Princess Priv E Regulatory News (PEY)

Princess Private Equity Holding Limited

For Immediate Release

ANNUAL FINANCIAL RESULTS ANNOUNCEMENT

YEAR ENDED 31 DECEMBER 2010

The Board of Princess Private Equity Holding Limited (Princess or the Company) announces the Audited Consolidated Annual Financial Results of the Company for the year ended 31 December 2010.

In accordance with DTR4.1, the full Annual Financial Report will be issued to Shareholders on or about 14 March 2011. The required announcement in accordance with DTR4.1 will be made on the day of issue of the Annual Financial Report.

CHAIRMAN'S REPORT

Dear Valued Investor

In my role as Chairman of the Board of Princess Private Equity Holding Limited, I am pleased to present this Annual Report to you. I continue to have great confidence in the Princess portfolio and its Investment Manager, and I am convinced that the active repositioning measures taken in 2010 have substantially enhanced the position of your Company.

2010 was an eventful year for Princess as the Board and the Investment Manager launched various initiatives to develop shareholder value and to close the discount to net asset value (NAV) at which the shares have been trading over the past few years. The first option proposed was changing the capital structure of the Company to that of an open-ended investment company. However, this was narrowly rejected by shareholders at the Annual General Meeting of Princess on 16 June 2010.

The Board and the Investment Manager implemented the shareholders' decision and continued reviewing opportunities to develop shareholder value under the existing listed closed-ended corporate structure. In October 2010, following a strategic review, we announced a series of measures aimed at closing the discount to NAV over the medium to long term. These measures included the commitment to resume dividend payments in the short term, the implementation of a share buyback program and a shift in the investment focus towards direct investments.

These measures were supported by a secondary sale of selected fund commitments that was completed after the reporting period and at much narrower discounts to NAV than the discount at which Princess shares were trading.

I believe the Board's and the Investment Manager's commitment to take meaningful measures to close the discount over time has been well received by investors and market participants alike. This was also reflected in the strong share price development of Princess. Its shares rose by 87.3% in 2010 on the Frankfurt Stock Exchange. Within this move, the discount to the NAV narrowed to 26.9%, from 53.8% at the end of 2009.

The robust share price performance was supported by a continued increase in the NAV, which closed the year up 18.4% at a total value of EUR 609.0 million. The prime driver behind the rise in the NAV was the strong operating performance of the companies in the Princess portfolio. Foreign exchange movements also had an overall positive effect on the NAV.

Investment and exit activity in the Princess portfolio picked up considerably during the year. Exits gained particular momentum, with distributions from the realization of mature portfolio companies more than doubling compared to 2009. Overall, distributions from realized portfolio companies exceeded capital calls for new investments by EUR 11.5 million in 2010.

My fellow Directors and I would like to take this opportunity to thank investors for the confidence they have shown in Princess. With the significantly positive NAV development over the past year, the strong momentum for exits of Princess' mature portfolio companies and the substantial progress made with the strategic repositioning of the Company, I believe that Princess is well placed to continue creating value for its shareholders over the years to come.

Brian Human

Chairman

Guernsey, 11 March 2011

Audited consolidated statement of financial position

As at 31 December 2010

Audited consolidated statement of comprehensive income

for the period from 01 January 2010 to 31 December 2010

Basic surplus / (loss) per share for the financial 1.35 (0.93)

period

Diluted surplus / (loss) per share for the financial 1.35 (0.93)

period

The earnings per share is calculated by dividing the surplus / (loss) for the financial period by the weighted average number of shares outstanding.

Audited consolidated statement of changes in equity

for the period from 01 January 2010 to 31 December 2010

Audited consolidated cash flow statement

for the period from 01 January 2010 to 31 December 2010

Investment Review:

Investment manager's report

NAV increases strongly in 2010

The audited net asset value (NAV) of Princess increased significantly in the year to the end of December 2010, by 18.4% to EUR 609.0 million, or EUR 8.69 per share, continuing the substantial rebound that had started in mid-2009.

The prime driver behind the rise in the NAV of Princess was the strong operating performance of the companies in its portfolio, which resulted in positive revaluations of 16.6% for 2010 as a whole. Portfolio companies in the buyout and special situations segments particularly contributed to this positive development. Many portfolio companies experienced positive earnings momentum on the back of the improving global economy and revised business plans. Additionally, a number of portfolio companies were sold for a price that was significantly higher than their previous book value, resulting in write-ups in the NAV of Princess at the time of exit and suggesting further potential for Princess' portfolio companies.

Foreign exchange movements also had an overall positive effect on the NAV in 2010. Substantial foreign exchange gains in the first half of the year and again in the fourth quarter of 2010 were partially offset by losses in the third quarter of 2010 when the euro strengthened against the US dollar. Princess uses put options to reduce the negative effects of US dollar weakness against the euro. This typically increases the short-term volatility of the NAV while minimizing the risk to the liquidity position of Princess. During the twelve-month reporting period, currency movements had a positive impact on the NAV of 5.5%.

