QUARTERLY REPORT Q3 2011 - Datahotel

PEARL HOLDING LIMITED

QUARTERLY REPORT Q3 2011Unaudited financial statements for the periodfrom 1 July 2011 to 30 September 2011

Karin Hallin Head São Paolo, Roy Baumann and Claudia Petersen Private Equity Investments

PEARL HOLDING LIMITED

Pearl Holding Limited (Pearl, Company) is a Guernsey-registered private equity investmentcompany. Pearl Holding’s convertible bond enables institutional and private investors to parti-cipate in a professionally managed, broadly diversified portfolio of investments in direct invest-ments, private equity partnerships and listed private equity vehicles. Since inception in Sep-tember 2000, EUR 660 million has been raised in three closings. The redemption amount (108%of the nominal amount) of the bond as well as the annual coupon of 2% are insured until ma-turity on 30 September 2014 under an arrangement with European International ReinsuranceCompany, a wholly-owned subsidiary of Swiss Re. The convertible bond, which is eligible forthe investment of prime stock reserves in Germany, has been given an AA- rating by Standard& Poor’s.

This document is not intended to be an investment advertisement or sales instrument; it constitutes neither an offer nor an attempt to solicit offers for theproduct described herein. This report was prepared using financial information contained in the Company’s books and records as of the reporting date. Thisinformation is believed to be accurate but has not been audited by any third party. This report describes past performance, which may not be indicative offuture results. The Company does not accept any liability for actions taken on the basis of the information provided.

PEARL HOLDING L IMITED2

QUARTERLY REPORT Q3 2011

TABLE OF CONTENTS

Key figures 41Investment Manager's report 52Private equity market environment 83Portfolio composition 124Portfolio transactions 145Largest portfolio holdings 156Structural overview 187Facts and figures 198Unaudited financial statements 219

3

KEY FIGURES1.

30 JUNE 201130 SEPTEMBER 2011IN EUR

104.08%104.74%Net asset value (NAV)

21.50%22.00%Accrued and paid interest since inception

125.58%126.74%Theoretical NAV (if no interest accrued andpaid to date)

96.50%98.00%Mid-market price

-7.28%-6.43%(Discount)/Premium to NAV

28'538'76514'847'257Net liquidity

35'000'00035'000'000Use of credit facility

658'392'398676'439'560Value of investments

164'052'922158'963'187Undrawn commitments

95.85%97.85%Investment level

19.73%20.85%Overcommitment level

9.54%10.72%Overcommitment level (incl. credit line)



NAV of Pearl remains stable during thirdquarter

Continuing in the positive vein of the previoustwo quarters, Pearl Holding Limited again re-corded an increase, albeit marginal, in the netasset value (NAV) for the reporting period.The NAV increased by 0.6% to 104.74% perconvertible bond in the third quarter. Thisamounts to a performance gain of 4.7% sincethe beginning of the year.

The majority of the underlying portfolio com-panies continued to post positive performancefigures during the reporting period. So farthey have managed to maintain sales andmargins despite signs of weakening economicmomentum. Past experience has shown thatchanges in the economic environment gene-rally have a delayed impact on the companies.In this respect, and in view of the market de-velopments in the third quarter, the Invest-ment Manager felt compelled to take pre-emptive measures by making certain valuationadjustments in the portfolio. Foreign-exchange

developments, by contrast, had a positiveimpact on the NAV of Pearl during the repor-ting period, as the US dollar strengthenedagainst the euro.

Mid-market price of Pearl edges upward

The mid-market price of the Pearl convertiblebond edged upward in the third quarter tostand at 98.00% as of the end of September,a gain of 1.6% over the end of June.

Environment remains conducive to exits

Despite financial markets becoming increasin-gly nervous, the environment remained con-ducive to making investments and exits in thethird quarter. However, increasing uncertaintymeant that initial public offerings (IPOs) beca-me a less attractive exit route. Merger andacquisition (M&A) activity was dominated bysales to strategic investors (trade sales),which accounted for around 50% of all tran-

INVESTMENT MANAGER'S REPORT2.

NAV AND PRICE DEVELOPMENT

Source: Partners Group AG / Deka Bank

5

saction activity, according to data frommarketresearch firm Preqin.

Pearl received EUR 25.7 million in distributionsin the reporting period, slightly less than inthe past two quarters. Pearl received distribu-tion proceeds from, among others, one of thefew successful IPOs that were brought tomarket in the third quarter. Dunkin’ BrandsGroup, a quick-service restaurant franchisor,in which Pearl was invested through CarlylePartners IV, raised USD 423 million in its IPOon the NASDAQ on 27 July 2011. The offeringprice was set at USD 19.00 per share. Theshare price rose 47% in its first day of trading,giving Dunkin’ Brands a market capitalizationof around USD 3.5 billion. Its share price clo-sed at USD 27.70 on 30 September 2011, stillrepresenting a gain of around 46% for thequarter. Thus, Dunkin’ Brands managed tobuck the downward trend on the equity mar-kets.

Pearl also received proceeds from a trade salein which JP Morgan Partners Global Investorssold CareMore, a provider of health plans andservices for senior citizens, to WellPoint. Sinceinvesting in the company in 2006, the invest-ment partner had worked closely with CareMo-re's management team to implement thecompany's growth plans, expanding its clientbase from 20'000 to 50'000 and doubling itsEBITDA. CareMore was sold to WellPoint foraround USD 800 million, generating a returnof about 5x its invested capital.

Conversely, Pearl received a total of EUR 16.1million in capital calls in the reporting period.Providence Equity Partners VI, for example,called capital from Pearl for the takeover ofBlackboard Inc. Headquartered in Washington,D.C., Blackboard is primarily known as a de-veloper of educational software. ProvidenceEquity Partners paid USD 45.00 per share incash for Blackboard, valuing the transactionat around USD 1.64 billion. Providence EquityPartners, a proven investor in the education

sector, aims to leverage its know-how andexperience for the benefit of Blackboard, andthus drive the company forward.

Pearl also received a capital call from 3i Euro-fund Vb relating to its acquisition of a minoritystake in TouchTunes Interactive Networks forUSD 40 million. The company is an operatorof digital jukeboxes, which can be foundthroughout the United States. TouchTuneshas grown strongly in recent years. 3i plansto support the management team in implemen-ting its global expansion strategy.

