Quarterly Results as of June 30, 2004

Private Equity Holding has seen an encouraging start of its financial year 2004/2005 and can report a profit of EUR 0.8 million for the first quarter. The main positive contributor to this result were gains on realized private equity investments of EUR 3.2 million, which more than outweighed write-downs on the portfolio of EUR 1.1 million. In the same period, the fair value per share increased from EUR 33.44 to EUR 34.19.
Total long-term assets remained steady at EUR 147.8 million in the reporting period. Trading securities decreased from EUR 4.4 million as of March 31, 2004 to EUR 1.1 million as of June 30, 2004 mainly due to the sale of Oscient Pharmaceuticals shares received from the investment in Genesoft. Following capital calls during the quarter, outstanding commitments further declined to EUR 15.7 million. Total commitments stood at EUR 224.9 million as of June 30, 2004.
Venture Strategy
The Board of Directors of Private Equity Holding mandated the management team to implement the new venture strategy. New fund and direct investment opportunities, sourced by active market mapping and screening, combined with information gleaned from existing fund relationships and referrals, are evaluated continuously; new investments, however, are only made on a very selective basis, preferably in the secondary market and at prices which generate immediate value for the company and its shareholders. The venture capital deal flow, led mainly by the US and Israeli markets, shows strong signs of improvement.
New Investments
In line with the new venture strategy, Private Equity Holding acquired a secondary investment in the life science fund BB Bioventures, LP, for USD 0.6 million. BB Bioventures, LP was launched in 1997 with USD 205 million of committed capital and is advised by MPM Capital, one of the best life science teams in the US. The fund is considered to have excellent future potential. The remaining portfolio has 14 investments, including Idenix, which had a successful IPO in July 2004, raising USD 64.4 million from the public with a concurrent investment by Novartis of USD 75.6 million. The fund is fully invested and is in an active realization phase.
A new secondary direct investment in iolon, Inc., a California-based designer and manufacturer of tunable optical devices, was closed in June. Private Equity Holding negotiated the purchase of a stake in the company for a purchase price of USD 1.0 million at a significant discount to iolon's value implied by a new financing round completed in July. Private Equity Holding invested an additional USD 0.7 million in the new follow-on financing round; as a result of the purchase and the follow-on financing, Private Equity Holding now holds a 7.1% stake in iolon, Inc. This investment has a compelling risk profile and is projected to generate positive returns.
* * *
The 2003/2004 Annual Report is available electronically on the company's website www.peh.ch. Single copies can be obtained from Investor Relations.
The Quarterly Report as of June 30, 2004 is available on our website at www.peh.ch from August 3, 2004.
* * *
Private Equity Holding AG (SWX: PEHN), managed by ALPHA Associates, offers investors the opportunity to invest, within a simple legal and tax optimized structure, in a broadly diversified and professionally managed private equity portfolio. For further information: www.peh.ch or Tamara Krebs, Investor Relations and Communications (phone +41 41 726 79 80).