ADAM.L Regulatory News (ADAM)

21 August 2013

China Private Equity Investment Holdings Limited

("CPE" or the "Company")

Board approves US$1 million investment in new Greater China Credit Fund

The Board of Directors of CPE (the" Board") has agreed to invest US$1 million in a new private equity investment fund due to be launched by Adamas Asset Management (HK) Limited ("Adamas"), the Hong Kong-based based investment management firm, marking a further development in a long-term strategic partnership between the Company and Adamas.

The new Greater China Credit Fund LP (the "Fund") plans to raise a total of up to US$275 million to target high-return investments in Small and Medium Enterprises (SMEs) predominantly in Greater China, across a range of sectors including agriculture, natural resources, clean energy, consumer opportunities and healthcare, among others. The Fund will be focussed on providing mezzanine financing to operationally strong growth companies, predominantly in Greater China, using a mix of debt, convertible instruments and structured or preferred equity to minimise the investment risks. The Fund will, target SMEs that have an enterprise value of under US$400 million and EBITDA of less than US$40 million. The Fund will also aim for rapid returns by targeting deals with limited investment holding periods. Adamas anticipates that by recycling principal investment amounts (as opposed to raising further capital) it can complete two rounds of investments over a five-year investment period, targetting cash-on-cash multiples of 2.5 times.

The launch of the Fund follows successes achieved with an earlier fund launched by Adamas in March 2010, the Asia Private Credit Fund ("APCF"), which has already provided investors with exit returns for three out of 11 investments yielding a gross IRR of 27%.

According to China's State Administration for Industry and Commerce, the total number of SMEs in China was estimated at around 55 million in 2012, accounting for more than 60% of GDP and responsible for more than 80% or urban employment. With tightening credit conditions, an estimated 90% or more SMEs cannot get bank financing. Adamas believes a financing gap of around US$425 billion exists for private enterprises across Greater China.

Following last November's decision to develop a strategic partnership, CPE announced last month it intended to embark on a seven-year US$20 million co-investment programme with Adamas, predominately targeting income-generating assets in Greater China. The Company plans to raise additional new capital in tranches of US$5m via placings to support the programme as and when required.

CPE Chairman John Croft said: "Our decision to invest US$1 million in Adamas's new fund is a strong example of the long-term benefits we expect to realise from our agreement to develop a strategic partnership with Adamas, which has a strong team with an established track record of identifying and managing successful investments in high-growth Asian opportunities. Earlier this summer we completed a successful US$4 million fundraising to support our ongoing investment programme in prime private equity opportunities and we are confident this new commitment with Adamas, although at an early stage, will bring strong shareholder returns."

Adamas Partner and head of Business Development, Conor MacNamara said: "In view of the background economic conditions, we believe our investment approach of combined credit and equity financing meets the strong demand from high quality SMEs needing funding while at the same time limiting the downside risks in line with our philosophy of maximising returns within an environment of strong capital preservation. Our track record shows we are well placed to manage this process and we are delighted that CPE is participating in our new fund as an investment partner".

For further information, please visit www.cpe-invest.com or contact:

Notes to Editors

 Adamas is an independent asset management firm headquartered in Hong Kong and a specialist in private-debt investing in Greater China. The group also has offices in Tokyo and Shanghai, and employs over 20 experienced investment professionals.