe — Buyout3i Investments plc **************** 3i Europartners IIIA, L.P. 1,262,257,001 25,372,000 2.0 89.9 1999Astorg Partners S.A.S. ************ Astorg II, FCPR 235,864,455 11,924,840 5.1 97.0 1998B & S Investments Limited ******** Italian Private Equity Fund III, L.P. 380,587,612 5,074,400 1.3 95.6 2000BC Partners Limited ************** BC European Capital VIII, L.P. 7,421,310,006 12,686,000 0.2 7.7 2005Botts & Company Limited ********* Botts Capital Partners, L.P. 289,097,593 37,436,000 13.0 100.0 1998Bridgepoint Capital Limited ******** Bridgepoint Europe I ‘D’, L.P. 1,873,729,825 37,436,000 2.0 95.3 1998Bridgepoint Capital Limited ******** Bridgepoint Europe III, L.P. 3,171,500,003 9,514,500 0.3 11.0 2005Candover Partners Ltd. ************ Candover 2005 Fund, L.P. 5,225,109,684 12,686,000 0.2 21.0 2005Cinven ************************* Fourth Cinven Fund, L.P. 8,245,900,007 9,514,500 0.1 0.0 2006Graphite Capital Management

Limited*********************** Graphite Capital Partners V, L.P. 343,007,350 18,718,000 3.0 87.5 1999Industri Kapital 2000 Limited ****** Industri Kapital 2000, L.P. 2,664,060,002 12,686,000 0.5 100.0 1999Mercapital Servicios Financieros **** Mercapital Spanish Private Equity

Fund II, L.P. 761,160,001 8,880,200 1.2 93.9 2000Nordic Capital ******************* Nordic Capital IV, L.P. 842,698,600 18,438,300 2.2 93.5 2000Nordic Capital ******************* Nordic Capital VI, L.P. 2,156,620,002 9,514,500 0.4 6.7 2005Palamon Capital Partners ********** Palamon European Equity ‘C’, L.P. 557,776,780 12,686,000 2.3 100.0 1999Partners Private Equity Management

Inc. ************************* Partners Private Equity, L.P. 119,970,000 8,573,856 7.2 100.0 1998Permira Advisers Limited ********** Permira Europe II, L.P. 4,186,380,003 25,372,000 0.6 97.5 2000Quadriga Capital Limited ********** Quadriga Capital Private Equity Fund

II, L.P. 337,285,133 10,369,507 3.2 97.9 1999Segulah Management II Limited **** Segulah II, L.P. 116,093,000 11,609,300 10.0 91.1 1999Warburg Pincus, LLC ************* Warburg Pincus International

Partners, L.P. 2,500,000,000 5,000,000 0.2 100.0 2000

Europe — Venture CapitalAbingworth Management Limited *** Abingworth Bioventures III, L.P. 225,000,000 2,500,000 1.1 92.5 2001EEP Managers Limited ************ European Equity Partners (III), L.P. 66,722,112 3,805,800 5.7 97.7 1999EEP Managers Limited ************ European Equity Partners (IV), L.P. 13,320,300 761,160 5.7 53.1 2004Elderstreet Investments Limited ***** Elderstreet Capital Partners, L.P. 106,690,728 13,102,600 12.3 91.8 1999Galileo Partners ****************** Galileo III, L.P. 200,383,299 5,328,120 2.7 77.1 2000

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GMT Communications PartnersLimited*********************** GMT Communications Partners II,

L.P. 466,210,500 17,760,400 3.8 88.1 2000Index Ventures******************* Index Ventures I (Jersey), L.P. 183,453,456 10,000,000 5.5 100.0 1998Merlin Capital Partners ************ Merlin Biosciences Fund, L.P. 313,279,502 6,343,000 2.0 98.0 2000SVLS Management Advisers Inc. *** SV Life Sciences Fund II, L.P. 279,964,000 20,000,000 7.1 100.0 1998Wellington Partners Verwaltungs

GmbH************************ Wellington Partners II, L.P. 140,814,600 5,074,400 3.6 96.0 2000Zouk Ventures Limited ************ European E-Commerce Fund 75,800,000 5,000,000 6.6 99.8 1999

Europe — Special SituationsColler Capital Limited ************ Coller International Partners III, L.P. 501,000,000 12,000,000 2.4 99.0 1999Doughty Hanson & Co ************ Doughty Hanson & Co. European

Real Estate Fund 616,350,000 7,728,563 1.3 83.5 1999Intermediate Capital Group PLC

(AKA: ICG)******************* ICG Mezzanine Fund 2000 L.P.No. 2 390,094,500 12,686,000 3.3 97.6 2000

Mezzanine Management Limited **** Mezzanine Management Fund III,L.P. 528,926,900 15,000,000 2.8 95.4 1999

Rutland Fund Management Limited** Rutland Fund, The 392,482,767 12,166,700 3.1 78.0 2000

North America — BuyoutAmerican Securities Associates ***** American Securities Partners III, L.P. 650,000,000 5,000,000 0.8 86.0 2001Apollo Management, L.P. ********* Apollo Investment Fund V, L.P. 3,741,951,000 10,000,000 0.3 100.0 2001Apollo Management, L.P. ********* Apollo Overseas Partners VI, L.P. 10,025,000,000 25,000,000 0.3 10.7 2005Bruckmann, Rosser, Sherrill & Co.,

Inc. ************************* Bruckmann, Rosser, Sherrill & Co. II,L.P. 767,200,000 15,000,000 2.0 97.6 1999

Carlyle Group ******************* Carlyle Partners III, L.P. 3,800,000,000 10,000,000 0.3 100.0 1999Clayton, Dubilier & Rice, Inc. ***** Clayton, Dubilier & Rice Fund VII

L.P. 2,660,000,000 10,000,000 0.4 17.1 2005Fenway Partners, Inc. ************* Fenway Partners Capital Fund II, L.P. 909,090,909 30,500,000 3.4 100.0 1998Heritage Partners, Inc. ************ Heritage Fund III, L.P. 843,434,343 10,000,000 1.2 83.0 1999INVESCO Private Capital, Inc. ***** INVESCO U.S. Buyout Partnership

Fund II, L.P. 87,897,373 30,000,000 34.1 84.2 2000Kohlberg & Company, L.L.C ******* Kohlberg TE Investors IV, L.P. 576,044,250 10,000,000 1.7 89.3 2000Providence Equity Partners, Inc. **** Providence Equity Partners IV, L.P. 2,755,511,022 10,380,028 0.4 100.0 2000Silver Lake Partners ************** Silver Lake Partners, L.P. 2,247,940,000 30,000,000 1.3 93.5 1999Sterling Investment Advisers

Management L.P. ************** Sterling Investment Partners II, L.P. 544,500,000 10,000,000 1.8 12.2 2005Texas Pacific Group ************** T3 Partners, L.P. 486,842,106 7,000,000 1.4 77.0 2000Texas Pacific Group ************** TPG Partners III, L.P. 3,413,684,209 4,000,000 0.1 92.1 2000The Blackstone Group ************ Blackstone Communications

Partners I, L.P. 2,018,600,000 10,000,000 0.5 97.8 2000Thomas H. Lee Company********** Thomas H. Lee Parallel Fund V, L.P. 6,114,039,327 10,000,000 0.2 92.1 2000Vestar Capital Partners ************ Vestar Capital Partners IV, L.P. 2,480,350,000 5,000,000 0.2 92.5 1999Warburg Pincus, LLC ************* Warburg Pincus Private Equity IX,

L.P 8,000,000,000 15,000,000 0.2 42.5 2005North America — Venture CapitalAccess Technology Partners ******** Access Technology Partners, L.P. 272,676,768 15,000,000 5.5 100.0 1999Advanced Technology Partners****** Advanced Technology Ventures VI,

L.P. 400,000,000 5,000,000 1.3 97.5 2000Apax Partners ******************* APAX Excelsior VI, L.P. 1,053,131,313 5,000,000 0.5 93.8 2000Austin Ventures ****************** Austin Ventures VII, L.P. 825,000,000 5,000,000 0.6 93.9 1999Battery Ventures ***************** Battery Ventures VI, L.P. 850,000,000 4,207,500 0.5 100.0 2000Cardinal Health Partners *********** Cardinal Health Partners II, L.P. 117,474,747 5,000,000 4.3 86.4 2000Catterton Partners **************** Catterton Partners IV Offshore, L.P. 400,000,002 15,000,000 3.8 100.0 1999Columbia Capital***************** Columbia Capital Equity Partners III

(Cayman), L.P. 855,675,639 10,000,000 1.2 90.5 2000Crescendo Ventures *************** Crescendo IV, L.P. 644,777,735 7,000,000 1.1 97.5 2000Dolphin Communications ********** Dolphin Communications Fund, L.P. 125,606,061 10,000,000 8.0 100.0 1998Draper Fisher Jurvetson *********** Draper Fisher Jurvetson Fund VII,

L.P. 643,080,808 5,000,000 0.8 78.5 2000EnerTech Capital Partners********** EnerTech Capital Partners II, L.P. 234,194,600 5,000,000 2.1 93.0 2000Infinity Capital Ventures *********** Infinity Capital Venture Fund 1999,

L.P. 199,013,258 10,000,000 5.0 95.7 1999INVESCO Private Capital, Inc. ***** Chancellor V, L.P. 225,740,230 20,000,000 8.9 84.0 1999

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INVESCO Private Capital, Inc. ***** INVESCO Venture PartnershipFund II, L.P. 341,877,575 60,000,000 17.6 88.6 1999

Lightspeed Venture Partners ******** Lightspeed Venture Partners VI, L.P. 880,838,323 8,000,000 0.9 78.4 2000Menlo Ventures ****************** Menlo Ventures IX, L.P. 1,515,151,515 10,000,000 0.7 75.0 2000Morgan Stanley Dean Witter & Co ** Morgan Stanley Dean Witter Venture

Partners IV, L.P. 487,000,000 5,000,000 1.0 95.7 1999Morgenthaler Partners ************* Morgenthaler Partners VII, L.P. 868,917,526 3,172,740 0.4 74.8 2001Partners Private Equity Management

Inc. ************************* INVESCO Venture PartnershipFund II-A, L.P. 40,404,040 34,500,000 85.4 81.8 2000

Prism Venture Partners ************ Prism Venture Partners IV, L.P. 428,838,388 2,000,000 0.5 71.5 2001Sevin Rosen Funds *************** Sevin Rosen Fund VIII, L.P. 600,426,500 3,430,000 0.6 88.5 2000Sierra Ventures******************* Sierra Ventures VIII-A, L.P. 495,172,803 10,000,000 2.0 85.0 2000Summit Partners ***************** Summit Ventures VI-B, L.P. 2,005,282,121 5,000,000 0.3 95.0 2000TA Associates, Inc. *************** TA IX, L.P. 2,000,100,000 10,000,000 0.5 97.0 2000Tailwind Capital Partners ********** Thomas Weisel Capital Partners, L.P.

(Tailwind) 1,070,741,483 10,000,000 0.9 99.8 1999TH Lee Internet Partners*********** TH Lee Putnam Parallel Ventures,

L.P. 432,018,616 10,000,000 2.3 85.0 1999TL Ventures ********************* TL Ventures V, L.P. 685,506,000 10,000,000 1.5 69.0 2000Vortex Partners******************* Vortex Corporate Development Fund,

L.P. 46,230,400 2,920,000 8.7 88.2 2000Worldview Technology Partners ***** Worldview Technology Partners III,

L.P. 364,646,465 5,000,000 1.4 100.0 1999Worldview Technology Partners ***** Worldview Technology Partners IV,

L.P. 512,890,426 3,021,671 0.6 83.4 2000

North America — SpecialSituations

ACOF Operating Manager II, L.P. ** Ares Corporate OpportunitiesFund II, L.P. 2,065,000,000 20,000,000 1.0 11.2 2006

Canterbury Capital Partners ******** Canterbury Mezzanine Capital II, L.P. 243,181,818 10,000,000 4.1 87.8 1999Levine Leichtman Capital Partners II,

Inc. ************************* Levine Leichtman Capital Partners II,L.P. 349,455,000 30,000,000 8.6 100.0 1998

Oaktree Capital Management, LLC ** OCM Mezzanine Fund II, L.P. 1,250,000,000 15,000,000 1.2 49.5 2005Oaktree Capital Management, LLC ** OCM Opportunities Fund III, L.P. 2,076,910,000 4,000,000 0.2 100.0 1999Oaktree Capital Management, LLC ** OCM/GFI Power Opportunities Fund,

L.P. 449,101,000 4,000,000 0.9 84.7 1999Pegasus Capital Advisors ********** Pegasus Partners II, L.P. 561,050,000 4,000,000 0.7 100.0 1999Peninsula Capital Partners, LLC***** Peninsula Fund IV, L.P. 335,353,535 10,000,000 3.0 20.5 2005TCW/Crescent Mezzanine, L.L.C**** TCW/Crescent Mezzanine

Partners III, L.P. 1,172,135,000 10,000,000 0.9 97.5 2001The Blackstone Group ************ Blackstone Mezzanine Partners, L.P. 1,141,000,000 4,000,000 0.4 64.6 1999

Rest of World — BuyoutAdvent International Corporation **** Advent Latin American Private

Equity Fund II, L.P. 127,500,000 5,000,000 3.9 87.0 2001Enterprise Investors *************** Polish Enterprise Fund IV, L.P. 216,666,666 5,000,000 2.3 98.3 2000Exxel Group S.A., The ************ Exxel Capital Partners VI, L.P. 441,382,766 5,000,000 1.1 88.2 2000Newbridge Capital Ltd ************ Newbridge Asia III, L.P. 724,000,000 5,000,000 0.7 100.0 2000Unison Capital, Inc. ************** Unison Capital Partners, L.P. 321,993,000 5,338,305 1.7 80.3 1999

Rest of World — Venture CapitalCarmel Ventures ***************** Carmel Software Fund (Cayman),

L.P. 171,130,000 10,000,000 5.8 90.0 2000Crimson Capital****************** Crimson Velocity Fund, L.P. 331,050,000 5,000,000 1.5 98.7 2000Genesis Partners ***************** Genesis Partners II LDC 263,407,775 10,000,000 3.8 85.7 1999Jerusalem Venture Partners (Israel) ** Jerusalem Venture Partners III, L.P. 146,400,000 5,000,000 3.4 100.0 1999Pitango Venture Capital *********** Pitango Venture Capital Fund III 500,000,000 12,000,000 2.4 93.0 2000

AmountSecondary Investments Fund Size Committed % Drawn VintageManager Partnership (in USD) (in USD) % owned Down Year

Chase Capital Partners ************ Chase 1998 Pool Participation Fund, 252,525,252 20,000,000 7.9 98.6 1998L.P.

Cinven ************************* Second Cinven Fund (No. 2), L.P. 1,693,978,999 9,592,975 0.6 97.5 1998Coller Capital Limited ************ Coller International Partners III NW1, 212,710,519 24,333,400 11.4 81.7 1994

L.P.

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AmountSecondary Investments Fund Size Committed % Drawn VintageManager Partnership (in USD) (in USD) % owned Down Year

Coller Capital Limited ************ Coller International Partners III NW2, 215,368,937 29,012,900 13.5 92.4 1996L.P.

Doughty Hanson & Co ************ Doughty Hanson & Co. Fund III, 2,660,000,000 6,784,269 0.3 92.1 1997L.P.

PGPEAL *********************** Partners Group SPP1 Limited 310,219,000 40,000,000 12.9 93.7 1996William Blair & Company LLC***** William Blair Capital Partners VI, 269,655,000 2,000,000 0.7 99.1 1998

L.P.

Portfolio Allocation

Allocation of the private equity investments by region for the period from 1 January 2003 to 30 September2006*

31 December 31 December 31 December 30 September2003 2004 2005 2006

Europe ************************************* 45% 43% 34% 29%North America******************************* 51% 51% 59% 64%Rest of World******************************** 4% 6% 7% 7%

* (figures based on value of private equity investments as provided by general partners or managers of underlying funds)

Allocation of the private equity investments by financing stage for the period from 1 January 2003 to30 September 2006*


Buyout ************************************* 56% 56% 53% 50%Venture Capital ****************************** 27% 29% 35% 38%Special Situations **************************** 17% 15% 12% 12%


Allocation of the private equity investments by industries for the period from 1 January 2003 to30 September 2006*


Retail ************************************** 24% 23% 20% 20%Industrial Production/Manufacturing ************* 13% 13% 13% 13%Financial Services **************************** 6% 5% 6% 5%Life Sciences ******************************** 12% 12% 12% 12%IT & High-Tech ****************************** 20% 16% 19% 18%Communication & Media ********************** 15% 18% 18% 18%Other ************************************** 10% 13% 12% 14%


Competition and Competitive Position of Princess

Princess believes that a number of other entities will compete with it to make the types of investments that itplans to make. With respect to its private equity investments, depending on the investment, it expects to facecompetition primarily from larger private equity investors that also seek to secure access to closed private equityfunds, or who have developed relationships enabling them to generate secondary investment deal flow, or to co-invest alongside private equity funds. With respect to private debt investments, Princess expects to facecompetition from banks, business development companies and hedge funds, among others. In addition, Princesswill be indirectly exposed to competition for investment opportunities between private equity or private debtfunds with which it invests, which could drive up the cost of the Princess’ investments and consequently reduceits potential returns.

Many of these competitors may be substantially larger and have considerably greater financial, technical andmarketing resources than are available to Princess. Several of these competitors may have significant amounts of

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available capital, and may have similar investment objectives, which may create additional competition forinvestment opportunities. Some of these competitors may also have a lower cost of capital and access to fundingsources that are not available to Princess, which may create competitive disadvantages for Princess with respectto investment opportunities. In addition, some of these competitors may have higher risk tolerances or differentrisks assessments, which could allow them to consider a wider variety of investments and establish a broadernetwork of business relationships. Please refer to section ‘‘Risk Factors’’ for additional information concerningthe competitive risks that Princess faces.

Corporate Strategy

The Company’s aim is to provide shareholders with long-term capital growth and an attractive dividendyield in the mid- to long-term. In order to achieve this aim, Princess invests in private market investments inaccordance with its investment strategy (see ‘‘— Investment Strategy upon the Restructuring’’). Therefore,Princess pursues the corporate strategy to transfer the investment decisions and advices to a professionalinvestment adviser, which is Partners Group (Zug), a wholly owned subsidiary of Partners Group Holding, one ofthe world’s largest independent alternative assets manager.

Property, Leases, Tangible Assets

Princess does not own any property and has not entered into any leases. Princess is billed quarterly in arrearsby Partners Group (Guernsey) Limited for services provided in relation to the facilities used by Princess.

Princess does not have any tangible assets.

Trademarks and Domains

The Company does not depend on any patents or licences. The domain ‘‘www.princess-privateequity.net’’has been registered for the Company. Princess does not own any trademarks.

Workforce

Currently Princess has one employee who is a part time employee and serves as managing director. Duringthe last three financial years Princess did not have any employees.

Insurance

The Company has not entered into any insurance agreements. The parties to the Restructuring Agreement(see ‘‘Organisational Structure and Material Agreements — Material Agreements — Restructuring Agreement’’)agreed to terminate the Insurance Agreements (see ‘‘Organisational Structure and Material Agreements —Material Agreements — Insurance and Reinsurance Arrangements’’) with Princess Management Limited incourse of the Restructuring.

Litigation

Neither the Company nor its subsidiary is engaged in governmental, legal or arbitration proceedings thatmight have a material adverse effect on the financial position or profitability of the Company or the PrincessGroup, nor have any such proceedings been threatened, nor, so far as the Company is aware, are any suchproceedings to be expected. No such proceedings have been brought during the past twelve months.

Investments by Financial Year

Princess made the following investments in the financial years 2003 to 2005 and in the first nine months offinancial year 2006:

Financial year 2003

Based on the decision taken in summer 2001, no further commitments were allocated to private equity fundsin 2002 and 2003. Nevertheless, the private equity funds in which Princess was invested continued to makeinvestments in 2003. Investments made by the funds amounted to approximately USD 115 million in 2003, andincreased by 17% to approximately USD 805 million, compared to approximately USD 690 million in financialyear 2002.

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Financial year 2004

Having halted its commitment activity in 2001, Princess made one new commitment in 2004, namely toEuropean Equity Partners (IV), L.P. and committed EUR 600,000. This is essentially an annex fund that has beenraised to finance the future investment requirements of the existing portfolio companies in the European EquityPartners (III), L.P. Princess funded capital calls from the partnerships to the tune of approximatelyUSD 114 million in 2004, compared to approximately USD 115 million in 2003. This brought the total value ofinvestments made by the underlying funds to approximately USD 919 million. New investments by theunderlying funds were made primarily in the buyout sector, which at approximately USD 63 million accountedfor 55% of new investments, as compared to 47% in the previous year. Investments in venture-backed companiesaccounted for 32% of the total, and special situations (including mezzanine) declined from 18% to 13%.

Financial year 2005

In 2005, the Investment Manager resumed making commitments, and made new commitments totallingUSD 146 million to 2005 vintage funds, as detailed in the below. The main focus was on buyout funds, whichaccounted for around 70% of total new commitments, and to funds with a focus into the North American region(72%). No new commitments were made to venture funds which invest into Asia or the rest of the world region.

Undrawn commitments stood at approximately USD 245 million at the end of 2005, against approximatelyUSD 223 million at the end of 2004. The increase reflects the fact that the value of the new commitments made in2005 exceeded the value of capital calls funded for all vintages.

Princess continued to fund capital calls under existing commitments to the underlying funds. These capitalcalls totalled approximately USD 100 million in 2005, compared to around USD 115 million in both 2004 and2003. This brings the total value of capital calls funded by Princess to approximately USD 1.02 billion. Theventure sector accounted for 45% of new investments in 2005, up significantly from 32% in 2004, with buyoutand special situations accounting for 48% and 7% respectively.

New commitments in 2005:

Private Equity Fund Commitment

BC European Capital VIII, L.P. ***************************************************** EUR 10mBridgepoint Europe III, L.P ********************************************************* EUR 7.5mWarburg Pincus Private Equity IX, L.P ************************************************ USD 15mSterling Investment Partners II, L.P. ************************************************** USD 10mApollo Investment Fund VI, L.P. **************************************************** USD 25mCandover 2005 Fund*************************************************************** EUR 10mPeninsula Fund IV, L.P************************************************************* USD 10mClayton Dubilier & Rice VII, L.P. *************************************************** USD 10mNordic Capital VI, L.P. ************************************************************ EUR 7.5mOCM Mezzanine Fund II, L.P ******************************************************* USD 15m

Nine-months period from 1 January until 30 September 2006

In the first quarter of 2006, the Investment Manager made new commitments to two 2006 vintage funds, asdetailed in the below. No further commitments have been made since then.

Undrawn commitments stood at around USD 234 million at the end of September 2006, againstapproximately USD 245 million at the end of 2005.

Princess continued to fund capital calls under existing commitments to limited partnerships. These capitalcalls totalled approximately USD 20 million in the first quarter of 2006, approximately USD 17 million in thesecond quarter of 2006, and approximately USD 57 million in the third quarter, compared to aroundUSD 100 million in the financial year 2005.

New commitments in 2006:

Private Equity Fund Commitment

Ares Corporate Opportunities Fund II, L.P. *************************************** USD 20 millionThe fourth Cinven Fund ******************************************************* EUR 7.5 million

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Regulatory Environment for Private Equity Investments

Consent under The Control of Borrowing (Bailiwick of Guernsey) Ordinances, 1959 to 1989 has beenobtained for the issuance of this Prospectus. Neither the Guernsey Financial Services Commission nor the Statesof Guernsey Policy Council takes any responsibility for the Company’s financial soundness or for the correctnessof any of the statements made or the opinions expressed with regard to the Company. The Company is subject tothe ongoing supervision of the Guernsey Financial Services Commission.

With respect to the taxation of the Company under German and Guernsey law see the section ‘‘Taxation’’.For any material risk factors in relation to the tax regulation see the section ‘‘Risk Factors — Risks Related toPrincess’ Business’’.

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ORGANISATIONAL STRUCTURE AND MATERIAL AGREEMENTS

Organisational Structure

On to the business day on which approval for admission to trading of the Ordinary Shares deliverable in theform of Co-ownership Interests on the official market (Amtlicher Markt), with concurrent admission to trading onthe segment of the official market with additional post-admission obligations (Prime Standard) of the FrankfurtStock Exchange is granted by the Frankfurt Stock Exchange (the ‘‘Restructuring Completion Date’’), theCompany completed a substantial restructuring. Prior to the Restructuring Completion Date the organisationalstructure of the Company was as follows.

The Company was founded on 12 May 1999 by Partners Group Holding, Baar-Zug and Swiss ReinsuranceCompany, Zurich which held 80.1 and 19.9%, respectively, in the share capital of Princess Private EquityHolding Limited issued upon its formation.

In order to invest in private equity, the Company issued Bonds due 2010 (see ‘‘The Capital of theCompany — Convertible Bonds’’). The USD 700,000,000 of funds raised by the issue of the Bonds have beeninvested in private equity and private debt funds with a net asset value of USD 816,575,136 as at 30 September2006.

Princess Management Limited (formerly named Princess Management & Insurance Limited), is owned byPartners Group Holding (50.004%) and Swiss Re (49.996%) acting as the Company’s Investment Manager, onthe basis of the Old Investment Management Agreement (see ‘‘— Material Agreements — InvestmentManagement Arrangements — Investment Management Agreement’’) and the Investment Guidelines. PrincessManagement Limited is advised by its investment advisers, Partners Group (Zug), Hamilton Lane and Invesco.Partners Group (Zug) is a wholly-owned subsidiary of Partners Group Holding. With both Swiss Re and PartnersGroup (Zug), Princess Management Limited agreed to service agreements (see ‘‘— Material Agreements —Service Arrangements’’) which were designed to ensure compliance with the Investment Guidelines and avoidrisk concentrations.

In order to limit the bondholders’ risks, the Company in 1999 had entered into an insurance agreement withPrincess Management Limited (see ‘‘— Material Agreements — Insurance and Reinsurance Arrangements’’)according to which the Company could have claimed the amounts due under the Bonds in 2010. In return,Princess Management Limited was granted the right to direct the Company to mitigate the likelihood of a loss incase of falling short of any of several financial figures (the ‘‘Mitigation Right’’). Princess Management Limitedassigned this right to the reinsurer, Swiss Re. Moreover, the Company, Princess Management Limited, Swiss Reand Carey Langlois Trust Company Limited (the name of which is now Carey Commercial Limited) entered intoan insurance trust agreement (see ‘‘— Material Agreements — Insurance and Reinsurance Arrangements’’).

Furthermore Princess, the Investment Manager and Partners Group (Guernsey) Limited (the‘‘Administrator’’), a Guernsey incorporated company wholly-owned by Partners Group Holding, entered into anadministration agreement, pursuant to which the Administrator agreed to provide Princess with variousadministrative, financial and accounting services in relation to the Old Investment Management Agreement (see‘‘— Material Agreements — Administration Arrangements’’).

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Organisational structure prior to the Restructuring Completion Date:

Princess PrivateEquity Holding

Limited

Princess Management &

Insurance Limited

Princess Private Equity Subholding

Limited

Investments

Partners Group(Guernsey) Limited

AdministrationAgreement

Sub Manager

Sub-Manager


100%

Partners Group Hamilton Lane

Partners GroupHolding

Bondholders

100%

50.004% 19.9%

Reinsurance

Agreement

Insurance Trust

Partners GroupService Agreement

81.1%

Swiss Re Service Agreement

Invesco

Sub-Manager

49.996 %

Investment Management AgreementInsurance Agreement

SwissReinsurance

Company

Restructuring

In February 2006, Swiss Re, exercised the Mitigation Right and directed the Company not to make anyfurther commitments in private equity, due to the underlying net asset value of the Bonds as at 31 December 2005being less than 130% of the initial principal amount of the Bonds. Accordingly, no further private equitycommitments could be made by Princess until the earliest to occur of (i) the net asset value underlying the Bondsexceeding 140% of the initial principal amount of the Bonds, (ii) 1 January 2011 and (iii) the exercise by at least95% of the bondholders of their right to convert their Bonds into Ordinary Shares deliverable in the form ofCo-ownership Interests.

Therefore, the Company proposed to its bondholders, in a bondholders meeting on 5 December 2006, amandatory early conversion of the Bonds into Ordinary Shares deliverable in the form of Co-ownership Interestsof the Company (the ‘‘Mandatory Early Conversion’’). As per the Mandatory Early Conversion, bondholders haveagreed to convert their Bonds into Ordinary Shares deliverable in the form of Co-ownership Interests of theCompany on the business day on which approval for admission to trading of the Ordinary Shares deliverable inthe form of Co-ownership Interests on the official market, with concurrent admission to trading on the segment ofthe official market with additional post-admission obligations (Prime Standard) of the Frankfurt Stock Exchangeis given by the Frankfurt Stock Exchange (the ‘‘Restructuring Completion Date’’).

Subsequently to the bondholders’ decision, the Company, Swiss Re, the Investment Manager, the InvestmentAdviser and Carey Commercial Limited entered into various agreements in order to change the organisationalstructure of Princess as follows (altogether referred to as the ‘‘Restructuring’’):

) The insurance and reinsurance arrangements, including any provisions relating to the payments of feesand premiums payable thereunder, have been terminated with effect from the Restructuring CompletionDate. As soon as practicable after the Restructuring Completion Date, the Insurance Trust will bedissolved and distributed amongst Partners Group Holding and Swiss Re.

) Furthermore, Swiss Re has sold its shares in the Company to Partners Group Holding. In addition, SwissRe has agreed to sell its shares in the Investment Manager with effect from 1 January 2007. Accordingly,the service agreement with Swiss Re has been terminated with effect from the Restructuring CompletionDate. By shareholders’ resolution Partners Group Holding and Swiss Re resolved to rename PrincessManagement & Insurance Limited to Princess Management Limited which will take effect shortly afterthe Restructuring Completion Date.

) The Old Investment Management Agreement has, with effect from the Restructuring Completion Date,been replaced by a new investment management agreement which includes a new management and

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incentive fee structure (the ‘‘Investment Management Agreement’’) and the Investment Guidelines havebeen changed to a new investment policy.

) Finally, the following changes to the corporate structure of the Company were implemented:(a) cancellation of the authorised Class A Share capital of the Company; (b) redesignation of the Class BShares as unclassified ordinary shares of the Company; (c) change of the denomination of the issued andauthorised share capital from US dollars to euros; and (d) restatement of the Memorandum and Articlesof Association of the Company.

