Strong Proposals received from Potential Managers

Invesco Perpetual Enhanced Income Limited

LEI: S0VPNHMIZ40I9QSUB528

29 May 2018

Strong Proposals Received from Potential Managers

Introduction

The Board of Invesco Perpetual Enhanced Income Limited (the "Company" or "IPE") announces that it has received a significant number of highly credible proposals to act as investment manager for the Company. These proposals are in response to the recruitment process initiated after the incumbent investment manager, Invesco, unexpectedly resigned. They have been submitted despite the disruptive requisition that followed Invesco's resignation.

Current and historic management fee arrangements

The base fee arrangements with Invesco amount to a current blended annual rate* of 0.90% (in addition Invesco charges a performance fee). In the period from 2007 to 2017 inclusive the Company has paid Invesco £12.3m in total fees including base and performance fees (of note, the Company's unaudited net assets as at 30 April 2018 were £122m). For the last financial year the Company's ongoing charge was 2.15% of which investment management costs represented 1.86¹%.

Overview of proposals received

- A significant number of highly credible organisations have submitted a range of proposals. Virtually all are from 'household names' in the asset management industry

- Management fees proposed range from 0.35% to 0.83% of Net Assets*. No party has proposed a performance fee. The Board believes that a performance fee might in future encourage inappropriate use of leverage at the latter stages of a credit cycle and thus removing this possible incentive is in the interests of shareholders

- Every proposal received would result in lower management costs than those currently incurred by the Company and indeed almost all the fee proposals are lower than those that the Board thought it had agreed with Invesco before their sudden resignation.

- As shareholders are aware the Board had been seeking to renegotiate management terms with Invesco. In fact it was informed in writing in April that Invesco had agreed to improved fee terms. This makes their subsequent resignation all the more disappointing. The agreed terms would have removed the performance fee and reduced the blended annual rate to 0.77%*. Note that this reduced fee is still slightly higher than virtually all of the fees quoted by alternative managers

- As reported in the recent interim report the Board is currently cautious about prospective returns from high yield bond markets. Therefore it is important that base fees are competitive and limit the reduction in shareholder returns to a more reasonable level

- A further consequence of lower fees offered by prospective managers is that dividend cover could potentially be fully restored and a positive contribution to reserves restarted, improving the long term sustainability of the yield the Company offers

- Many of the proposals include fee waivers or direct cost contributions to offset or partially offset costs that would arise from any transition to a new manager. They also include interesting investment proposals that would give the Company the flexibility to adapt to a changing fixed income landscape if so desired

- A preliminary review of 5-year performance suggests that, when measured on a like for like basis against IPE's unleveraged performance, IPE's historic performance is at approximately the mid-point of the performances quoted in the proposals. Leverage has been an important influence in enhancing IPE's historic performance

- Most of the managers that submitted proposals have significant experience with listed closed-ended investment companies

The Board intends to progress the process of appointing a new manager, and notwithstanding their previously indicated refusal to participate in an open and competitive process, the Board would consider a revised fee proposal from Invesco in the context of a withdrawal of the requisition notice.

Whilst further investigation is needed of all the proposals submitted, the Board notes that four proposals in particular merit further investigation. A summary is included in the following table:

* on basis of unaudited net assets of the Company as at 30 April 2018 of £122m.

¹ Management fees and Performance fees for the financial year 2017 were each £1,018,000, or 0.93%

² All UK AUM

³ Total AUM

Source: Submissions received by J.P. Morgan Cazenove on behalf of the Company.

Summary and Next Steps

The Board believes the responses received fully vindicate its position that significantly more attractive management terms are available in the market from managers of comparable quality and standing to Invesco. Of course, the Board is conscious that cost is not the only consideration and that a qualitative assessment is needed. In making that assessment, the expertise of the Chairman of the Management Engagement Committee (who was named in the requisition) is particularly important in securing the best outcome for all shareholders. He has 25 years of experience in fixed income investment management.

The Invesco-led requisition has been served against the Board Chairman who is retiring at or before the next AGM and the one Board member with extensive experience as a practitioner in fixed income investment management. The Board therefore considers the requisition to be particularly unhelpful.

In the light of these responses, the Board intends to consult further with shareholders as to their views on the requisition and determine the appropriate course of action in the best interests of all the shareholders of the Company.

Enquiries:

William Simmonds

J.P. Morgan Cazenove

02077424000

Ed Berry

02037271046

Tom Blackwell

020 3727 1051

FTI Consulting

Hilary Jones

R&H Fund Services (Jersey) Ltd

Company Secretary