2003 State of the Market Report Preview for Secondary Private Equity Transfers –

Below is a preview of the upcoming NYPPE State of the Market Report for 2003 which highlights several key trends that are occurring in the secondary private transfer market, as viewed by the New York Private Placement Network, LLC (“NYPPE”), a leading global private transfer agent for transferring interests in private equity partnerships and securities of private companies. Noteworthy trends for 2003 include:

1. Secondary Transfer Volume Up 60% to $4 billion. Secondary transfer volume for private equity partnership interests and securities of private companies is expected to be approximately $4 billion, an increase of 60% versus $2.5 billion in 2002. We believe 2003 secondary transfer volume could be higher, however, several institutions appear willing to delay large sales to 2004.

2. Delinquent Capital Calls Increase and Now Include Corporations. Approximately 15% of individual investors have become delinquent or defaulted on their capital calls. In 2003, corporations increasingly became delinquent on capital calls. Most individuals become delinquent due to a decline in personal liquidity. However, an increasing number of the world’s wealthiest individuals, especially non-U.S. individuals, are intentionally becoming delinquent as they seek to reduce portfolio allocations to private equity and U.S. dollar-denominated securities. For 2004, we project that more small institutions, foundations, endowments, and pension funds will become delinquent.

3. FASB 46 Quietly Causing Sales from Publicly-Held Entities. As a result of Enron, FASB Interpretation 46 was implemented in 2003, requiring publicly-held entities to add-back to their balance sheets certain off-balance sheet special purpose entities (“SPE”) (e.g. bank and company SPE issued asset-backed securities), which has reduced capital ratios and caused the sale of non-core assets such as private equity investments. In 2004, general partners should anticipate more requests to sell interests by their publicly-held limited partners.

4. Private Company Securities Sales Increase. Institutions that have co-invested directly in securities of private companies that now wish to reduce their allocation to private equity increasingly realize they can get better price executions from sales of their private company securities, since private equity partnerships generally transfer at greater discounts to their fair market values.

5. Cross-Border Secondary Transfer Volume Increases. Secondary private equity offerings increasingly originate in one country and are privately transferred to an investor in another country. Non-U.S. countries having funds with noteworthy secondary transfer volumes, on either the buy or sell side in 2003, include the United Kingdom, France, Switzerland, Israel, Canada, Germany, Japan, Abu-Dhabi, China, Egypt, Brazil, and Argentina.

6. Limited Partners Increasingly Utilize Secondary Market Price Information to Differentiate Value Among Funds. Limited partners increasingly request historical price information about a fund’s secondary transfers as part of their due diligence when considering whether to invest. This also indicates that institutions are increasingly concerned about the impact of a future portfolio rebalancing. Funds that provide greater disclosure generally transfer at higher percentages of stated net asset value (“NAV”).

7. Tier 1 LBO Funds Transferring at 100% of NAV. For the prior six-month period, Tier 1 LBO funds (e.g. LBO funds judged by NYPPE as having maximum secondary investor demand for their interests) have increasingly transferred at approximately 100% or more of their stated net asset values.

For a copy of the NYPPE 2003 State of the Market Report, or to independently value or transfer your private equity holdings, please contact either:

Laurence G. AllenDexter B. Blake III

Managing MemberManaging Director

203-422-5000 x201 203-422-5000 x204

lallen@nyppe.com dblake@nyppe.com