Organisational structure as of the Restructuring:

Equity HoldingLimited

Princess PrivateEquity Subholding

Limited

Investments

Partners Group(Guernsey)

Limited

PrincessManagement

Limited

Partners Group

Holding

100%

100%

Princess Private

100%*

Partners Group (Zug)100%



Investment Management Agreement

100%

100%

Investment AdvisoryAgreement

* with effect from 1 January 2007

Material Agreements

Investment Management Arrangements

Investment Management Agreement

General: The Company and its wholly-owned subsidiary, Princess Private Equity Subholding Limited,entered into an investment management agreement, dated 30 June 1999, (the ‘‘Old Investment ManagementAgreement’’) with Princess Management Limited (in such capacity, the ‘‘Investment Manager’’) to act asinvestment manager of the assets of Princess, subject to the investment objectives, policies and strategies of, andthe restrictions on Princess, including the Investment Guidelines.

According to this agreement the Investment Manager was responsible for, inter alia, making investmentsand commitments which were consistent with the Investment Guidelines; conducting analyses and due diligencereviews of underlying investments in which Princess could have invested; and giving advice to Princess at leastquarterly and upon request on the Investment Guidelines, including in respect of any restrictions or weightings inthe Investment Guidelines.

In the course of the Restructuring, this agreement has, with effect from the Restructuring Completion Date,been replaced by a new investment management agreement (the ‘‘Investment Management Agreement’’).According to this agreement, the Company has appointed Princess Management Limited as Investment Managerin respect of Princess’ portfolio. The Investment Manager manages the investment and re-investment of theportfolio on a discretionary basis, with a view to achieving its investment objective and in accordance with itsinvestment policy. It is granted the authority, power and right for the account and in the name of Princess to take

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any and all actions as the Investment Manager considers necessary, appropriate, proper, advisable or incidental toor in furtherance of the investment objective. However, the Investment Manager does not, without the priorwritten consent of the Board, have the power to (i) borrow more than 25% of the value of the Company’s assetsfrom time to time on behalf of the Company or any of its subsidiaries, (ii) lend or pledge any of the Company’sassets, (iii) enter into investment or other transactions with affiliates of the Investment Manager, or (iv) investmore than 10% of the value of the Company’s assets from time to time in any single investment (disregarding forthese purposes investments in Pooling Vehicles in relation to which a look-through principle applies).

In carrying out its duties hereunder the Investment Manager shall, inter alia, observe and comply with alldirections of the Board and with all resolutions of the Board of which it has notice; act with a view to achievingthe investment objective and in accordance with the investment policy; act in accordance with the investment andborrowing powers of the Company.

Management fee and performance fee: Under the Investment Management Agreement, in consideration ofthe investment services provided by the Investment Manager, the Company pays to the Investment Manager amanagement fee (the ‘‘Management Fee’’). The Management Fee equals 0.375% per quarter of the Company’sPrivate Equity Asset Value (defined as the higher of (i) the Company’s net asset value, and (ii) the value ofPrincess’ assets less any temporary investments, plus the amount of Princess’ unfunded commitments to makeinvestments (calculated, in the case of Pooling Vehicles, as Princess’ pro rata share in the relevant PoolingVehicle’s unfunded commitments to make underlying investments and disregarding Princess’ commitment toinvest in such Pooling Vehicle)). With respect to secondary investments and direct investments the Company willpay a quarterly management fee to the Investment Manager. In respect of secondary investments, the additionalquarterly fee will equal to 0.0625% of the secondary investment value (defined as the value of Princess’secondary investments, plus the amount of Princess’ unfunded commitments to such secondary investment(calculated, in the case of Pooling Vehicles, as Princess’ pro rata share in the relevant Pooling Vehicle’s unfundedcommitments to make underlying secondary investments and disregarding Princess’ commitment to invest in suchPooling Vehicle) (the ‘‘Secondary Fee’’) and in respect of direct investments, the additional quarterly fee will beequal to 0.1250% of the direct investment value (defined as the value of Princess’ direct investments, plus theamount of Princess’ unfunded commitments to such direct investments (calculated, in the case of PoolingVehicles, as Princess’ pro rata share in the relevant Pooling Vehicle’s unfunded commitments to make underlyingdirect investments and disregarding Princess’ commitment to invest in such Pooling Vehicle) (the ‘‘Direct Fee’’).

The Management Fee, the Secondary Fee and the Direct Fee are all calculated as of the last business day ofthe respective calendar quarter the fee is paid for.

In the event that the Investment Management Agreement is terminated, the Investment Manager shallcontinue to receive a Management Fee, Secondary Fee and Direct Fee for the period commencing immediatelyafter the termination date of the Investment Management Agreement (the ‘‘Termination Date’’), provided that inthe event of such termination the Management Fee, Secondary Fee and Direct Fee shall be calculated and paid asprovided for above, but only with respect to investments made prior to the Termination Date and any suchinvestments acquired by Princess after such Termination Date where there existed prior to the Termination Date alegally binding commitment on Princess to acquire such investment. For the purpose of calculating theManagement Fee, Secondary Fee and Direct Fee after the Termination Date, the aforementioned provisions shallapply, excluding (in each case) investments held through Pooling Vehicles. If the Investment Manager hasinvested in any Pooling Vehicle on Princess’ behalf, the waiver or rebate to Princess of any management orperformance fees charged by the Investment Manager or any affiliate thereof in connection with such investmentshall cease as of the Termination Date, following which any such fees shall be solely for the account of theInvestment Manager or its relevant Affiliate.

Moreover, under the Investment Management Agreement the Company pays the Investment Manager aperformance fee calculated in respect of each direct investment and in respect of each secondary investment(i.e. on a deal-by-deal basis), regardless of whether such direct or secondary investments are made directly byPrincess or through any Pooling Vehicle.

The performance fee in respect of direct investments is determined as provided below, and the performancefee in respect of secondary investments is determined in the same manner, mutatis mutandis, save that theperformance fee in respect of secondary investments is determined using a rate of 10%. The performance fee inrespect of each direct investment is calculated as follows:

) first, Princess receives 100% of all distributions (being all amounts whether of an income or capitalnature) derived from the relevant direct investment (‘‘Relevant Distributions’’) until it has receivedRelevant Distributions equal to:

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) its acquisition cost in respect of the relevant direct investment; plus

) an amount (the ‘‘Preferred Return’’) calculated at the rate of 8% per annum compounded annually onthe amount outstanding in respect of the relevant direct investment from time to time (i.e. zero oracquisition cost less Relevant Distributions, whichever is greater), taking into account the timing ofthe relevant cash flows;

) second, an incentive fee equal to 100% of further Relevant Distributions received by Princess is due andpayable to the Investment Manager until such time as the Investment Manager has received 15% of thesum of the Preferred Return distributed to Princess under the preceding paragraph and the performancefee due and payable to the Investment Manager under this paragraph; and

) third, an additional incentive fee equal to 15% of further Relevant Distributions to Princess is due andpayable to the Investment Manager.

In the event that the Investment Management Agreement is terminated, the Investment Manager continues toreceive performance fee for the period commencing immediately after the Termination Date provided that in theevent of such termination the performance fee is calculated and paid as provided for above, but only with respectto direct investments and secondary investments made prior to the Termination Date and any such investmentsacquired by Princess after such Termination Date where there existed prior to the Termination Date a legallybinding commitment on Princess to acquire such investment.

On an ongoing basis, the Company will pay or reimburse the Investment Manager for the Company’soperating and investment expenses, as well as extraordinary expenses (such as litigation and indemnification).The Investment Manager will be responsible for its routine overhead expenses, including rent, utilities, secretarialexpenses and compensation and benefits of its employees. Moreover, the Investment Manager and its affiliatesmay be entitled to receive cash topping, break-up, monitoring, directors’, organizational, set-up, advisory,investment banking, syndication and other similar fees in connection with the purchase, monitoring or dispositionof investments or from unconsummated transactions.

Qualifying Shareholder Payments: The Investment Manager may enter into distribution or other agreementsin which it agrees to pay to shareholders or distributors holding or representing Co-ownership Interests in anamount in excess of EUR 2 million (based on the net asset value per Co-ownership Interest) as at 30 June or31 December of each year (each a ‘‘Determination Date’’) an amount per Co-ownership Interest equal to 0.50%per annum of the Company’s net asset value per Co-ownership Interest on the relevant Determination Date semi-annually (the ‘‘Qualifying Shareholder Payments’’). Any such payments will be paid by the Investment Managerfrom the Management Fee, Direct Fee and Secondary Fee and will be conditional upon the receipt by theInvestment Manager of these fees.

Any shareholder or distributor that receives a Qualifying Shareholder Payment is entitled to retain it or passit on in its absolute discretion.

Indemnification: The Investment Management Agreement provides that, absent wilful misfeasance, bad faithor gross negligence in the performance of its duties, the Investment Manager and its partners, employees, agentand each other person who serves as an officer or director of any investee company, are entitled toindemnification from the Company for any liabilities, costs and expenses (including reasonable attorneys’ feesand amounts reasonably paid in settlement) arising from the rendering of the Investment Manager’s servicesunder the Investment Management Agreement, in connection with the listing or otherwise.

Duration and Termination: This Investment Management Agreement will become effective on theRestructuring Completion Date, remains in effect for a term of ten calendar years from the RestructuringCompletion Date (the ‘‘Initial Term’’), and thereupon shall be automatically renewed for additional consecutiveterms of ten years (each an ‘‘Additional Term’’). The Investment Management Agreement may be terminated byeither party thereto at the end of the Initial Term and each Additional Term upon three calendar years’ priorwritten notice to the other party. The agreement is non-exclusive.

Sub-Management and Sub-Adviser Agreements

Under the Old Investment Management Agreement in June 1999 the Investment Manager entered into sub-management agreements with the private equity advisers Hamilton Lane and Invesco, pursuant to which itdelegated certain of its obligations under the Old Investment Management Agreement. The sub-managementagreements with Hamilton Lane and Invesco were terminated in June 2002. However, both Hamilton Lane andInvesco agreed to continue to provide monitoring services with regard to investments they managed until theCompany’s participation in the respective investments has been terminated.

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In order to fulfil its obligations under the Old Investment Management Agreement, Princess ManagementLimited entered into a further agreement, a sub-advisory agreement (the ‘‘Sub-Advisory Agreement’’) withPartners Group (Zug) (in this function the ‘‘Investment Adviser’’) in June 1999. Partners Group (Zug) is awholly-owned subsidiary of Partners Group Holding. Under this agreement Partners Group (Zug) was responsiblefor the observation of the portfolio composition limits, the preparation of a forecast of intended commitments,conducting due diligence, making investments and commitments, monitoring the funds etc.

As part of the Restructuring and with effect from the Restructuring Completion Date, Partners Group (Zug)and Princess Management Limited entered into a new investment advisory agreement (the ‘‘Investment AdvisoryAgreement’’), according to which Princess Management Limited appoints Partners Group (Zug) as investmentadviser (the ‘‘Investment Adviser’’) in respect of Princess’ portfolio. The Investment Adviser’s duties are thefollowing: asset allocation, commercial due diligence reviews, investment and disposition proposals, performancemonitoring and co-operation with Administrator. The Investment Adviser may delegate all or any of itsobligations under this agreement to any third parties. The agreement is non-exclusive.

For the services provided under this Investment Advisory Agreement, the Investment Manager remuneratesthe Investment Adviser. The Investment Manager bears the reasonable costs of the Investment Adviser or any ofits affiliates or agents.

Service Arrangements

Partners Group Service Agreement

On 30 June 1999, Princess Management Limited and Private Equity Partners (now Partners Group (Zug))entered into a service agreement (the ‘‘Partners Group Service Agreement’’) pursuant to which Partners Group(Zug) agreed to provide Princess Management Limited with the following services which were designed toensure compliance with the Investment Guidelines and avoid risk concentrations:

) advice to Princess Management Limited from time to time on: the Investment Guidelines, including (butnot limited to) any restrictions or weightings, or the amendment or replacement thereof or supplementthereto; portfolio diversification; structural changes in the private equity industry; and new funds in theprivate equity industry;

) analysis of return expectations of different financing stages, industries and regions;

) review, analysis and advice concerning portfolio allocation;

) review, analysis and advice concerning potential investments or commitments;

) risk management advisory services, as mutually agreed between the parties; and

) marketing on behalf of Princess Management Limited, as mutually agreed between the parties.

Moreover, Partners Group (Zug) provided advice on portfolio diversification based on country, financingstage, industry sectors and vintage years.

This agreement has been terminated with effect from the Restructuring Completion Date.

Swiss Re Service Agreement

On 30 June 1999 Princess Management Limited and Swiss Re entered into a service agreement (the ‘‘SwissRe Service Agreement’’). Pursuant to this agreement, Swiss Re provided Princess Management Limited withsimilar services as Partners Group (Zug) did under the Partners Group Service Agreement.

Furthermore, Swiss Re provided advice on risk control, based on Swiss Re’s risk models, statistical data,cluster analysis and benchmarking. This agreement has been terminated with effect from the RestructuringCompletion Date.

Custodian Agreement

The Company (for itself and its subsidiary), the Investment Manager and Bank of Bermuda (Guernsey)Limited, Bermuda House, 12 St Julian’s Avenue, Guernsey (the ‘‘Guernsey Custodian’’) entered into a CustodianAgreement, dated 30 June 1999, (the ‘‘Custodian Agreement’’) pursuant to which the Guernsey Custodian agreedto provide Princess with various custodian services in relation to the Investment Management Agreement. Withinthis Custodian Agreement the Company has appointed the Investment Manager to provide discretionaryinvestment management services in respect of the assets of the Company placed in the custody of the Guernsey

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Custodian. The Guernsey Custodian provides the Company with custody services e.g. receipt and disbursementof cash, receipt and transfer of securities and registration of securities. However, interests in private equity andprivate debt funds and direct investments are purchased directly in the name of Princess and are not held by theGuernsey Custodian.

The Guernsey Custodian is entitled to receive from the Company a fee not exceeding 0.05% per annum ofthe assets deposited with it, plus transaction fees. The Guernsey Custodian is also entitled to be reimbursed by theCompany for certain of its expenses incurred in connection with the provisions of its services under the CustodianAgreement. Princess has also agreed to indemnify the Guernsey Custodian for certain liabilities in connectionwith the provision of its services under the Custodian Agreement.

The Guernsey Custodian has been appointed for an indefinite term. However, the Custodian Agreementcontains provisions entitling any party to terminate the agreement on 90 days’ notice and immediately in certainother circumstances.

The Custodian Agreement was not amended in connection with the Restructuring.

Administration Agreement

The Company, Princess Private Equity Subholding Limited, Princess Management Limited and PartnersGroup Private Equity Administration Limited (the name of which is now Partners Group (Guernsey) Limited)Tudor House, St Peter Port, Guernsey, (the ‘‘Administrator’’) entered into an administration agreement, dated30 June 1999, (the ‘‘Administration Agreement’’) pursuant to which the Administrator agreed to provide Princesswith various administrative, financial and accounting services in relation to the Investment ManagementAgreement, including:

) reviewing and reporting to the Investment Manager and the Company on the investments made pursuantto the Investment Management Agreement;

) reviewing, analysing and, upon request, reporting to the Investment Manager and/or the Company upon,the portfolio allocation, reporting on the full portfolio of (i) underlying investments, including a portfoliocomposition analysis by country and industry and (ii) private equity and private debt funds, includingportfolio composition analyses by, financing stage and vintage years and such other criteria as arereasonably required by the Investment Manager and/or the Company;

) maintaining all books and records with respect to the investment activities;

) preparing annual reports;

) reporting to the Investment Managers documentation connected with all accounting matters which isrequired to be supplied to the auditors;

) reporting to the Investment Manager and the Company on the financial standing and businesses ofPrincess and its subsidiary;

) taking responsibility for the supply of all administrative functions connected with the investments andcommitments.

Pursuant to the Administration Agreement the administration fee is paid quarterly in advance. The quarterlyadministration fee is calculated as 0.0125% of the first USD 1 billion of the Company’s net assets and 0.005% ofthe amount by which the Company’s net asset exceed USD 1 billion.

The Administrator has been appointed for an indefinite term. However, the Administration Agreementcontains provisions entitling any party to terminate the agreement on 30 business days’ notice and immediately incertain other circumstances.

The Administration Agreement was not amended in connection with the Restructuring.

Insurance and Reinsurance Arrangements

The obligations of the Company under the Bonds and the trust deed were solely obligations of the Companyand were not guaranteed by Princess Management Limited, Swiss Re or any other person. In order to limit thebondholders’ risks, the Company entered into the Insurance Policy with Princess Management, dated 30 June1999, whereby Princess Management Limited agreed to pay the Company in December 2010 a sum equal to theamount required by the Company to redeem the Bonds outstanding. In return, the Company paid to the Insurer anannual premium of 1.5% of the Company’s net assets. The Insurance Policy provided that in the event the net

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assets of the Company as reported in the relevant annual report or quarterly report were less than a particularpercentage of the initial principal amount of the Bonds, the Insurer could assert its right (the ‘‘Mitigation Right’’)to direct the management of the Company so as to mitigate the likelihood of an outstanding Bond loss. TheMitigation Right included, but was not limited to, the power to: amend in any way whatsoever the InvestmentGuidelines, at the sole discretion of the Insurer deal with the assets of the Company require that any income ofthe Company is held in cash, cash equivalents or marketable securities. In the Reinsurance Agreement, the Insurerhas assigned its Mitigation Right in favour of Swiss Re. The Mitigation Right was exercised in February 2006. Inthe course of the Restructuring, the Insurance Policy has been terminated with effect from the RestructuringCompletion Date.

The Company, Princess Management Limited, Swiss Re and Carey Langlois Trust Company Limited (nowCarey Commercial Limited) entered into an insurance trust agreement, dated 30 June 1999, pursuant to whichPrincess Management Limited agreed, subject to certain conditions, and during the term of the insurance trustagreement to deposit a proportion of the fees and premiums received by it under the Investment ManagementAgreement and the Insurance Policy in the trust (the ‘‘Insurance Trust’’). This agreement has been terminatedwith effect from the Restructuring Completion Date.

Furthermore, Princess Management Limited entered into a Reinsurance Agreement with Swiss Re, dated30 June 1999, whereby Swiss Re agreed to pay Princess Management Limited a sum equal to the differencebetween the amount required by Princess Management Limited to meet its obligations under the Insurance Policyand the amount (if any) standing to the credit of the Insurance Trust. This agreement also has been terminatedwith effect from the Restructuring Completion Date.

Restructuring Agreement

In the course of the Restructuring Princess Management Limited, Partners Group Holding, Swiss Re andCarey Commercial Limited entered into a restructuring agreement according to which Swiss Re has sold itsshares in the Company to Partners Group Holding and has agreed to sell its shares in Princess ManagementLimited also to Partners Group Holding with effect from 1 January 2007. Furthermore, the parties to theagreement acknowledged and agreed to terminate the Insurance Policy and the Reinsurance Agreement witheffect from the Restructuring Completion Date, as well as to convert the insurance trust assets into cash as soonas practicable after the Restructuring Completion Date.

Financing Agreements

The Company invests in private equity and private debt investments through its wholly owned subsidiaryPrincess Private Equity Subholding Limited (the ‘‘Subholding’’). On 30 December 2002, the Company and Bankof Scotland entered into a USD 130 million revolving credit facility in order to provide the Company with funds,which it in turn can further provide to Princess Private Equity Subholding Limited in order to assist in acquiring,or meeting Princess Private Equity Subholding Limited’s funding obligations in respect of, investments.According to this agreement, the Company may draw funds under certain conditions and gives certainrepresentation and warranties as well as certain general, financial, investment, and financial informationcovenants. The Company had to pay an arrangement fee to Bank of Scotland and has to pay interest on the fundsdrawn down and a non-utilisation fee on the undrawn amount under the credit facility.

In order to finance such investments, the Company and the Subholding entered into an unsecured andinterest-free USD 1 billion revolving loan facility on 30 December 2002 (the ‘‘Intra-Group Loan Agreement’’).Pursuant to this agreement Subholding may utilise the intra group facility for the purpose of making investmentsin accordance with the Bonds.

As collateral for the credit facility with Bank of Scotland, the Company granted a security interest in theshares held in Subholding to Bank of Scotland. Furthermore, the Company assigned the right, title, benefit andinterest pursuant to the Intra-Group-Loan Agreement to Bank of Scotland and agreed to a set-off with respect toany or all money standing to the Company’s credit with Bank of Scotland. By way of security Subholdingappointed Bank of Scotland as its attorney, granting it authority inter alia to sell, deal with, alienate, realiseand/or dispose of properties of the Subholding. Moreover, Subholding gave a payment undertaking to deposit orpay monies or proceeds from the sale, disposal or realisation of property to Bank of Scotland as collateral and aunconditional guarantee to pay and discharge of all monies and liabilities which shall from time to time be due toBank of Scotland.

With effect from 14 October 2005, the credit facility with Bank of Scotland was reduced to USD 50 million.

The Company has currently no funds drawn under the revolving credit facility with Bank of Scotland.

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GENERAL INFORMATION CONCERNING THE COMPANY

Company History

The Company was registered on the Records of the Island of Guernsey on 12 May 1999.

The Company is an investment holding company which was founded by Partners Group Holding andSwiss Re. Partners Group Holding and Swiss Re held 80.1 and 19.9% in the shares of Princess Private EquityHolding Limited before the Restructuring (see ‘‘Organisational Structure and Material Agreements —Organisational Structure and Restructuring’’).

In order to invest in private equity, the Company in 1999 issued zero coupon convertible bonds due 2010 asa result of which the Company raised funds in an amount of USD 700,000,000.

Princess then made commitments to a number of underlying funds and these commitments wereprogressively drawn down to fund investments identified by the managers of the underlying funds. Princessachieved a full investment level in mid 2003.

The net asset value of the portfolio was approximately USD 695 million at the end of 1999 and reachedapproximately USD 722 million in April 2001. In July 2003 the net asset value reached a low of approximatelyUSD 527 million. Since this time the net asset value has recovered and reached approximately USD 817 millionby 30 September 2006.

In late 2006 the Restructuring (see ‘‘Organisational Structure and Material Agreements — OrganisationalStructure and Restructuring’’) of Princess took place and the Bonds will be converted into Ordinary Sharesdeliverable in the form of Co-ownership Interests with effect from the Restructuring Completion Date.

Formation, Company Name, Registered Office, Financial Year and Duration of the Company

The Company was registered on the Records of the Island of Guernsey on 12 May 1999.

The legal name of the Company is ‘‘Princess Private Equity Holding Limited.’’ The Company is a limitedliability company under Guernsey law. The commercial name of the Company is ‘‘Princess Private EquityHolding Limited’’.

The registered office of the Company is in Guernsey. The business address and registered office of theCompany is Princess Private Equity Holding Limited, Tudor House, Le Bordage, St Peter Port, GuernseyGY1 1BT, Channel Islands, Tel.: +44 1481 730 946, Fax +44 1481 730 947.

The Company’s place of registration is the Island of Guernsey with registered number 35421.

The Company’s financial year begins on 1 January and ends on 31 December of each calendar year.

The duration of the Company is not restricted to a specific time.

Corporate Purpose

According to section 3 of the Memorandum of Association of Princess Private Equity Holding Limited dated12 May 1999 and amended on 5 December 2006, the objects for which the Company is established are:

) To carry on business as an investment holding company and for that purpose to purchase or otherwiseacquire any shares, stocks, certificates, bills, monetary instruments, units, participations, debenturestocks, bonds, obligations, policies of assurance, currencies, securities and other property or estates ofany kind or nature whatsoever and to hold and from time to time to vary and dispose of any suchinvestments and to acquire any such securities or investments as aforesaid in the name of the Companyor its nominees by original subscription tender purchase exchange or otherwise and to guarantee thesubscription thereof and to exercise and enforce all rights and powers conferred by or incidental to theownership thereof and powers or realising capital or earning income in respect thereof or incidentalthereto.

) To borrow or raise money in any manner and to secure the repayment of any money borrowed raised orowing by assignment, charge, hypothecation, pledge or mortgage on all or any of the property or rightsof the Company present future vested or contingent including uncalled capital.

) To invest the capital and other moneys of the Company in the purchase of land or any interest in land,buildings or hereditaments of any tenure and to develop and turn the same to account in any manner thatmay seem expedient.

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) To advance, lend or deposit money or give credit to or with any company, firm or person on such termsas may be thought fit whether on an interest free or subordinated basis or otherwise and whether with orwithout security.

) To guarantee, assure or become liable for or to indemnify against any loss, damage or obligation of anyperson whether or not connected or associated in any manner with the Company (including withoutlimitation any holding or subsidiary company of the Company and any subsidiary of any such holdingcompany) and whether for direct or indirect consideration benefit or advantage and in connection with orsupport of such arrangements to assign charge hypothecate, mortgage or pledge all or any of theundertaking and property of the Company (including uncalled capital) and to enter into any contracts orother transactions in relation to any such arrangements.

) To accept payment for any property right or undertaking sold or disposed of or dealt with by theCompany either in cash or in shares or other securities whether with or without deferred or preferredrights or in debentures securities or mortgages or in any other manner.

) To issue and deposit any shares or securities which the Company may issue by way of charge,hypothecation, pledge or mortgage to secure any sum less than the nominal amount of such shares orsecurities and also by way of security for the performance of any obligations or liabilities of theCompany or of any person whether or not the Company has an interest in such person or his business.

) To accumulate capital for any of the purposes of the Company and to appropriate any property or rightsfor specific purposes conditionally or unconditionally and to allow any person having dealings with theCompany to share in the Company’s profits or any other advantages or benefits.

) To pay all or any expenses incurred in connection with formation and promotion of the Company or tocontract with any other person to pay the same and to pay commissions to brokers and others forunderwriting placing selling or guaranteeing the subscription of any shares or securities of the Companyor of any other entity promoted by the Company.

) To enter into arrangements with any state, government or authority national local or otherwise and toobtain therefrom all rights concessions or privileges conducive to the Company’s objects and to opposethe grant to any other person of similar rights concessions and privileges.

) To make gifts to any persons in such circumstances and whether of cash or other property or rights asmay be considered directly or indirectly conducive to any of the Company’s objects or otherwiseexpedient and in particular to remunerate any person introducing or doing business to or with theCompany.

) To subscribe or guarantee money for charitable or benevolent objects and to aid in the establishment andsupport of associations for the benefit of persons at any time employed by or having dealings with theCompany or the dependants or families of such persons and to establish and support associationsinstitutions funds and trusts to benefit employees (including Directors) and their respective dependantsand families at any time and to grant pensions and allowances and to make payments towards insurancesfor the purpose of indemnifying the Company in respect of claims for any risks or accidents to anyofficers or employees of the Company whether in the course of their employment or not and to paypremiums on any such insurances including insurance against illness accident or death or for any otherpurpose.

) To draw, make, accept, endorse, issue, discount and execute deeds, agreements, arrangements, cheques,promissory notes, bills of exchange and lading warrants, securities, debentures and all other negotiableand transferable instruments or transactions whatsoever.

) To enter into any joint ventures or arrangements or agreements for sharing profits with any persons.

) To distribute in specie among the shareholders by way of dividend or bonus or on a return of capital anyproperty or rights of the Company or any proceeds of sale.

) To effect insurances and reinsurances against risks of every description whether of the Company or anyother person.

) To amalgamate with any other company whose objects are or include objects similar to those of theCompany whether by sale or purchase (for full or partly paid shares or otherwise) of the undertaking orby sale or purchase (for full or partly paid shares or otherwise) of all or a controlling interest in the

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shares of the Company or any such other company or partnership or any arrangement in the nature ofpartnership or in any other manner.

) To procure the Company to be recognised or registered anywhere and to carry on all or any part of theCompany’s business anywhere whether or not the Company has established an office or is so recognisedor registered and as principals agents contractors trustees nominees or otherwise and by or through suchpersons and either alone or in conjunction with others.

) To do all such other things as the Company may think incidental to or connected with any of the aboveobjects or conducive to their attainment or otherwise likely in any respect to be advantageous to theCompany.

‘‘Person’’ is defined in the Memorandum and Articles of Association as term which (except in reference tothe Company) includes any individual partnership or other body of persons whether incorporated or not and anygovernment state or authority and further that the objects specified in each paragraph is treated as independentand accordingly in no way limited or restricted by reference to or inference from any other paragraph or from thename of the Company and may be carried out as fully and construed as widely as if each paragraph defined theobjects of a separate and independent company.

Group Structure

From the date of the acquisition of the shares in the Company by Partners Group Holding from Swiss Re inthe course of the Restructuring and until the Restructuring Completion Date the Company is a wholly-ownedsubsidiary of Partners Group Holding.

The Company has one wholly-owned subsidiary, Princess Private Equity Subholding Limited. The followingtable gives an overview of Princess Private Equity Holding Limited’s sole subsidiary as well as importantcompany data relative to this subsidiary.

Number of Employees Percentageas of 30 September of Equity

Name and Registered Office of Subsidiary Date Founded Corporate Purpose 2006 Owned

Princess Private Equity Subholding Limited 28 May 1999 To carry on — 100%business as aninvestmentholding company

Princess Private Equity Subholding Limited was registered on the Records of the Island of Guernsey on28 May 1999 with the registration number 35314. The Company was formed to hold the private equity assets ofPrincess Private Equity Holding Limited. The authorized share capital is 10,000 Class A ordinary voting shares ofUSD 1.00 each. The share capital is fully issued and paid up. The sole director of the Company is PrincessPrivate Equity Holding Limited as Corporate Director.

Earnings and Dividends per Share, Dividend Policy

The Company has never distributed any dividends. The Company currently intends to distribute a substantialportion of its realised income and gains as dividends. There can be no assurance that the Company will be able topay dividends.

Dividends paid for the relevantConsolidated annual profits financial year

Per Ordinary ShareIn USD in USD2 Per Ordinary Share in USD

2005 ********************************* 47,374,636 6.76 02004 ********************************* 30,577,146 4.36 02003 ********************************* (41,537,379)1 (5.92) 0


2 The consolidated annual profits per share are calculated by dividing the consolidated annual profits by the number of shares in issue(7,010,000). The 700,000 convertible bonds at a par value of USD 1,000 each, if converted at USD 100 per share resulted in7,000,000 Ordinary Shares upon conversion, whilst 10,000 shares were already outstanding at the respective balance sheet date.

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Auditors

PricewaterhouseCoopers CI LLP has been appointed auditor for Princess Private Equity Holding Limited forthe current fiscal year. PricewaterhouseCoopers CI LLP, National Westminster House, St Peter Port, GuernseyGY1 4ND (hereinafter also referred to as ‘‘PwC’’ or the ‘‘Auditor’’) audited the consolidated financial statements(IFRS) as of 31 December 2005, the consolidated financial statements (IFRS) as of 31 December 2004, theconsolidated financial statements (IFRS) as of 31 December 2003 and provided them with the unqualifiedauditor’s opinions reproduced in this Prospectus. PricewaterhouseCoopers CI LLP is supervised by the Instituteof Chartered Accountants in England and Wales.

