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NICK LANGFORD Head of Corporate Advisers, Equity Primary Markets February 2008

NICK LANGFORD Head of Corporate Advisers, Equity Primary Markets February 2008. Supplying innovation – Specialist Fund Market. Driven by the need to supply market choice Main Market – widest audience including general retail AIM – ‘plain vanilla’ funds

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NICK LANGFORD Head of Corporate Advisers, Equity Primary Markets February 2008

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  1. NICK LANGFORDHead of Corporate Advisers, Equity Primary MarketsFebruary 2008

  2. Supplying innovation – Specialist Fund Market • Driven by the need to supply market choice • Main Market – widest audience including general retail • AIM – ‘plain vanilla’ funds • Specialist Fund Market – larger, more sophisticated propositions and associated audience • Driven by the increasing demand for alternatives • Global demographics – ageing investors • Emerging investor wealth – China, India, etc.. • Increasing allocations to alternatives – not going away! • Where can market participants meet? • Quality venue required! Specialist Fund Market – provides a London-based capital markets venue

  3. Designed to accommodate Meeting the demand • Single-strategy hedge funds • Multi-strategy hedge funds • Fund of hedge funds • Private equity funds • Property investment funds • Infrastructure funds • Sophisticated legal structures and security types The world’s first public equity market designed to meet the specific needs of sophisticated investment managers and sophisticated investors NOTE: The Specialist Fund Market does not accept trading companies

  4. Full list of features and benefits Key benefits of the Specialist Fund Market Public capital market dedicated to your needs Access to Europe’s deepest pool of capital Cachet and profile of a London quotation Flexibility of an EU-regulated market No domicile restrictions Access to efficient trading - TradElect Regulated by the Financial Services Authority Regulated market for UCITS Directive Ability to tailor your prospectus to investor needs Accepts sophisticated structures and/or securities

  5. Summary… Permanent capital Supporting longer term investment strategies Ability to target investors across the EU Wide & diversified investor base Access to Europe’s deepest capital pool Globally-based institutional investor base Liquidity ‘Mark to market’ valuation An investor entrance/exit route Profile raising Enhanced credibility – building track record Quotation on a regulated market in London

  6. Not suitable where.. Suitable where.. • A public offer to a wide investment audience in the UK including retail investors is sought • Participation in the FTSE UK Series of indices is sought • Index trackers and benchmarked fund exposure is sought • Access to ISA and PEP portfolios is sought • Complex structures and securities are involved, e.g. LPs, PCCs, non-voting shares • The investment manager lacks a public track record • There is limited risk diversification – single strategies, emerging market assets, feeder funds, etc. • There is an unusual governance structure in place • There is no requirement to appoint a sponsor • Flexibility to adapt the investment policy is required • Straightforward financial disclosures suffice Consider… NOTE: Specialist Fund Market is ONLY FOR INVESTMENT ENTITIES

  7. Specialist Fund Market admission process • Regulated Market – UKLA approve prospectus • Admission to market is dependent on compliance with the London Stock Exchange’s Admission and Disclosure Standards • Transferable securities must be freely negotiable

  8. Regulatory overview – comparison of regimes Note: the FSA is currently consulting on its proposals to create a unitary regime for listing investment entities on the Main Market via Chapter 15 of the Listing Rules. The FSA expects the new regime to be effective from March ’08 at which time, Chapter 14 (currently open to non-UK domiciled investment entities) will be closed to new applicants

  9. Trading Specialist Fund Market securities will be admitted to specific segments on the SETS and SETSqx trading services. See below: Further details on trading systems and eligibility requirements can be accessed at: http://www.londonstockexchange.com/tradingmechanisms

  10. Key timings • The Specialist Fund Market opened for new admissions from the 1st November 2007 • The FSA is cuurently reviewing prospectuses for approval • For information please visit our dedicated website: www.londonstockexchange.com/specialistfundmarket

  11. ….and why choose London? • London: the world’s capital market: • The leading global financial centre • 255 foreign banks based in London • 3 out of 4 leading law firms based in London • 42% of global foreign equity trading • 36% of global derivatives turnover • 32% of global turnover in foreign exchange • A central time-zone 70 yrs’ experience with investment entities 572 quoted funds capitalised at over £130bn ($264bn) c.80% European hedge funds managed here Institutional funds up 40% in London over last 10yrs Supported by an intelligent approach to regulation, a network of specialist advisers and one of the world’s most efficient, global public capital markets Sources: London Stock Exchange statistics (July 2007) and The City – UK Financial Services (May 2007)

  12. Nick Langford Head of Corporate Advisers, Equity Primary Markets +44 20 7797 3403 nlangford@londonstockexchange.com www.londonstockexchange.com

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