Credit facility to support liquiditymanagement

Since September 2009, Pearl has had a creditfacility at its disposal to offset any imbalancesbetween capital calls and distributions. As of30 September 2011, Pearl had drawn downEUR 35 million of the credit line. Pearl madeno new commitments during the reportingperiod.

Cautiously optimistic outlook

The Investment Manager to Pearl does notanticipate that public markets will calm downuntil credible and sustainable solutions to thecontinuing macroeconomic challenges, forexample unbalanced government budgets,can be found.

Underlying the Pearl convertible bond is amature and broadly diversified private equityportfolio with EUR 159 million in undrawncommitments as of 30 September 2011. Thisfigure includes commitments to funds withmore mature vintages, i.e. from the year 2004and older. These funds have come to the endof their investment period and therefore it canbe assumed that the undrawn capital commit-ments are unlikely to still be called. Alsoworthy of note here is Pearl's solid cash-flowsituation. As in the previous two quarters,Pearl was again net cash-flow positive in the



reporting period. This means that capital dis-tributions were higher than capital calls forthe portfolio. The continuing, stable level ofdistributions in the current environment andthe healthy level of as yet undrawn commit-ments show the advantageous position ofPearl.

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Global economic growth weakens

Downside risks to the world economy increa-sed during the third quarter, with the financialturbulence in the euro zone and a low econo-mic growth scenario facing the advancedeconomies remaining largely unresolved.

In the United States, the world's largest eco-nomy, several obstacles are constraininggrowth. Weakened consumer and businessconfidence as a result of the credit ratingdowngrade that followed the protracted reso-lution of the debt ceiling debate, coupled witha weak housing market and persistently highunemployment, are making sustainable eco-nomic growth difficult to achieve. Nonetheless,at the end of the quarter macroeconomic indi-cators have pointed to a tentative improve-ment in conditions. Retail sales, manufactu-ring activity and even job growth have allsurprised on the upside. This may reduce therisk of a double-dip recession in the UnitedStates.

Meanwhile, the sovereign debt crisis of Euro-pe’s peripheral economies weighed on globalfinancial markets in the third quarter, as therisk of contagion remained pronounced. Theregion’s financial system has been under signi-ficant pressure, as certain European bankshold significant sovereign debt exposures thatrequire larger haircuts than had been assu-med. This may result in another round of ca-pital-raising for European banks.

The structural problems facing crisis-hit advan-ced countries are likely to result in weakergrowth for these economies. According to theInternational Monetary Fund (IMF), real grossdomestic product (GDP) in the advanced eco-

nomies is forecast to grow at a pace of just1.6% in 2011, down from 3.1% in 2010.

In the emerging economies, domestic de-mand-driven inflationary risks remain, whileweakness in the advanced economies posesan external threat. Central banks in emergingeconomies are on alert for a slowdown in theglobal economy and have been adopting amore neutral policy stance. In some cases,monetary policy has been eased, for instance,in August Brazil lowered its benchmark rateby 50 basis points to 12%.

Reflecting these uncertainties, the IMF hasrecently revised down its projections, estima-ting that global growth will moderate to 4.0%for 2011 - compared to its earlier estimate of4.3% in June 2011 - and a slowdown fromthe 5.1% growth achieved in 2010.

M&A activity eased in the third quarter

Following a very strong second quarter forcorporate finance transactions, the value ofannounced merger and acquisition (M&A)deals in the third quarter reached USD 516billion, according to data from Bloomberg.This represents a decline of 20.4% from thesecond quarter and is 12.4% less than thesame quarter last year, reflecting heighteneduncertainty surrounding the global economy,increased volatility in the financial marketsand fading corporate confidence. Across geo-graphical regions, the results were mixed.M&A activity was up 10.7% and 4.3% year-on-year, respectively, in the United Statesand Asia, while European M&A fell 34.6%owing to the sovereign debt crisis. M&A activi-ty in Latin America contracted by more thanhalf.

PRIVATE EQUITY MARKET ENVIRONMENT3.



The fundamental factors for strong and heal-thy deal-making are still in place: strong cor-porate balance sheets, ample funding (at leastfor investment-grade companies) and theneed to deliver growth in a challenging macroenvironment. These factors drove deal-makingin the previous quarter and will do so againwhen stability returns to the markets.

Private equity investment activity slowsdown

Private equity investment activity weakenedin value terms during the quarter, mirroringthe decline in overall M&A activity. While thenumber of private equity-backed M&A dealsnearly doubled from the same quarter lastyear (to 1'500 deals), the combined value fellby 20.0% to USD 74 billion, according toBloomberg data.

In the United States, private equity-relatedtransactions were essentially flat on a year-on-year basis, totaling USD 38 billion. Deal-making activity was constrained by the wea-kened US economy and the heightened vola-tility in the financial markets. On the otherhand, high-quality assets continued to befairly sought after by investors, which provi-ded a level of support to deal flow. For instan-ce, Kinetic Concepts was sold to a consortiumcomprising Apax Partners, CPP InvestmentBoard and the Public Sector Pension Invest-ment Board in a USD 6.3 billion buyout.

Private equity-led transactions in Europeamounted to USD 15 billion, a decline of50.7% from the same quarter last year. Thesovereign debt crisis in the euro zone led todeals being delayed as banks become morereluctant to provide debt financing, unless onmore expensive terms. For example, Permirawithdrew its planned USD 1.2 billion sale ofALL3MEDIA, while Schneider Electric had at-tracted private equity interest over its plannedUSD 1.4 billion sale of its US division, whichhas since been deferred.

In contrast, investment activity in Asia re-mains positive as the outlook for the region’seconomies is relatively stable. Private equityinvestments in Asia rose during the quarterto USD 11 billion. Higher domestic consumpti-on, the opening-up of financial markets andgreater economic diversification have allowedthe emerging markets to be somewhat lessdependent on the developed markets forgrowth.

Overall, there was a notable slowdown in lar-ge-cap deal flow. Activity in this segmentweakened significantly towards the latter halfof the quarter as market volatility increasedand the European debt situation worsened.Large-cap deal activity in particular droppedsharply in Europe as banks became increasin-gly reluctant to provide debt financing forlarger buyouts. Small- and mid-cap deals havebeen affected to a lesser extent by the tighteravailability of debt financing, reflecting themore conservative leverage typically employ-ed in smaller deals.

