CIN.L Regulatory News (CIN)

City of London Group plc ("COLG" or "the Company")

·; COLG TAKES CONTROLLING STAKE IN TRADE FINANCE PARTNERS LIMITED(TFPL)

·; INVESTMENT THROUGH COLG'S NEW COMPANY "CITY OF LONDON CONFIRMING HOUSE LIMITED"

·; COLG INVESTS TOTAL OF £450,000 AND UNDERWRITES £1MILLION ISSUE OF LOAN NOTES BY TFPL

·; BANK OF LONDON AND THE MIDDLE EAST PROVIDES £10M TRADE FINANCE FACILITY

·; TFPL TEAM LED BY CHRIS ASH, GLYN POWELL WITH WILLIAM TEBBIT AS COMMERCIAL DIRECTOR

·; TFPL TEAM EXPECTS TO BE WRITING BUSINESS 'WITHIN WEEKS'

·; CREATES THIRD LEG OF COLG'S ALTERNATIVE FUND MANAGEMENT PLATFORMS

COLG is pleased to announce the formation and funding of a new subsidiary company, City of London Confirming House Limited, ("COLCH"), to fund specialist trade finance for small & medium sized enterprises. COLG will invest £150,000 in Equity with a further £300,000 of Working Capital to own 80% of COLCH, with the remaining 20% owned by Paul Tinkler, an experienced entrepreneur with extensive import knowledge, although if certain pre-determined targets are not met by Mr Tinkler, his interest can reduce to 10%.

COLCH will acquire a 51% interest in Trade Finance Partners Ltd (TFPL) by subscribing for ordinary shares. In addition, it will provide a working capital facility of £300,000 and has agreed to procure subscriptions for at least £1million of preference shares in TFPL. TFPL intends to increase its capital base by issuing Preference Shares with a high coupon to high net worth individuals ("HNW's"). COLG will underwrite an initial issue of £1,000,000 of Loan notes, repayable as and when TPFL preference shares are issued.

Bank of London and The Middle East plc has also agreed to provide an initial Sharia compliant bank facility of £10million to TFPL.

Paul Tinkler will take the chairman role of TFPL going forward. The core management team of TFPL is led by Chris Ash as CEO, with Glyn Powell as Chief Operating Officer, Noel Lyons as Finance Director and William Tebbit as Commercial Director. The business will operate from COLG's new office at 30 Cannon Street in the City of London. The team will utilise an IT platform and operating systems developed over many years in the Transactional Finance Industry. It will facilitate trades by issuing Letters of Credit or Purchase Commitments to suppliers on behalf of its clients, to fund the supply chain.

All transactions of TFPL will be conducted on a "Closed Bridge" basis whereby the ultimate buyer of the goods from TFPL's clients (TFPL's client's customer) will already have placed a confirmed order. TFPL will credit insure the end buyer.

In addition TFPL will take a standard security package from its clients, including Debentures and /or personal guarantees. The goods will remain under the control of TFPL during the transaction until invoiced, delivered and accepted by the end buyer.TFPL will retain Title over the goods until full payment has been received.

Eric Anstee, Chief Executive of COLG said," This, our third major strategic investment, continues our strategy of building a portfolio of Alternative Fund Management platforms focussing on specialist finance opportunities where we see a strong business model supported by a strong management team. In this case we have a wealth of operational and commercial expertise in an area which is growing fast but where the banking crisis has left a funding gap"

Chris Ash of TFPL said, "We are delighted to join with COLG and Paul Tinkler as our partners in this initiative. We are already in advanced discussions with some of our clients and expect to be writing business within weeks. The Fund raising capabilities of COLG and Paul should allow us to grow the business significantly."

24 November 2010

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Notes to editors:

City of London Group plc (COLG) is an investment company, with a wide range of national and international investments. A public company since 1986, COLG has had a full London Stock Exchange listing since August 1996 (LSE symbol CIN).

The Group's strategy is to build a quality financial services Group centred on specialist financing and Alternative Fund Management. It seeks above-average performance in growth and income via a prudent mix of low, medium and higher-risk investments. It holds a legacy portfolio of income stocks, offering a high degree of security, which are balanced by a higher risk portfolio, which is primarily focused on the minerals and resources sector, where the Board has particular experience. Its future strategy is to create a number of specialist funds to support business models and management skills where financing opportunities exist and yet conventional funding is not available.

Since the final quarter of 2009, significant Seed funds have been pledged to Therium Capital Management Limited, a third party litigation funder, and St.Helens Finance Legal Funding, which provides working capital loans to law firms. Historical investments have been made in Fundamental Tracker Investment Management Ltd, a privately quoted asset management company based in Glasgow (www.fundamentaltracker.com) and FX Capital Group, a privately quoted foreign exchange dealing company (www.fxcapitalgroup.co.uk). These investments are part of a policy of building a range of interests in the financial services sector.