Attractive portfolio valuations

The strong performance of Princess' portfolio companies largely reflected their continued positive operational development. The 30 largest companies in the Princess portfolio, representing more than 22% of the NAV, posted weighted average year-on-year revenue and earnings (EBITDA) growth of 4.6% and 5.7%, respectively. In terms of valuations, the 30 largest portfolio companies were valued at a weighted average multiple of 9.0x EBITDA (based on historical EBITDA over the past twelve months) as of the end of 2010. Further details about the valuation metrics can be found in Chapter 5 of this report.

Share price almost doubles

The Princess share price performed very well during the year, almost doubling since the end of 2009. Overall, it gained 87.3% and closed the reporting period at EUR 6.35 per share on the Frankfurt Stock Exchange, outperforming the LPX 50 Total Return Index (in euro terms) for listed private equity by 46.0%. The strong share price performance in 2010 was underpinned by the discount narrowing from 53.8% as of the end of 2009 to 26.9% as of the end of 2010. The Investment Manager interprets this as a sign of investors' appreciation for the active management steps taken by the Board and the Investment Manager during the course of the year.

Strategic repositioning initiated

The proposal to restructure the Company into an open-ended investment company with limited but regular liquidity was narrowly rejected by shareholders at the Annual General Meeting on 16 June 2010. The Board and the Investment Manager implemented the decision and reiterated their commitment to develop shareholder value and reduce the structural discount within the existing corporate structure as a closed-ended investment company listed in Frankfurt and London.

The Board undertook a strategic review with the Investment Manager and announced in October 2010 that the Company would be strategically repositioned. Measures that would be taken to this end included selling selected fund commitments on the secondary market, resuming dividend payments with an annual target of 5% to 8% of the NAV and gradually shifting the investment focus of the Company towards direct investments. On 13 December 2010, the Board also passed a resolution to implement a share buyback program.

After the reporting period, Princess announced that it had signed sale agreements for interests in nine buyout funds. These secondary sales were completed at an aggregate discount of 7.7% to the general partners' valuations as of the respective cut-off dates of the transactions, taking into account post year-end cash flows. The secondary sales were thus completed at a much lower discount to the NAV than the 26.9% discount at which Princess shares were trading at the end of 2010. The secondary sales program generated total cash proceeds of EUR 50.1 million. Of this sum, the Company received EUR 28.9 million in December 2010 and the remaining EUR 21.2 million after year-end.

Marked pick-up in investment activity

2010 witnessed a significant increase in private equity investment activity over 2009, both in the wider private equity market and particularly in the Princess portfolio. Princess invested EUR 83.8 million in new investment opportunities in 2010 compared to EUR 46.6 million in 2009. During the course of the year, the global economic environment improved significantly and also financing became increasingly available, leading to a higher level of new private equity investments.

New investments were completed in, among others, relatively more stable sectors such as healthcare and education. For example, Industri Kapital 2007 acquired a majority stake in Colosseum Dental, a leading provider of private dental care in Scandinavia, and Providence Equity Partners VI acquired Australia-based Study Group, a global leader in private higher education, language and career education.

Distributions from exits more than double

Just as investment activity picked up strongly, so too did the exit environment for the Company's mature portfolio companies. Thus, in 2010, Princess received EUR 95.2 million in distribution proceeds from realized portfolio companies, well over double the EUR 41.6 million in distributions received in 2009.

Princess' significant allocation to investments in Asia resulted in a number of successful exits in the region. For example, Princess received EUR 9.5 million from the highly successful exit of Chinese lender Shenzhen Development Bank, which produced a return of approximately 16x the original investment. Successful realizations were also completed in the consumer sector. Among these was the sale of Loyalty Partner, operator of the PAYBACK loyalty card in Germany, which generated a return of approximately 3x the original investment and an internal rate of return (IRR) of 25%.

Full investment exposure coupled with a strong funding position

Distributions from realizations of Princess' portfolio companies exceeded capital calls for new investments by EUR 11.5 million in 2010. Then in December 2010, the secondary sales program outlined above generated a further EUR 28.9 million in cash proceeds and thus contributed positively to the liquidity position of Princess. Overall, Princess held EUR 49.1 million in cash and cash equivalents as of the end of December 2010. In addition, it had drawn down EUR 32.5 million under the credit facility, which currently amounts to EUR 65.0 million and can potentially be increased to EUR 90.0 million. This translated into an investment level of 96.7% as of the end of December 2010, thus providing investors with undiluted exposure to private equity investments and Princess with sufficient cash to carry out the repositioning measures in 2011.

Unfunded commitments reduced by more than 25%

Unfunded commitments in the Princess portfolio decreased by more than 25% during the course of 2010 to EUR 210.4 million, down from EUR 283.5 million at the end of 2009. Around 20% of the Company's unfunded commitments stem from funds with vintage years 2000 and older that are unlikely to call down any more capital as these funds should have typically completed their investment period. This lower level of unfunded commitments will, nevertheless, continue to provide Princess with promising investment opportunities over the coming months in addition to the focus of the Company in future on private equity and private debt direct investments.

Outlook

The NAV of Princess developed very favorably in 2010, with a key driver being the revenue and earnings growth of the companies in the portfolio. The Investment Manager is confident that the valuation development of Princess' underlying portfolio companies is likely to remain positive over the coming months as the portfolio companies improve their operating results and earnings further, providing the global economy remains on a positive track.