Paying and Depositary Agent, Registrar

The paying and depositary agent in Germany is Sal. Oppenheim jr. & Cie. KGaA, Untermainanlage 1,60329 Frankfurt/Main, Germany.

The registrar of the Company is Capita Registrar (Guernsey) Limited, Second Floor, 1 Le Truchot, St PeterPort, Guernsey.

Corporate Secretary

The Company has appointed Aon Insurance Managers (Guernsey) Limited, P.O. Box 30, Maison Trinity,Trinity Square, St Peter Port, GY1 4AT, Guernsey, to act as corporate secretary (the ‘‘Corporate Secretary’’) ofthe Company. The Corporate Secretary will be responsible for attending and minuting all meetings of the Boardand all general meetings of the Company, and performing other secretarial duties for the Company from timeto time.

Notices

A notice may be given by the Company to any shareholder either personally or by sending it by prepaid postaddressed to such shareholder at his registered address or if he desires that notices is sent to some other address orperson to the address or person nominated for such purpose. Notices to be posted to addresses outside theChannel Islands and the United Kingdom so far as practicable is forwarded by prepaid airmail.

A notice given by advertisement is published in at least one German national newspaper and one dailynewspaper circulated widely in each of Guernsey and is deemed to have been served before noon the day onwhich the advertisement appears.

Notices relating to the Company’s shares must also be published in at least one nationwide newspaperauthorised by the Frankfurt Stock Exchange in accordance with the German Stock Exchange Act (Borsengesetz)and the German Exchange Admission Regulation (Borsenzulassungsverordnung). Notices in connection with theapproval of this Prospectus or of supplements thereto is made in compliance with the provisions of the GermanSecurities Prospectus Act (Wertpapierprospektgesetz) in the form of publication stipulated for this Prospectus,i.e., by publication on the Company’s website and by making a print version available at the offices of theCompany, Sal. Oppenheim and the admission office of the Frankfurt Stock Exchange, and by subsequent noticeof the publication in the national German newspaper, Frankfurter Allgemeine Zeitung.

All notices regarding the Global Bearer Certificate will be published in the Bundesanzeiger (FederalGazette) and in at least one obligatory newspaper of each German stock exchange on which the Ordinary Sharesdeliverable in the form of Co-ownership Interests will traded and quoted. The notice will be deemed to be validlygiven by publication in the Bundesanzeiger.

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THE CAPITAL OF THE COMPANY

Share Capital and Shares

The Company has an authorised share capital of EUR 200,100 divided into 20,010,000 ordinary registeredshares of EUR 0.01 each (‘‘Ordinary Shares’’) of which 7,010,000 Ordinary Shares will be issued andoutstanding on the Restructuring Completion Date.

Evolution of Share Capital

The Company was incorporated with an authorised share capital of USD 200,100 divided into 20,000,000Class A shares of USD 0.01 each and 10,000 Class B shares of USD 0.01 each. Out of the authorised sharecapital 10,000 Class B shares were issued in 1999. None of the Class A ordinary shares were issued.

Pursuant to a shareholders’ resolution on 5 December 2006, the authorised Class A share capital wascancelled and the Class B shares were re-designated as unclassified shares. The nomination of the issued andauthorised share capital was changed from USD to euro. A new authorised share capital denominated in euro wascreated. As a result of these changes, the Company has an authorised share capital of EUR 200,100 which isdivided into 20,010,000 Ordinary Shares, of which 7,010,000 Ordinary Shares will be issued and outstanding atthe Restructuring Completion Date.

Alteration of Capital

The Company at any time may by ordinary resolution resolve to raise share capital of such amount to bedivided into shares of such nominal value as the resolution prescribes and from time to time by ordinaryresolution to increase such share capital by such sum to be divided into shares of such amount as the resolutionprescribes.

Subject to the terms and rights attaching to shares already in issue and the Articles, any new shares are ofsuch class and amount and have such preference or priority as regards dividends or in the distribution of assets oras to voting or otherwise over any other shares of any class whether then issued or not or be subject to suchstipulations deferring them to any other shares with regard to dividends or in the distribution of the assets as theBoard may determine.

Subject to the terms and rights attaching to shares already in issue and the Articles, the Board before theissue of any new shares may resolve that all or some of them are offered to the shareholders in proportion to theirexisting shares at such price as the Board may fix and such offer is made by notice specifying the number ofshares to which the shareholder is entitled and limiting a time within which the offer if not accepted will bedeemed to be declined; and after the expiration of such period or on the receipt of an intimation from theshareholder that he declines, the Board may offer the same on similar terms to such of the other shareholders asthey may select including the Directors or dispose of them in such manner as they think fit. For the purpose ofgiving effect to this provision, the Board is entitled to disregard fractions.

Subject as provided elsewhere in the Articles, the Company may by ordinary resolution: (a) consolidate anddivide all or any of its share capital into shares of larger amount than its existing shares; (b) subdivide all or anyof its shares into shares of smaller amount than is fixed by the Memorandum and Articles of Association sohowever that in subdivision the proportion between the amount paid and the amount if any unpaid on eachreduced share is the same as it was in the case of the share from which the reduced share is derived and so that theresolution whereby any share is subdivided may determine that as between the holders of the shares resultingfrom subdivision one or more of the shares may have such preferred deferred or other rights over the others as theCompany has power to attach to unissued or new shares; (c) cancel any shares which at the date of the resolutionhave not been taken or agreed to be taken by any person and diminish the amount of its authorised share capitalby the amount of the shares so cancelled; (d) convert all or any of its fully paid shares into stock and reconvertthat stock into paid-up shares of any denomination; and (e) convert all or any of its fully paid shares the nominalamount of which is expressed in a particular currency into fully paid shares of a nominal amount of a differentcurrency, the conversion being effected at the rate of exchange (calculated to not less than 3 significant figures)current on the date of the resolution or on such other date as may be specified therein.

The Board on any consolidation of shares may deal with fractions of shares in any manner.

The Company may by special resolution reduce its share capital any capital redemption reserve fund or anyshare premium account in any manner and with and subject to any incident authorised and consent required byGuernsey law.

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Where subscription monies are not an exact multiple of the subscription price a fraction of a share is allottedto the subscriber who is registered as the holder of such fraction provided that any holding of shares is a multipleof 1/1,000 part of a share.

Any preference shares may, with the sanction either of the Board or an ordinary resolution, be issued onterms that they are at the option of the Company or the holder liable to be redeemed on such terms and in suchmanner as the Company before the issue may by ordinary resolution determine and subject to and in default ofsuch determination as the Board may determine.

For the avoidance of doubt, it is declared that a resolution to increase the authorised share capital of theCompany is not regarded or deemed as varying, modifying or abrogating the special rights conferred upon theholders of any shares issued with preferred, deferred or other special rights.

Subject to the provisions of the Articles, the unissued shares and any treasury shares are at the disposal ofthe Board which may allot, grant options over (including, without limitation, by way of granting phantom stock,stock appreciation rights or other similar rights) or otherwise dispose of them to such persons on such terms andconditions and at such times as the Board determines but so that the amount payable on application on each shareis fixed by the Board.

The Company may pay commission in money or shares to any person in consideration of his subscribing oragreeing to subscribe whether absolutely or conditionally for any shares in the Company or procuring or agreeingto procure subscriptions whether absolute or conditional for any shares in the Company provided that the rate oramount of commission is fixed by the Board and disclosed in accordance with Guernsey law. The Company mayalso pay brokerages.

The Board may at any time after the allotment of any share but before any person has been entered in theregister as the holder: (a) recognise a renunciation thereof by the allottee in favour of some other person andaccord to any allottee of a share a right to effect such renunciation; and/or (b) allow the rights represented therebyto be one or more participating securities, in each case upon and subject to such terms and conditions as theBoard may think fit to impose.

For the purposes of Section 29 of the Companies (Guernsey) Law 1994 as amended, the minimumsubscription are two shares.

Treasury Shares

Currently the Company does not hold any of its own shares.

The Company may from time to time, subject to the provisions of Guernsey law, purchase its own shares(including any redeemable shares) in any manner authorised by Guernsey law. The Company may hold anyshares purchased by it as treasury shares. The Company does not exercise any voting rights or make or receiveany dividend in respect of treasury shares held by it. The aggregate nominal value of the shares of any class heldas treasury shares must not exceed at anytime 10% of the nominal value of the issued share capital of the sharesin that class at that time.

Convertible Bonds

Description of Bonds

The Company issued zero coupon convertible bonds with an aggregate nominal value of up toUSD 525,000,000 due 2010 under a trust deed dated 30 June 1999 and further zero coupon convertible bondswith an aggregate nominal value of up to USD 475,000,000 due 2010 pursuant to the terms of the firstsupplemental trust deed dated 5 October 1999, the second supplemental trust deed dated 3 November 1999 andthe third supplemental trust deed dated 20 December 1999 and raised funds in an aggregate amount of USD atotal of 700,000,000 by issuing 700,000 Bonds with a nominal value of USD 1,000 each (together the ‘‘Bonds’’).The Bonds did not bear interest. They were direct, unconditional, unsubordinated and unsecured obligations ofthe Company ranking pari passu and rateably without any preference or priority among themselves.

Restructuring of the Convertible Bonds

In connection with the Insurance Policy and the Reinsurance Agreement (see ‘‘Organisational Structure andMaterial Agreements — Material Agreements — Insurance and Reinsurance Arrangements’’) Swiss Re wasgranted a Mitigation Right, which Swiss Re exercised in February 2006 due to the underlying net asset value ofthe Bonds as at 31 December 2005 being less than 130% of the initial principal amount of the Bonds.

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On a bondholders’ meeting held on 5 December 2006, bondholders approved to amend the terms andconditions of the Bonds by entering into a fourth supplemental trust deed with Law Debenture Trustees Limited(the ‘‘Fourth Supplemental Trust Deed’’) giving the Company a mandatory conversion right. Accordingly theCompany was granted the right (the ‘‘Mandatory Conversion Right’’) to convert all of the Bonds intoCo-ownership Interests on the Restructuring Completion Date provided the Company has within the previous10 business days notified the bondholders of the date which it reasonably expects to be the RestructuringCompletion Date. The Restructuring Completion Date will be the business day on which approval for admissionto trading of the Ordinary Shares deliverable in the form of Co-ownership Interests in a global bearer certificateissued by and deposited with Clearstream Banking AG, Frankfurt representing new shares of the Company ofEUR 0.01 each on the official market (Amtlicher Markt) on the segment with additional post-admissionobligations (Prime Standard) of the Frankfurt Stock Exchange is given by the Frankfurt Stock Exchange(the ‘‘Restructuring Completion Date’’) provided such date is prior to 30 March 2007. Upon the deposit of theglobal bearer certificate with Clearstream, Frankfurt, the global certificate in registered form representing theBonds will be cancelled. Further, within 72 hours of the Restructuring Completion Date, the Company shallprocure that 10 Co-ownership Interests in respect of each USD 1,000 in principal amount of the Bonds convertedshall be credited to the depository accounts of those persons who had an interest in the global certificates inregistered form representing the Bonds in Euroclear Bank S.A./N.V. and Clearstream Banking, societe anonyme.

On or immediately following the Restructuring Completion Date, each Bond has beed or will be converted,as the case may be, into 10 Ordinary Shares deliverable in the form of Co-ownership Interests in a global bearercertificate issued by Clearstream, Frankfurt such that each Co-ownership Interest in a global bearer certificatecarries rights corresponding to one Ordinary Share.

Shareholding Notification Requirements

Pursuant to section 26 of the German Securities Trading Act (Wertpapierhandelsgesetz), the Company isrequired to announce the fact that a voting interest of a shareholder or a holder of Co-ownership Interests reaches,exceeds or falls below a threshold of 5%, 10%, 25%, 50% or 75% of the voting rights as well as the percentage ofthe voting rights of such shareholder or holder of Co-ownership Interests at the latest within nine days in anationwide newspaper authorised by the stock exchanges in Germany. The time limit commences with the pointof time in which the Company becomes aware of the fact that the voting interest of the shareholder or the holderof Co-ownership Interests reaches, exceeds or falls below of such threshold. There is currently no obligation onthe part of the shareholders or the holder of Co-ownership Interests to notify the company of such fact.

By implementation of Directive 2004/109/EG of the European Parliament and the Council of 15 December2004 on the harmonisation of transparency requirements in relation to information about issuers whose securitiesare admitted to trading on a regulated market and amending directive 2001/34/EC (the ‘‘Transparency Directive’’)into German law through the German Transparency Directive Implementation Act (Gesetz zur Umsetzung derRichtlinie 2004/109 EG des Europaischen Parlaments und des Rates vom 15. Dezember 2004 zurHarmonisierung der Transparenzanforderungen in Bezug auf Informationen uber Emittenten, deren Wertpapierezum Handel auf einem geregelten Markt zugelassen sind, und zur Anderung der Richtlinie 2001/34/EG) theGerman Securities Trading Act is expected to be changed with respect to shareholding notification requirements.The Transparency Directive Implementation Act as adopted by the German parliament (Bundestag) on30 November 2006, which is expected to take effect on 20 January 2007 proposes to change Section 21 of theGerman Securities Trading Act to the effect that holders of shares and co-ownership interests in issuers whosehome member state is Germany and who by way of acquisition, disposal or otherwise reaches, exceeds or fallsbelow 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% or 75% of the voting rights in the issuer shall notify this factimmediately to the issuer and simultaneously to the German Federal Financial Supervisory Authority at the latestwithin four trading days. Furthermore, section 26 of the German Securities Trading Act is expected to be replacedby a rule which requires an issuer to publish information pursuant to section 21 of the German Securities TradingAct at the latest within three trading days after receiving such notification and to forward such information to thenewly established companies register (Unternehmensregister).

Takeover Law

The City Code on Takeovers and Mergers (the ‘‘UK Takeover Code’’ or the ‘‘Code’’) will apply to anytakeover offer for the Company if at that time the Company is considered by The Panel on Takeovers and Mergers(the ‘‘Takeover Panel’’) to have its place of central management and control in Guernsey (or elsewhere in the UK,the Channel Islands and the Isle of Man). The Company has and it is the intention of the Directors that theCompany should continue to have its place of central management and control in Guernsey. The Company

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currently does not expect to change its place of central management and control as a result of which the UKTakeover Code would not apply to an offer for the Company’s shares.

The UK Takeover Code operates principally to ensure that shareholders are treated fairly and are not deniedan opportunity to decide on the merits of a takeover and that shareholders of the same class are affordedequivalent treatment by an offeror. The UK Takeover Code also provides an orderly framework within whichtakeovers are conducted; in addition it is designed to promote, in conjunction with other regulatory regimes, theintegrity of the financial markets. The UK Takeover Code is issued and administered by the Takeover Panel. TheUK Takeover Code is based upon a number of general principles (the ‘‘General Principles’’), which areessentially statements of standards of commercial behaviour. These General Principles are the same as thegeneral principles set out in Article 3 of the 2004 EU Directive on Takeover Bids. They apply to takeovers andother matters to which the Code applies. They are expressed in broad general terms and the Code does not definethe precise extent of, or the limitations on, their application. They are applied by the Takeover Panel inaccordance with their spirit in order to achieve their underlying purpose. In addition to the General Principles, theCode contains a series of rules. Although most of the rules are expressed in less general terms than the GeneralPrinciples, they are not framed in technical language, and like the General Principles, are to be interpreted toachieve their underlying purpose. Therefore, their spirit is to be observed as well as their letter. The TakeoverPanel may derogate or grant a waiver to a person from the application of a rule in certain circumstances.The following is a brief summary of some of the most important rules:

) When a person or group acquires interests in shares carrying 30% or more of the voting rights of acompany, they must make a cash offer to all other shareholders at the highest price paid in the 12 monthsbefore the offer was announced (30% of the voting rights of a company is treated by the Code as thelevel at which effective control is obtained).

) When interests in shares carrying 10% or more of the voting rights of a class have been acquired by anofferor in the offer period and the previous 12 months, the offer must include a cash alternative for allshareholders of that class at the highest price paid by the offeror in that period. Further, if an offeroracquires for cash any interest in shares during the offer period, a cash alternative must be made availableat that price at least.

) If the offeror acquires an interest in shares in a target company at a price higher than the value of theoffer, the offer must be increased accordingly.

) The target company must appoint a competent independent adviser whose advice on the offer must bemade known to all the shareholders, together with the opinion of the board.

) Favourable deals for selected shareholders are banned.

) All shareholders must be given the same information.

) Those issuing takeover circulars must include statements taking responsibility for the contents.

) Profit forecasts and asset valuations must be made to specified standards and must be reported on byprofessional advisers.

) Misleading, inaccurate or unsubstantiated statements made in documents or to the media must bepublicly corrected immediately.

) Actions during the course of an offer by the target company which might frustrate the offer are generallyprohibited unless shareholders approve these plans.

) Stringent requirements are laid down for the disclosure of dealings in relevant securities during an offer.

) Employees of both the offeror and the offeree must be informed about an offer.

As the Company is incorporated in Guernsey but listed in Germany, the German Act on the Acquisition ofSecurities and on Takeovers (Wertpapiererwerbs- und Ubernahmegesetz) will not apply to a bid for theCompany’s shares or Co-ownership-Interests. Generally the German Act on the Acquisition of Securities and onTakeovers is only applicable with respect to target companies that have their registered seat in Germany (or anyother member state of the European Economic Area) and that have their shares listed on an organised market inthe European Economic Area.

Since Guernsey does not have a takeover regulation, Guernsey law does not offer any takeover protection forthe Company’s shareholders and holders of Co-ownership Interests.

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Director’s Dealings

Under section 15 a of the German Securities Trading Act, persons with management responsibilities in alisted stock corporation (‘‘Managers’’) must inform the Company and BaFin within five business days concerningtheir own transactions with shares of the Company or financial instruments relating thereto, particularlyderivatives. This also applies to individuals closely related to Managers. The Company is required to publish anysuch notice promptly after receiving it and to send the publication to the German Federal Financial SupervisoryAuthority. This duty does not arise as long as the total amount of the transactions of a Manager and any personwith whom he is closely related does not reach an amount of EUR 5,000.00 in total by the end of the calendaryear. Managers are members of a management, administrative or supervisory body of the stock corporation aswell as other persons who have regular access to insider information within the meaning of the German SecuritiesTrading Act and who are authorised to make material business decisions for the Company. The following personsconstitute persons who are closely related with a Manager: spouses, registered civil partners (eingetrageneLebenspartner), dependent children and other relatives who have lived in the same household with the Managerfor at least one year as of the date of the transaction requiring disclosure. Legal entities in which theaforementioned persons have managerial responsibilities are also subject to the disclosure duty. The aboveprovision also applies to such legal entities, companies and organisations, which are directly or indirectlycontrolled by a Manager, which were established for the benefit of any such person, or whose economic interestssubstantially correspond to those of any such person. Persons at fault for non-compliance with the foregoingnotification requirement may be subject to an administrative fine.

The provisions of section 15 a of the German Securities Trading Act apply to the Company also with respectto transactions in Co-ownership Interests.

Pursuant to an amendment to the German Securities Trading Act through the Transparency DirectiveImplementation Act as adopted by the German parliament (Bundestag) on 30 November 2006, which is expectedto take effect on 20 January 2007, the Company will further be required to forward the above notices to the newlyestablished companies register (Unternehmensregister).

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THE COMPANY’S BODIES

Board of Directors

Members of the Board of Directors

The members of the board of directors (the ‘‘Board of Directors’’, each director also referred to as the‘‘Director’’) and the duration of their appointment are set out in the table below:

Director Member since Appointed until

Urs Wietlisbach *********************************** 24 June 1999 June 2008Graham Hall ************************************* 24 June 1999 June 2009Brian Human ************************************* 19 November 2003 June 2007Andreas Billmaier ********************************* 5 December 2006 November 2008

Details of the members of the Board of Directors are as follows:

Urs Wietlisbach (Swiss, born in 1961) is a founder of Partners Group, a member of both the businessdevelopment committee and private equity investment committee and serves as the firm’s executive vicechairman. As Chief Markets Officer, he is responsible for marketing strategy and for client relationshipmanagement. He was initially responsible for the firm’s partnership investment activities and instrumental inbuilding Partners Group’s private equity fund portfolio and a global industry network. Later, he also focused onbusiness development responsibilities, first in Europe, and subsequently in the US and the Asia-Pacific region.Prior to founding Partners Group, Mr Wietlisbach was an executive director at Goldman Sachs & Co. where, afterassignments in London and New York, he was appointed head of the firm’s institutional clients business inSwitzerland. Previously, he was a relationship manager for multinational corporate clients at Credit Suisse inNew York and Zurich.

Graham Hall (British, born in 1963) is an Advocate of the Royal Court of Guernsey and a partner in CareyOlsen. He specialises in investment business, banking and commercial work generally. He joined Carey Langloisin 1990 as an associate and became a partner in January 1995. Prior to this, he worked as a solicitor with FieldFisher Waterhouse in London, specialising in Banking and Commercial Law. He was called to the Guernsey Barin 1992. Carey Langlois merged with Olsens in March 2003. Carey Olsen has acted as Guernsey legal adviser tothe Company.

Brian Human (British, born in 1948) is currently managing director of Princess Private Equity HoldingLimited and served before as managing director of Princess Management Limited. He has a BA (Econ) degreefrom Rhodes University, South Africa and the IAC qualification from the UK’s Securities and InvestmentInstitute. Mr Human has been in the finance industry since graduating in 1971. He immigrated to Englandin 1973, joining first Midland Bank and then Grindlays Bank, which was acquired by the ANZ Bank in 1992 andthen by Standard Chartered Bank in 2000. He has worked in Thailand, Hong Kong and Australia as well asEngland, Jersey and Guernsey. Prior to joining Princess in November 2003 he was head of risk management forStandard Chartered Bank (Jersey) Limited, and his previous posts include managing director of ANZ GrindlaysBank (Jersey) Limited, managing director of ANZ Bank Guernsey Limited, Senior Manager Credit ANZ BankLondon, Senior Manager Business Banking ANZ Melbourne and general manager of Thailand-based GeneralFinance and Securities Limited.

Andreas Billmaier (German, born 1964) has been division manager, head of participation management andprivate equity and member of several steering committees of Nuernberger Insurance Group since 2000. Prior tothis, he has worked as controller and auditor with Nuernberger Insurance Group since graduation inDecember 1993. Prior to his studies, he worked as client adviser with Deutsche Bank. Mr Billmaier is advisoryboard member in several private equity and real estate fund and fund-of-funds. Mr Billmaier holds a degree ineconomics (banking, taxes, auditing, controlling).

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In addition to their directorships in the Company, the Directors hold or have held, as the case may be, thefollowing directorships and/or positions of a partner in the following partnerships within the five years prior tothe publication of this Prospectus:

Name of Director Directorships/Partnerships

Urs Wietlisbach******************************* Current Directorships/PartnershipsPartners Group HoldingPearl Holding LimitedPartners Group Global Opportunities Limited

Past Directorships/PartnershipsPartners Group (Guernsey) LimitedPearl Management Limited

Graham Hall ********************************* Current Directorships/PartnershipsCarey Olsen Holdings LimitedChannel Islands Stock Exchange, LBG (The)City Rd Investments PCC LimitedCO 1 LimitedCO 2 LimitedCommercial Property Growth Fund Limited (The)Commercial Property Income Fund Limited (The)Credit Suisse Advanced Solutions PCC LimitedCrownstone Hedging LimitedCustom Investments PCC LtdCustom Portfolio PCC LtdDynamica PCC LimitedElven Investments LimitedEmerging Markets Debt and Currency FundEquis PCC LimitedFIM Management (Guernsey) LimitedFuture Generation PCC LimitedGL Fund Management (BVI) LimitedGL Fund Management (Guernsey) LimitedGreystones (Holdings) LimitedHelios Alternative Strategies LimitedInsight Investment Currency Fund LimitedInsight Investment International Bond Funds LimitedInsight Investment International Multi-ManagerFunds LimitedInsight Investment International Reserves LimitedInsight Investment Management (CI) LimitedInsight Investment Management Holdings (Malta)LimitedInsight Investment Nominees (CI) LimitedLCF Edmond de Rothschild (CI) LimitedLCF Edmond de Rothschild Holdings (C.I.) LimitedLeonis Investments PCC LimitedLindos Alternative Investment Strategies LimitedLong-Invest Capital LimitedFIM Long-Invest PCC LimitedFIM Long-Invest Portfolio LimitedManaged Investments PCC LimitedM3 Capital Management (Guernsey) LimitedM3 Capital Mutual PCC LimitedOmega Selected Investment Managers LimitedOrchis PCC LimitedPalmer Fund Management Services LimitedPalmer PCC LimitedParin PCC Limited

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Parinus PCC LimitedPartners Group (Guernsey) LimitedPartners Group Private Equity Performance HoldingLimitedPensus LtdPensus Commoditas LimitedPensus Isaios LimitedPensus Rhetis LimitedPHI Russia Property LimitedPIN PCC LimitedPluris Alternative Investment Strategies LimitedPolygon Capital Limited (The)Premium Portfolio Fund PCC LimitedPremium Series PCC LimitedPrincess Private Equity Holding LimitedPrincess Private Equity Sub-holding LimitedRealis PCC LimitedSecundum Series PCC LimitedSogeval Fund LimitedStrategic Investment Fund LimitedTaranis Investments PCC LimitedTotal Return Alternative Strategies LtdTritos Alternative Investment Strategies LtdTrotanoy Investment Company LtdVenture Holdings LtdVitur PCC LimitedWCP Holdings LimitedWegelin Asset Management LimitedWestbourne Growth Fund PCC LimitedWestbury Commercial Property Fund Limited (The)

Past Directorships/PartnershipsDV3 Mid City LimitedEoffshore LimitedEuclidian Insurance PCC LimitedGreenpark Capital Investment Management LimitedGreenpark International General Partner I LimitedGreenpark International General Partner II LimitedGreystones (Holdings) LimitedInsight Foundation Holding Company LimitedInsight Foundation Property (Mid City) LimitedInsight Foundation Property LimitedInsight Foundation Property No. 2 LimitedInsight Foundation Property Trust LimitedLP (Alfreton) LimitedLP (Brentford) LimitedLP (Bristol) LimitedLP (Cannock) LimitedLP (Fleet) LimitedLP (Havant) LimitedLP (Hemel Hempstead) LimitedLP (New Malden) LimitedLP (Northampton) LimitedLP (Tudor Street) LimitedLP (York) LimitedLunar Partnership (Alfreton) LimitedLunar Partnership (Bolton) LimitedLunar Partnership (Brentford) Limited

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Lunar Partnership (Bristol) LimitedLunar Partnership (Cannock) LimitedLunar Partnership (Fleet) LimitedLunar Partnership (Havant) LimitedLunar Partnership (Hemel Hempstead) LimitedLunar Partnership (New Malden) LimitedLunar Partnership (Northampton) LimitedLunar Partnership (Scunthorpe) LimitedLunar Partnership (Tudor Street) LimitedLunar Partnership (York) LimitedLunar Partnership LimitedMaypole LimitedMetaris PCC LimitedPNE Invest LimitedSafeway Stores (Guernsey) LimitedSafeway Stores (Jersey) LimitedTronos PCC LimitedVerides PCC Limited

Brian Human********************************* Current Directorships/PartnershipsPrincess Private Equity Holding LimitedStandard Chartered Management Company(Guernsey) Limited

Past Directorships/PartnershipsPrincess Management and Insurance Limited(until Restructuring Completion Date)Standard Chartered Bank (Jersey) Limited

Andreas Billmaier***************************** Current Directorships/PartnershipsDurkop Holding AG, NurnbergAareal European Property Investments No. 1 S.A.,LuxemburgVEGA Invest Fund plc, DublinVEGA Invest (Guernsey) Ltd., GuernseyFeronia L.P.Partners Group Europe L.P.SR Private Equity Partners III L.P.SR Private Equity Partners IV L.P.Metzler US Real Estate Fund GmbH & Co. KG(as deputy)

There are no service agreements in place between the Directors and Princess which provide for any benefitsupon their termination.

Responsibilities

The Board of Directors is responsible for the determination of the investment policy of the Company,resolving conflicts and for monitoring the overall portfolio of investments of the Company. Until otherwisedetermined by the Board, the number of Directors is not less than three nor more than seven. At no time amajority of Directors is resident in Switzerland or the United Kingdom.

To assist the Board in the day-to-day operations of the Company, arrangements have been put in place todelegate authority for performing certain of the day-to-day operations of the Company to the InvestmentManager, the Investment Adviser and other third-party service providers, such as the Administrator and theCorporate Secretary.

The Articles set out the following provisions relating to the conduct of the Board of Directors:

) The decision taking process and entitlement to vote on resolutions — Article 22.8 of the Company’sArticles of Association defines quorum for the Board being fixed by the directors and, unless so fixed, is

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three directors provided that a majority of the directors counting towards the quorum are non-resident inthe UK and Switzerland.

) The process for appointment of directors — Article 16.

) The conditions under which a director may retire from office, be removed or be disqualified —Article 21.

) The remuneration of directors — Article 17.

The Board has power at any time to appoint any person to be a Director either to fill a casual vacancy or asan addition to the existing Directors but so that the total number of Directors does not at any time exceed thenumber (if any) fixed pursuant to the Articles. At the first annual general meeting and at each annual generalmeeting thereafter: (a) any Director who was elected or last re-elected a Director at or before the annual generalmeeting held in the third calendar year before the current year retires by rotation; and (b) such further Directors(if any) retires by rotation as would bring the number retiring by rotation up to one-third of the number ofDirector in office at the date of the notice of the meeting (or, if their number is not a multiple of three, the numbernearest to but not greater than one-third).

The Directors are entitled to receive by way of fees for their services as Directors such sum as the Boardmay from time to time determine provided that the amount paid to each Director by way of fees does not exceed4100,000 in any financial year, or such higher amount as may be determined from time to time by ordinaryresolution of the Company. The Directors are also entitled to be repaid all reasonable out of pocket expensesproperly incurred by them in or with a view to the performance of their duties or in attending meetings of theBoard or of committees or general meetings.

Any Director may by notice in writing under his hand served upon the Company appoint any personapproved by the Board as an alternate Director to attend and vote in his place at any meeting of the Board.

The Board may meet for the despatch of business adjourn and otherwise regulate its meetings as it thinks fit.Questions arising at any meeting are decided by a majority of votes. In case of an equality of votes the chairmanat the meeting has a second or casting vote. All meetings of Directors take place outside of Switzerland and theUnited Kingdom and any decision reached or resolution passed by the Directors at any meeting held withinSwitzerland or the United Kingdom or at which a majority of Switzerland or United Kingdom resident Directorsis present is invalid and of no effect.