Exit activity loses momentum

The uncertainties surrounding the global eco-nomy and the volatile financial markets haveled to potential exits being delayed or cancel-led. According to Preqin, there were a total of254 private equity exits valued at over USD56 billion in the third quarter, down by morethan a half from the USD 120 billion achievedin the second quarter.

While exit activity has slowed, it is importantto note that it had reached record levels inthe second quarter. The increase in exit flowhad started in late 2010, with private equityfirms capitalizing on the robust market condi-tions to exit deals completed during the 2007boom. Nonetheless, several sizeable exitswere completed by private equity firms in thethird quarter. These included The CarlyleGroup’s USD 3.0 billion sale of Insight Com-munications to Time Warner Cable as well as

9

General Atlantic and Hellman & Friedman’sUSD 3.0 billion sale of Emdeon, a US medicaldata services provider, to Blackstone Group.Global initial public offering (IPO) activity slo-wed in the third quarter of 2011 as valuationsfor companies declined amid increased volati-lity in financial markets. According to Ernst &Young, there were a total of 284 IPOs raisingUSD 29 billion in the quarter, a drop of morethan 50% in funds raised from the secondquarter. Asia dominated global IPO activity,accounting for nearly half of all proceeds rai-sed during the quarter, which reflects the re-latively more stable markets in the region.Private equity-backed IPO activity declined inline with the overall IPO volumes. During thethird quarter, private equity firms exited 21companies via IPOs, raising USD 3 billion. Thiswas more than a 50% decline in volume,while funds raised fell by more than 80% fromthe preceding quarter. Notwithstanding thevolatile market conditions and weak IPOnumbers, the largest private equity-backedIPO during the period was also a very success-ful one. Dunkin' Brands Group, the US-basedfranchisor of quick-service restaurants, whichis held by The Carlyle Group, Bain Capital andThomas H. Lee Partners, raised USD 423 mil-lion in a NASDAQ listing early in the thirdquarter. The shares were priced above theexpected range, had a strong first-day gainand have broadly maintained this valuationsince.

Secondary buyout activity moderated in linewith the broader drop in exit activity. Thelong-term dynamics for secondary buyoutsremain intact, with private equity firms beingunder increasing pressure to invest the capitalthat was raised before the financial crisis. Ac-cording to Preqin, there were 87 secondarybuyouts with a total value of USD 17 billionin the third quarter, the value of deals beingone-third lower than in the preceding quarter.However, despite the sequential slowdown,the quarter still represents one of the stron-gest periods for secondary buyouts since the

collapse of Lehman Brothers. One of the lar-gest secondary buyouts during the quarterwas The Carlyle Group’s USD 2.6 billion saleof Com Hem, the largest cable televisionoperator in Sweden, to BC Partners.

Private equity fundraising declines amideconomic uncertainty

For the quarter ended 30 September, a totalof 97 buyout funds raised nearly USD 45 billi-on, down from the USD 83 billion raised by175 funds in the preceding quarter, accordingto data from Preqin. The various macro andmarket headwinds led to private equity inves-tors adopting a selective approach while wai-ting for a clearer economic outlook. On theother hand, the average time spent to closefunds (as of 30 September) was 17 months,down from the average of 20 months for2010. Compared to the previous year, thereis a positive upward momentum for fundrai-sing activity in 2011.

Across geographical regions, funds focusingon North America raised the most capital inthe third quarter, with 37 funds raising USD23 billion. This was followed by funds targe-ting investments in Asia/Rest of World (ROW),which raised an aggregate USD 11 billion via32 vehicles. Europe-focused funds raised asimilar amount, with USD 11 billion collectedacross 28 funds.

Although the recent market uncertainty anddeclines in deal flow have had an impact onthe investment plans of private equity inves-tors in the near term, there has been littlechange in plans for investing over the next12-18 months. There are currently more than1'700 funds on the road, seeking to raisemore than USD 700 billion, and the fundrai-sing environment remains highly competitive.



Outlook

Although macro events have impacted theglobal economy, measures are being taken toaddress these concerns. The concerted effortsof Europe’s "Troika" to contain the sovereigndebt crisis, along with the proposed job crea-tion package in the United States, are aimedat reducing the risk of a double-dip scenariofor the world economy. Emerging economiesenjoy the relative luxury of having monetarytools available to combat a slowdown by wayof relaxing policies that have been tightenedover the past quarters.

In the private equity market environment, thepast sell-down in the financial markets willcreate new investment opportunities whenmarkets stabilize. While IPO activity has beenstifled due to market volatility, trade salesand secondary buyouts remain viable exitavenues, assuming financing is available.Supporting this view are corporate balancesheets flush with cash, low interest rates andprivate equity funds that are under pressureto deploy capital. On the whole, while conditi-ons in the wider economies are challenging,high-quality assets continue to resonate withinvestors, especially in the small- and mid-cap deal segments where the use of leverageis less prominent.

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PORTFOLIO COMPOSITION4.

INVESTMENTS BY REGIONAL FOCUSINVESTMENTS BY FINANCING STAGEAsia-Pacific2%Rest of

World 4%

Europe43%

NorthAmerica51%

Specialsituations

11%

Venturecapital20%

Buyout69%

INVESTMENTS BY INDUSTRY SECTORINVESTMENTS BY TRANSACTION TYPE

Materials6%Financial

10%

Consumerstaples5%

IT 14%

Energy3%

Healthcare 17%

Tele-com 3%

Industrial19%

Utilities1%

Consumerdiscr.22%

Sec-ondary7%

Direct 8%

Primary85%

INVESTMENTS BY INVESTMENT YEAR

20113%

20108%

20098%

200813%

200723%

200618%

200511%

20049%

20034%

20021%

20012%



NAV PERFORMANCE ATTRIBUTION IN 2011

INVESTMENTS AND DISTRIBUTIONS

"Investments" refers to the value of private equity investments.

The above allocations are provided for additional investor information only and do not necessarily constitute nor are necessarily managed as separatereportable segments by the Investment Advisor and Company.