The Investment Manager expects private equity investment and exit activity to gain further momentum over the next quarters. An improved exit environment should have a definite impact on the mature portfolio of Princess as around 30% of the NAV is accounted for by portfolio companies that have been held since before 2006. These portfolio companies have been developed in the past years in readiness for an exit and should thus be realized over the medium term.

The Investment Manager believes that Princess will be able to take advantage of attractive new investment opportunities arising in 2011. The Investment Manager intends to use the Company's current and prospective cash position to close new direct private equity and private debt investments on a global basis in order to provide investors with a broadly diversified direct investment portfolio going forward.

At the end of 2010 and the beginning of 2011, the strategic repositioning of Princess had progressed very well. The Investment Manager believes the repositioning measures, which include the share buyback program, the shift in the investment focus towards direct investments and the anticipated resumption of dividend payments in the short term, will create further value for the Company's shareholders.

PORTFOLIO ALLOCATION

Higher allocation to direct investments

At 80%, the largest allocation in the Company's portfolio as of the end of 2010 was to primary investments, down from 83% as of the end of the previous year. The allocation to direct investments increased to 17% as of year-end 2010 (2009: 15%) and the allocation to secondary investments increased to 3% of the portfolio (2009: 2%). Princess has historically provided investors with very high levels of diversification as the majority of the portfolio has been accounted for by primary investments. At the end of 2010, the Company had exposure to more than 2'000 portfolio companies. Going forward, the focus on direct investments will reduce the number of individual portfolio companies significantly, which is however not expected to substantially affect the volatility of the NAV.

Special situations allocation increases

The allocation of the portfolio to the buyout sector increased slightly to 66% as of the end of 2010 from 64% as of the end of 2009. Investments were spread equally between the small- and mid-cap and the large- and mega-large-cap buyout segments. The allocation to special situations investments rose by 2% during the reporting period to 17% of the portfolio. Finally, the share of venture capital investments in the portfolio decreased from 21% at the end of 2009 to 17% at the end of 2010. This reflects the fact that many of the portfolio companies in the venture stage are maturing, and more and more of them are being realized.

New investments expected to favor Asia in the medium term

The geographical exposure of the Princess portfolio by value at the end of 2010 was split between North America (59% against 57% in 2009), Europe (32% against 33% in 2009) and Asia & rest of world (9% against 10% in 2009). Since the strategic review last autumn and the start of the portfolio repositioning, it is the intention to increase the allocation to Asia and the rest of the world in the medium term.

Well-balanced industry allocation

The Princess portfolio is broadly diversified across a wide range of industries. The highest allocations are to the consumer discretionary (25%), industrials (19%), health care (17%), information technology (12%) and financial (10%) sectors, which together represented more than three-quarters of the NAV as of the end of 2010.

Well-balanced split by investment year

The maturity of the Princess portfolio is further underpinned by a healthy level of diversification across investment years. Around 30% of Princess' current investments were made before 2006. These portfolio companies have been developed in the past years in readiness for exiting over the next few years. Of the more recent investment years, a significant share of the investments was made in 2007 and reflects the ramp-up of the allocation to direct investments. Around 31% of the Company's more recent investments were made over the past three years and typically at lower entry valuations, a period that is likely to be a good vintage.

Ends.

About Princess

Princess is an investment holding company founded in 1999 and domiciled in Guernsey. It invests, inter alia, in private equity and private debt investments. Princess is advised in its investment activities by Partners Group AG, a global private markets investment management firm with over EUR 20 billion in investment programs under management in private equity, private debt, private real estate and private infrastructure. Princess aims to provide shareholders with long-term capital growth and an attractive dividend yield. Princess is traded on the Frankfurt Stock Exchange (ticker symbol: PEY1) and on the London Stock Exchange (ticker symbol: PEY). Further information: www.princess-privateequity.net

Contacts

Princess Private Equity Holding Limited:

princess@princess-privateequity.net

www.princess-privateequity.net

Registered Number: 35241

Media enquiries:

Partners Group AG

Dr. Anna Hollmann

Communications

Tel.: +41 41 768 83 72

anna.hollmann@partnersgroup.com

www.partnersgroup.com

This document does not constitute an offer to sell or a solicitation of an offer to buy or subscribe for any securities and neither is it intended to be an investment advertisement or sales instrument of Princess Private Equity Holding Limited. The distribution of this document may be restricted by law in certain jurisdictions. Persons into whose possession this document comes must inform themselves about, and observe any such restrictions on the distribution of this document. In particular, this document and the information contained therein is not for distribution or publication, neither directly nor indirectly, in or into the United States of America, Canada, Australia or Japan.

This document may have been prepared using financial information contained in the books and records of the product described herein as of the reporting date. This information is believed to be accurate but has not been audited by any third party. This document may describe past performance, which may not be indicative of future results. No liability is accepted for any actions taken on the basis of the information provided in this document. Neither the contents of Princess' website nor the contents of any website accessible from hyperlinks on Princess' website (or any other website) is incorporated into, or forms part of, this announcement.