The Board may delegate any of their powers to committees consisting of such one or more Directors as theythink fit. The quorum necessary for the transaction of the business of the Board may be fixed by the Board andunless so fixed is three.

The Managing Director

The Company has appointed Brian J. Human as its managing director (the ‘‘Managing Director’’). As such,he will be responsible on a part time basis for the day-to-day management and oversight of the Company and willsupport the Board in its responsibilities. Mr Human’s primary responsibilities, beside his responsibilities asordinary Director, will include (i) administration of the Company including all corporate formalities,(ii) monitoring and maintaining compliance with applicable governmental regulations and so forth,(iii) monitoring and overseeing the Company’s service providers and (iv) coordination and preparation of Boardmeetings.

Remuneration of the Members of the Board of Directors

The total remuneration paid by the Company to the members of the Board of the Company for the financialyear ending 31 December 2005 was GBP 11,250, and the period ending at the Restructuring Completion Datewas GBP 6,000. In future, the Company expects to pay a total remuneration to the members of the Board of theCompany not exceeding EUR 150,000 per annum.

Loans, other legal relationships, conflicts of interest

The Company has neither granted any loan to any Director nor received any loans of any Director in thefinancial years 2005 and 2006. The Company’s Board of Directors is resolved to conclude to a directors andofficers insurance (D&O) for its members with a cover of GBP 10 million as of 8 December 2006.

Mr Wietlisbach is an employee of Partners Group (Zug) and a director of Partners Group Holding.Mr Human is also an employee of Partners Group Global Opportunities Limited, a closed end investment

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company incorporated in Guernsey which is managed by an affiliate of Partners Group Holding. Partners GroupHolding is the only shareholder of the Investment Adviser, Partners Group (Zug), and currently together withSwiss Re (Swiss Re has sold its shares to Partners Group Holding with effect from 1 January 2007) a shareholderof the Investment Manager, Princess Management Limited.

Save as disclosed in the previous paragraph, no member of the Board of Directors has any conflicts ofinterest with respect to their obligations vis-a-vis the Company, on the one hand, and their private interests orother obligations on the other hand. However, from the above disclosed relationships potential conflicts ofinterests may arise. The service contracts, which were concluded between the Board of Directors and theCompany, provide for no benefits in the event they terminate. No member of the Company’s Board of Directorshas been found guilty of any criminal acts of fraud in the last five years, nor has any such member in the last fiveyears been on a governing body or part of the management of any company, whose assets were subject toinsolvency proceedings, receivership or liquidation. Furthermore, no member of the Company’s Board ofDirectors has been subject to any conviction in relation to fraudulent offences, bankruptcies, receiverships orliquidations, official public incrimination and/or sanctions for the previous five years. No member of the Boardof Directors has ever been disqualified by a court from acting as a member of the administrative, management orsupervisory body of any issuing company, or from acting in the management or conduct of the affairs of anyissue. The members of the Board of Directors may be reached at the Company’s business address.

All the Directors, other than Urs Wietlisbach, are independent of the Investment Manager and the InvestmentAdviser.

The Company does have a managing director but no senior management.

General Meeting

Overview

General meetings (which are annual general meetings) are held once at least in each subsequent calendaryear. All general meetings (other than annual general meetings) are called extraordinary general meetings.General meetings are held in Guernsey or such other place as may be determined by the Board from time to time.

A shareholder is not entitled in respect of any share held by him to attend or vote (either personally or byrepresentative or by proxy) at any general meeting or separate class meeting of the Company unless all calls duefrom him in respect of that share have been paid.

A shareholder is not, if the Board so determines, entitled in respect of any share held by him to attend orvote (either personally or by representative or by proxy) at any general meeting or separate class meeting of theCompany or to exercise any other right conferred by membership in relation to any such meeting if he or anyother person appearing to be interested in such shares has failed to comply with a notice requiring the disclosureof shareholders’ interests and given under the Articles within 14 days, in a case where the shares in questionrepresent at least 0.25% of their class, or within 28 days, in any other case, from the date of such notice.The restrictions will continue until the information required by the notice is supplied to the Company or until theshares in question are transferred or sold in circumstances specified for this purpose in the Articles.

Any general meeting convened by the Board, unless its time has been fixed by the Company in generalmeeting or unless convened in pursuance of a requisition may be postponed by the Board by notice in writing andthe meeting is, subject to any further postponement or adjournment, held at the postponed date for the purpose oftransacting the business covered by the original notice.

The Board may whenever it thinks fit and on the requisition in writing of one or more holders representingnot less than one-tenth of the issued share capital of the Company upon which all calls or other sums then duehave been paid, forthwith proceeds to convene an extraordinary general meeting.

The requisition is dated and states the object of the meeting and is signed by the requisitionists anddeposited at the Company’s office and may consist of several documents in like form each signed by one or moreof the requisitionists. If the Board does not proceed to cause a meeting to be held within 21 days from the date ofthe requisition being so deposited the requisitionists or a majority of them in value may themselves convene themeeting. Any meeting convened by requisitionists is convened in the same manner (as nearly as possible) as thatin which meetings are convened by the Board.

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Notice

Not less than 21 days notice specifying the time and place of any general meeting and specifying also in thecase of any special business the general nature of the business to be transacted is given by notice sent by post bythe Corporate Secretary or other officer of the Company or any other person appointed in that behalf by the Boardto such shareholders as are entitled to receive notices provided that with the consent in writing of all theshareholders entitled to receive notices of such meeting a meeting may be convened by a shorter notice or at nonotice and in any manner they think fit. In every notice there appears a statement that a shareholder entitled toattend and vote is entitled to appoint one or more proxies to attend and vote instead of him and that a proxy neednot be a shareholder.

The accidental omission to give notice of any meeting to or the non-receipt of such notice by anyshareholder does not invalidate any resolution (or any proposed resolution otherwise duly approved) passed orproceeding at any meeting.

Proceedings at General Meetings

The ordinary business of a general meeting is to receive and consider the profit and loss account and thebalance sheet of the Company and the reports of the Directors and the Auditors, to elect Directors and appointAuditors in the place of those retiring, to fix the remuneration of the Directors and Auditors, to sanction ordeclare dividends and to transact any other ordinary business which ought to be transacted at such meeting. Allother business are deemed special and are subject to notice as hereinbefore provided. The quorum for a generalmeeting is two shareholders present in person or by proxy.

If within five minutes from the time appointed for the meeting a quorum is not present, the meeting ifconvened by or upon a requisition is dissolved. If otherwise convened it stands adjourned for 7 days at the sametime and place or to such other day and at such other time and place as the Board may determine and (subject toArticle 14.5) no notice of adjournment need be given. On the resumption of an adjourned meeting, thoseshareholders present in person or by proxy constitute the quorum.

If an amendment is proposed to any resolution under consideration but is in good faith ruled out of order bythe chairman of the meeting the proceedings on the substantive resolution is not invalidated by any error in suchruling. In the case of a resolution duly proposed as a special or Extraordinary Resolution, no amendment thereto(other than a mere clerical amendment to correct a patent error) may in any event be considered or voted upon.

At any meeting, a resolution put to the vote is decided by a show of hands or by a poll at the option of thechairman. Nevertheless before or on the declaration of the result a poll may be demanded: (a) by the chairman; or(b) by one shareholder present in person or by proxy provided he represents at least one-tenth of the subscribedcapital; or (c) by two shareholders present in person or by proxy. In the case of an equality of votes on a poll thechairman has a second or casting vote in addition to any other vote he may have.

Votes of Shareholders

Subject to any special rights or restrictions for the time being attached to any class of share, on a show ofhands every shareholder present in person or by proxy has one vote, on a poll every shareholder present in personor by proxy has one vote for each share held by him.

Where there are joint registered holders of any share such persons has not the right of voting individually inrespect of such share but elects one of their number to represent them and to vote whether in person or by proxyin their name. In default of such election the person whose name stands first on the register shall alone be entitledto vote.

No shareholder shall be entitled to be present or take part in any proceedings or vote either personally or byproxy at any meeting unless all calls due from him have been paid. No shareholder shall be entitled to vote inrespect of any shares unless he has been registered as their holder. For the purposes of determining which personsare entitled to attend or vote at a meeting and how many votes such person may cast, the Company may specify inthe notice of the meeting a time, not more than 48 hours before the time fixed for the meeting, by which a personmust be entered on the register in order to have the right to attend or vote at the meeting.

Any corporation which is a shareholder may by resolution of its directors or other governing body authorisesuch person as it thinks fit to act as its representative at any meeting of the Company or of any class ofshareholders or to approve any resolution submitted in writing and the person so authorised is entitled to exerciseon behalf of the corporation which he represents the same powers (other than to appoint a proxy) as thatcorporation could exercise if it were an individual shareholder. Each holder of Co-ownership Interests is entitled

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to request a voting proxy from Clearstream, Frankfurt, with respect to the number of Ordinary Shares representedby the Co-ownership Interests.

Corporate Governance

Listed stock corporations having their registered seat in Germany are subject to the German CorporateGovernance Code adopted by the German Corporate Governance Code Commission on 26 February 2002, in the2 June 2005 version thereof currently in force (hereinafter the ‘‘Code’’). The Code’s aim, in particular, is to makethe German system of Corporate Governance more transparent, to clarify shareholder rights and to improveManagement Board-Supervisory Board collaboration, internal reporting and auditor independence. The Code isnot applicable to the Company, as its registered seat is in Guernsey.

In Guernsey, there are no specific corporate governance principles the Company is obliged to comply with.

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SHAREHOLDER STRUCTURE

Upon formation of the Company, Partners Group Holding held 8,010 Class B shares and Swiss Re held1,990 Class B shares of the Company. Class A shares were not issued then.

From the date of the acquisition of the shares in the Company by Partners Group Holding from Swiss Re inthe course of the Restructuring and until the conversion of the Bonds into Ordinary Shares (deliverable in theform of Co-ownership Interests) of the Company in the course of the Restructuring (see ‘‘OrganisationalStructure and Material Agreements — Organisational Structure and Restructuring’’) Partners Group Holdingholds the entire share capital consisting of 10,000 issued and outstanding Class B shares. The Class B shares heldby Swiss Re had been sold to Partners Group Holding on 5 December 2006. Pursuant to a shareholders’resolution on 5 December 2006, the authorised Class A shares were cancelled and the Class B shares werere-designated as unclassified ordinary shares.

Following the Restructuring Completion Date, Clearstream, Frankfurt will be the sole shareholder of theCompany. Clearstream, Frankfurt will hold all Ordinary Shares of the Company as underlying stock for theglobal bearer certificate issued by it and representing the Ordinary Shares.

The following table shows the shareholder structure of the Company with regard to the Ordinary Sharesbefore the Restructuring and with regard to the Co-ownership Interests on the Restructuring Completion Date,respectively.

Interest in Ordinary Shares Interest in Co-ownershipName of shareholder immediately prior to the Interests on the Restructuring

Restructuring Completion Date Completion Date*

Number of Number of (in %)Ordinary (in %) Co-ownership

Shares Interests

Partners Group Holding 10,000 100.00 10,000 0.14

Free Float — 0.00 7,000,000 99.86

Total number of Ordinary Sharesissued / Co-ownership Interests 10,000 100.00 7,010,000 100.00

* The Company does not know any of its other shareholders or holder of Co-ownership Interests other than Partners Group Holding(see ‘‘Risk Factors — The Company does not know the structure of holders of Co-ownership Interests’’).

The Co-ownership Interests held by the main shareholder following the Restructuring Completion Date donot confer different voting rights to it.

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RELATED PARTY TRANSACTIONS

Between the Company and persons closely related to them, there are and/or were the following materiallegal relations:

Investment Arrangements

Under the Investment Management Agreement (see ‘‘Organisational Structure and Material Agreements —Material Agreements — Investment Management Agreement’’) Princess owes management fees to PrincessManagement Limited, a wholly owned subsidiary of Partners Group Holding. Under the Old InvestmentManagement Agreement, in financial year 2003 Princess paid USD 13,566,546, in financial year 2004USD 12,739,586 and in financial year 2005 USD 11,852,212 to Princess Management Limited. For the first ninemonths of financial year 2006 Princess paid USD 9,211,486. The fee structure has been changed in theInvestment Management Agreement with effect from the Restructuring Completion Date.

Insurance Arrangements

Furthermore, Princess was obliged to pay an insurance fee under the Insurance Policy (see ‘‘OrganisationalStructure and Material Agreements — Material Agreements — Insurance and Reinsurance Arrangements’’). Infinancial year 2003 Princess paid USD 8,130,720, in financial year 2004 USD 8,235,584 and in financialyear 2005 USD 9,114,500 as insurance fee to Princess Management Limited. For the first nine months offinancial year 2006 Princess paid USD 6,517,700. The insurance policy has been terminated with effect from theRestructuring Completion Date.

Administration Agreement and other Services

Under the Administration Agreement (see ‘‘Organisational Structure and Material Agreements — MaterialAgreements — Administration Agreement’’) Princess owes administration fees and fees for services and facilitiesprovided outside the Administration Agreement to Partners Group (Guernsey) Limited, a wholly ownedsubsidiary of Partners Group Holding. In financial year 2003 Princess paid USD 271,052, in financial year 2004USD 274,519 and in financial year 2005 USD 303,817 as administration fees under this agreement. For the firstnine months of financial year 2006 Princess paid USD 265,918. Moreover, Princess paid a yearly fee ofUSD 100,000 to Princess Management Limited for performed services with respect to the IFRS valuation of theCompany’s portfolio. This service is performed by the Investment Adviser on behalf of the Investment Manager.The fee is annual and covers a review of the portfolio of underling investments to ensure adherence to‘‘fair value’’ as defined under IFRS (IAS 39). This service is requested and agreed by the Directors from time totime.

Legal Services

In the course of the restructuring of the Bonds, Carey Olsen, of which the Company’s Director Graham Hallis a partner, has rendered certain legal advice to the Company. Such legal services have been compensated withmarket standard hourly rates.

Restructuring

In the course of the Restructuring of the Company, Princess Management Limited, Partners Group Holding,Swiss Re and Carey Commercial Limited entered into a restructuring agreement according to which Swiss Re hassold its shares in the Company to Partners Group Holding and has agreed to sell its shares in PrincessManagement Limited also to Partners Group Holding with effect from 1 January 2007. Furthermore, the partiesto the agreement terminated the Insurance Policy and the Reinsurance Agreement with effect from theRestructuring Completion Date and decided to convert the Insurance Trust assets into cash.

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CONFLICTS OF INTEREST

Princess Management Limited, as well as Partners Group (Zug) as well as Partners Group (Guernsey)Limited, provide services to Princess on a non-exclusive basis. Princess Management Limited, Partners Group(Zug) and Partners Group (Guernsey) Limited may be involved in other financial, investment or professionalactivities and accordingly could not devote their full time and attention to the affairs of the Company. TheInvestment Management Agreement, the Investment Advisory Agreement as well as the AdministrationAgreement generally do not limit or restrict the company or Partners Group’s ability to engage in any business ormanage any other investment.

The Company may buy or borrow investments from or sell or lend (including by way of repurchaseagreements) investments to other entities managed or controlled by Partners Group, and may borrow funds fromor lend funds to other entities managed or controlled by the entities, but any such transactions will be entered intoonly on an arm’s length basis and subject to approval of the Board of Directors.

Partners Group may on occasion represent both the buyer and the seller of the investment object in a specifictransaction. In such a case, Partners Group will obtain an independent valuation for the investment object to betraded to facilitate fair pricing of the transaction. Partners Group will execute the purchase transaction on behalfof the client at the seller’s price. Princess may enter into such transactions with Partners Group and its officersand employees, provided that such transactions are conducted and entered into on an arm’s length basis andapproved by the Board of Directors and/or delivery of a fairness opinion.

For any material risks relating to conflicts of interests see ‘‘Risk Factors — Potential Conflicts of Interests’’.

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TAXATION

The following statements are by way of a general guide to potential shareholders only and do not constitutelegal or tax advice. Potential shareholders are therefore advised to consult their professional advisers concerningpossible taxation or other consequences of purchasing, holding, selling or otherwise disposing of Co-ownershipInterests under the laws of their country of incorporation, establishment, citizenship, residence or domicile.Prospective investors should be aware that the relevant law and practice or their interpretation may change,possibly with retrospective effect. The following summary of the anticipated tax treatment is not a guarantee toany shareholder of the tax results from investing in the Company.

Guernsey

The Company

The Company has been granted exempt status for Guernsey tax purposes. Under current law and practice inGuernsey, the Company will only be liable to tax in Guernsey in respect of income arising in Guernsey, otherthan bank deposit interest. A fee, currently GBP 600 per annum, is payable to the States of Guernsey Treasuryand Resources Department in respect of the Company’s exempt status and an application for exempt status mustbe submitted annually to the Income Tax Authority. Payments of dividends and interest by a company that hasexempt status for Guernsey tax purposes are regarded as having their source outside Guernsey and hence arepayable without deduction of tax in Guernsey.

In response to the review carried out by the European Union Code of Conduct Group, the Policy Council ofthe States of Guernsey (the Government) has announced that the States of Guernsey intend to abolish exemptstatus for the majority of companies with effect from January 2008 and to introduce a zero rate of tax forcompanies carrying on all but a few specified types of regulated business. However, the States of GuernseyAdministrator for Income Tax has advised that because collective investment schemes, including closed endedinvestment vehicles, were not one of the regimes in Guernsey that were classified by the European Union Code ofConduct Group as being harmful, it is intended that collective investment schemes and closed ended vehicles willcontinue to apply for exempt status for Guernsey tax purposes after 31 December 2007. These proposals have yetto be enacted.

The Policy Council of the States of Guernsey has stated that it may consider further revenue raisingmeasures in 2011/2012, including possibly the introduction of a goods and services tax, depending on the state ofGuernsey’s public finances at that time.

Guernsey currently does not levy taxes upon capital inheritances, capital gains (with the exception of adwellings profit tax), gifts, sales or turnover, nor are there any estate duties, save for an ad valorem fee for thegrant of probate or letters of administration. Document duty is payable on the creation or increase of authorisedshare capital, at the rate of one half of one per cent of the authorised share capital of a company incorporated inGuernsey, up to a maximum of GBP 5,000 in the lifetime of a company. No stamp duty is chargeable inGuernsey on the issue, transfer or redemption of Ordinary Shares.

Shareholders

Payments made by the Company to non-Guernsey resident shareholders, whether made during the life of theCompany or by distribution on the liquidation of the Company, will not be subject to Guernsey tax. Whilst theCompany is not required to deduct Guernsey income tax from dividends on any participating share (if applicable)paid to Guernsey, Alderney or Herm residents, the Company is required to make a return to the Administrator ofIncome Tax, on an annual basis, when renewing the Company’s exempt tax status, as described above, of thenames, addresses and gross amounts of income distributions paid to Guernsey, Alderney or Herm residentshareholders during the previous year.

Whilst Guernsey is not part of the European Union (‘‘EU’’), Guernsey has introduced measures that are thesame as the EU Directive on the Taxation of Savings Income, which affects income received by individuals(but not companies) resident in the EU. However, paying agents located in Guernsey are not required to operatethe measures on payments made by closed ended investment companies, such as the Company.

Subject to comments set out above, no withholding tax or deduction will be made on payments made by theCompany in respect of any Ordinary Shares issued by the Company to shareholders.

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Germany

The following comments are intended as a general guide only to certain aspects of current German tax lawand practice and may not apply to certain classes of shareholders. They only consider shareholders who areresident in Germany for tax purposes and who are the beneficial owners of the Co-ownership Interests. Thesummary is limited to issues of income, corporation and trade tax. It is not to be considered exhaustive and it maynot be taken as a guarantee to any investor of the tax results of investing in the Company. Prospective investorsshould seek independent professional advice regarding the personal tax consequences of their investment in theCo-ownership Interests.

Investment Tax Act (Investmentsteuergesetz)

The Company should not qualify as a collective investment scheme in the sense of the Investment Tax Act,provided the Company and the underlying funds exercise an entrepreneurial influence on the portfolio companiesand further provided that other investments except for investments in listed private equity vehicles are undertakenfor liquidity purposes only. The Company is of the opinion that investments in other listed private equity vehiclesof up to 20% of the Company’s net asset value should not result in the applicability of the Investment Tax Actbecause they do not substantially change the character of the Company being an active private equity investor. Incase the German tax administration would treat the Company as a collective investment scheme and thereforeapply the Investment Tax Act German investors could face a disadvantageous tax treatment of their investment inthe Ordinary Shares of the Company due to an attribution of deemed dividends even in years the Company hasmade a loss or the market value of the Ordinary Shares has decreased.

German Legislation on Controlled Foreign Companies (Außensteuergesetz)

No attribution of deemed profits of the Company to German investors under the German legislation oncontrolled foreign companies should occur provided German investors collectively do not hold directly orindirectly more that 50% of the Ordinary Shares or of the voting rights of the Company and each individualGerman investor holds directly or indirectly less than 1% of the Ordinary Shares and of the voting rights of theCompany and further provided a continuous, lasting and substantial trading of the Ordinary Shares takes place.

Taxation of Dividends

Individual Shareholders

Dividends paid by the Company to an individual shareholder will be 50% exempt from taxation(Halbeinkunfteverfahren). The other 50% will be subject to the marginal income tax rate of the respectiveindividual and the solidarity surcharge of 5.5% of the income tax. Correspondingly, only half of the expensesrelated to the dividends (Werbungskosten) are deductible for tax purposes. In case the Ordinary Shares are held asbusiness assets, the dividends will be fully subject to trade tax at the rate applicable in the respectivemunicipality.

Individual shareholders holding shares as private assets are currently entitled to a saver’s tax-exemptallowance for their entire investment income (Sparerfreibetrag) in the annual amount of EUR 1,370(for individual filers) or EUR 2,740 (for married couples filing jointly). As of 1 January 2007, these amounts willbe reduced to EUR 750 and EUR 1,500 respectively. In addition, a shareholder is entitled to a lump-sumdeduction for expenses related to investment income (Werbungskostenpauschale) in the amount of EUR 51(for singles) or EUR 102 (for married couples filing jointly), unless a higher amount of expenses can beestablished. The aggregate amount of the non-tax exempt portion of dividends received by the individualshareholder and of all other investment income, reduced by the actual expenses related to investment income orthe lump-sum deduction, exceeding the saver’s tax-exempt allowance are therefore subject to tax. Thegovernment coalition agreement between the CDU/CSU and the SPD provides that the saver’s annual tax-exemptallowance shall be reduced to EUR 750.00 (or EUR 1,500 for married couples filing jointly) beginning on1 January 2007.

Corporate Shareholders

Dividends paid to a corporate shareholder subject to corporation tax in Germany will be fully exempt fromcorporation tax provided that an amount of 5% of the exempt dividend qualifies as a non-deductible expense.Therefore 5% of the dividends will be subject to 26.375% corporation tax including solidarity surcharge. Inaddition, the dividends will be fully subject to trade tax at the rate applicable in the respective municipality.

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Special rules for banks, financial services institutions, financial enterprises, life and health insurance companiesand pension funds are described further below.

Taxation of Capital Gains

Individual Shareholders

Capital gains resulting from the disposal of Ordinary Shares in the Company held by an individualshareholder as private asset will not be subject to income tax and solidarity surcharge provided the shares are heldfor longer than 12 months and further provided the respective shareholder has held less than 1% of the OrdinaryShares of the Company during the five years preceding the disposal. Disposing the Ordinary Shares within the12 months-period results in a so-called private disposal transaction (privates Veraußerungsgeschaft). Capitalgains from such private disposal transactions will be 50% exempt from taxation (Halbeinkunfteverfahren).The other 50% will be subject to the marginal income tax rate of the respective individual and the solidaritysurcharge of 5.5% of the income tax. If the shareholder’s aggregate amount of capital gains from private disposaltransactions for the calendar year is less than EUR 512, such capital gains are not subject to tax. In case theOrdinary Shares disposed of by an individual shareholder are held as business assets, the 50% of the capital gainwill be subject to the marginal income tax rate of the respective individual and the solidarity surcharge of 5.5% ofthe income tax and 50% of the capital gain will be subject to trade tax at the rate applicable in the respectivemunicipality.

Corporate Shareholders

Capital gains realised by a corporate shareholder subject to corporation tax in Germany will be fully exemptfrom corporation tax provided that an amount of 5% of the exempt capital gain qualifies as a non-deductibleexpense. Therefore 5% of the capital gain will be subject to 26.375% corporation tax including solidaritysurcharge. In addition, 5% of the exempt capital gain will be subject to trade tax at the rate applicable in therespective municipality.

Special Rules for Banks, Financial Services Institutions, Financial Enterprises, Life and Health InsuranceCompanies and Pension Funds

To the extent banks and financial service institutions hold shares that are, pursuant to Section 1(12) of theGerman Banking Act (Kreditwesengesetz), attributable to the trading book (Handelsbuch), neither the taxexemption usually applying to corporations or the so-called half-income system (Halbeinkunfteverfahren) appliesto dividends received or to capital gains or losses realised on the disposal of shares, i.e. such dividends or gainsare fully subject to corporate income tax and to trade tax. The same applies to shares that were acquired byfinancial enterprises within the meaning of the German Banking Act in order to realise short-term trading gains(kurzfristige Eigenhandelserfolge). This also applies to banks, financial services institutions and financialenterprises with their registered office in another Member State of the European Community or another MemberState of the European Economic Area Agreement, to the extent that they hold the shares in a permanentestablishment in Germany. In the same way, the tax exemption usually applying to corporations does not apply todividends received or to capital gains or losses realised on the disposal of shares to the extent that life and healthinsurance companies or pension funds hold shares that are attributable to their capital investments(Kapitalanlagen), i.e. such dividends or gains are fully taxable for the insurance company or pension fund.

Inheritance and Gift Tax

The transfer of shares to other persons by way of gift or inheritance is subject to German inheritance and gifttax only if

(i) the testator, donor, heir, donee or any other beneficiary has his residence, habitual abode,management or registered office in Germany at the time of the transfer or

(ii) the testator’s or donor’s shares belong to business assets in relation to which a permanentestablishment is maintained in Germany or a permanent representative has been appointed inGermany.

The few double taxation treaties relating to inheritance and gift taxation to which Germany is a partygenerally provide that German inheritance or gift tax is only levied in case (i) and, with certain restrictions, alsoin case (ii). Special regulations apply to certain German nationals living outside Germany and former Germannationals.

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Other Taxes

No other German taxes (value-added tax, capital transfer tax (Kapitalverkehrsteuer), etc.) are levied on theacquisition, the sale or other transfer of shares. However, under certain circumstances it is possible that anentrepreneur may opt to have value added tax levied on a transaction involving the disposal of shares, when suchtransaction is executed for the enterprise of another entrepreneur. No wealth tax (Vermogensteuer) is at presentlevied in Germany.

Switzerland

The following comments are intended as a general guide only to certain aspects of current Swiss tax law andpractice and may not apply to certain classes of Shareholders. Prospective investors should be aware that therelevant law or practice or their interpretation may change. This paragraph only considers Shareholders who(unless the position of non-resident Shareholders is expressly referred to) are resident in Switzerland for taxpurposes, who hold their Ordinary Shares as an investment and who are the beneficial owners of their OrdinaryShares. The following summary of the anticipated tax treatment in Switzerland is not a guarantee to any investorof the tax results of investing in the Company.

The Company

The Company is incorporated in Guernsey. Provided the Company is not managed and controlled inSwitzerland, it should not be treated as resident in Switzerland for Swiss tax purposes. Provided the Companydoes not conduct a trade in Switzerland through a permanent establishment in Switzerland, the Company shouldnot be liable to Swiss corporate income tax.

Shareholders

The Company is a closed-ended investment company incorporated in Guernsey and therefore the Companyshould not as at the date of this document be qualified as a ‘‘collective investment scheme’’ as per Circular LetterNo. 10 of the Swiss Federal Tax Administration of 6 May 1994 regarding the taxation of investments intocorporate type foreign investment funds. In the following, it is assumed that the Company will be treated as acorporate type company, not as an investment scheme. However, if the Company becomes a collective investmentscheme (for example, if the Company passes a resolution to become an open-ended company), an investment intothe Company will be qualified as an investment into a foreign investment fund as per Circular Letter No. 10 of theSwiss Federal Tax Administration of 6 May 1994 regarding the taxation of investments into corporate typeforeign investment funds and the tax consequences for the shareholders will significantly deviate from thefollowing summary.

Taxation of dividends

No Swiss tax should be required to be withheld from dividends paid by the Company, provided it is nottreated as resident in Switzerland for Swiss tax purposes (see the above paragraph titled ‘‘The Company’’).

(a) An individual Shareholder who is resident in Switzerland for Swiss tax purposes and whoreceives a dividend from the Company will generally be liable to Swiss individual income taxes in respect ofthat dividend. Dividends will be subject to Swiss individual income taxes (direct federal tax, cantonal andcommunal taxes, church taxes to the extent applicable) at ordinary rates, which depend on factors such as theoverall income, the place of residence and the marital status.

(b) A corporate holder of Ordinary Shares that is resident in Switzerland for tax purposes willgenerally be liable to Swiss corporate income taxes (direct federal tax, cantonal and communal taxes, churchtaxes to the extent applicable) on the amount of any dividend received from the Company. To the extent thatthe conditions according to articles 69 and 70 of Swiss Federal Direct Tax Statute, respectively therespective conditions according to the applicable cantonal tax law, are met, the corporate investor may claimthe participation relief on the dividend income.

(c) A tax-exempt holder of Ordinary Shares, e.g. a Swiss pension fund, will generally be exemptfrom Swiss income taxes on any dividend received from the Company.

Taxation of capital gains

(a) An individual Shareholder who is resident in Switzerland for tax purposes and who realises acapital gain from the disposal of Ordinary Shares will only be subject to individual income taxes on the gain

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to the extent that the sale arises from a business activity, including the qualification as a professionalsecurities dealer for Swiss income tax purposes. Capital gains on the sale of Ordinary Shares held as privateassets are free of capital gains tax.

(b) A corporate holder of Ordinary Shares that is resident in Switzerland for Swiss tax purposes willgenerally be liable to Swiss corporate income taxes on the capital gain realised on the sale of the shares inthe Company. To the extent that the conditions according to articles 69 and 70 of Swiss Federal Direct TaxStatute, respectively the respective conditions according to the applicable cantonal tax law, are met, thecorporate investor may claim the participation relief on the capital gain. For capital gains, the participationrelief is — among other conditions — only available, if the requirement of the one year holding period ismet and if a share of at least 20 per cent in the Company is sold.