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Selected investments

3i Eurofund Vb / TouchTunes InteractiveNetworks

■

In August, Pearl received a capital call from 3iEurofund Vb which bought a USD 40 millionminority stake in TouchTunes InteractiveNetworks. TouchTunes is an out-of-home en-tertainment provider, with a network of digitaljukeboxes across the US. The company recent-ly unveiled Virtuo, a smart jukebox that offersadvanced music, technology and advertisingcapabilities. TouchTunes has experienced si-gnificant growth over the past few years, and3i plans to network to support TouchTunes’management team in growing the businessglobally.

Providence Equity Partners VI / BlackboardInc.

■

In September, Providence Equity Partners VIcalled capital from Pearl for the takeover ofBlackboard Inc. Headquartered in Washington,D.C., Blackboard is primarily known as a de-veloper of educational software. ProvidenceEquity Partners paid USD 45.00 per share incash for Blackboard, valuing the transactionat around USD 1.64 billion. Providence EquityPartners, a proven investor in the educationsector, aims to leverage its know-how andexperience for the benefit of Blackboard, andthus drive the company forward.

Selected exits

Carlyle Partners IV / Dunkin' Brands Group■

On 27 July, Pearl participated in the initialpublic offering (IPO) of Dunkin’ Brands Group,in which Pearl acquired a stake through Carly-le Partners IV. Dunkin’ Brands raised USD 423million after pricing its IPO on the NASDAQat USD 19.00 per share, well above the pricerange set by its underwriters. On the first dayof trading, its shares rose by 47%, correspon-ding to a market capitalization of approxima-tely USD 3.5 billion. Dunkin’ Brands, whichfranchises restaurants under the Dunkin’ Do-nuts and Baskin-Robbins brands operates anearly 100% franchised business model withover 16'000 points of distributions in 57countries and has a market leading positionin Japan and South Korea.

JP Morgan Partners Global Investors /CareMore

■

In September, Pearl received a distributionfrom the sale of CareMore by JP MorganPartners Global Investors to WellPoint, a lea-ding health insurer in the US. CareMore provi-des health plans for senior citizens. Followingthe initial investment in 2006, the investmentpartner worked with CareMore’s managementto execute the company’s growth plan. As aresult, the company successfully increased itscustomer base from 20'000 to 50'000 anddoubled its EBITDA. WellPoint bought CareMo-re for approximately USD 800 million, genera-ting a return of about 5.0x the investmentcost for the fund.

PORTFOLIO TRANSACTIONS5.



LARGEST PORTFOLIO HOLDINGS6for the period ended 30 September 2011 (in EUR)

Sinceinception

ContributionsTotalcommitments

VintageyearRegional focusFinancing stageType of

investmentInvestment

n.a.3'156'0732007EuropeBuyoutDirectAHT Cooling Systems GmbH

3'374'8313'374'8312004North AmericaBuyoutDirectAMC Entertainment Inc.

2'044'7502'044'7502005North AmericaSpecial situationsDirectAOT Bedding Super Holdings LLC

3'000'0003'000'0002006EuropeBuyoutDirectAWAS Aviation Holding

4'000'0004'000'0002004EuropeBuyoutDirectBalta Group

n.a.n.a.2007Rest of WorldBuyoutDirectDirect marketing and sales company

n.a.n.a.2007North AmericaBuyoutDirectEducation publisher

2'739'9512'740'7992006North AmericaBuyoutDirectFreescale Semiconductor, Inc.

2'000'0002'000'0002006EuropeBuyoutDirectHealthcare operator 1

2'108'0792'107'4822007North AmericaBuyoutDirectInformation service company

n.a.n.a.2007North AmericaBuyoutDirectMeasurement machinery company

n.a.n.a.2008North AmericaBuyoutDirectMedia and communications company

n.a.n.a.2008North AmericaBuyoutDirectMedical diagnostic company

2'571'1552'571'1552005EuropeBuyoutDirectSanitec Oy

2'834'0202'834'0202005North AmericaBuyoutDirectSunGard Data Systems, Inc.

2'750'0002'750'0002004EuropeBuyoutDirectTFCP II Co-Investment 2 L.P.

2'438'4222'438'4222006North AmericaSpecial situationsDirectThe Sports Authority, Inc. - Debt

397'438425'0612006North AmericaSpecial situationsDirectThe Sports Authority, Inc. - Equity

1'783'5821'706'3682007North AmericaBuyoutDirectUnivision Communications, Inc.

n.a.n.a.2008North AmericaBuyoutDirectUS entertainment company

8'910'72910'000'0002006EuropeBuyoutPrimary3i Eurofund Vb

22'418'55823'000'0002003EuropeBuyoutPrimary3i Europartners IVc, L.P.

4'583'2747'317'1272007EuropeVenture capitalPrimaryAbingworth Bioventures V, L.P.

15'175'25716'317'4812005EuropeBuyoutPrimaryAdvent International GPE V-C, L.P.

5'637'5685'042'1892007North AmericaBuyoutPrimaryAmerican Industrial Partners Capital Fund IV, L.P.

9'383'47815'000'0002008EuropeBuyoutPrimaryAnonymized European Buyout Fund 3

n.a.n.a.2007EuropeBuyoutPrimaryAnonymized European Buyout Fund 7

11'746'18611'663'3202004North AmericaBuyoutPrimaryAnonymized US Buyout Fund 1

7'225'49611'081'9202007North AmericaBuyoutPrimaryAnonymized US Buyout Fund 16

n.a.n.a.2007North AmericaBuyoutPrimaryAnonymized US Buyout Fund 2

15'300'00015'000'0002004EuropeBuyoutPrimaryApax Europe VI-A, L.P.

13'049'40010'713'7592005North AmericaBuyoutPrimaryApollo Overseas Partners VI, L.P.

10'718'55214'661'1632008North AmericaBuyoutPrimaryApollo Overseas Partners VII, L.P.

11'066'46310'681'4502006North AmericaSpecial situationsPrimaryAres Corporate Opportunities Fund II, L.P.

15

Sinceinception




8'755'81114'456'4732008North AmericaSpecial situationsPrimaryAres Corporate Opportunities Fund III, L.P.

7'841'3918'720'4702008North AmericaBuyoutPrimaryAvista Capital Partners (Offshore) II, L.P.

12'243'79410'524'4892005North AmericaBuyoutPrimaryAvista Capital Partners (Offshore), L.P.

9'180'00010'000'0002005EuropeBuyoutPrimaryBC European Capital VIII, L.P.

