ADAM.L Regulatory News (ADAM)

22 November 2012

China Private Equity Investment Holdings Limited (AIM: CPEH)

("CPE" or the "Company")

Strategic partnership with Gen2 Capital Partners Limited

China Private Equity Investments Holdings Limited has entered into a Memorandum of Understanding ("MOU") to develop a strategic partnership with Gen2 Capital Partners Limited ("Gen2"), aiming to exploit synergies between the two companies with the potential to create additional value for their shareholders and respective investors (the "Partnership").

Gen2 is an independent asset management firm headquartered in Hong Kong and a specialist in private equity investing in Greater China founded by Barry Lau and Paul Heffner. Gen2 currently has assets under management of approximately US$500 million and is primarily focused on East Asian investment opportunities. The group also has offices in Tokyo and in Xiamen in China's Fujian Province, and employs over 30 experienced investment professionals.

The board of directors of CPE (the "Board") believes the Partnership should provide a significant boost to the Company's growth potential by leveraging Gen2's well regarded, proven and robust investment and risk management processes in private equity investing in the Greater China region.

In turn, Gen2 is expected to benefit from CPE's specialist operational private equity experience and hands-on involvement with investee companies and its connections in the TMT and financial service sectors. Investors in Gen2 funds are also expected to benefit from the transparency and corporate governance provided through CPE's listing on AIM, as collaboration between the parties matures.

CPE intends to appoint David Kiang, a Gen2 senior advisor, to the Board as a Non-Executive Director. The timing of this appointment and further details regarding Mr Kiang will be notified in due course. The Company may appoint further directors employed by or connected with Gen2 as the relationship develops.

The MOU signed by CPE and Gen2 establishes the general terms and conditions of the Partnership. These provide for Gen2 to act as strategic consultant to CPE and to provide strategic advice and assistance to CPE as agreed by the parties. In recognition of Gen2's first year of consultancy services, CPE will grant to Gen2 an option over 750,000 ordinary shares in the Company at an exercise price of 25c per share, representing a 36% discount to the current net asset value of the Company. The option will expire three years after the date of grant, if not exercised earlier. Under the MOU, Gen2 has also agreed to introduce investment and other business opportunities to CPE for additional fees which will be agreed on a case by case basis. Payments for consultancy services which may be provided by Gen2 after the first year will be agreed in due course. The consultancy arrangements entered into between the parties may be terminated by either party giving 30 days notice.

The Board has been reviewing the current portfolio of assets held by Gen2 and has identified a number of assets that would be attractive additions to the CPE's portfolio of investments. Subject to further review and negotiation, it is likely that CPE will acquire certain assets from the Gen2 portfolio for a consideration that could comprise cash and/or ordinary shares in CPE. The parties have agreed that any injection of Gen2 assets into CPE will be subject to individual assessment and agreement between them, to be notified at the time. The MOU recognises the consideration of such asset injection into CPE as one of the objectives of the Partnership and acknowledges that Gen2 may become a significant shareholder in CPE in due course.

CPE Chief Executive Officer, John Croft, said: "This Partnership represents an important step to what we hope will become a long-term strategic relationship to realise benefits that might be achieved from exposure to wider market opportunities and from the experience and institutional reach of Gen2."

Speaking on behalf of Gen2, Managing Partner Barry Lau added: "We are delighted by the opportunity to work with CPE to develop a strong investment platform catering to the needs of European investors, and are looking forward to reaping the benefits brought to Gen2 by our resulting exposure to the London markets. Working together, we expect to benefit from the high standards of corporate governance and transparency which CPE's London listing requires, and believe that jointly our combined team of professionals, robust investment and risk management processes should generate enhanced returns for investors on both sides."

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