(c) A tax-exempt holder of Ordinary Shares, e.g. a Swiss pension fund, will generally be exemptfrom Swiss income taxes on any capital gain realised on the sale of shares in the Company.

A sale of shares in the Company for redemption is qualified as partial liquidation and the proceeds aretreated as dividend in the hand of the Swiss resident investors. Swiss individual Shareholders holding theOrdinary Shares as private assets will in general be subject to individual income taxes on the difference betweenthe proceeds on the sale for redemption and the nominal value of the Ordinary Shares.

Swiss Issuance Stamp Tax/Swiss Securities Transfer Stamp Tax

The Company is incorporated in Guernsey. Therefore, the issue of new shares in the Company is not subjectto Swiss Issuance Stamp Tax.

The Company is a closed-ended investment company incorporated in Guernsey and therefore the Companyshould not as at the date of this document be qualified as a ‘‘collective investment scheme’’. Therefore, the issueof new shares in the Company is exempt from Swiss Securities Transfer Stamp Tax, even if a Swiss securitiesdealer is involved in the transaction.

If a Swiss securities dealer according to Swiss Stamp Tax Statute is involved in a sales transaction of sharesin the Company either as a contracting party or as an intermediary, Swiss Securities Transfer Stamp Tax of0.3 percent is due to the extent that no exemption applies. There are a number of exemptions from SwissSecurities Transfer Stamp Tax, such as a sale for redemption purposes.

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GLOSSARY

The following is an explanation to terms used in the Prospectus.

CDO***************************** A Collateralised Debt Obligation (CDO) is a securitisation of debt,and can be conceptualised as similar to a finance company thatinvests in assets (collateral), borrows money (rated debt), and hasresidual value (equity). A CDO raises capital through issuance ofnotes and allocates interest and principal payments according toprioritised collection CDO securities (called tranches). The tranchesare usually arranged according to priority of payment orsubordination e.g. senior tranches are paid before junior or equitytranches.

Class A shares ******************** Means class A shares in the Company of 1 cent each, which wouldhave been issued upon the conversion of the Bonds and which werenon-voting until the earlier of the conversion of 95% of the Bonds or1 January 2011.

Class B shares ******************** Means class B shares in the Company of 1 cent each, which wereissued to Partners Group Holding and Swiss Re and which werere-designated as unclassified shares in connection with theRestructuring.

CLO***************************** A Collateralised Loan Obligation (CLO) is a special kind of a CDOwhere the collateral consists of loans.

EBITDA************************** Means earnings before interest, tax, depreciation and amortisationand is an indicator of a company’s financial performance which iscalculated as follows: EBITDA = revenue — expenses (excludinginterest, tax, depreciation and amortisation).

IFRS***************************** Means the International Financial Reporting Standards issued by theInternational Accounting Standards Board.

General partners ****************** The general partner controls the private investment fund and makesinvestments on behalf of it, typically in accordance with apre-defined investment strategy. In the context of a limitedpartnerships, the commonly used vehicle for making private marketinvestments, the general partner generally has unlimited legalresponsibility for the liabilities of a limited partnership.

GDP ***************************** Means ‘‘Gross Domestic Product’’ which is the monetary value of allthe finished goods and services produced within a country’s bordersin a specific time period.

IRR ***************************** The internal rate of return method is a commonly used method forcalculating returns of private equity funds. In essence, the internalrate of return represents the rate at which positive and negative cashflows are discounted so that the net present value of the cash flowsamounts to zero.

M & A*************************** Means ‘‘Mergers & Acquisitions’’ and is a general term used to referto the consolidation of companies. A merger is a combination of twocompanies to form a new company, while an acquisition is thepurchase of one company by another with no new company beingformed.

Net asset value ******************** The value of the assets of a company less its liabilities (in the case ofthe Company excluding liabilities from the convertible bond),determined in accordance with the accounting principles adopted bysuch company.

Pooling vehicle ******************** Is any collective investment scheme or other pooled investmentvehicle that is established, managed and/or advised by a management

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adviser typically to indirectly access direct investments, secondaryinvestments or primary investments.

Top-down analysis ***************** Means an investment analysis based on broad industry trends,regional economic conditions and/or other macro-level factors.

Vintage year ********************** Is the year in which a private equity or private debt fund first drawscapital from its investors.

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Global Reports LLC

FINANCIAL SECTION

INDEX TO FINANCIAL SECTION

Page

PRINCESS PRIVATE EQUITY HOLDING LIMITED: CONSOLIDATED AUDITEDFINANCIAL STATEMENTS FOR THE YEAR FROM 1 JANUARY 2005 TO31 DECEMBER 2005 (IFRS) ********************************************************* F-2

Consolidated audited income statement*************************************************** F-3Consolidated audited balance sheet ****************************************************** F-4Consolidated audited statement of changes in equity *************************************** F-5Consolidated audited cash flow statement************************************************* F-6Notes to the consolidated audited financial statements ************************************** F-7Independent Auditors’ Report to the members of Princess Private Equity Holding Limited****** F-16


Consolidated audited income statement*************************************************** F-18Consolidated audited balance sheet ****************************************************** F-19Consolidated audited statement of changes in equity *************************************** F-20Consolidated audited cash flow statement************************************************* F-21Notes to the consolidated audited financial statements ************************************** F-22Independent Auditors’ Report to the members of Princess Private Equity Holding Limited****** F-31


Consolidated audited statement of income ************************************************ F-33Consolidated audited balance sheet ****************************************************** F-34Consolidated audited statement of changes in equity *************************************** F-35Consolidated audited cash flow statement************************************************* F-36Notes to the consolidated audited financial statements ************************************** F-37Independent Auditors’ Report to the Members of Princess Private Equity Holding Limited ***** F-46

PRINCESS PRIVATE EQUITY HOLDING LIMITED: AUDITED FINANCIALSTATEMENTS FOR THE YEAR FROM 1 JANUARY 2005 TO31 DECEMBER 2005 (IFRS) ********************************************************* F-47

Audited income statement ************************************************************** F-48Audited balance sheet****************************************************************** F-49Audited statement of changes in equity*************************************************** F-50Audited cash flow statement ************************************************************ F-51Notes to the audited financial statements ************************************************* F-52Independent Auditors’ Report to the members of Princess private equity holding limited ******* F-60

PRINCESS PRIVATE EQUITY HOLDING LIMITED: CONSOLIDATED UNAUDITEDFINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JANUARY 2006 TO30 SEPTEMBER 2006 (IFRS) ******************************************************** F-61Consolidated unaudited income statement ********************************************** F-62Consolidated unaudited balance sheet ************************************************** F-63Consolidated unaudited statement of changes in equity *********************************** F-64Consolidated unaudited cash flow statement ******************************************** F-65Notes to the consolidated unaudited financial statements********************************** F-66

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PRINCESS PRIVATE EQUITY HOLDING LIMITED:CONSOLIDATED AUDITED FINANCIAL STATEMENTS FORTHE YEAR FROM 1 JANUARY 2005 TO 31 DECEMBER 2005 (IFRS)

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CONSOLIDATED AUDITED INCOME STATEMENTfor the year from 1 January 2005 to 31 December 2005

01.01.2005 – 01.01.2004 –31.12.2005 31.12.2004

Notes USD USD

Net income from limited partnerships and directly heldinvestments ********************************************** 110,274,266 93,196,744

— Dividend and interest income******************************** 6&13 15,018,766 9,370,958— Revaluation ********************************************** 6&15 95,766,450 88,553,138— Foreign exchange gains & losses***************************** 6&14 (510,950) (4,727,352)Net income from short-term investments *********************** 150,296 —— Gains and losses ****************************************** 7 150,296 —Net income from cash & cash equivalents ********************** 1,323,072 145,956— Interest income ******************************************* 9&13 1,328,159 152,739— Foreign exchange gains & losses***************************** 14 (5,087) (6,783)

Operating income ******************************************* 111,747,634 93,342,700Operating expenses****************************************** (21,747,598) (21,694,543)— Management fee ****************************************** 3 (11,852,212) (12,739,586)— Insurance fee ********************************************* 3 (9,114,500) (8,235,584)— Administration fee***************************************** 3 (303,817) (274,519)— Tax exemption fee***************************************** 4 (2,179) (2,243)— Other foreign exchange gains & losses ************************ 14 (52,503) —— Other operating expenses *********************************** (422,387) (442,611)Financing cost ********************************************** (42,625,400) (41,071,011)— Finance cost on convertible bond***************************** 11 (40,664,029) (38,145,853)— Amortization of transaction costs***************************** 11 (1,487,513) (1,487,513)— Interest expense******************************************* 13 (473,858) (1,437,645)

Surplus/(loss) for the financial year**************************** 47,374,636 30,577,146

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CONSOLIDATED AUDITED BALANCE SHEETas at 31 December 2005

31.12.2005 31.12.2004Notes USD USD

AssetsNon-current assetsInvestments in limited partnerships and directly held investments****** 1&6 595,273,964 629,976,924Current assetsShort-term investments **************************************** 1&7 59,463,335 —Other short-term receivables************************************ 8 421,528 422,993Hedging assets*********************************************** 6 2,913,419 —Cash and cash equivalents ************************************* 9 49,315,979 16,605,856

112,114,261 17,028,849

Total assets ************************************************* 707,388,225 647,005,773

EquityCapital and reservesIssued capital************************************************ 10 100 100Reserves**************************************************** 51,703,726 4,329,090

Total equity ************************************************ 51,703,826 4,329,190LiabilitiesLiabilities falling due after more than one yearConvertible bond ********************************************* 11 655,163,727 613,012,186Liabilities falling due within one yearHedging liabilities ******************************************** 6 — 18,704,616Other short-term payables************************************** 12 520,670 959,782Credit facility************************************************ 18 — 10,000,000Rounding *************************************************** 2 (1)

520,672 29,664,397


The financial statements were approved by the board of directors on 19 January 2006 and are signed on itsbehalf by:

B. Human G. HallDirector Director

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CONSOLIDATED AUDITED STATEMENT OF CHANGES IN EQUITYfor the year from 1 January 2005 to 31 December 2005

(all amounts in USD)

Share Share Accumulatedcapital premium surplus/(loss) Total

Equity at beginning of reporting year************* 100 263,086,949 (258,757,859) 4,329,190Surplus/(loss) for the financial year **************** — — 47,374,636 47,374,636

Equity at end of reporting year ****************** 100 263,086,949 (211,383,223) 51,703,826




Equity at beginning of reporting year ************ 100 263,086,949 (289,335,005) (26,247,956)Surplus/(loss) for the financial year**************** — — 30,577,146 30,577,146

Equity at end of reporting year ***************** 100 263,086,949 (258,757,859) 4,329,190

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CONSOLIDATED AUDITED CASH FLOW STATEMENTfor the year from 1 January 2005 to 31 December 2005

01.01.2005 – 01.01.2004 –31.12.2005 31.12.2004

Notes USD USD

Cash flow from operating activities— Management fee ****************************************** 3 (11,852,212) (12,739,586)— Administration fee***************************************** 3 (303,817) (274,519)— Insurance fee ********************************************* 3 (9,114,500) (8,235,584)— Tax exemption fee***************************************** 4 (2,179) (2,243)— Other operating expenses *********************************** (422,387) (442,611)— Proceeds from/(costs of) hedging activities********************* 6 1,194,415 (18,871,798)— (Increase)/decrease in other short-term receivables*************** (51,038) (354,544)— Increase/(decrease) in other short-term payables***************** (116,322) 18,125— Dividends received from limited partnerships and directly held

investments ********************************************** 6 11,954,949 6,170,064— Interest received from limited partnerships and directly held

investments ********************************************** 6 3,063,817 3,200,894— Purchase of limited partnerships and directly held investments***** 6 (98,252,399) (113,750,668)— Distributions by limited partnerships and directly held investments 6 205,398,410 164,513,747— Purchase of short-term investments *************************** 7 (59,313,038) —— Cash inflow from cash and cash equivalents******************** 9 1,328,159 152,739— Financing cost/credit line charges **************************** (796,647) (1,561,468)

Net cash from/(used in) operating activities *********************** 42,715,211 17,822,548Cash flow from financing activities— Increase/(decrease) in credit facility*************************** 18 (10,000,000) (20,000,000)

Net increase/(decrease) in cash and cash equivalents ************* 32,715,211 (2,177,452)Cash and cash equivalents at beginning of reporting year ******** 9 16,605,856 18,790,091Effects on cash and cash equivalents— Movement in exchange rates ******************************** (5,087) (6,784)— Rounding ************************************************ (1) 1

Cash and cash equivalents at end of reporting year************** 9 49,315,979 16,605,856

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NOTES TO THE CONSOLIDATED AUDITED FINANCIAL STATEMENTS

1. Principal accounting policies

The following accounting policies have been applied consistently in dealing with items which are consideredmaterial in relation to the Group’s financial statements:

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards(IFRS) and under the historical cost convention as modified by the revaluation of ‘‘financial assets and financialliabilities at fair value through profit or loss’’.

The preparation of financial statements in conformity with IFRS requires the use of estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts of revenues and expenses during thereporting year. Although these estimates are based on management’s best knowledge of current events andactions, actual results ultimately may differ from those estimates.



Expenditure



Items included in the Group’s financial statements are measured using the currency of the primary economicenvironment in which it operates (‘The Functional Currency’). This is the US dollar, which reflects the Group’sprimary activity of investing in US dollar limited partnerships and private equity. The Group has also adopted theUS dollar as its presentation currency.



International Financial Reporting Standards; ‘‘International Accounting Standard 39 (IAS 39 (revised2004)), Financial Instruments: Recognition and Measurement’’ requires investments treated as ‘‘financial assets atfair value through profit or loss’’ to be held at fair value. Fair value is the amount for which an asset could beexchanged between knowledgeable willing parties in an arms length transaction.

Investments in limited partnerships are being treated as ‘‘financial assets at fair value through profit or loss’’and therefore disclosed at fair value. Initially they are valued at fair value. For the ongoing valuation of suchinvestments the directors review information provided by underlying partnerships and other business partners andapply widely recognized valuation methods to estimate a fair value as at the balance sheet date.

In selecting investments the directors have taken into consideration the accounting and valuation basis of theunderlying partnerships and select only those investments, which adopt an internationally recognized standard.

The directors also review management information provided by underlying partnerships on a regular basis.In those cases where the management information is limited, the directors work with the underlying partnershipin an attempt to obtain more meaningful information.

Notwithstanding the above, the variety of valuation bases adopted and quality of management informationprovided by the underlying partnerships and the lack of liquid markets for the investments held mean that thereare inherent difficulties in determining the fair values of these investments that cannot be eliminated.

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The directly held investments are being treated as ‘‘financial assets at fair value through profit or loss’’ andare therefore disclosed at fair value. Initially they are valued at fair value. For determining the fair value, thedirectors refer to the most recent available information provided by the lead investor of the investment with anychanges resulting from additional financing rounds or a diminution in value.












The Group’s policy of hedging the value of non-US dollar investments against the US dollar does not qualifyas hedge accounting as defined in IAS 39 (revised 2004). Derivative financial instruments are initially recognizedin the balance sheet at cost and subsequently are remeasured at their fair value. As a result the unrealized changesin the fair value of these derivatives and the realized net gains/losses on the derivatives that matured during theyear are recognized in the income statement under the heading of ‘‘Net income from limited partnerships anddirectly held investments — foreign exchange gains and losses’’. The fair values of various derivative instrumentsused for hedging purposes are disclosed in note 6.

Consolidation

Subsidiary undertakings, which are those companies in which the Group, directly or indirectly, has aninterest of more than one half of the voting rights or otherwise has the power to exercise control over theoperations, have been consolidated. All inter-company transactions, balances and unrealized surpluses and losseson transactions between group companies have been eliminated. A listing of the Group’s subsidiaries is set out inNote 22.

2. Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances.

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The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will,by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk ofcausing a material adjustment to the carrying amounts of assets and liabilities within the next financial year arediscussed below.


For the valuation of such investments the directors review information provided by underlying partnershipsand other business partners and apply widely recognized valuation methods to estimate a fair value as at thebalance sheet date. The variety of valuation bases adopted and quality of management information provided bythe underlying partnerships and the lack of liquid markets for the investments held mean that there are inherentdifficulties in determining the fair values of these investments that cannot be eliminated. Therefore the amountsrealized on the sale of investments will differ from the fair values reflected in these financial statements and thedifferences may be significant.

3. Expenses

Management fee

The management fee is paid quarterly in advance pursuant to the Investment Management Agreementbetween the Company and Princess Management & Insurance Limited. The quarterly management fee iscalculated as 0.375% of the higher of the sum of Private Equity Net Assets and the undrawn commitments or theNet Assets of the Group.

Administration fee

The administration fee is paid quarterly in advance pursuant to the Administration Agreement between theCompany and Partners Group (Guernsey) Limited. The quarterly administration fee is calculated as 0.0125% ofthe first USD 1 billion of Net Assets and 0.005% of the amount by which such Net Assets exceed USD 1 billion.

Insurance fee

The insurance fee is paid quarterly in advance pursuant to the Insurance Trust Agreement between theCompany and Princess Management & Insurance Limited. The quarterly insurance premium is calculated as0.375% of Net Assets.

4. Taxation status

All companies in the Group are exempt from Guernsey income tax under the Income Tax (Exempt Bodies)(Guernsey) Ordinances 1989 and 1992 and they are each charged an annual exemption fee of GBP 600.

5. Financial risk management

Financial risk factors

The Group’s activities expose it to a variety of financial risks, including the effects of changes in debt andequity market prices, foreign currency exchange rates and interest rates. The Group’s overall risk managementprogram focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects onthe financial performance of the Group. The Group uses derivative financial instruments such as foreign exchangecontracts to hedge certain exposures.

(a) Foreign exchange risk

The Group operates and invests internationally and is exposed to foreign exchange risk arising from variouscurrency exposures. A portion of the private equity investments are made in a number of different countries anddenominated in a number of different currencies. Any returns on and value of such investments may therefore bematerially affected by exchange rate fluctuations, local exchange control and other restrictions, includingrestrictions on the convertibility of the currencies in question and also by political and economic developments inthe relevant countries. The Group may use forward contracts to hedge its exposure to foreign currency risk inconnection with the functional currency.

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(b) Interest rate risk

The Group’s income and operating cash flows are substantially independent of changes in market interestrates. The Group has no significant interest-bearing assets.

(c) Credit risk

The Group has no significant concentration of credit risk. Derivative counterparties and cash transactions arelimited to high credit quality financial institutions.

(d) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, theavailability of funding through an adequate amount of committed credit facilities and the ability to close outmarket positions. Due to the dynamic nature of the underlying business, the Group aims at maintaining flexibilityin funding by keeping committed credit lines available.

The Group’s over-commitment strategy could result in periods in which the Group has inadequate liquidityto fund its investments or to pay other amounts payable by the Group. The liquidity risk arising from the over-commitment strategy is managed through the use of quantitative models and the internal risk committee.

(e) Underlying asset risk

It is expected that a large proportion of the Group’s investments will be made by investing in private equityfunds (including affiliated funds). Many of the private equity funds may be wholly unregulated investmentvehicles. In addition, certain of the private equity funds may have limited or no operational history and have noproven track record in achieving their stated investment objective. The underlying asset risk is managed by aninvestment strategy that diversifies the investments in terms of geography, financing stage, industry or time.

The value of the investments in the private equity funds and the income from them may fluctuatesignificantly.

Fair value estimation

The fair value of publicly traded derivatives and ‘‘financial assets at fair value through profit or loss’’securities is based on quoted market prices at the balance sheet date. The fair value of forward foreign exchangecontracts is determined using forward exchange market rates at the balance sheet date.

In assessing the fair value of non-traded derivatives and other financial instruments, the Group uses a varietyof methods and makes assumptions that are based on market conditions existing at each balance sheet date.Quoted market prices or dealer quotes for the specific or similar instruments are used for long-term debt. Othertechniques, such as option pricing models and estimated discounted value of future cash flows, are used todetermine fair value for the remaining financial instruments.

6. Limited partnerships and directly held investments

6.1 Investments

31.12.2005 31.12.2004

Balance at beginning of reporting year ****************************** 629,976,924 577,115,116Capital activity recorded at the transaction rate************************** 98,252,399 113,750,668Distributions ****************************************************** (205,398,410) (164,513,747)Revaluation ******************************************************* 95,766,450 88,553,138Foreign exchange gains/(losses) ************************************** (23,323,399) 15,071,749

Balance at end of reporting year ************************************ 595,273,964 629,976,924

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6.2 Distributions

01.01.2005 – 01.01.2004 –31.12.2005 31.12.2004

Dividends********************************************************** 11,954,949 6,170,064Interest income ***************************************************** 3,063,817 3,200,894

15,018,766 9,370,958Return of investments************************************************ 205,484,959 164,513,747Gains/(losses) from sale of stock distributions **************************** (86,549) —

Total distributions************************************************** 220,417,176 173,884,705

6.3 Foreign exchange

01.01.2005 - 01.01.2004 -31.12.2005 31.12.2004

Foreign exchange revaluation ****************************************** (23,323,399) 15,071,749Revaluation of foreign exchange hedges relating to investments in limited

partnerships and directly held investments ****************************** 21,618,035 (927,303)Realized gains/(losses) from foreign exchange hedges relating to investments in

limited partnerships and directly held investments************************ 1,194,415 (18,871,798)Rounding ********************************************************** (1) —

(510,950) (4,727,352)

At the balance sheet date, the Company had the following forward foreign exchange contracts in place. Thecontracts were entered into to hedge against changes in the foreign exchange value of the investments of theSubholding. The unrealized surplus/(loss) at the end of the reporting year is detailed below:

Surplus/ Surplus/(loss) (loss)

USD Rate Value date 31.12.2005 31.12.2004

Sell GBP against USD*************** 77,990,000 1.7725 15.04.2005 — (5,949,724)Sell EUR against USD*************** 97,170,000 1.2300 15.04.2005 — (10,052,750)Sell CHF against USD*************** 4,331,782 1.2466 15.04.2005 — (431,987)Sell SEK against USD *************** 19,924,099 7.3780 15.04.2005 — (2,191,997)Sell JPY against USD *************** 1,031,398 109.5600 15.04.2005 — (78,158)Sell GBP against USD*************** 36,799,770 1.7524 20.04.2006 679,602 —Sell EUR against USD*************** 91,254,375 1.2167 20.04.2006 1,959,825 —Sell SEK against USD *************** 9,777,083 7.6710 20.04.2006 273,992 —

2,913,419 (18,704,616)

7. Short-term investments

7.1 Investments

31.12.2005 31.12.2004

At beginning of reporting year******************************************* — —Additions************************************************************** 59,313,038 —Redemptions *********************************************************** — —Gains/(losses) on short-term investments ************************************ 150,296 —Rounding************************************************************** 1 —

At end of reporting year ************************************************ 59,463,335 —

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7.2 Income

01.01.2005 - 01.01.2004 - 31.12.2005 31.12.2004

Realized gains/(losses) from short-term investments*************************** 52,915 —Unrealized gains/(losses) from short-term investments ************************* 97,381 —

Total gains and losses from short-term investments************************* 150,296 —

Due to the level of distributions received from limited partnerships, the Company holds cash in excess of itsimmediate requirements. To achieve better returns the cash has been invested into short-term bonds with amaturity of less than one year.

8. Other short-term receivables

31.12.2005 31.12.2004

Distributions receivable **************************************************** 421,528 296,013Receivables from related parties ********************************************* — 126,980

421,528 422,993

9. Cash and cash equivalents

9.1 Balance

31.12.2005 31.12.2004

Cash at banks ******************************************************** 49,315,980 16,605,856Rounding ************************************************************ (1) —

Total cash and cash equivalents **************************************** 49,315,979 16,605,856

9.2 Interest income

01.01.2005 - 01.01.2004 - 31.12.2005 31.12.2004

Total interest income from cash and cash equivalents*********************** 1,328,159 152,739

10. Share capital

31.12.2005 31.12.2004

Authorized20,000,000 Class A shares of USD 0.01 each********************************** 200,000 200,00010,000 Class B shares of USD 0.01 each ************************************* 100 100

200,100 200,100

Issued and fully paid10,000 Class B shares of USD 0.01 each ************************************* 100 100

Bondholders have the right to convert bonds into shares. Shares issued and allotted on conversion of thebonds will be fully paid Class A shares (‘‘Ordinary shares’’) and will rank pari passu in all respects with all otherOrdinary Shares in issue on the relevant conversion date, save that until the earlier of the date upon which 95 percent of the principal amount of the bonds have been converted or final maturity (‘‘Specified Date’’), OrdinaryShares will not confer voting rights.

The holders of the Class B shares will be entitled to attend and vote at any general meetings. Following theSpecified Date, each Class B share issued and outstanding will be automatically converted into a similar numberof Ordinary shares without the holders thereof being obliged to make any payment therefor.

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11. Convertible bond

31.12.2005 31.12.2004

Balance at beginning of reporting year ******************************** 613,012,186 573,378,819Amortization of transaction costs ************************************** 1,487,513 1,487,513Finance cost on convertible bond ************************************** 40,664,029 38,145,853Rounding ********************************************************** (1) 1

Balance at end of reporting year ************************************* 655,163,727 613,012,186

As at the balance sheet date the nominal value of the convertible bond outstanding was USD 700,000,000.The bond is not convertible into shares until on or after 1 January 2007, at the option of the investor, using therelevant conversion price. The Company has entered into an insurance policy to ensure that it is provided withsufficient funds for the repayment of the principal upon redemption of the bond on 31 December 2010.



12. Other short-term payables

31.12.2005 31.12.2004

Accrued interest ********************************************************** 448,658 771,447Accruals to related parties************************************************** — 145,000Other accruals *********************************************************** 72,012 43,334Rounding *************************************************************** — 1

520,670 959,782

13. Dividend and interest income and expense

01.01.2005 - 01.01.2004 -31.12.2005 31.12.2004

Interest income:— Dividend and interest income from limited partnerships and directly held

investments ******************************************************** 15,018,766 9,370,958— Interest income from cash and cash equivalents ************************** 1,328,159 152,739

Total dividend and interest income**************************************** 16,346,925 9,523,697

Total interest expense ************************************************** (473,858) (1,437,645)

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14. Foreign exchange gains and losses

01.01.2005 - 01.01.2004 - 31.12.2005 31.12.2004

Foreign exchange gains and losses on:— Limited partnerships and directly held investments************************* (510,950) (4,727,352)— Cash and cash equivalents********************************************* (5,087) (6,783)— Other ************************************************************* (52,503) —

(568,540) (4,734,135)

15. Revaluation

01.01.2005 - 01.01.2004 -31.12.2005 31.12.2004

Revaluation of:— Limited partnerships and directly held investments************************ 95,766,450 88,553,138

16. Commitments

31.12.2005 31.12.2004

Total commitments translated at the rate prevailing at the balance sheet date 1,264,969,349 1,200,227,092

Unutilized commitments translated at the rate prevailing at the balance sheetdate ********************************************************* 245,329,670 222,820,371

17. Diluted net assets per ordinary share

The net assets are calculated by deducting the Liabilities falling due within one year from the Total Assets.The 700,000 convertible bonds at a par value of USD 1,000 each, if converted at USD 100 per share would resultin 7,000,000 shares.

31.12.2005 31.12.2004

Net assets of the Group ********************************************** 706,867,553 617,341,376Outstanding shares at the balance sheet date ***************************** 10,000 10,000Additional shares due to conversion ************************************ 7,000,000 7,000,000Net assets per share after conversion************************************ 100.8370 88.0658

18. Credit line facility

The Company entered into a revolving credit facility with Bank of Scotland on 31 December 2002 for amaximum of USD 130,000,000. Security is inter alia, by way of a security agreement over the entire issued sharecapital of the Subholding. The credit facility has been reduced to USD 50,000,000 in the meantime.

Interest is calculated using a LIBOR rate on the day of the advance plus a margin. The margin depends onthe total drawdown amount. An additional margin may be added if the ratio of Net Asset Value to the borrowingsdue to Bank of Scotland (including capitalized interest) is less than 5:1.

There is a non utilization fee which is payable yearly in arrears and this is calculated at 0.40% per annum onthe average undrawn amount of the revolving credit during the year.

In addition, an arrangement fee of USD 1,170,000 was paid to Bank of Scotland on entering into the facility.

As at the balance sheet date, the amount drawn under the credit facility was nil.

19. Insurance Policy

On 29 June 1999, the Company entered into an Insurance Agreement with Princess Management &Insurance Limited, to ensure that it will be provided with sufficient funds to be able to pay the principal amountof the Bond at maturity on 31 December 2010.

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20. Number of employees

At the balance sheet date no persons were employed by the Group.

21. Related party transactions

Partners Group Holding owns 100% of the share capital of Partners Group Product Investments which inturn holds 80.1% of the Class B shares of the Company.

Partners Group Product Investments and Swiss Reinsurance Company hold 8,010 and 1,990 Class B Sharesrespectively.

Partners Group and all its subsidiaries and affiliates are considered to be related parties to the Group.

The directors as disclosed in the Directors’ Report are also considered to be related parties to the Group.

Transactions with related parties

The following transactions were carried out with related parties:

i) Services

01.01.2005 - 01.01.2004 -Notes 31.12.2005 31.12.2004

Management fee paid to:— Princess Management & Insurance Limited*********************** 3 11,852,212 12,739,586Insurance fee paid to:— Princess Management & Insurance Limited*********************** 3 9,114,500 8,235,584Administration fee paid to:— Partners Group (Guernsey) Limited ***************************** 3 303,817 274,519IFRS Valuation advice:— Princess Management & Insurance Limited*********************** 100,000 100,000Directors’ fees paid********************************************* 20,705 16,364

Princess Management & Insurance Limited is a company incorporated in Guernsey and owned by PartnersGroup and Swiss Reinsurance Company. Partners Group (Guernsey) Limited is a company incorporated inGuernsey and owned by Partners Group.

ii) Year-end balances

31.12.2005 31.12.2004

Other short-term receivables from related parties:— Princess Management & Insurance Limited ********************************** — 126,980Other short-term payables to related parties:— Princess Management & Insurance Limited ********************************** — 145,000

The year-end balances are unsecured, interest free and repayable upon demand.

22. Group enterprises — significant subsidiaries

Country of Ownership interestincorporation 31.12.2005 31.12.2004

Princess Private Equity Subholding Limited ***************** Guernsey 100% 100%

23. Parent company and ultimate controlling party

Partners Group Product Investments, a company organized under Swiss law holds the majority of theClass B shares. Partners Group Product Investments is a wholly owned subsidiary of Partners Group Holding.