7'666'5177'487'6722005North AmericaBuyoutPrimaryClayton, Dubilier & Rice Fund VII L.P.

8'955'63110'000'0002007EuropeBuyoutPrimaryCVC European Equity Partners Tandem Fund (A), L.P.

6'614'29610'000'0002006EuropeBuyoutPrimaryDoughty Hanson & Co V

26'162'03525'000'0002003EuropeBuyoutPrimaryDoughty Hanson & Co. Fund IV, L.P.

11'711'87010'000'0002004EuropeBuyoutPrimaryEQT IV, L.P.

10'445'67610'000'0002006EuropeBuyoutPrimaryEQT V, L.P.

13'215'59611'317'4812003EuropeSpecial situationsPrimaryICG Mezzanine Fund 2003 L.P. No. 1

6'058'1566'500'0002005EuropeVenture capitalPrimaryIndex Venture Partners III, L.P.

4'204'9416'000'0002007EuropeVenture capitalPrimaryIndex Ventures IV (Jersey) , L.P.

6'927'8248'964'4192006North AmericaBuyoutPrimaryIrving Place Capital Partners III, L.P.

14'865'03611'622'8512001North AmericaBuyoutPrimaryJP Morgan Partners Global Investors (Cayman), L.P.

7'320'8627'639'7282004North AmericaBuyoutPrimaryKohlberg TE Investors V, L.P.

7'398'6907'150'7142007North AmericaSpecial situationsPrimaryMatlinPatterson Global Opportunities Partners III

5'765'7087'698'4152005North AmericaVenture capitalPrimaryMenlo Ventures X, L.P.

6'205'8717'251'7882006North AmericaVenture capitalPrimaryNew Enterprise Associates 12, L.P.

7'038'3166'317'4812002EuropeBuyoutPrimaryNordic Capital V, L.P.

7'164'8687'023'5562006North AmericaSpecial situationsPrimaryOCM Principal Opportunities Fund IV, L.P.

156'350'730163'624'3271996North AmericaSpecial situationsSecondaryPartners Group SPP1 Limited

7'854'43210'000'0002006Rest of WorldBuyoutPrimaryPolish Enterprise Fund VI, L.P.

7'925'3447'022'2132005North AmericaBuyoutPrimaryProvidence Equity Partners V, L.P.

13'874'55014'780'9852007North AmericaBuyoutPrimaryProvidence Equity Partners VI, L.P.

7'290'2649'310'6652007EuropeSpecial situationsSecondaryRBS Special Opportunities Fund F, L.P.

9'664'71714'523'5132007North AmericaBuyoutPrimarySilver Lake Partners III, L.P.

9'840'9989'000'0002004EuropeVenture capitalPrimarySofinnova Capital Partners V, FCPR

7'976'2918'855'8562001North AmericaVenture capitalSecondaryT2C2 / BIO 2000, Société en Commandite

9'839'43514'247'2302007North AmericaVenture capitalPrimaryTA Atlantic & Pacific VI, L.P.

19'049'37813'500'0002002EuropeBuyoutPrimaryTerra Firma Capital Partners II, L.P.

20'837'57020'000'0002001EuropeBuyoutPrimaryThird Cinven Fund (No.4), L.P.

11'173'90014'770'2562006North AmericaBuyoutPrimaryThomas H. Lee Parallel Fund VI, L.P.

9'396'5089'396'5082005North AmericaBuyoutPrimaryWarburg Pincus Private Equity IX, L.P

11'493'00511'493'0052001North AmericaBuyoutPrimaryWarburg Pincus Private Equity VIII, L.P.



Sinceinception




11'601'98714'485'7312007North AmericaBuyoutPrimaryWarburg Pincus Private Equity X, L.P.

Some names and figures (marked "n.a.") may not be disclosed for confidentiality reasons. Furthermore, some investments have been made through PartnersGroup pooling vehicles at no additional fees. Please note that contributions may exceed total commitments due to foreign currency movements. The overviewshows the 20 largest direct investments and the 50 largest partnerships based on NAV.

17

The capital that Pearl raised through the is-suance of its convertible bond is invested inprivate equity. Pearl uses three different typesof investment forms, namely direct invest-ments, private equity partnerships and listedprivate equity vehicles. The identification andselection as well as the allocation of fundsto direct investments, partnerships and listedprivate equity vehicles are undertaken byPearl Management Limited. This company,which is also registered in Guernsey, is awholly-owned subsidiary of Partners GroupHolding AG. The redemption amount at matu-rity on 30 September 2014 (108% of the no-minal amount) of the bond is insured by Euro-pean International Reinsurance Company withPearl Management Limited being the policyhol-der. This primary insurance is reinsured atmaturity in 2014 by means of a reinsurancepolicy with Swiss Re. As such, the Pearl con-vertible bond offers the return potential

of a broadly diversified, professionally mana-ged private equity portfolio and an additional2% coupon while at the same time limitingthe downside risk through the nominal capitalprotection at maturity. The bond is rated AA-by Standard and Poor’s and is eligible for theinvestment of prime stock reserves in Germa-ny.

STRUCTURAL OVERVIEW7.



FACTS AND FIGURES8.

The principal amount of the bond is protected at maturity under insurancearrangements by Pearl Holding Limited and European International ReinsuranceCompany, and reinsured by Swiss Re.

Capital protection

1 October 2012 until 31 August 2014Conversion period

2% p.a. on 30 September of each year, until 30 September 2014Coupon

Management fee: 1.5% p.a.Insurance fee: 1.8% p.a.

Fees

EUR 100Initial conversion price

Pearl Holding Limited, GuernseyIssuer

EUR 660 millionIssue size

29 September 2000Launch date

30 September 2014Maturity

AA- rating by Standard & Poor’sRating

108%Redemption

Monthly reportQuarterly reportAnnual report

Reporting

Switzerland: 1.140.571Germany: 558.527ISIN: XS0117871698

Security numbers

Euroclear/ClearstreamSettlement

Fulfills stringent investment regulations for German investorsStatus

19

The Pearl convertible bond is listed on the Luxembourg Stock ExchangeStock Exchange



UNAUDITED FINANCIAL STATEMENTS9.

