Private Equity

Legal & General Ventures Limited (LGV) specialises in mid-market buy-outs of UK companies with an enterprise value of between £50 million and £250 million in three principal sectors: consumer, leisure and services. The current limited partnership agreement prohibits investment in any US entities and in any entity principally involved in the business of tobacco, derivatives, casinos or gambling, other than casinos or gambling businesses which are licensed by the United Kingdom Gaming Board or equivalent body in other major European countries.

Management of social and environmental risk

Extensive due diligence is performed prior to investment, mainly covering financial, market, management and environmental due diligence. LGV is generally represented on the boards of companies in the portfolio and is in regular contact with management teams, which enables LGV to monitor the emergence of any potential social or environmental risk and to encourage good practice in the companies in which LGV invests.

Achievements in 2006

During 2006 all portfolio companies were given information regarding The Carbon Trust. In October 2006, at least one representative from each portfolio company attended a presentation by Energy 2000 on the opportunities available with regard to improving fuel efficiency. As a result, at least one company is undertaking a review to see whether any fuel efficiency savings can be made.

Guidelines for standards required by LGV when making a significant investment in a company

When making an investment in a company, LGV will commission expert external consultants to prepare due diligence reports covering all the major risks usually including environmental, legal and commercial aspects of the business.

These will cover such areas as:

• Conformity with the relevant country’s environmental legislation
• Investigation as to whether there have been any pollution incidents/environmental fines incurred
• Conformity with the relevant country’s health and safety legislation
• Investigation as to any customer service/brand management issues
• Investigation as to any exposure to litigation.

LGV will study the reports produced by these consultants and use the information provided when making its investment decision.

On an ongoing basis, LGV expects the companies in which it invests to conform strictly to all laws applying in the countries in which they operate. In most cases, where LGV managed funds hold a significant proportion of the equity, LGV will appoint at least one director to the board. It will form part of the directors’ responsibilities to ensure that all appropriate legislation is followed.