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INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OFPRINCESS PRIVATE EQUITY HOLDING LIMITED

We have audited the financial statements of Princess Private Equity Holding Limited for the year ended31 December 2005 which comprise the consolidated Income Statement, the consolidated Balance Sheet, theconsolidated Cash Flow Statement, the consolidated Statement of Changes in Equity and the related notes. Thesefinancial statements have been prepared under the accounting policies set out therein.

Respective responsibilities of directors and auditors

As described in the Statement of Directors’ Responsibilities the company’s directors are responsible for thepreparation of the financial statements in accordance with applicable Guernsey law and International FinancialReporting Standards.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatoryrequirements and International Standards on Auditing. This report, including the opinion, has been prepared forand only for the company’s members as a body in accordance with Section 64 of The Companies (Guernsey)Law, 1994 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for anyother purpose or to any other person to whom this report is shown or in to whose hands it may come save whereexpressly agreed by our prior consent in writing.

We report to you our opinion as to whether the financial statements give a true and fair view and have beenproperly prepared in accordance with The Companies (Guernsey) Law, 1994. We also report to you if, in ouropinion, the Directors’ report is not consistent with the financial statements, if the company has not kept properaccounting records, or if we have not received all the information and explanations we require for our audit.

We read the other information contained in the Annual Report and consider the implications for our report ifwe become aware of any apparent misstatements or material inconsistencies with the financial statements. Theother information comprises only the director’s report.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing issued by the InternationalAuditing and Assurance Standards Board. An audit includes examination, on a test basis, of evidence relevant tothe amounts and disclosures in the financial statements. It also includes an assessment of the significant estimatesand judgements made by the directors in the preparation of the financial statements, and of whether theaccounting policies are appropriate to the company and group’s circumstances, consistently applied andadequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financialstatements are free from material misstatement, whether caused by fraud or other irregularity or error. In formingour opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion the financial statements give a true and fair view, in accordance with International FinancialReporting Standards, of the state of the groups affairs as at 31 December 2005 and of its surplus and cash flowsfor the year then ended and have been properly prepared in accordance with The Companies (Guernsey) Law,1994.

Without qualifying our opinion, we draw attention to Note 6 to the financial statements. As indicated inNote 6, the financial statements include unquoted investments (funds and direct investments) stated at their fairvalue of USD 595,273,964. Because of the inherent uncertainty associated with the valuation of such investmentsand the absence of a liquid market, these fair values may differ from their realisable values, and the differencescould be material.

PricewaterhouseCoopers CI LLPChartered AccountantsGuernsey, Channel Islands

24 January 2006

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CONSOLIDATED AUDITED INCOME STATEMENTfor the year from 1 January 2004 to 31 December 2004

01.01.2004 - 01.01.2003 -31.12.2004 31.12.2003

Notes USD USD

Net income from limited partnerships and directly held investments 93,196,744 20,391,401— Dividend and interest income ******************************** 5&11 9,370,958 4,858,192— Revaluation*********************************************** 5&13 88,553,138 17,199,710— Foreign exchange gains & losses ***************************** 5&12 (4,727,352) (1,666,501)Net income from cash & cash equivalents ********************** 145,956 320,189— Interest income******************************************** 7&11 152,739 160,077— Gains and losses ****************************************** 7 — 161,017— Foreign exchange gains & losses ***************************** 12 (6,783) (905)

Operating income ******************************************* 93,342,700 20,711,590Operating expenses ****************************************** (21,694,543) (22,530,305)— Management fee******************************************* 2 (12,739,586) (13,566,546)— Insurance fee ********************************************* 2 (8,235,584) (8,130,720)— Administration fee ***************************************** 2 (274,519) (271,025)— Tax exemption fee ***************************************** 3 (2,243) (1,847)— Other operating expenses *********************************** (442,611) (560,167)Financing cost ********************************************** (41,071,011) (39,718,664)— Finance cost on convertible bond ***************************** 9 (38,145,853) (35,783,619)— Amortization of transaction costs ***************************** 9 (1,487,513) (1,487,513)— Interest expense ******************************************* 11 (1,437,645) (895,271)— Other finance cost ***************************************** — (1,552,261)

Surplus/(loss) for the financial year **************************** 30,577,146 (41,537,379)

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31.12.2004 31.12.2003Notes USD USD

AssetsNon-current assetsInvestments in limited partnerships and directly held investments****** 1&5 629,976,924 577,115,116Current assetsOther short-term receivables************************************ 6 422,993 68,449Cash and cash equivalents ************************************* 7 16,605,856 18,790,091

17,028,849 18,858,540

Total assets ************************************************* 647,005,773 595,973,656

EquityCapital and reservesIssued capital************************************************ 8 100 100Reserves**************************************************** 4,329,090 (26,248,056)

4,329,190 (26,247,956)LiabilitiesLiabilities falling due after more than one yearConvertible bond ********************************************* 9 613,012,186 573,378,819Liabilities falling due within one yearHedging liabilities ******************************************** 5 18,704,616 17,777,313Other short-term payables************************************** 10 959,782 1,065,480Credit facility drawn ****************************************** 16 10,000,000 30,000,000Rounding *************************************************** (1) —

29,664,397 48,842,793


The financial statements were approved by the board of directors on 18 February 2005 and are signed on itsbehalf by:

B. Human R. ClarkDirector Alternate Director for G. Hall

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Equity at beginning of reporting year ************ 100 263,086,949 (289,335,005) (26,247,956)Surplus/(loss) for the financial year**************** — — 30,577,146 30,577,146





Equity at beginning of reporting year ************ 100 263,086,949 (247,797,626) 15,289,423Surplus/(loss) for the financial year**************** — — (41,537,379) (41,537,379)

Equity at end of reporting year ***************** 100 263,086,949 (289,335,005) (26,247,956)

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01.01.2004 - 01.01.2003 -31.12.2004 31.12.2003

Notes USD USD

Cash flow from operating activities— Management fee ***************************************** 2 (12,739,586) (13,566,546)— Administration fee**************************************** 2 (274,519) (271,025)— Insurance fee ******************************************** 2 (8,235,584) (8,130,720)— Tax exemption fee**************************************** 3 (2,243) (1,847)— Other operating expenses ********************************** (442,611) (560,167)— Proceeds from/(costs of) hedging activities******************** 5 (18,871,798) (19,917,601)— (Increase)/decrease in other short-term receivables************** (354,544) 21,612— Increase/(decrease) in other short-term payables**************** 18,125 (60,139)— Interest and dividends received from limited partnerships and

directly held investments ********************************** 5 9,370,958 4,858,192— Purchase of limited partnerships and directly held investments**** 5 (113,750,668) (116,287,455)— Distributions by limited partnerships and directly held investments 5 164,513,747 65,411,041— Cash inflow from cash and cash equivalents******************* 7 152,739 321,094— Financing cost/credit line charges *************************** (1,561,468) (1,552,261)

Net cash from/(used in) operating activities ********************** 17,822,548 (89,735,822)Cash flow from financing activities— Increase/(decrease) in credit facility************************** 16 (20,000,000) 30,000,000

Net increase/(decrease) in cash and cash equivalents ************ (2,177,452) (59,735,822)Cash and cash equivalents at beginning of reporting year ******* 7 18,790,091 78,526,819Effects on cash and cash equivalents— Movement in exchange rates ******************************* (6,784) (905)— Rounding *********************************************** 1 (1)

Cash and cash equivalents at end of reporting year************* 7 16,605,856 18,790,091

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The financial statements have been prepared in accordance with International Financial Reporting Standards(IFRS) and under the historical cost convention as modified by the revaluation of ‘‘financial assets and financialliabilities at fair value through profit and loss’’ and all derivative contracts. Recognized assets and liabilities thatare hedged are stated at fair value in respect of the risk that is hedged.

The preparation of financial statements in conformity with IFRS requires the use of estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts of revenues and expenses during thereporting year. Although these estimates are based on management’s best knowledge of current events andactions, actual results ultimately may differ from those estimates.

Early adoption of standards

In 2004, the Group early adopted the IFRS below, which are relevant to its operations. The 2003 accountshave been amended in accordance with the relevant requirements.

IAS 28 (revised 2003)************************** Investments in AssociatesIAS 32 (revised 2003)************************** Financial Instruments: Disclosure and PresentationIAS 39 (revised 2004)************************** Financial Instruments: Recognition and Measurement

The early adoption of IAS 39 (revised 2004) has resulted in a change in the accounting policy relating to theclassification of financial assets at fair value through profit or loss. IAS 39 requires simultaneous adoption withIAS 32.

All changes in the accounting policies have been made in accordance with the transition provisions in therespective standards. All standards adopted by the Company require retrospective application other than:

IAS 39 ************************************** does not require the classification of financial assetsas at ‘‘fair value through profit or loss’’ of previouslyrecognised financial assets



Expenditure



Items included in the Group’s financial statements are measured using the currency of the primary economicenvironment in which it operates (‘The Functional Currency’). This is the US dollar, which reflects the Group’sprimary activity of investing in US dollar limited partnerships and private equity. The Group has also adopted theUS dollar as its presentation currency.


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International Financial Reporting Standards; ‘‘International Accounting Standard 39 (IAS 39 (revised2004)), Financial Instruments: Recognition and Measurement’’ requires investments treated as ‘‘financial assets atfair value through profit or loss’’ to be held at fair value, or at cost less provision for diminution in value, whereno reasonable range of fair values can be determined. Fair value is the amount for which an asset could beexchanged between knowledgeable willing parties in an arms length transaction.

Investments in limited partnerships are being treated as ‘‘financial assets at fair value through profit or loss’’and therefore disclosed at fair value. Initially they are valued at cost. For the ongoing valuation of suchinvestments the Directors review information provided by underlying partnerships and other business partners andapply widely recognized valuation methods to estimate a fair value as at the balance sheet date.

In selecting investments the Directors have taken into consideration the accounting and valuation basis of theunderlying partnerships and select only those investments, which adopt an internationally recognized standard.

The Directors also review management information provided by underlying partnerships on a regular basis.In those cases where the management information is limited, the Directors work with the underlying partnershipin an attempt to obtain more meaningful information.



The directly held investments are being treated as ‘‘financial assets at fair value through profit or loss’’ andare therefore disclosed at fair value. For determining the fair value, the Directors refer to the most recent availableinformation provided by the lead investor of the investment with any changes resulting from additional financingrounds or a diminution in value.











The Group’s policy of hedging the value of non-US dollar investments against the US dollar does not qualifyas hedge accounting as defined in IAS 39 (revised 2004). Derivative financial instruments are initially recognized

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in the balance sheet at cost and subsequently are remeasured at their fair value. As a result the unrealized changesin the fair value of these derivatives and the realized net gains/losses on the derivatives that matured during theyear are recognized in the income statement under the heading of ‘‘Net income from limited partnerships anddirectly held investments — foreign exchange gains and losses’’. The fair values of various derivative instrumentsused for hedging purposes are disclosed in note 5.

Consolidation

’Subsidiary undertakings, which are those companies in which the Group, directly or indirectly, has aninterest of more than one half of the voting rights or otherwise has the power to exercise control over theoperations, have been consolidated. All inter-company transactions, balances and unrealized surpluses and losseson transactions between group companies have been eliminated. A listing of the Group’s subsidiaries is set out inNote 20.

2. Expenses

Management fee

The management fee is paid quarterly in advance pursuant to the Investment Management Agreementbetween Princess Private Equity Holding Limited and Princess Management & Insurance Limited. The quarterlymanagement fee is calculated as 0.375% of the higher of the sum of Private Equity Net Assets and the undrawncommitments or the Net Assets of the Group.

Administration fee

The administration fee is paid quarterly in advance pursuant to the Administration Agreement betweenPrincess Private Equity Holding Limited and Partners Group (Guernsey) Limited. The quarterly administrationfee is calculated as 0.0125% of the first USD 1 billion of Net Assets and 0.005% of the amount by which suchNet Assets exceed USD 1 billion.

Insurance fee

The insurance fee is paid quarterly in advance pursuant to the Insurance Trust Agreement between PrincessPrivate Equity Holding Limited and Princess Management & Insurance Limited. The quarterly insurancepremium is calculated as 0.375% of Net Assets.

3. Taxation status

The companies of the Group are exempt from Guernsey income tax under the Income Tax (Exempt Bodies)(Guernsey) Ordinances 1989 and 1992 and they are each charged an annual exemption fee of GBP 600.





The Group operates and invests internationally and is exposed to foreign exchange risk arising from variouscurrency exposures. The Group may use forward contracts to hedge its exposure to foreign currency risk inconnection with the functional currency.



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(c) Credit risk


(d) Liquidity risk






5.1 Investments

31.12.2004 31.12.2003

Balance at beginning of reporting year ******************************* 577,115,116 481,527,060Capital activity recorded at the transaction rate ************************** 113,750,668 116,287,455Distributions******************************************************* (164,513,747) (65,411,041)Revaluation ******************************************************* 88,553,138 17,199,710Foreign exchange gains/(losses) *************************************** 15,071,749 27,511,932


5.2 Distributions

01.01.2004 - 01.01.2003 -31.12.2004 31.12.2003

Dividends*********************************************************** 6,170,064 2,330,371Interest income ****************************************************** 3,200,894 2,527,822Rounding *********************************************************** — (1)

9,370,958 4,858,192Return of investments************************************************* 164,513,747 65,411,041

Total distributions*************************************************** 173,884,705 70,269,233


01.01.2004 - 01.01.2003 -31.12.2004 31.12.2003

Foreign exchange revaluation ****************************************** 15,071,749 27,511,932Revaluation of foreign exchange hedges relating to investmentsin limited partnerships and directly held investments *********************** (927,303) (9,260,832)Realized gains/(losses) from foreign exchange hedges relating to investments in

limited partnerships and directly held investments************************ (18,871,798) (19,917,601)

(4,727,352) (1,666,501)

At the balance sheet date, Princess Private Equity Holding Ltd. had the following forward foreign exchangecontracts in place. The contracts were entered into to hedge against changes in the foreign exchange value of the

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investments of Princess Private Equity Subholding Limited. The unrealized surplus/(loss) at the end of thereporting year is detailed below:

Surplus/(loss) Surplus/(loss)USD Rate Value date 31.12.2004 31.12.2003

Sell GBP against USD ************* 87,000,000 1.6397 25.03.2004 — (7,072,190)Sell EUR against USD ************* 89,000,000 1.1410 25.03.2004 — (9,057,313)Sell CHF against USD ************* 3,000,000 1.3373 25.03.2004 — (244,039)Sell SEK against USD ************* 14,000,000 7.8764 25.03.2004 — (1,285,911)Sell JPY against USD************** 3,000,000 111.4325 25.03.2004 — (117,860)Sell GBP against USD ************* 77,990,000 1.7225 15.04.2005 (5,949,724) —Sell EUR against USD ************* 97,170,000 1.2300 15.04.2005 (10,052,750) —Sell CHF against USD ************* 4,331,782 1.2466 15.04.2005 (431,987) —Sell SEK against USD ************* 19,924,099 7.3780 15.04.2005 (2,191,997) —Sell JPY against USD************** 1,031,398 109.5600 15.04.2005 (78,158) —

(18,704,616) (17,777,313)


31.12.2004 31.12.2003

Distributions receivable **************************************************** 296,013 68,449Sundry prepayments******************************************************* 126,980 —

422,993 68,449


7.1 Balance

31.12.2004 31.12.2003

Cash equivalents at beginning of reporting year *************************** — 49,929,322Additions ********************************************************** — 69,909,661Redemptions ******************************************************* — (120,000,000)Realized gains and losses ********************************************* — 161,017

Cash equivalents at end of reporting year****************************** — —Cash at banks****************************************************** 16,605,856 18,790,091

Total cash and cash equivalents ************************************** 16,605,856 18,790,091

7.2 Interest income

Total interest income from cash and cash equivalents ************************* 152,739 160,077

8. Share capital

31.12.2004 31.12.2003


200,100 200,100



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9. Convertible bond

31.12.2004 31.12.2003

Balance at beginning of reporting year ******************************** 573,378,819 536,107,687Amortization of transaction costs ************************************** 1,487,513 1,487,513Finance cost on convertible bond ************************************** 38,145,853 35,783,619Rounding ********************************************************** 1 —


As at the balance sheet date the nominal value of the convertible bond outstanding was USD 700,000,000.The bond is not convertible into shares until on or after 1 January 2007, at the option of the investor, using therelevant conversion price. Princess Private Equity Holding Limited has entered into an insurance policy to ensurethat it is provided with sufficient funds for the repayment of the principal upon redemption of the bond on31 December 2010.

In accordance with IAS 32, Financial Instruments: Disclosure and Presentation, the net proceeds of the bondhave been split between the liability and equity option components. The fair value of the equity component hasbeen calculated as USD 264,834,825 using cash flows discounted at market interest rates for an equivalent period.This amount is classified as share premium and will remain part of the permanent equity of the Group. Theremaining net proceeds, after the allocation of the liability related transaction costs, of USD 424,077,733 areallocated to the liability component. The liability, including transaction costs, is therefore stated at a discount of1.6110% per quarter to the maturity value.



31.12.2004 31.12.2003

Accrued interest ********************************************************* 771,447 895,271Other accruals*********************************************************** 188,334 170,209Rounding*************************************************************** 1 —

959,782 1,065,480


01.01.2004 - 01.01.2003 -31.12.2004 31.12.2003


investments********************************************************* 9,370,958 4,858,192— Interest income from cash and cash equivalents 152,739 160,077

Total dividend and interest income **************************************** 9,523,697 5,018,269

Total interest expense *************************************************** (1,437,645) (895,271)

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01.01.2004 - 01.01.2003 -31.12.2004 31.12.2003

Foreign exchange gains and losses on:— Limited partnerships and directly held investments ************************ (4,727,352) (1,666,501)— Cash and cash equivalents ******************************************** (6,783) (905)

(4,734,135) (1,667,406)

13. Revaluation

01.01.2004 - 01.01.2003 -31.12.2004 31.12.2003

Revaluation of:— Limited partnerships and directly held investments************************ 88,553,138 17,199,710

14. Commitments

31.12.2004 31.12.2003





31.12.2004 31.12.2003



Princess Private Equity Holding Limited entered into a revolving credit facility with Bank of Scotland on31 December 2002 for a maximum of USD 130,000,000. Security is inter alia, by way of a security agreementover the entire issued share capital of Princess Private Equity Subholding Limited.




As at year end USD 10,000,000 was drawn on the facility (2003: USD 30,000,000).


On 29 June 1999, Princess Private Equity Holding Limited entered into an Insurance Agreement withPrincess Management & Insurance Limited, to ensure that it will be provided with sufficient funds to be able topay the principal amount of the Bond at maturity on 31 December 2010.

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Partners Group Holding owns 19.9 % of the share capital of GE & W AG which in turn holds 80.1% of theClass B shares of Princess Private Equity Holding Limited.

GE & W AG, a majority of whose shares are held by the founding partners of Partners Group, and SwissReinsurance Company hold 8,010 and 1,990 Class B Shares respectively. Mr Wietlisbach, a Director of PrincessPrivate Equity Holding Limited and a partner of Partners Group, controls 26.7% of the issued share capital ofGE & W AG.

Partners Group and all its subsidiaries and affiliates are considered to be related parties to the Group.




i) Services

01.01.2004 – 01.01.2003 –31.12.2004 31.12.2003

Management fee paid to:— Princess Management & Insurance Limited ***************************** 12,739,586 13,566,546Insurance fee paid to:— Princess Management & Insurance Limited ***************************** 8,235,584 8,130,720Administration fee paid to:— Partners Group (Guernsey) Limited ************************************ 274,519 271,025IFRS Valuation advice:— Princess Management & Insurance Limited ***************************** 100,000 200,000Directors’ fees paid**************************************************** 16,364 15,227



31.12.2004 31.12.2003

Other short-term receivables from related parties:— Princess Management & Insurance Limited ********************************* 126,980 —Other short-term payables to related parties:— Princess Management & Insurance Limited ********************************* 145,000 100,000


Ownership interestCountry ofincorporation Principal activity 31.12.2004 31.12.2003

Princess Private EquitySubholding Limited********************* Guernsey Holding of investments 100% 100%


GE & W AG, a company organized under Swiss law holds the majority of the Class B shares. The majorityof the shares of GE & W AG are held by the founding partners of Partners Group.

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22. Restatement of convertible bond

The Group early adopted International Financial Reporting Standards (IFRS). IAS 32, FinancialInstruments: Disclosure and Presentation, and IAS 39, Financial Instruments: Recognition and Measurement,require that the accounting policy for the convertible bond should be changed. In the past, the net proceeds of thebond were split between the liability and equity option components using an option valuation model. Based onthe early adoption of IFRS, the fair value of the equity component has been calculated using cash flowsdiscounted at market interest rates for an equivalent period. The policy has been applied retrospectively.

The impact of the change in accounting policy is shown below:

Previously Restatedreported Restatement amounts

EquityEquity as at 31 December 2002**************************** 612,957 14,676,466 15,289,423Surplus/(loss) for the financial year 2003******************** (38,569,746) (2,967,633) (41,537,379)

Equity as at 31 December 2003**************************** (37,956,789) 11,708,833 (26,247,956)

Convertible bondConvertible bond as at 31 December 2002 ******************* 550,784,153 (14,676,466) 536,107,687Amortization of transaction costs*************************** 1,567,071 (79,558) 1,487,513Finance cost on convertible bond ************************** 32,736,428 3,047,191 35,783,619

Convertible bond as at 31 December 2003 ******************* 585,087,652 (11,708,833) 573,378,819

Finance cost on convertible bond — 2003 ******************* (32,736,428) (3,047,191) (35,783,619)

23. Risks

It is expected, that a large proportion of the Group’s investments will be made by investing in private equityfunds (including affiliated funds). Many of the private equity funds may be wholly unregulated investmentvehicles. In addition, certain of the private equity funds may have limited or no operational history and have noproven track record in achieving their stated investment objective.


The Group’s over-commitment strategy could result in periods in which the Group has inadequate liquidityto fund its investments or to pay other amounts payable by the Group.

The Group expects that a portion of the private equity investments to be made by the Group will be in anumber of different countries and denominated in a number of different currencies. Any returns on and value of,such portion of the private equity investments made by the Group may, therefore, be materially affected byexchange rate fluctuations, local exchange control and other restrictions, including restrictions on theconvertibility of the currencies in question and also by political and economic developments in the relevantcountries.

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We have audited the financial statements which comprise the consolidated income statement, theconsolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statementand the related notes 1 to 23.


The directors’ responsibilities for preparing the annual report and the financial statements in accordancewith applicable law and International Financial Reporting Standards are set out in the statement of directors’responsibilities.


We report to you our opinion as to whether the financial statements give a true and fair view and are properlyprepared in accordance with The Companies (Guernsey) Law, 1994 and International Financial ReportingStandards. We also report to you if, in our opinion, the directors’ report is not consistent with the financialstatements, if the company has not kept proper accounting records, or if we have not received all the informationand explanations we require for our audit.

We read the other information contained in the Annual Report and consider the implications for our report ifwe become aware of any apparent misstatements or material inconsistencies with the financial statements. Theother information comprises only the directors’ report.


We conducted our audit in accordance with International Standards on Auditing. An audit includesexamination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. Italso includes an assessment of the significant estimates and judgements made by the directors in the preparationof the financial statements, and of whether the accounting policies are appropriate to the company’scircumstances, consistently applied and adequately disclosed.


Opinion

In our opinion the financial statements give a true and fair view of the state of the company’s affairs at31 December 2004 and of its loss and cash flows for the year then ended and have been properly prepared inaccordance with The Companies (Guernsey) Law,1994 and International Financial Reporting Standards.


PricewaterhouseCoopers CI LLPChartered AccountantsGuernseyChannel Islands

18 February 2005

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CONSOLIDATED AUDITED STATEMENT OF INCOMEfor the year from 01 January 2003 to 31 December 2003

01.01.2003 – 01.01.2002 –31.12.2003 31.12.2002

Notes USD USD

Net income from limited partnerships and directly heldinvestments ********************************************** 20,391,401 (72,180,452)

— Dividend and interest income ******************************* 5&12 4,858,192 2,864,378— Revaluation********************************************** 5&14 17,199,710 (73,716,731)— Foreign exchange gains and losses*************************** 5&13 (1,666,501) (1,328,099)Net income from short-term investments*********************** — 1,132,370— Gains and losses ***************************************** 6 — 1,132,370Net income from cash and cash equivalents ******************** 320,189 983,674— Interest income******************************************* 8&12 160,077 995,407— Gains and losses ***************************************** 8 161,017 —— Foreign exchange gains and losses*************************** 13 (905) (11,733)

Operating income ****************************************** 20,711,590 (70,064,408)Operating expenses ***************************************** (22,530,305) (24,380,559)— Management fee****************************************** (13,566,546) (14,526,568)— Insurance fee ******************************************** (8,130,720) (9,107,402)— Administration fee **************************************** (271,025) (303,579)— Tax exemption fee **************************************** (1,847) (1,732)— Other operating expenses ********************************** (560,167) (441,278)Financing cost ********************************************* (36,751,031) (32,486,453)— Finance cost on convertible bond **************************** 10 (32,736,428) (30,919,382)— Amortisation of transaction costs **************************** 10 (1,567,071) (1,567,071)— Interest expense ****************************************** 12 (895,271) —— Other finance cost **************************************** (1,552,261) —

Surplus/(loss) for the financial year *************************** (38,569,746) (126,931,420)

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31.12.2003 31.12.2002Notes USD USD

AssetsNon-current assetsInvestments in limited partnerships and directly held investments****** 1&5 577,115,116 481,527,060Current assetsOther short-term receivables************************************ 7 68,449 90,061Cash and cash equivalents ************************************* 8 18,790,091 78,526,819

18,858,540 78,616,880

Total assets ************************************************* 595,973,656 560,143,940

Equity and LiabilitiesCapital and reservesIssued capital************************************************ 9 100 100Reserves**************************************************** (37,956,889) 612,857

(37,956,789) 612,957Liabilities falling due after more than one yearConvertible bond ********************************************* 10 585,087,652 550,784,154Liabilities falling due within one year ************************** 5 17,777,313 8,516,481Hedging liabilities ******************************************** 11 1,065,480 230,348Other short-term payables************************************** 17 30,000,000 —

48,842,793 8,746,829

Total liabilities ********************************************** 595,973,656 560,143,940

The financial statements were approved by the board of directors on 13 February 2004 and are signed on itsbehalf by:


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Equity at beginning of reporting year *********** 100 241,028,914 (240,416,057) 612,957Surplus/(loss) for the financial year*************** — — (38,569,746) (38,569,746)

Equity at end of reporting year **************** 100 241,028,914 (278,985,803) (37,956,789)




Equity at beginning of reporting year *********** 100 241,028,914 (113,484,637) 127,544,377Surplus/(loss) for the financial year*************** — — (126,931,420) (126,931,420)

Equity at end of reporting year **************** 100 241,028,914 (240,416,057) 612,957

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01.01.2003 – 01.01.2002 –31.12.2003 31.12.2002

Notes USD USD

Cash flow from operating activities— Management fee ***************************************** (13,566,546) (14,526,568)— Administration fee**************************************** (271,025) (303,579)— Insurance fee ******************************************** (8,130,720) (9,107,402)— Tax exemption fee**************************************** (1,847) (1,732)— Other operating expenses ********************************** (560,167) (441,278)— Proceeds from hedging activities **************************** 5 (19,917,601) (15,418,624)— (Increase)/decrease in other short-term receivables************** 21,612 98,820— Increase/(decrease) in other short-term payables**************** (60,139) 189,765— Interest and dividends received from limited partnerships and

directly held investments ********************************** 5 4,858,192 2,864,378— Purchase of limited partnerships and directly held investments**** 5 (116,287,455) (119,849,809)— Distributions of limited partnerships and directly held investments 5 65,411,041 49,447,332— Purchase of short-term investments ************************** 6 — (154,190,387)— Repayment of short-term investments ************************ 6 — 284,996,968— Cash inflow from cash and cash equivalents******************* 8 321,094 995,407— Financing cost/credit line charges *************************** (1,552,261) —

Net cash from/(used in) operating activities ********************** (89,735,822) 24,753,291Cash flow from financing activities— Increase/(decrease) in credit facility************************** 17 30,000,000 —

Net increase/(decrease) in cash and cash equivalents ************ (59,735,822) 24,753,291Cash and cash equivalents at beginning of reporting year ******* 8 78,526,819 53,785,261Effects on cash and cash equivalents— movement in exchange rates******************************** (905) (11,733)— rounding************************************************ (1) —

Cash and cash equivalents at end of reporting year************* 8 18,790,091 78,526,819

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The consolidated financial statements have been prepared in accordance with International FinancialReporting Standards (IFRS) and under the historical cost convention as modified by the revaluation of available-for-sale investments, financial assets and financial liabilities held for trading and all derivative contracts.Recognised assets and liabilities that are hedged are stated at fair value in respect of the risk that is hedged.

The preparation of financial statements in conformity with generally accepted accounting principles requirethe use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenues andexpenses during the reporting period. Although these estimates are based on management’s best knowledge ofcurrent events and actions, actual results ultimately may differ from those estimates.

Income

Income from bank deposits is included on an accruals basis. Gains and losses from short-term investmentsand gains and losses from cash and cash equivalents also include the increase in value of bonds purchased at adiscount. All realised and unrealised surpluses and losses are recognised in the statement of income.

Expenditure

The expenditure is included in the accounts on an accruals basis.

Reporting currency

As US dollars reflect the economic substance of the underlying events and circumstances relevant to theGroup and US dollars are used to a significant extent in, or has a significant impact on, the Group, US dollars arethe appropriate currency to be used as the measurement currency and accordingly the reporting currency in thesefinancial statements. All transactions in currencies other than the measurement currency are treated astransactions in foreign currencies.


International Accounting Standard 39 (‘‘IAS 39’’), ‘‘Financial Instruments: Recognition and Measurement’’requires investments treated as ‘‘available for sale’’ to be held at fair value, or at cost less provision fordiminution in value, where no reasonable range of fair values can be determined. Fair value is the amount forwhich an asset could be exchanged between knowledgeable willing parties in an arms length transaction.

Investments in limited partnerships are being treated as ‘‘available-for-sale’’ and therefore disclosed at fairvalue. Initially they are valued at cost. For the ongoing valuation of such investments the directors reviewinformation provided by underlying partnerships and other business partners and apply widely recognisedvaluation methods to estimate a fair value as per the balance sheet date.

In selecting investments the Directors have taken into consideration the accounting and valuation basis of theunderlying partnership and selected only those investments, which adopt an internationally recognised standard.

The Directors also review management information provided by underlying partnerships on a regular basis.In those cases where the management information is limited, the Directors work with the underlying partnershipin an attempt to obtain more meaningful information.