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21

Unaudited statement of comprehensive incomefor the period from 01 January 2011 to 30 September 2011

01.01.201001.07.201001.01.201101.07.2011NotesIn thousands of EUR30.09.201030.09.201030.09.201130.09.2011

85'974(12'848)63'78727'715Net income from financial assets at fairvalue through profit or loss

85'466(11'387)63'51827'120Private equity1'1001--Interest and dividend income

66'26825'13563'316(2'436)4Revaluation18'098(36'523)20229'5564Net foreign exchange gains / (losses)

983(997)16585Private debt37622548566Interest income (including PIK)527(167)(230)424Revaluation80(1'055)(239)4774Net foreign exchange gains / (losses)

(475)(464)25310Private infrastructure(475)(464)253104Revaluation

62---Net income from financial assets at fairvalue through profit or loss held for trading

62---Net income from opportunistic investments57---5Revaluation5---5Net foreign exchange gains / (losses)

50(61)158151Net income from cash and cash equivalentsand other income

215152102Interest income29(66)649Net foreign exchange gains / (losses)

86'086(12'909)63'94527'866Total net income

(24'828)(7'632)(20'711)(7'104)Operating expenses(21'769)(7'376)(20'744)(6'759)Management fees and Insurance fees(1'934)178844(129)Incentive fees(660)(224)(629)(205)Administration fees(201)(92)(152)(45)Other operating expenses(264)(118)(30)34Other net foreign exchange gains / (losses)

(24'370)2'634(25'412)(20'872)Other financial activities10(20)--Setup expenses - credit facility

(2'111)(866)(2'647)(513)Interest expense - credit facility--(314)(314)Other interest expense

(7)(3)(8)(3)Other finance cost63211'181772(12'276)Net gains / (losses) from hedging activities

(9'900)(3'300)(9'900)(3'300)Interest expense - convertible bond(363)(121)(362)(121)Amortization transaction costs

(12'631)(4'237)(12'953)(4'345)Finance cost on convertible bond

36'888(17'907)17'822(110)Surplus / (loss) for the financial period----Other comprehensive income for the period; net

of tax

36'888(17'907)17'822(110)Total comprehensive income for the period



Unaudited statement of financial positionAs at 30 September 2011

31.12.201030.09.2011NotesIn thousands of EUR

Financial assets at fair value through profit orloss

653'233665'8674Private equity12'2998'9134Private debt1'3611'6604Private infrastructure

666'893676'440Non-current assets

1'381292Other short-term receivables17'511-Hedging assets16'82457'3976Cash and cash equivalents

35'71657'689Current assets

702'609734'129TOTAL ASSETS

LIABILITIES1010Share capital

5'4295'429Share premium150'291150'291Reserves

(176'930)(159'108)Retained earnings

(21'200)(3'378)Total Equity

681'349694'6648Convertible bond

681'349694'664Liabilities falling due after one year

35'00035'000Short-term credit facilities-5'192Hedging liabilities

7'4602'651Other short-term payables

42'46042'843Liabilities falling due within one year

702'609734'129TOTAL LIABILITIES

23

Unaudited statement of changes in equityfor the period from 01 January 2011 to 30 September 2011

TotalRetainedearningsReserves

Sharepremium

SharecapitalIn thousands of EUR

(21'200)(176'930)150'2915'42910Equity at beginning of reporting period

-----Other comprehensive income for the period;net of tax

17'82217'822---Surplus / (loss) for the financial period

(3'378)(159'108)150'2915'42910Equity at end of reporting period

for the period from 01 January 2010 to 30 September 2010

TotalRetainedearningsReserves

Sharepremium

SharecapitalIn thousands of EUR

(82'879)(238'609)150'2915'42910Equity at beginning of reporting period

-----Other comprehensive income for the period;net of tax

36'88836'888---Surplus / (loss) for the financial period

(45'991)(201'721)150'2915'42910Equity at end of reporting period



Unaudited cash flow statementfor the period from 01 January 2011 to 30 September 2011

01.01.201001.01.2011NotesIn thousands of EUR30.09.201030.09.2011

Operating activities

36'88817'822Surplus / (loss) for the financial period

Adjustments:(17'948)61Net foreign exchange (gains) / losses(66'377)(63'339)Investment revaluation

6142'324Net (gain) / loss on interests363362Amortization transaction costs

12'63112'953Finance cost on convertible bond

(18'062)18'554(Increase) / decrease in receivables(2'799)399Increase / (decrease) in payables

(55'972)(44'021)4Purchase of private equity investments(2'699)(36)4Purchase of private debt investments(450)(84)4Purchase of private infrastructure investments

96'03494'9054Distributions from and proceeds from sales ofprivate equity investments

6502'7074Distributions from and proceeds from sales ofprivate debt investments

-384Distributions from and proceeds from sales ofprivate infrastructure investments

240-5Sale of opportunistic investments1'370883Interest and dividends received

(15'517)43'528Net cash from / (used in) operatingactivities

Financing activities

23'000-Increase / (decrease) in credit facilities(2'111)(2'647)Interest expense - credit facility

-(314)Interest expense on prepayments

20'889(2'961)Net cash from / (used in) financingactivities

5'37240'567Net increase / (decrease) in cash and cashequivalents

9'96416'8246Cash and cash equivalents at beginning ofreporting period

296Effects of foreign currency exchange ratechanges on cash and cash equivalents

15'36557'3976Cash and cash equivalents at end ofreporting period

25

Notes to the unaudited financial statementsfor the period from 01 January 2011 to 30 September 2011

Organization and business activity1

Pearl Holding Limited (the "Company") is a limited liability company, incorporated and domiciled in Guernsey, ChannelIslands. The Company invests in a broadly diversified portfolio of private market investments. The Company'sregistered office is Tudor House, St. Peter Port, Guernsey, GY1 1BT.

The convertible bonds of the Company are listed on the Luxembourg Stock Exchange.

Basis of preparation2

The condensed financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. Thecondensed financial statements do not include all the information and disclosures required in the annual financialstatements and should be read in conjunction with the Company's annual financial statements for the period ended31 December 2010, which have been prepared in accordance with International Financial Reporting Standards.

The accounting policies adopted in the preparation of the condensed financial statements are consistent with thosefollowed in the preparation of the Company's annual financial statements for the period ended 31 December 2010,except for the adoption of the following amendments mandatory for annual periods beginning on or after 1January 2011.

