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31 August 2005   

STAR Capital Partners announces sale of its investment in gas pipeline business to the Challenger Infrastructure Fund for €681 million

STAR Capital Partners (“STAR”) announces the sale of Inexus, the UK’s leading independent gas transportation company to the Challenger Infrastructure Fund for an enterprise value of £465 million (€681 million). The sale is the first realisation from its STAR 1 portfolio which focuses in the main on investing in and developing capital intensive and asset based investment opportunities.

Inexus (the “Company”) is the leader in sourcing and developing “last mile” utility connections. The Company designs, constructs, owns, operates and maintains gas and electricity networks throughout the UK and focuses primarily on the domestic new build market.

Since STAR acquired Inexus in August 2001, the number of connections installed and contracted by Inexus has grown from 135,000 to over 450,000 today, an increase in market share from approximately 35 per cent to 47 per cent. The business reported revenues of £22.9 million and EBITDA of £16.2 million in 2004. This growth has created significant value.

Until 2004, Inexus focused on gas only connections but has recently established itself as the first UK licensed, fully industry-accredited and operational independent electricity distribution network operator. Considerable growth is expected to be generated from this new line of business.

Commenting on the realisation:


Stephen Wright, Managing Director of STAR Capital said:

“Inexus is an excellent example of STAR’s strategy of investing in asset-based businesses with low downside risk and growth potential. The management and employees of Inexus have consistently outperformed our expectations. Inexus has been an extremely successful investment for us and we wish all those at the Company well under its new ownership.”


Philip Gibb, Chief Executive Officer of Inexus, added:

"The past four years have been a period of great achievement for Inexus and we have grown substantially in terms of market share and subsequent connections. The company is ideally placed for the next stage of its development. This is a compliment to all employees of the company. STAR has been a valuable and highly supportive partner during our time under its ownership. We look forward to delivering similar success to the Challenger Infrastructure Fund."


Tony Mallin, CEO of STAR Capital, added

“We are delighted with the outcome of our first realisation from STAR I. This is proof that our differentiated investment strategy works. We hope that our high quality portfolio and exciting deal pipeline will continue to produce good risk-adjusted returns for our existing and future Investors.”


Steven Bickerton, CEO of CIF, said:

“We believe this is an outstanding infrastructure asset and we are particularly pleased with management’s decision to invest over £12 million of their own money into Inexus. This is a strong endorsement of their belief in Inexus’ growth potential and reflects a strong alignment of interests between management and the consortium.”


N M Rothschild & Sons Limited acted as financial adviser to STAR in the transaction. Hawkpoint advised Inexus in relation to the March 2005 refinancing.


Challenger Management Services Limited and Macquarie Bank Limited acted as financial advisor to the Challenger Infrastructure Fund.


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