Amounts realised on the sale of investments will differ from the values reflected in these financial statementsand the difference may be significant.

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The directly held investments are being treated as ‘‘available-for-sale’’ and are therefore disclosed at fairvalue. For determining the fair value, the Directors refer to the most recent available information provided by thelead investor of the investment with any changes resulting from additional financing rounds or a permanentdiminution in value.


The Group recognises the funding of the limited partnerships and directly held investments on the date fundsare transferred to the partnership. Any distributions, including return of principal of investment, received from theunderlying limited partnerships and directly held investments are recognised on the distribution date.


Short-term investments are defined as investments with maturity between three and twelve months from thedate of purchase and are being treated as ‘‘available-for-sale’’.


The short-term investments purchased at a discount are included in the balance sheet at market values rulingat the balance sheet date. The changes in the fair value and the interest received at maturity are included within‘‘Net income from short-term investments — Gains and losses’’.

Upon maturity of the short-term investments purchased at a discount the difference between the last reportedfair value and the maturity amount are included within ‘‘Realised gains and losses’’.

All transactions relating to short-term investments are recognised on the settlement date.


The cash and cash equivalents consist of cash at bank and cash invested in money market instruments with amaturity of up to three months from the date of purchase. The cash equivalent investments purchased at adiscount are included in the balance sheet at market values ruling at the balance sheet date. The changes in thefair value and the interest received at maturity are included within ‘‘Net income from cash and cash equivalents’’.

Credit Facility/Loans

All loans are stated at amortised cost.

Foreign exchange

Transactions in foreign currencies are translated into US dollars at the exchange rate prevailing at the date ofthe transaction. Monetary assets and liabilities denominated in foreign currencies are translated into US dollars atthe exchange rate prevailing at the balance sheet date. Exchange gains and losses are included in the statement ofincome.

Accounting for hedging activities

The Group’s policy of hedging the value of non-US dollar investments in limited partnerships and directlyheld investments against the US dollar does not qualify as hedge accounting as defined in IAS 39. As a result theunrealised changes in the fair value of these derivatives and the realised net gains/losses on the derivatives thatmatured during the year are recognised in the statement of income under the heading of ‘‘Net income fromlimited partnerships and directly held investments — foreign exchange gains and losses’’.

Consolidation

Subsidiary undertakings, which are those companies in which the Group, directly or indirectly, has aninterest of more than one half of the voting rights or otherwise has the power to exercise control over theoperations, have been consolidated. All inter-company transactions, balances and unrealised surplus and deficitson transactions between group companies have been eliminated. A listing of the Group’s subsidiaries is set out inNote 21.

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2. Expenses

Management fee

The management fee is paid quarterly in advance pursuant to the Investment Management Agreementbetween Princess Private Equity Holding Limited and Princess Management & Insurance Limited. The quarterlymanagement fee is calculated as 0.375% of the higher of the sum of Private Equity Net Assets and the undrawncommitments or the Net Assets of Princess.

Administration fee

The administration fee is paid quarterly in advance pursuant to the Administration Agreement betweenPrincess Private Equity Holding Limited and Partners Group (Guernsey) Limited. The quarterly administrationfee is calculated as 0.0125% of the first USD 1 billion of Net Assets and 0.005% of the amount by which suchNet Assets exceed USD 1 billion.

Insurance fee

The insurance fee is paid quarterly in advance pursuant to the Insurance Trust Agreement between PrincessPrivate Equity Holding Limited and Princess Management & Insurance Limited. The quarterly insurancepremium is calculated as 0.375% of Net Assets.

3. Taxation status

The companies are exempt from Guernsey income tax under the Income Tax (Exempt Bodies) (Guernsey)Ordinances 1989 and 1992 and they are each charged an annual exemption fee of GBP 600.



The Group’s activities expose it to a variety of financial risks, including the effects of changes in debt andequity market prices, foreign currency exchange rates and interest rates. The Group’s overall risk managementprogramme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effectson the financial performance of the Group. The Group uses derivative financial instruments such as foreignexchange contracts to hedge certain exposures.


The Group operates and invests internationally and is exposed to foreign exchange risk arising from variouscurrency exposures primarily with respect to EUR, GBP, SEK and JPY. The Group uses forward contracts tohedge their exposure to foreign currency risk in connection with the measurement currency.



(c) Credit risk


(d) Liquidity risk



Derivative financial instruments are initially recognised in the balance sheet at cost and subsequently areremeasured at their fair value. Changes in the fair value of any derivative instruments are recognized immediately

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in the income statement. The fair values of various derivative instruments used for hedging purposes are disclosedin Note 5.


The fair value of publicly traded derivatives and trading and available-for-sale securities is based on quotedmarket prices at the balance sheet date. The fair value of forward foreign exchange contracts is determined usingforward exchange market rates at the balance sheet date.



5.1 Investments

31.12.2003 31.12.2002

Balance at beginning of reporting year ******************************** 481,527,060 461,574,349Capital activity recorded at the transaction rate *************************** 116,287,455 119,849,809Distributions ******************************************************* (65,411,041) (49,447,332)Revaluation ******************************************************** 17,199,710 (73,716,731)Foreign exchange gains/(losses)**************************************** 27,511,932 23,266,965


5.2 Distributions

01.01.2004 - 01.01.2003 -31.12.2004 31.12.2003

Dividends************************************************************ 2,330,371 1,669,375Interest income ******************************************************* 2,527,822 1,195,003Rounding ************************************************************ (1) —

4,858,192 2,864,378

Return of investments************************************************** 65,411,041 49,460,254

Total distributions**************************************************** 70,269,233 52,324,632

5.3. Foreign exchange

01.01.2003 – 01.01.2002 –31.12.2003 31.12.2002

Foreign exchange revaluation ****************************************** 27,511,932 23,266,965Revaluation of foreign exchange hedges relating to investments in limited

partnerships and directly held investments ****************************** (9,260,832) (9,176,440)Realized gains/(losses) from foreign exchange hedges relating to investments in

limited partnerships and directly held investments************************ (19,917,601) (15,418,624)

(1,666,501) (1,328,099)

At the balance sheet date, Princess Private Equity Holding Ltd. had the following forward foreign exchangecontracts in place. The contracts were entered into to hedge against changes in the foreign exchange value of the

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investments of Princess Private Equity Subholding Limited. The unrealised surplus/(loss) at the end of thereporting period is detailed below:


Buy USD against GBP ************** 80,000,000 1.5460 29.01.2003 — (3,151,358)Buy USD against EUR************** 54,000,000 0.9740 29.01.2003 — (4,069,405)Buy USD against CHF ************** 6,000,000 1.4966 29.01.2003 — (493,781)Buy USD against SEK ************** 10,000,000 9.4100 29.01.2003 — (801,937)Buy USD against GBP ************** 87,000,000 1.6397 25.03.2004 (7,072,190) —Buy USD against EUR************** 89,000,000 1.1410 25.03.2004 (9,057,313)Buy USD against CHF ************** 3,000,000 1.3373 25.03.2004 (244,039) —Buy USD against SEK ************** 14,000,000 7.8764 25.03.2004 (1,285,911) —Buy USD against JPY ************** 3,000,000 111.4325 25.03.2004 (117,860) —

(17,777,313) (8,516,481)


6.1 Investments

31.12.2003 31.12.2002

At beginning of reporting year ***************************************** — 128,945,901Additions ************************************************************ — 154,190,387Redemptions ********************************************************* — (283,864,598)Unrealised gains/(losses) *********************************************** — 728,310

At end of reporting year ********************************************** — —

6.2 Income

01.01.2003 – 01.01.2002 –31.12.2003 31.12.2002

Gains and lossesRealised gains and losses from investments issued at a discount **************** — 1,860,680Unrealised gains and losses from investments issued at a discount ************** — (728,310)

Total gains and losses from short-term investments ************************ — 1,132,370


31.12.2003 31.12.2002

Bank deposit interest receivable ********************************************* — 1,647Distributions receivable **************************************************** 68,449 —Stock distributions ******************************************************** — 60,869Sundry prepayments******************************************************* — 27,545

68,449 90,061


8.1 Balance31.12.2003 31.12.2002

Cash equivalents at beginning of reporting year ************************* 49,929,322 —Additions ******************************************************** 69,909,661 229,128,404Redemptions ****************************************************** (120,000,000) (179,263,179)Realized gains and losses ******************************************* 161,017 64,097

Cash equivalents at end of reporting year **************************** — 49,929,322Cash at banks **************************************************** 18,790,091 28,597,497

Total cash and cash equivalents************************************* 18,790,091 78,526,819

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8.2 Interest income

01.01.2003 – 01.01.2002 –31.12.2003 31.12.2002

Total interest income from cash and cash equivalents ********************** 160,077 995,407

9. Share capital

31.12.2003 31.12.2002


200,100 200,100


Bondholders have the right to convert bonds into shares. Shares issued and allotted on conversion of thebonds will be fully paid Class A shares (‘‘Ordinary shares’’) and will rank pari passu in all respects with all otherOrdinary Shares in issue on the relevant conversion date, save that the earlier of the date upon which 95 per centof the principal amount of the bonds have been converted or final maturity (‘‘Specified Date’’), Ordinary Shareswill not confer voting rights.



31.12.2003 31.12.2002

Balance at beginning of reporting year ******************************** 550,784,154 518,297,701Amortization of transaction costs ************************************** 1,567,071 1,567,071Finance cost on convertible bond ************************************** 32,736,428 30,919,382Rounding ********************************************************** (1) —


As at the balance sheet date the nominal value of the convertible bond outstanding was USD 700,000,000.The bond is not convertible into shares until on or after 1 January 2007, at the option of the investor, using therelevant conversion price. Princess Private Equity Holding Limited has entered into an insurance policy to ensurethat it is provided with sufficient funds for the repayment of the principal upon redemption of the bond on31 December 2010.

In accordance with IAS 32, Financial Instruments: Disclosure and Presentation, the net proceeds of the bondhave been split between the liability and equity option components. The fair value of the equity component hasbeen calculated as USD 242,200,000 using an accepted option valuation model. This amount is classified as sharepremium and will remain part of the permanent equity of the Company. The remaining net proceeds, after theallocation of the liability related transaction costs, of USD 446,135,767 are allocated to the liability component.The liability, including transaction costs, is therefore stated at a discount of 1.4379% per quarter to the maturityvalue.

The result of this technical requirement in IAS 32 is that the discount is amortised through the incomestatement as a finance cost, on a yield to maturity basis, over the 7.5-year life of the bonds until the firstconversion at 1 January 2007. This accounting treatment has no effect on either the economic position or the netasset value (as defined in the prospectus) of the Company. The cumulative finance cost in retained earnings isoffset by the equivalent credit in share premium. However, the required treatment clearly does have a significantimpact on the net surplus or loss reported in the income statement over the period to the conversion of the bond.

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31.12.2003 31.12.2002

Accrued interest ********************************************************* 895,271 —Other accruals*********************************************************** 170,209 230,348

1,065,480 230,348


01.01.2003 – 01.01.2002 –31.12.2003 31.12.2002

Interest income:— Dividend and interest income from limited partnerships and Directly held

investments ******************************************************** 4,858,192 2,864,378— Interest income from cash and cash equivalents 160,077 995,407


Total interest expense *************************************************** (895,271) —


01.01.2003 – 01.01.2002 –31.12.2003 31.12.2002

Foreign exchange gains and losses on:— Limited partnerships and directly held investments ************************ (1,666,501) (1,328,099)— Cash and cash equivalents ******************************************** (905) (11,733)

(1,667,406) (1,339,832)

14. Revaluation

01.01.2003 – 01.01.2002 –31.12.2003 31.12.2002

Revaluation of:— Limited partnerships and directly held investments *********************** 17,199,710 (73,716,731)

15. Commitments

31.12.2003 31.12.2002




The net assets are calculated by deducting the Current Liabilities from the Gross Assets. The 700,000convertible bonds at a par value of USD 1,000 each, if converted at USD 100 per share would result in 7,000,000shares.

31.12.2003 31.12.2002


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Princess Private Equity Holding Limited has entered into a revolving credit facility with Bank of Scotland on31 December 2002 for a maximum of US$ 130,000,000. Security is inter alia, by way of a security agreementover the entire issued share capital of Princess Private Equity Subholding Limited.

Interest is calculated using a LIBOR rate on the day of the advance plus a margin. The margin depends onthe total drawdown amount. An additional margin may be added if the ratio of Net Asset Value divided by thedrawn down facility (including capitalised interest) is less than 5:1.

There is a non utilisation fee which is payable yearly in arrears and this is calculated at 0.40% per annum onthe average undrawn amount of the revolving credit during the year.

In addition, an arrangement fee of US$ 1,170,000 was paid to Bank of Scotland on entering into the facility.


On 29 June 1999, Princess Private Equity Holding Limited has entered into an Insurance Agreement withPrincess Management & Insurance Limited, to ensure that it will be provided with sufficient funds to be able topay the principal amount of the Bond at maturity on 31 December 2010.




Partners Group Holding owns 19.9% of the share capital of GE & W AG who in turn holds 80.1% of theClass B shares of Princess Private Equity Holding Limited.

GE & W AG, a majority of whose shares are held by the founding partners of Partners Group, and SwissReinsurance Company hold 8,010 and 1,090 Class B Shares respectively. Mr Wietlisbach, a Director of PrincessPrivate Equity Holding Limited and a partner of Partners Group, controls 26.7 % of the issued share capital ofGE & W AG.

Partners Group and all its subsidiaries and affiliates are considered to be related parties to the Group. Thedirectors as dislosed in the Directors Report are also considered to be related parties to the Group.



01.01.2003 – 01.01.2002 –Notes 31.12.2003 31.12.2002i) Services

Management fee paid to:— Princess Management & Insurance Limited*********************** 2 13,566,546 14,526,568Insurance fee paid to:— Princess Management & Insurance Limited*********************** 2 8,130,720 9,107,402Administration fee paid to:— Partners Group (Guernsey) Limited ***************************** 2 271,025 303,579IFRS Valuation advice:— Princess Management & Insurance Limited*********************** 200,000 —Directors’ fees paid********************************************* 15,227 7,749

Princess Management & Insurance Limited is a company incorporated in Guernsey and owned by PartnersGroup and Swiss Reinsurance Company. Partners Group Private Equity Administration Limited is a companyincorporated in Guernsey and owned by Partners Group.


31.12.2003 31.12.2002

Accruals to related parties:— Princess Management & Insurance Limited ********************************* 100,000 —

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Ownership interestCountry ofincorporation 31.12.2003 31.12.2002

Princess Private Equity Subholding Limited *********************** Guernsey 100% 100%


GE & W AG, a company organized under Swiss law holds the majority of the Class B shares. The majorityof the shares of GE & W AG are held by the founding partners of Partners Group.

23. Risks

It is expected, that a large proportion of the Group’s investments will be made by investing in private equityfunds (including affiliated funds). Many of the private equity funds may be wholly unregulated investmentvehicles. In addition, certain of the private equity funds may have limited or no operational history and have noproven track record in achieving their stated investment objective.


The Group’s over-commitment strategy could result in periods in which the Group has inadequate liquidityto fund its investments or to pay other amounts payable by the Group.

The Group expects that a portion of the private equity investments to be made by the Group will be in anumber of different countries and denominated in a number of different currencies. Any returns on and value of,such portion of the private equity investments made by the Group may, therefore, be materially affected byexchange rate fluctuations, local exchange control and other restrictions, including restrictions on theconvertibility of the currencies in question and also by political and economic developments in the relevantcountries.

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INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PRINCESS PRIVATE EQUITY HOLDING LIMITED

We have audited the financial statements which comprise the consolidated statement of income, theconsolidated balance sheet, the consolidated statement of changes in shareholder’s equity, the consolidated cashflow statement and the related notes which have been prepared under the historical cost convention (as modifiedby the revaluation of certain fixed assets) and the accounting policies set out in the statement of accountingpolicies.


The directors’ responsibilities for preparing the annual report and the financial statements in accordancewith applicable Guernsey law and International Financial Reporting Standards are set out in the statement ofdirectors’ responsibilities.


We report to you our opinion as to whether the financial statements give a true and fair view and have beenproperly prepared in accordance with The Companies (Guernsey) Law, 1994 and International FinancialReporting Standards. We also report to you if, in our opinion, the directors’ report is not consistent with thefinancial statements, if the company has not kept proper accounting records, or if we have not received all theinformation and explanations we require for our audit.

We read the other information contained in the Annual Report and consider the implications for our report ifwe become aware of any apparent misstatements or material inconsistencies with the financial statements. Theother information comprises only the directors’ report.


We conducted our audit in accordance with International Standards on Auditing. An audit includesexamination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. Italso includes an assessment of the significant estimates and judgements made by the directors in the preparationof the financial statements, and of whether the accounting policies are appropriate to the company’scircumstances, consistently applied and adequately disclosed.


Opinion

In our opinion the financial statements give a true and fair view of the state of the company’s affairs at31 December 2003 and of its loss and cash flows for the year then ended and have been properly prepared inaccordance with The Companies (Guernsey) Law, 1994.


PricewaterhouseCoopersChartered AccountantsGuernsey, Channel Islands

19 February 2004

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PRINCESS PRIVATE EQUITY HOLDING LIMITED:AUDITED FINANCIAL STATEMENTS FORTHE YEAR FROM 1 JANUARY 2005 TO 31 DECEMBER 2005 (IFRS)

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AUDITED INCOME STATEMENTfor the year from 1 January 2005 to 31 December 2005

01.01.2005 - 01.01.2004 -31.12.2005 31.12.2004

Notes USD USD

Net income from hedging activities *************************** 22,812,449 (19,799,101)— Foreign exchange gains & losses **************************** 6&16 22,812,449 (19,799,101)Net income from short-term investments*********************** 150,296 —— Gains and losses ***************************************** 9 150,296 —Net income from cash & cash equivalents ********************* 1,323,072 145,955— Interest income******************************************* 11&15 1,328,159 152,739— Foreign exchange gains & losses **************************** 16 (5,087) (6,784)

Operating income ****************************************** 24,285,817 (19,653,146)Operating expenses ***************************************** (20,456,420) (21,593,589)— Management fee****************************************** 3 (11,852,212) (12,739,586)— Insurance fee ******************************************** 3 (9,114,500) (8,235,584)— Administration fee **************************************** 3 (303,817) (274,519)— Tax exemption fee **************************************** 4 (2,179) (2,243)— Other foreign exchange gains & losses *********************** 16 1,138,199 —— Other operating expenses ********************************** (321,911) (341,657)Financing cost ********************************************* (42,625,400) (41,071,011)— Finance cost on convertible bond **************************** 13 (40,664,029) (38,145,853)— Amortization of transaction costs **************************** 13 (1,487,513) (1,487,513)— Interest expense ****************************************** 15 (473,858) (1,437,645)

Surplus / (loss) for the financial year************************** (38,796,003) (82,317,746)

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AUDITED BALANCE SHEETas at 31 December 2005

31.12.2005 31.12.2004Notes USD USD

AssetsNon-current assetsLoan account with subsidiary ********************************** 7 423,400,398 544,048,483Investment in subsidiary ************************************** 8 10,000 10,000

423,410,398 544,058,483Current assetsShort-term investments *************************************** 1&9 59,463,335 —Other short-term receivables *********************************** 10 — 126,980Hedging assets ********************************************** 6 2,913,419 —Cash and cash equivalents************************************* 11 49,315,979 16,605,856

111,692,733 16,732,836

Total assets ************************************************ 535,103,131 560,791,319

EquityCapital and reservesIssued capital *********************************************** 12 100 100Reserves *************************************************** (120,581,368) (81,785,365)

Total equity ************************************************ (120,581,268) (81,785,265)

LiabilitiesLiabilities falling due after more than one yearConvertible bond ******************************************** 13 655,163,727 613,012,186Liabilities falling due within one yearHedging liabilities ******************************************* 6 — 18,704,616Other short-term payables ************************************* 14 520,670 859,782Credit facility *********************************************** 18 — 10,000,000Rounding ************************************************** 2 —

520,672 29,564,398

Total liabilities and equity *********************************** 535,103,131 560,791,319

The financial statements were approved by the board of directors on 19 January 2006 and are signed on itsbehalf by:


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AUDITED STATEMENT OF CHANGES IN EQUITYfor the year from 1 January 2005 to 31 December 2005



Equity at beginning of reporting year *********** 100 263,086,949 (344,872,314) (81,785,265)Surplus/(loss) for the financial year*************** — — (38,796,003) (38,796,003)

Equity at end of reporting year **************** 100 263,086,949 (383,668,317) (120,581,268)

AUDITED STATEMENT OF CHANGES IN EQUITYfor the year from 1 January 2004 to 31 December 2004



Equity at beginning of reporting year ************ 100 263,086,949 (262,554,568) 532,481Surplus / (loss) for the financial year ************** — — (82,317,746) (82,317,746)

Equity at end of reporting year ***************** 100 263,086,949 (344,872,314) (81,785,265)

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AUDITED CASH FLOW STATEMENTfor the year from 1 January 2005 to 31 December 2005

01.01.2005 - 01.01.2004 -31.12.2005 31.12.2004

Notes USD USD

Cash flow from operating activities— Management fee ******************************************* 3 (11,852,212) (12,739,586)— Administration fee****************************************** 3 (303,817) (274,519)— Insurance fee ********************************************** 3 (9,114,500) (8,235,584)— Tax exemption fee****************************************** 4 (2,179) (2,243)— Other operating expenses ************************************ (321,911) (341,657)— Proceeds from/(costs of) hedging activities********************** 6 1,194,415 (18,871,798)— (Increase)/decrease in other short-term receivables**************** 1,265,179 (126,980)— Increase/(decrease) in other short-term payables****************** (16,322) 18,125— Monies (advanced to)/repaid by subsidiary ********************** 7 120,648,085 59,805,518— Purchase of short-term investments **************************** 9 (59,313,038) —— Cash inflow from cash and cash equivalents********************* 11 1,328,159 152,739— Financing cost/credit line charges ***************************** (796,647) (1,561,468)

Net cash from/(used in) operating activities ************************ 42,715,212 17,822,547Cash flow from financing activities— Increase/(decrease) in credit facility**************************** 18 (10,000,000) (20,000,000)

Net increase/(decrease) in cash and cash equivalents ************** 32,715,212 (2,177,453)Cash and cash equivalents at beginning of reporting year ********* 11 16,605,856 18,790,091Effects on cash and cash equivalents— Movement in exchange rates ********************************* (5,087) (6,784)— Rounding ************************************************* (2) 2

Cash and cash equivalents at end of reporting year*************** 11 49,315,979 16,605,856

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NOTES TO THE AUDITED FINANCIAL STATEMENTS


The following accounting policies have been applied consistently in dealing with items which are consideredmaterial in relation to the Company’s financial statements:


These financial statements are the unconsolidated financial statements of the Company. Consolidatedfinancial statements which include Princess Private Equity Subholding Limited have been prepared in addition tothese statements, and may be obtained from the Company. These financial statements should be read inconjunction with the consolidated financial statements in order to obtain complete understanding of the entity’scircumstances.


The preparation of financial statements in conformity with IFRS requires the use of estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts of revenues and expenses during thereporting period. Although these estimates are based on management’s best knowledge of current events andactions, actual results ultimately may differ from those estimates.



Expenditure



Items included in the Company’s financial statements are measured using the currency of the primaryeconomic environment in which it operates (‘The Functional Currency’). This is the US dollar, which reflects theCompany’s primary activity of investing in US dollar limited partnerships and private equity. The Company hasalso adopted the US dollar as its presentation currency.







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The Company’s policy of hedging the value of non-US dollar investments held by Princess Private EquitySubholding Limited against the US dollar does not qualify as hedge accounting as defined in IAS 39 (revised2004). Derivative financial instruments are initially recognized in the balance sheet at cost and subsequently areremeasured at their fair value. As a result the unrealized changes in the fair value of these derivatives and therealized net gains/losses on the derivatives that matured during the year are recognized in the income statementunder the heading of ‘‘Net income from hedging activities — foreign exchange gains and losses’’.

The fair values of various derivative instruments used for hedging purposes are disclosed in note 6.

Consolidation

Subsidiary undertakings are those companies in which the Company, directly or indirectly, has an interest ofmore than one half of the voting rights or otherwise has the power to exercise control over the operations. Alisting of the Company’s subsidiaries is set out in Note 22.


Estimates and judgments are continually evaluated and are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances.

The Company makes estimates and assumptions concerning the future. The resulting accounting estimateswill, by definition, seldom equal the related actual results. There are no material estimates and assumptions thathave a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within thenext financial year.

3. Expenses

The following fees are paid by the Company for the whole Princess Group:

Management fee

The management fee is paid quarterly in advance pursuant to the Investment Management Agreementbetween the Company and Princess Management & Insurance Limited. The quarterly management fee iscalculated as 0.375% of the higher of the sum of Private Equity Net Assets and the undrawn commitments or theNet Assets of Princess (Consolidated).

Administration fee

The administration fee is paid quarterly in advance pursuant to the Administration Agreement between theCompany and Partners Group (Guernsey) Limited. The quarterly administration fee is calculated as 0.0125% ofthe first USD 1 billion of Net Assets (Consolidated) and 0.005% of the amount by which such Net Assets(Consolidated) exceed USD 1 billion.

Insurance fee

The insurance fee is paid quarterly in advance pursuant to the Insurance Trust Agreement between theCompany and Princess Management & Insurance Limited. The quarterly insurance premium is calculated as0.375% of Net Assets (Consolidated).

4. Taxation status

The Company is exempt from Guernsey income tax under the Income Tax (Exempt Bodies) (Guernsey)Ordinances 1989 and 1992 and is charged an annual exemption fee of GBP 600.

Annual exemption fee has also been paid by the Company on behalf of Princess Private Equity SubholdingLimited.

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The Company’s activities expose it to a variety of financial risks, including the effects of changes in debt andequity market prices, foreign currency exchange rates and interest rates. The Company’s overall risk managementprogramme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effectson the financial performance of the Company. The Company may use derivative financial instruments such asforeign exchange contracts to hedge certain exposures.


The Company operates and invests internationally and is exposed to foreign exchange risk arising fromvarious currency exposures. A portion of the private equity investments are made in a number of differentcountries and denominated in a number of different currencies. Any returns on and value of such investments maytherefore be materially affected by exchange rate fluctuations, local exchange control and other restrictions,including restrictions on the convertibility of the currencies in question and also by political and economicdevelopments in the relevant countries. The Company may use forward contracts to hedge its exposure to foreigncurrency risk in connection with the functional currency.


The Company’s income and operating cash flows are substantially independent of changes in market interestrates. The Company has no significant interest-bearing assets.

(c) Credit risk

The Company has no significant concentration of credit risk. Derivative counterparties and cash transactionsare limited to high credit quality financial institutions.

(d) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, theavailability of funding through an adequate amount of committed credit facilities and the ability to close outmarket positions. Due to the dynamic nature of the underlying business, the Company aims at maintainingflexibility in funding by keeping committed credit lines available.



In assessing the fair value of non-traded derivatives and other financial instruments, the Company uses avariety of methods and makes assumptions that are based on market conditions existing at each balance sheetdate. Quoted market prices or dealer quotes for the specific or similar instruments are used for long-term debt.Other techniques, such as option pricing models and estimated discounted value of future cash flows, are used todetermine fair value for the remaining financial instruments.

6. Hedging assets /liabilities


01.01.2005 - 01.01.2004 -31.12.2005 31.12.2004

Revaluation of foreign exchange hedges ********************************** 21,618,035 (927,303)Realized gain/(loss) from foreign exchange hedges ************************* 1,194,415 (18,871,798)Rounding *********************************************************** (1) —

22,812,449 (19,799,101)

At the balance sheet date, the Company had the following forward foreign exchange contracts in place. Thecontracts were entered into to hedge against changes in the foreign exchange value of the investments of Princess

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Private Equity Subholding Limited. The unrealized surplus/(loss) at the end of the reporting year is detailedbelow:


Sell GBP against USD ************* 77,990,000 1.7725 15.04.2005 — (5,949,724)Sell EUR against USD ************* 97,170,000 1.2300 15.04.2005 — (10,052,750)Sell CHF against USD ************* 4,331,782 1.2466 15.04.2005 — (431,987)Sell SEK against USD ************* 19,924,099 7.3780 15.04.2005 — (2,191,997)Sell JPY against USD ************** 1,031,398 109.5600 15.04.2005 — (78,158)Sell GBP against USD ************* 36,799,770 1.7524 20.04.2006 679,602 —Sell EUR against USD ************* 91,254,375 1.2167 20.04.2006 1,959,825 —Sell SEK against USD ************* 9,777,083 7.6710 20.04.2006 273,992 —

2,913,419 (18,704,616)

7. Loan to subsidiary

31.12.2005 31.12.2004

Balance at beginning of reporting year ******************************* 544,048,483 603,854,001Capital activity recorded at the transaction rate ************************** (120,648,085) (59,805,518)


The loan to Princess Private Equity Subholding Limited is unsecured, interest free and although it isrepayable upon demand, the Company has confirmed to Princess Private Equity Subholding Limited that it willnot seek repayment within one year.

The Company advances further interest free loans as requested by Princess Private Equity SubholdingLimited to cover further capital calls from their investments. The loan balance reduces when Princess PrivateEquity Subholding Limited receives distributions from its investments.

8. Investments in subsidiary

31.12.2005 31.12.2004

Princess Private Equity Subholding Limited 100% wholly owned subsidiary10,000 shares of USD 1.00 each ****************************************** 10,000 10,000


9.1 Investments

31.12.2005 31.12.2004

At beginning of reporting year******************************************* — —Additions************************************************************** 59,313,038 —Redemptions *********************************************************** — —Gains/(losses) on short-term investments ************************************ 150,296 —Rounding************************************************************** 1 —

At end of reporting year ************************************************ 59,463,335 —

9.2 Income

01.01.2005 - 01.01.2004 - 31.12.2005 31.12.2004

Realized gains/(losses) from short-term investments*************************** 52,915 —Unrealized gains/(losses) from short-term investments ************************* 97,381 —

Total gains and losses from short-term investments************************* 150,296 —

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31.12.2005 31.12.2004

Sundry prepayments******************************************************* — 126,980


11.1 Balance31.12.2005 31.12.2004

Cash at banks ******************************************************** 49,315,980 16,605,856Rounding ************************************************************ (1) —

Total cash and cash equivalents **************************************** 49,315,979 16,605,856

11.2 Interest income

01.01.2005 - 01.01.2004 -31.12.2005 31.12.2004

Total interest income from cash and cash equivalents*********************** 1,328,159 152,739

12. Share capital

31.12.2005 31.12.2004


200,100 200,100





31.12.2005 31.12.2004

Balance at beginning of reporting year ******************************** 613,012,186 573,378,819Amortization of transaction costs ************************************** 1,487,513 1,487,513Finance cost on convertible bond ************************************** 40,664,029 38,145,853Rounding ********************************************************** (1) 1



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In accordance with IAS 32, Financial Instruments: Disclosure and Presentation, the net proceeds of the bondhave been split between the liability and equity option components. The fair value of the equity component hasbeen calculated as USD 264,834,825 using cash flows discounted at market interest rates for an equivalent year.This amount is classified as share premium and will remain part of the permanent equity of the Company. Theremaining net proceeds, after the allocation of the liability related transaction costs, of USD 424,077,733 areallocated to the liability component. The liability, including transaction costs, is therefore stated at a discount of1.6110% per quarter to the maturity value.