IFRS 1 - First-time adoption of International Financial Reporting StandardsIFRS 3 - Business combinationsIFRS 7 - Financial instruments: disclosures

IAS 1 - Preparation of financial statementsIAS 24 - Related party transactionsIAS 27 - Consolidated financial statementsIAS 32 - Financial instruments: presentationIAS 34 - Interim financial reporting

IFRIC 13 - Customer loyalty programmesIFRIC 14 - Prepayments of a minimum funding requirementIFRIC 19 - Extinguishing financial liabilities with equity instruments

The board of Directors has assessed the impact of these amendments and concluded that these standards and newinterpretations will not affect the Company's results of operations or financial position.

The following standards, interpretations and amendments to published standards that are mandatory for futureaccounting periods, but where early adoption is permitted now have not been duly adopted.

IFRS 7 (effective 1 July 2011) - Financial instruments: disclosuresIFRS 9 (effective 1 January 2013) - Financial instrumentsIFRS 10 (effective 1 January 2013) - Consolidated financial statementsIFRS 11 (effective 1 January 2013) - Joint arrangementsIFRS 12 (effective 1 January 2013) - Disclosure of interests in other entitiesIFRS 13 (effective 1 January 2013) - Fair value measurement

IAS 12 (effective 1 January 2012) - Deferred tax



IAS 27 (effective 1 January 2013) - Separate financial statementsIAS 28 (effective 1 January 2013) - Investments in associates and joint ventures

The board of Directors is in the process of assessing the impact of these amendments and believes that these newaccounting standards and interpretations will not significantly affect the Company's results of operations or financialposition but will require additional disclosures with respect to the valuation and treatment of financial assets.

Segment calculation3

TotalNon attributablePrivateInfrastructure

Private DebtPrivate EquityIn thousands of EUR

2010201120102011201020112010201120102011

1'49763721152--3764851'100-Interest and dividend income66'37763'33957-(475)253527(230)66'26863'316Revaluation18'212(31)346--80(239)18'098202Net foreign exchange gains / (losses)

86'08663'945112158(475)2539831685'46663'518Total Net Income

61'25843'234(24'716)(20'553)(475)2539831685'46663'518Segment Result

(24'370)(25'412)Other financial activities not allocated

36'88817'822Surplus / (loss) for the financial period

Financial assets at fair value through profit or loss4

Private equity4.1

31.12.201030.09.2011In thousands of EUR

572'359653'233Balance at beginning of period77'27944'021Purchase of limited partnerships and direct investments

(124'182)(94'905)Distributions from and proceeds from sale of indirect and direct investments; net103'00063'316Revaluation24'777202Foreign exchange gains / (losses)

653'233665'867Balance at end of period

Private debt4.2


10'43612'299Balance at beginning of period2'69936Purchase of limited partnerships and direct investments

(2'611)(2'706)Distributions from and proceeds from sale of indirect and direct investments; net27945Accrued cash and PIK interest

-(292)Interest received1'248(230)Revaluation248(239)Foreign exchange gains / (losses)


27

Private infrastructure4.3


1'1291'361Balance at beginning of period66484Purchase of limited partnerships and direct investments

-(38)Distributions from and proceeds from sale of indirect and direct investments; net(432)253Revaluation


Financial assets at fair value through profit or loss held for trading531.12.201030.09.2011In thousands of EUR

178-Balance at beginning of period(240)-Sale of listed private equity investments

57-Revaluation5-Foreign exchange gains / (losses)

--Balance at end of period

Cash and cash equivalents631.12.201030.09.2011In thousands of EUR

3'8244'397Cash at banks13'00053'000Cash equivalents

16'82457'397Total cash and cash equivalents

Share capital7


Authorized10101'000'000 Class A shares of EUR 0.01 each

10010010'000'100 non classified shares of EUR 0.01 each ("Ordinary Shares")

110110Total authorizedIssued and fully paid

10101'000'000 Class A shares of EUR 0.01 each

1010Total issued and fully paid

As per amended terms and conditions of the bonds, bondholders have the right to convert bonds into shares on orafter 1 October 2012 and up to the close of business on 31 August 2014. Bondholders have the right to convertbonds at their option into either fully paid, ordinary non-voting Class B shares or fully paid, ordinary voting Class Cshares (collectively "Ordinary Shares"). Ordinary shares will rank pari passu in all respects with all other OrdinaryShares of the issuer which are in issue on the relevant conversion date, save that Class B shares will not confervoting rights at all, and Class C shares will not confer voting rights until the earlier of the date upon which 95 percent of the principal amount of the bonds have been converted or final maturity ("Specified Date"). From the SpecifiedDate, but prior to the Class A shares being converted into Class C shares, the holders of Class C shares shall beentitled in aggregate to 4'000'000 votes, representing 80% of the votes available.

Following the Specified Date, the Class A shares issued may, at the option of the holders, be converted into Class Cshares. Upon conversion of all Class A shares into Class C shares, every shareholder of Class C shares shall haveone vote for every share held.



Financial liabilities at amortized cost831.12.201030.09.2011In thousands of EUR

663'970681'349Convertible bond - beginning of period483362Amortization of transaction costs

16'89612'953Finance cost on convertible bond

681'349694'664Convertible bond - end of period

At an extraordinary meeting of the bondholders on 9 December 2005, a resolution was passed to amend the termsand conditions of the Pearl convertible bond. The resolution became effective on 30 March 2006 when the respectiveagreements were amended and the rating of A+ for the Pearl convertible bond was approved by Standard & Poor's.

The terms and conditions of the Pearl convertible bond have been amended as follows:

Maturity of convertible bonds: 30 September 2014

Guaranteed redemption amount: 108% of the initial principal amount

Coupon payments: 2% p.a. on the initial principal amount up to September 2014

Conversion period: 1 October 2012 to 31 August 2014

The convertible bond is disclosed using the amended terms and conditions and the accounting of the convertiblebond has been changed with effect from 30 March 2006 when the extraordinary resolution of the bondholders becameeffective.

As at the balance sheet date, the nominal value of the convertible bond outstanding was EUR 660'000'000. The bondis not convertible into shares until on or after 1 October 2012, at the option of the investor, using the relevantconversion price. The Company has entered into an insurance policy to ensure that it is provided with sufficient fundsfor the repayment of 108% of the principal upon redemption of the bond on 30 September 2014.