The result of this technical requirement in IAS 32 is that the discount is amortized through the incomestatement as a finance cost, on a yield to maturity basis, over the 7.5-year life of the bonds until the firstconversion at 1 January 2007. This accounting treatment has no effect on either the economic position or the netasset value of the Company. The cumulative finance cost in retained earnings is offset by an equivalent credit inshare premium. However, the required treatment clearly does have a significant impact on the net surplus or lossreported in the income statement over the year to the conversion of the bond.


31.12.2005 31.12.2004

Accrued interest ********************************************************** 448,658 771,447Other accruals *********************************************************** 72,012 88,334Rounding *************************************************************** — 1

520,670 859,782


01.01.2005 - 01.01.2004 -31.12.2005 31.12.2004

Interest income:— Interest income from cash and cash equivalents *************************** 1,328,159 152,739

Total dividend and interest income **************************************** 1,328,159 152,739

Total interest expense *************************************************** (473,858) (1,437,645)


01.01.2005 - 01.01.2004 -31.12.2005 31.12.2004

Foreign exchange gains and losses on:— Hedging activities************************************************** 22,812,449 (19,799,101)— Cash and cash equivalents ******************************************* (5,087) (6,784)— Other************************************************************ 1,138,199 —

23,945,561 (19,805,885)



31.12.2005 31.12.2004

Net assets of the company ******************************************** 534,582,459 531,226,921Outstanding shares at the balance sheet date ***************************** 10,000 10,000Additional shares due to conversion ************************************ 7,000,000 7,000,000Net assets per share after conversion************************************ 76.2600 75.7813


The Company entered into a revolving credit facility with Bank of Scotland on 31 December 2002 for amaximum of USD 130,000,000. Security is inter alia, by way of a security agreement over the entire issued share

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capital of Princess Private Equity Subholding Limited. The credit facility has been reduced to USD 50,000,000 inthe meantime.








At the balance sheet date no persons were employed by the Company.


Partners Group Holding owns 100% of the share capital of Partners Group Product Investments which inturn holds 80.1% of the Class B shares of the Company.

Partners Group Product Investments and Swiss Reinsurance Company hold 8,010 and 1,990 Class B Sharesrespectively.

Partners Group and all its subsidiaries and affiliates are considered to be related parties to the Company. Thedirectors as disclosed in the Directors’ Report are also considered to be related parties to the Company.



i) Services

01.01.2005 - 01.01.2004 -Notes 31.12.2005 31.12.2004

Management fee paid to:— Princess Management & Insurance Limited*********************** 3 11,852,212 12,739,586Insurance fee paid to:— Princess Management & Insurance Limited*********************** 3 9,114,500 8,235,584Administration fee paid to:— Partners Group (Guernsey) Limited ***************************** 3 303,817 274,519Directors’ fees paid********************************************* 20,705 16,364



Notes 31.12.2005 31.12.2004

Loan account with subsidiary:— Princess Private Equity Subholding Limited ******************** 7 423,400,398 544,048,483Other short-term receivables from related parties:— Princess Management & Insurance Limited********************* — 126,980Other short-term payables to related parties:— Princess Management & Insurance Limited********************* — 45,000

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The year-end balances are unsecured, interest free and repayable upon demand.


OwnershipCountry of interest

incorporation 31.12.2005 31.12.2004

Princess Private Equity Subholding Limited*********************** Guernsey 100% 100%


Partners Group Product Investments, a company organized under Swiss law holds the majority of theClass B shares. Partners Group Product Investments is a wholly owned subsidiary of Partners Group Holding.

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We have audited the financial statements of Princess Private Equity Holding Limited for the year ended31 December 2005 which comprise the Income Statement, the Balance Sheet, the Cash Flow Statement, theStatement of Changes in Equity and the related notes. These financial statements have been prepared under theaccounting policies set out therein.


As described in the Statement of Directors’ Responsibilities the company’s directors are responsible for thepreparation of the financial statements in accordance with applicable Guernsey law and International FinancialReporting Standards.


We report to you our opinion as to whether the financial statements give a true and fair view and have beenproperly prepared in accordance with The Companies (Guernsey) Law, 1994. We also report to you if, in ouropinion, the Directors’ report is not consistent with the financial statements, if the company has not kept properaccounting records, or if we have not received all the information and explanations we require for our audit.

We read the other information contained in the Annual Report and consider the implications for our report ifwe become aware of any apparent misstatements or material inconsistencies with the financial statements. Theother information comprises only the director’s report.


We conducted our audit in accordance with International Standards on Auditing issued by the InternationalAuditing and Assurance Standards Board. An audit includes examination, on a test basis, of evidence relevant tothe amounts and disclosures in the financial statements. It also includes an assessment of the significant estimatesand judgements made by the directors in the preparation of the financial statements, and of whether theaccounting policies are appropriate to the company’s circumstances, consistently applied and adequatelydisclosed.


Opinion

In our opinion the financial statements give a true and fair view, in accordance with International FinancialReporting Standards, of the state of the company’s affairs as at 31 December 2005 and of its loss and cash flowsfor the year then ended and have been properly prepared in accordance with The Companies (Guernsey) Law,1994.

PricewaterhouseCoopers CI LLPChartered AccountantsGuernsey, Channel Islands

24 January 2006

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PRINCESS PRIVATE EQUITY HOLDING LIMITED:CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS FORTHE PERIOD FROM 1 JANUARY 2006 TO 30 SEPTEMBER 2006 (IFRS)

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CONSOLIDATED UNAUDITED INCOME STATEMENTfor the period from 1 January 2006 to 30 September 2006

01.01.2006 - 01.01.2005 -30.09.2006 30.09.2005

Notes USD USD

Net income from limited partnerships and directly heldinvestments ********************************************** 121,910,320 77,483,566

— Dividend and interest income******************************** 6&13 5,249,879 13,540,676— Revaluation ********************************************** 6&15 112,014,724 64,569,043— Foreign exchange gains & losses***************************** 6&14 4,645,717 (626,153)Net income from short-term investments *********************** 3,158,455 —— Gains and losses ****************************************** 7 3,047,875 —— Interest on short-term investments **************************** 7 110,580 —Net income from cash & cash equivalents ********************** 1,869,136 769,120— Interest income ******************************************* 9&13 1,832,935 582,185— Foreign exchange gains & losses***************************** 14 36,201 186,935

Operating income ******************************************* 126,937,911 78,252,686Operating expenses****************************************** (17,080,739) (15,936,265)— Management fee ****************************************** 3 (9,211,486) (8,825,883)— Insurance fee ********************************************* 3 (6,517,700) (6,662,614)— Administration fee***************************************** 3 (265,918) (222,087)— Tax exemption fee***************************************** 4 (2,181) (2,179)— Other foreign exchange gains & losses ************************ 14 (707,193) (50,234)— Other operating expenses *********************************** (376,261) (173,268)Financing cost ********************************************** (33,515,394) (31,779,842)— Finance cost on convertible bond***************************** 11 (32,250,170) (30,253,034)— Amortization of transaction costs***************************** 11 (1,115,635) (1,115,635)— Interest expense******************************************* 13 (149,589) (411,173)

Surplus/(loss) for the financial period ************************** 76,341,778 30,536,579

The notes on pages F-66 — F-74 are an integral part of these consolidated unaudited financial statements.

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CONSOLIDATED UNAUDITED BALANCE SHEETas at 30 September 2006

30.09.2006 31.12.2005Notes USD USD

AssetsNon-current assetsInvestments in limited partnerships and directly held investments****** 1&6 577,050,771 595,273,964Current assetsShort-term investments **************************************** 1&7 111,406,541 59,463,335Other short-term receivables************************************ 8 2,554,634 421,528Hedging assets*********************************************** 6 — 2,913,419Cash and cash equivalents ************************************* 9 130,974,447 49,315,979

244,935,622 112,114,261

Total assets ************************************************* 821,986,393 707,388,225

EquityCapital and reservesIssued capital************************************************ 10 100 100Reserves**************************************************** 128,045,504 51,703,725

Total equity ************************************************ 128,045,604 51,703,825LiabilitiesLiabilities falling due after more than one yearConvertible bond ********************************************* 11 — 655,163,727Liabilities falling due within one yearConvertible bond ********************************************* 11 688,529,532 —Hedging liabilities ******************************************** 6 3,968,555 —Other short-term payables************************************** 12 1,442,703 520,670Rounding *************************************************** (1) 3

693,940,789 520,673


The financial statements were approved by the board of directors on 31 October 2006 and are signed on itsbehalf by:

B. Human M. RoweDirector Director


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CONSOLIDATED UNAUDITED STATEMENT OF CHANGES IN EQUITYfor the period from 1 January 2006 to 30 September 2006



Equity at beginning of reporting year************ 100 263,086,949 (211,383,223) 51,703,826Surplus/(loss) for the financial year *************** — — 76,341,778 76,341,778


CONSOLIDATED UNAUDITED STATEMENT OF CHANGES IN EQUITYfor the period from 1 January 2005 to 30 September 2005



Equity at beginning of reporting year************* 100 263,086,949 (258,757,859) 4,329,190Surplus/(loss) for the financial year **************** — — 30,536,579 30,536,579

Equity at end of reporting year ****************** 100 263,086,949 (228,221,280) 34,865,769


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CONSOLIDATED UNAUDITED CASH FLOW STATEMENTfor the period from 1 January 2006 to 30 September 2006

01.01.2006- 01.01.2005 -30.09.2006 30.09.2005

Notes USD USD

Cash flow from operating activities— Management fee ****************************************** 3 (9,211,486) (8,825,883)— Administration fee***************************************** 3 (265,918) (222,087)— Insurance fee ********************************************* 3 (6,517,700) (6,662,614)— Tax exemption fee***************************************** 4 (2,181) (2,179)— Other operating expenses *********************************** (376,261) (173,268)— Proceeds from/(costs of) hedging activities********************* 6 (1,650,000) (11,354,813)— (Increase)/decrease in other short-term receivables*************** (2,840,299) (1,159,215)— Increase/(decrease) in other short-term payables***************** 1,221,102 (188,334)— Dividends received from limited partnerships

and directly held investments********************************* 6 1,630,030 10,955,482— Interest received from limited

partnerships and directly held investments ********************** 6 3,619,849 2,585,194— Purchase of limited partnerships and directly held investments***** 6 (57,487,609) (72,258,071)— Distributions by limited partnerships and

directly held investments ************************************ 6 200,903,216 155,045,531— Net purchase of short-term investments************************ 7 (177,417,619) —— Redemptions of short-term investments************************ 7 128,522,286 —— Interest on short-term investments **************************** 7 110,580— Interest from cash and cash equivalents *********************** 9 1,832,935 582,185— Financing cost/credit line charges **************************** (448,658) (796,647)

Net cash from/(used in) operating activities *********************** 81,622,267 67,525,281Cash flow from financing activities— Increase/(decrease) in credit facility*************************** 18 — (10,000,000)

Net increase/(decrease) in cash and cash equivalents ************* 81,622,267 57,525,281Cash and cash equivalents at beginning of reporting period******* 9 49,315,979 16,605,856Effects on cash and cash equivalents— Movement in exchange rates ******************************** 36,201 186,935— Rounding ************************************************ — (1)

Cash and cash equivalents at end of reporting period ************ 9 130,974,447 74,318,071


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NOTES TO THE CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS




The financial statements have been prepared in accordance with International Accounting Standard 34(Interim Reporting).

The same accounting policies apply as used for the 2005 consolidated financial statements.


The preparation of financial statements in conformity with IFRS requires the use of estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts of revenues and expenses during thereporting period. Although these estimates are based on management’s best knowledge of current events andactions, actual results ultimately may differ from those estimates.



Expenditure



Items included in the Group’s financial statements are measured using the currency of the primary economicenvironment in which it operates (‘‘The Functional Currency’’). This is the US dollar, which reflects the Group’sprimary activity of investing in US dollar limited partnerships and private equity. The Group has also adopted theUS dollar as its presentation currency.



Investments in limited partnerships are valued initially at fair value and thereafter at the most recent net assetvalue as reported by the underlying partnership and adjusted for subsequent net capital activity.

In selecting investments the directors have taken into consideration the accounting and valuation basis of theunderlying partnerships and select only those investments, which adopt an internationally recognized standard.The directors also review management information provided by underlying partnerships on a regular basis. Inthose cases where the management information is limited, the directors work with the underlying partnership inan attempt to obtain more meaningful information.


Amounts realized on the sale of directly held investments will differ from the values reflected in thesefinancial statements and the differences may be significant.

The directly held investments are being treated as ‘‘financial assets at fair value through profit or loss’’ andare therefore disclosed at fair value. Initially they are valued at fair value. For determining the fair value, the

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directors refer to the most recent available information provided by the lead investor of the investment with anychanges resulting from additional financing rounds or a diminution in value.












The Group’s policy of hedging the value of non-US dollar investments against the US dollar does not qualifyas hedge accounting as defined in IAS 39 (revised 2004). Derivative financial instruments are initially recognizedin the balance sheet at cost and subsequently are remeasured at their fair value. As a result the unrealized changesin the fair value of these derivatives and the realized net gains/losses on the derivatives that matured during theyear are recognized in the income statement under the heading of ‘‘Net income from limited partnerships anddirectly held investments — foreign exchange gains and losses’’. The fair values of various derivative instrumentsused for hedging purposes are disclosed in note 6.

Consolidation

Subsidiary undertakings, which are those companies in which the Group, directly or indirectly, has aninterest of more than one half of the voting rights or otherwise has the power to exercise control over theoperations, have been consolidated. All inter-company transactions, balances and unrealized surpluses and losseson transactions between group companies have been eliminated. A listing of the Group’s subsidiaries is set out inNote 22.


Estimates and judgements are continually evaluated and are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will,by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk ofcausing a material adjustment to the carrying amounts of assets and liabilities within the next financial year arediscussed below.

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For the valuation of such investments the directors review information provided by underlying partnershipsand other business partners and apply widely recognized valuation methods to estimate a fair value as at thebalance sheet date. The variety of valuation bases adopted and quality of management information provided bythe underlying partnerships and the lack of liquid markets for the investments held mean that there are inherentdifficulties in determining the fair values of these investments that cannot be eliminated. Therefore the amountsrealized on the sale of investments will differ from the fair values reflected in these financial statements and thedifferences may be significant.

3. Expenses

Management fee

The management fee is paid quarterly in advance pursuant to the Investment Management Agreementbetween the Company and Princess Management & Insurance Limited. The quarterly management fee iscalculated as 0.375% of the higher of the sum of Private Equity Net Assets and the undrawn commitments or theNet Assets of the Group.

Administration fee

The administration fee is paid quarterly in advance pursuant to the Administration Agreement between theCompany and Partners Group (Guernsey) Limited. The quarterly administration fee is calculated as 0.0125% ofthe first USD 1 billion of Net Assets and 0.005% of the amount by which such Net Assets exceed USD 1 billion.

Insurance fee

The insurance fee is paid quarterly in advance pursuant to the Insurance Trust Agreement between theCompany and Princess Management & Insurance Limited. The quarterly insurance premium is calculated as0.375% of Net Assets minus all assets held in cash, cash equivalents or marketable securities.

4. Taxation status

All companies in the Group are exempt from Guernsey income tax under the Income Tax (Exempt Bodies)(Guernsey) Ordinances 1989 and 1992 and they are each charged an annual exemption fee of GBP 600.





The Group operates and invests internationally and is exposed to foreign exchange risk arising from variouscurrency exposures. A portion of the private equity investments are made in a number of different countries anddenominated in a number of different currencies. Any returns on and value of such investments may therefore bematerially affected by exchange rate fluctuations, local exchange control and other restrictions, includingrestrictions on the convertibility of the currencies in question and also by political and economic developments inthe relevant countries. The Group may use forward contracts to hedge its exposure to foreign currency risk inconnection with the functional currency.


The Group invests in interest-bearing short-term investments with maturity between three and twelve monthsfrom the date of purchase. Apart from that, the Group’s income and operating cash flows are substantiallyindependent of changes in market interest rates.

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(c) Credit risk


(d) Liquidity risk


The Group’s over-commitment strategy could result in periods in which the Group has inadequate liquidityto fund its investments or to pay other amounts payable by the Group. The liquidity risk arising from the over-commitment strategy is managed through the use of quantitative models and the internal risk committee.

(e) Underlying asset risk

It is expected that a large proportion of the Group’s investments will be made by investing in private equityfunds (including affiliated funds). Many of the private equity funds may be wholly unregulated investmentvehicles. In addition, certain of the private equity funds may have limited or no operational history and have noproven track record in achieving their stated investment objective. The underlying asset risk is managed by aninvestment strategy that diversifies the investments in terms of geography, financing stage, industry or time.






6.1 Investments

30.09.2006 31.12.2005

Balance at beginning of reporting year ****************************** 595,273,964 629,976,924Capital activity recorded at the transaction rate************************** 57,487,609 98,252,399Distributions ****************************************************** (200,903,216) (205,398,410)Revaluation ******************************************************* 112,014,724 95,766,450Foreign exchange gains/(losses) ************************************** 13,177,690 (23,323,399)


6.2 Distributions

01.01.2006 - 01.01.2005 -30.09.2006 30.09.2005

Dividends ******************************************************** 1,630,030 10,955,482Interest income**************************************************** 3,619,849 2,585,194

5,249,879 13,540,676Return of investments ********************************************** 201,178,249 155,132,080Gains/(losses) from sale of stock distributions ************************** (275,033) (86,549)

Total distributions ************************************************ 206,153,095 168,586,207

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01.01.2006 - 01.01.2005 -30.09.2006 30.09.2005

Foreign exchange revaluation ******************************************* 13,177,690 (20,223,591)Revaluation of foreign exchange hedges relating to investments in limited

partnerships and directly held investments******************************* (6,881,974) 30,952,251Realized gains/(losses) from foreign exchange hedges relating to investments in

limited partnerships and directly held Investments ************************ (1,650,000) (11,354,813)Rounding *********************************************************** 1 —

4,645,717 (626,153)

At the balance sheet date, the Company had the following forward foreign exchange contracts in place. Thecontracts were entered into to hedge against changes in the foreign exchange value of the investments of theSubholding. The unrealized surplus/(loss) at the end of the reporting period is detailed below:

Surplus/ Surplus/(loss) (loss)

USD Rate Value date 30.09.2006 31.12.2005

Sell GBP against USD****************** 36,799,770 1.7524 20.04.2006 — 679,602Sell EUR against USD****************** 91,254,375 1.2167 20.04.2006 — 1,959,825Sell SEK against USD ****************** 9,777,083 7.6710 20.04.2006 — 273,992Sell GBP against USD****************** 35,670,000 1.7835 20.10.2006 (1,775,940) —Sell EUR against USD****************** 90,790,100 1.2437 20.10.2006 (1,904,789) —Sell SEK against USD ****************** 13,386,881 7.4700 20.10.2006 (287,826) —

(3,968,555) 2,913,419


7.1 Investments

30.09.2006 31.12.2005

At beginning of reporting year *************************************** 59,463,335 —Additions ********************************************************** 177,417,619 59,313,038Redemptions ******************************************************* (126,822,235) —Unrealized gains/(losses) on short-term investments************************ 1,347,823 150,296Rounding ********************************************************** (1) 1

At end of reporting year********************************************* 111,406,541 59,463,335

7.2 Income

01.01.2006 - 01.01.2005 -30.09.2006 30.09.2005

Interest on short-term investments ***************************************** 110,580 —Realized gains/(losses) from short-term investments *************************** 1,700,051 —Unrealized gains/(losses) from short-term investments ************************* 1,347,823 —Rounding ************************************************************* 1 —

Total gains and losses from short-term investments************************* 3,158,455 —



30.09.2006 31.12.2005

Distributions receivable *************************************************** 2,554,634 421,528

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9.1 Balance

30.09.2006 31.12.2005

Cash at banks ******************************************************* 130,974,447 49,315,980Rounding *********************************************************** — (1)

Total cash and cash equivalents *************************************** 130,974,447 49,315,979

9.2 Interest income

01.01.2006 01.01.200530.09.2006 30.09.2005

Total interest income from cash and cash equivalents ************************ 1,832,935 582,185

10. Share capital

30.09.2006 31.12.2005


200,100 200,100

Issued and fully paid10,000 Class B shares of USD 0.01 each************************************* 100 100




30.09.2006 31.12.2005

Balance at beginning of reporting year ******************************** 655,163,727 613,012,186Amortization of transaction costs ************************************** 1,115,635 1,487,513Finance cost on convertible bond ************************************** 32,250,170 40,664,029Rounding ********************************************************** — (1)




In the course of the planned restructuring, the convertible bond has been reclassified to liabilities falling duewithin one year as per 30.09.2006. The planned conversion of the bond is being described in note 24.

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The result of this technical requirement in IAS 32 is that the discount is amortized through the incomestatement as a finance cost, on a yield to maturity basis, over the 7.5-year life of the bonds until the firstconversion at 1 January 2007. This accounting treatment has no effect on either the economic position or the netasset value of the Group. The cumulative finance cost in retained earnings is offset by an equivalent credit inshare premium. However, the required treatment clearly does have a significant impact on the net surplus or lossreported in the income statement over the years to the conversion of the bond.


30.09.2006 31.12.2005

Accrued interest ******************************************************** 149,589 448,658Other accruals ********************************************************** 1,293,114 72,012

1,442,703 520,670


01.01.2006 - 01.01.2005 -30.09.2006 30.09.2005


investments********************************************************* 5,249,879 13,540,676— Interest income from cash and cash equivalents *************************** 1,832,935 582,185


Total interest expense *************************************************** (149,589) (411,173)


01.01.2006 - 01.01.2005 -30.09.2006 30.09.2005

Foreign exchange gains and losses on:— Limited partnerships and directly held investments ************************* 4,645,717 (626,153)— Cash and cash equivalents ********************************************* 36,201 186,935— Other ************************************************************** (707,193) (50,234)

3,974,725 (489,452)

15. Revaluation

01.01.2006 - 01.01.2005 -30.09.2006 30.09.2005

Revaluation of:— Limited partnerships and directly held investments*********************** 112,014,724 64,569,043

16. Commitments

30.09.2006 31.12.2005




The net assets are calculated by deducting the Liabilities falling due within one year (not taking into accountthe convertible bonds) from the Total Assets. The 700,000 convertible bonds at a par value of USD 1,000 each, ifconverted at USD 100 per share would result in 7,000,000 shares.

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30.09.2006 31.12.2005



The Company entered into a revolving credit facility with Bank of Scotland on 31 December 2002 for amaximum of USD 130,000,000. Security is inter alia, by way of a security agreement over the entire issued sharecapital of the Subholding. The credit facility has been reduced to USD 50,000,000 in the meantime.


There is a non utilization fee which is payable yearly in arrears and this is calculated at 0.40% per annum onthe average undrawn amount of the revolving credit during the period.





If the planned conversion of the bond is being approved by the bond holders, the Insurance Policy is beingdissolved. The planned conversion of the bond is being described in note 24.




Partners Group Holding and Swiss Reinsurance Company hold 8,010 and 1,990 Class B Shares respectively.

Partners Group Holding and all its subsidiaries and affiliates are considered to be related parties to theGroup.




i) Services

01.01.2006 - 01.01.2005 -Notes 30.09.2006 30.09.2005

Management fee paid to:— Princess Management & Insurance Limited ************************ 3 9,211,486 8,825,883Insurance fee paid to:— Princess Management & Insurance Limited ************************ 3 6,517,700 6,662,614Administration fee paid to:— Partners Group (Guernsey) Limited******************************* 3 265,918 222,087Directors’ fees paid ********************************************** 5,408 16,229

Princess Management & Insurance Limited is a company incorporated in Guernsey and owned by PartnersGroup Holding and Swiss Reinsurance Company. Partners Group (Guernsey) Limited is a company incorporatedin Guernsey and owned by Partners Group Holding.

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There were no period-end balances with related parties.


Ownership interestCountry ofincorporation 30.09.2006 31.12.2005

Princess Private Equity Subholding Limited *********************** Guernsey 100% 100%


Partners Group Holding, a company organized under Swiss law holds the majority of the Class B shares ofthe Company.

24. Subsequent Event: Restructuring of the Convertible Bonds

Notice has been given of a meeting of bondholders to be held in London on 3rd November 2006.Bondholders are being asked to approve an amendment to the terms and conditions of the Bonds by entering intoa fourth supplemental trust deed with Law Debenture Trustees Limited (the ‘‘Fourth Supplemental Trust Deed’’).This will give the Company a mandatory conversion right. If the Company is granted the right (the ‘‘MandatoryConversion Right’’) the Company will convert all of the Bonds into Co-ownership Interests on the RestructuringCompletion Date.

The Restructuring Completion Date will be the business day on which approval for admission to trading ofthe Ordinary Shares deliverable in the form of co-ownership interests in a global bearer certificate issued by anddeposited with Clearstream Banking AG, Frankfurt, representing new shares of the Company of EUR 0.01 eachon the official market (Amtlicher Markt) on the segment with additional post-admission obligations (PrimeStandard) of the Frankfurt Stock Exchange, is given by the Frankfurt Stock Exchange (the ‘‘RestructuringCompletion Date’’) provided such date is prior to 30 March 2007.

Upon the deposit of the global bearer certificate with Clearstream, Frankfurt, the global certificate inregistered form representing the Bonds will be cancelled. Further, within 72 hours of the RestructuringCompletion Date, the Company shall procure that 10 Co-ownership Interests in respect of each USD 1,000 inprincipal amount of the Bonds converted shall be credited to the depository accounts of those persons who had aninterest in the global certificates in registered form representing the Bonds in Euroclear Bank S.A./N.V. andClearstream Banking, societe anonyme.

On the Restructuring Completion Date, each Bond will be converted into 10 Ordinary Shares deliverable inthe form of co-ownership interests in a global bearer certificate issued by Clearstream, Frankfurt such that eachco-ownership interest in a global bearer certificate carries rights corresponding to one Ordinary Share.

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RECENT BUSINESS EVENTS AND OUTLOOK

As at 30 September 2006 the net asset value of the Princess portfolio stood at approximatelyUSD 817 million, or USD 116.4872 per share after conversion assuming that the conversion has taken place at30 September 2006, an increase of 15.52% over the end of 2005 (whereas the net asset value per share iscalculated by dividing the net asset value of Princess’ portfolio by the number of shares in issue (7,010,000); the700,000 convertible bonds at a par value of USD 1,000 each, if converted at USD 100 per share would result in7,000,000 shares, whilst 10,000 shares were already outstanding at 30 September 2006). The portfolio comprisedapproximately USD 577 million in investments in limited partnerships and approximately USD 245 million inshort-term investments and cash and equivalents. The increase in the value of the portfolio was primarilyattributable to the increase in short-term investments, up by approximately USD 52 million to approximatelyUSD 111 million, as well as in cash and equivalents, up by approximately USD 82 million to approximatelyUSD 131 million. This reflects the high level of distributions received from limited partnership investments —proceeds which were over and above the operating needs of the companies.

The value of investments in limited partnerships fell from approximately USD 595 million at the end of2005 to approximately USD 577 million at the end of September 2006. There was a substantial revaluation gainof approximately USD 112 million during the period as a result of the buoyant conditions in the key exit marketsflowing through into higher portfolio company valuations. In addition, Princess funded capital calls totalingapproximately USD 57 million. Together, these increased the value of the private equity assets in the portfolio,but were, however, largely offset by the USD 201 million in distribution proceeds.

The distributions do add value to the portfolio, albeit through an increase in cash and short-term investments.

The monthly net asset value for September stood at approximately USD 791 million (based on valuations bythe general partners), whereas the IFRS net asset value was approximately USD 817 million. The difference ofapproximately USD 26 million is solely due to the increase in the value of investments in limited partnerships.

Generally, Princess’ financial year 2006 was characterized by the exercise by Swiss Re of its MitigationRight in February 2006 and, as a result thereof, the inability of Princess to make further commitments. Thisresulted in the need to restructure the Bonds. On 5 December 2006 the meeting of bondholders of the Bondspassed certain extraordinary resolutions in order to restructure the Bonds. The key element of the restructuringwas the early conversion into newly issued shares of Princess and the listing of these shares on the FrankfurtStock Exchange. Apart from that, the investment scope of Princess was broadened and Princess adopted a globalrelative value investment approach, with Partners Group as investment advisor aiming to keep Princesssubstantially fully invested.

Due to the successful restructuring and the changes to the investment policy, Princess expects even at thisearly stage that the net asset value of its portfolio will continue to show a positive trend through 2007, althoughthis is dependent on there being no significant adverse developments in either the global economy in general or inthe private equity industry in particular. Princess will now be able to resume making new commitments but thepace at which new commitments can be made will be determined by the identification of suitable new investmentopportunities. The Investment Adviser has already identified suitable funds and intends to propose to PrincessManagement Limited commitments in funds with an aggregate amount of approximately USD 35 million which,if such proposal were to be considered positively by the boards of the Company and Princess ManagementLimited, may already be made in 2006 or early 2007. There is also a time lag between making new commitmentsand funding capital calls and Princess therefore expects to hold cash balances in excess of its immediate needsthrough 2007, but these are expected to be progressively reduced. The existing portfolio includes a number ofmore mature underlying investments which are expected to continue to make distributions and this, together withthe current cash holdings, should ensure that Princess will be able to meet its anticipated funding needs.

The monthly net asset value for November stood at approximately USD 806 million (based on valuations bythe general partners).

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Guernsey, Frankfurt am Main, 8 December 2006


sign. Brian Human sign. Graham Hall

Sal. Oppenheim jr. & Cie. KGaA

sign. Stefan Ries sign. Kerstin Moller

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PRINCESS PRIVATE EQUITY HOLDING LIMITED

PROSPECTUS

Registered Office


Tudor House

Le Bordage

St. Peter Port

Guernsey GY1 1BT

Channel Islands

Tel.: +44 1481 730 946

Fax: +44 1481 730 947

Email: [email protected]

Info: www.princess-privateequity.net

Global Reports LLC