In accordance with IAS 32, Financial Instruments: Disclosure and Presentation, the net proceeds of the bond havebeen split between the liability and equity option components. The fair value of the equity component has beencalculated as EUR 150'290'781 using cash flows discounted at market interest rates for an equivalent period. Thisamount is classified as share premium and will remain part of the permanent equity of the Company. The remainingnet proceeds, after the allocation of the related transaction costs, of EUR 497'711'848 are allocated to the liabilitycomponent. The liability, including transaction costs, is therefore stated at a discount of 0.62892% per quarter fromthe first quarter of 2006 (0.84276% to 31 December 2005) to the maturity value.

The result of this requirement of IAS 32 is that the discount is amortized through the income statement as a financecost, on a yield to maturity basis, over the life of the bonds until the beginning of the conversion period. Thisaccounting treatment has no effect on either the economic position or the net asset value of the Company. Thecumulative finance cost in retained earnings is offset by an equivalent credit in share premium. However, the requiredtreatment clearly does have a significant impact on the net surplus or loss reported in the income statement overthe period to the conversion of the bond.

In accordance with the Amended and Restated Insurance Policy dated 30 March 2006, and in the event that theCompany has insufficient funds to repay EUR 712.8m (being 108% of the initial principal amount) to the bondholdersupon the maturity of the bonds on 30 September 2014, then European International Reinsurance Company Limited(the "Reinsurer") agrees to indemnify the Company for any shortfall in the funds available to the Company. For theavoidance of doubt, the funds being available to the Company also include the amount in the experience accountheld by the Reinsurer for the benefit of the policyholder, Pearl Management Limited and ultimately the Company, inthe event of a claim.

29

Furthermore the EUR 712.8m will be adjusted for amounts that are converted by the bondholders into shares in theCompany.

As at the reporting date, the shortfall amounts to EUR nil (31 December 2010: EUR nil).

Short-term credit facilities9

As of 25 September 2009, the Company entered into a 3–year credit facility, with a large international bank andother lenders, of initially EUR 75m with the potential to increase to EUR 110m. The credit facility was structured asa combination of a committed senior term and revolving facilities and a subordinated term facility that formed partof a EUR 170m syndicated term loan and revolving facilities (the "Syndicated Facilities") available to the Company,Princess Private Equity Holding Limited and Partners Group Global Opportunities Limited (each a "Borrower").

The Syndicated Facilities were comprised of senior and junior facilities of EUR 85m each; with each Borrower beingindependently responsible for its borrowings with the default of one Borrower not triggering the default of any otherBorrower under the Syndicated Facilities.

The Syndicated Facilities could be allocated among the Borrowers as per individual demand required and as determinedby Partners Group AG (the "Allocation Agent") subject to certain minimum and maximum limits.

The Allocation Agent had allocated to the Company EUR 35m (31 December 2010: EUR 35m) under the junior facilityand EUR 35m (31 December 2010: EUR 35m) under the senior facility, a total of EUR 70m (31 December 2010:EUR 70m).

Partners Group Global Opportunities Limited repaid and cancelled its senior and junior facilities in June 2011 whilePrincess Private Equity Holding Limited repaid and cancelled its senior and junior facilities in August 2011. TheCompany remains the sole borrower under the Syndicated Facilities.

The junior term facility is provided by Green Stone IC Limited and Partners Group Finance CHF IC Limited, each aGuernsey limited liability company, which since 21 December 2009 had split the subordinated term facility in theproportion of EUR 15.67 and EUR 69.33m, respectively.

However, since the repayment and cancellation of the credit facilities of Princess Private Equity Holding Limited andPartners Group Global Opportunities Limited, this split is now EUR 6.45 and EUR 28.55m, respectively.

Green Stone IC Limited is majority owned by partners and employees of Partners Group Holding AG while PartnersGroup Finance CHF IC Limited is a wholly owned subsidiary of Partners Group Holding AG.

The senior term facility is provided by Partners Group Finance CHF IC Limited, a large international bank and effectivefrom 17 February 2010, an additional Swiss based bank with whom Partners Group Finance CHF IC Limited transferredpart of its initial commitment.

In relation to the senior revolving facility, interest on drawn amounts is calculated at a rate of 5% per annum(calculated as a margin of 2.75% on drawn amounts plus a facility fee of 2.25% per annum on the applicable seniorfacility amount) above the applicable EURIBOR rate. In addition there is a facility fee of 2.25% per annum on theremaining undrawn applicable senior facility amount.

The margin on drawn amounts under the junior facility is 8.75% per annum above EURIBOR. No facility fee is dueunder the junior facility.



In addition the Company must maintain a minimum adjusted net asset value and a minimum cash balance, whichin the case of the Company is EUR 350m and EUR 3m respectively. The Company must also have a net asset cover(total indebtedness to adjusted net asset value) of less than 25%.

In addition an annual agency fee of EUR 20’000 was paid to the senior facility agent.

The credit facility of the Company is secured, inter alia, by way of a pledge over the shares of the Company, theassignment of the Company’s claim towards a number of Scottish registered limited partnerships and a pledge overthe bank account within the Company.



Commitments1031.12.201030.09.2011In thousands of EUR

194'795158'963Unfunded commitments translated at the rate prevailing at the balance sheet date

31

Investment ManagerPearl Management LimitedTudor HouseSt. Peter PortGuernsey, GY1 1BTChannel Islands

Registered OfficePearl Holding LimitedTudor HouseSt. Peter PortGuernsey, GY1 1BTChannel IslandsPhone +44 1481 711 690Facsimile +44 1481 730 947www.pearl-privateequity.net

Registered number: 37232

Investor relationsE-Mail: [email protected]

AdministratorPartners Group (Guernsey) LimitedTudor HouseSt. Peter PortGuernsey, GY1 1BTChannel Islands

AuditorPricewaterhouseCoopers CI LLPFirst FloorRoyal Bank Place1 Glategny EsplanadeSt Peter PortGuernsey, GY1 4NDChannel IslandsPhone +44 1481 752 000

Trading InformationPrice information

558.527German Security Number1.140.571Swiss Security NumberXS0117871698ISINDGZ07Reuters

Market MakerDeka BankFrankfurt a. M., GermanyPhone +49 69 7147 1301

PEARL HOLDING L IMITED

Documents

QUARTERLY REPORT Q3 2011 - Datahotel