PRESS RELEASE LEGAL & GENERAL CAPITAL

Press Release

8 July 2015

BACKED BY L&G, PEMBERTON REACHES €547M AUM ON EUROPEAN MID-MARKET DEBT STRATEGY

Legal & General Capital ("LGC") today announces the successful €447m first close of Pemberton Asset Management's inaugural European Mid-Market Debt Fund, which brings together investors from large blue-chip financial services and insurance companies across Europe. This follows the completion of a hat-trick of lending deals for L&G's €100m segregated mandate, as it continues to take advantage of the significant investment opportunities presented by bank deleveraging.
LGC purchased a 40% stake in Pemberton Asset Management in July 2014, with an initial commitment to invest €250m into mid-market loans in order to develop a European lending capability, accelerating its participation in the direct lending market and providing a new source of institutional funding to corporates over the long term.
The Pemberton European Mid-Market Debt Fund I (the "Fund"), which today reached its first close, has been set up to provide much-needed finance to established mid-market European companies, in return offering L&G shareholders and other institutional investors with a strong stream of quarterly income and attractive total returns.
Focusing on companies with a turnover between €75m and €1bn, Pemberton is targeting a bigger and more attractive part of the market, which it believes offers better pricing and risk-adjusted returns for investors compared to larger LBO syndicated leveraged loans. The Fund is looking to build a diversified portfolio of bilateral, club and smaller syndicated senior and senior secured loans
Leveraging the Pemberton team's proven track record in credit underwriting and risk management, the Fund will focus on the three largest European economies of Germany, the U.K. and France, which account for more than half of EU-28
GDP, together with selected other countries in Europe, including non-EU members Norway and Switzerland. The origination teams are locally-based, currently with offices in the U.K., Germany, France, Holland, Spain and Italy, but with plans to be strategically located in other key countries in Europe, facilitating closer relationships with counterparties and other market participants, resulting in better market intelligence and investment sourcing capability.
The L&G €100m segregated mandate has completed three lending deals so far this year:

A seven-year senior term loan for the public to private takeout of Daisy Group plc, a telecommunications and IT

services provider to the SME and mid-market sector in the UK.

A seven-year senior term loan supporting the acquisition by Onex of the Survitec Group, a global leader in survival solutions across the marine, defence, aerospace, and offshore oil & gas markets.

PRESS RELEASE LEGAL & GENERAL CAPITAL

A loan to Faist, a German engineering company, manufacturing acoustic damping products for automotive and white goods industries.

The corporate mid-market continues to be a substantial and resilient segment within the European economy and a key driver of growth. With European banks remaining significantly more leveraged and more reliant on wholesale funding than banks in other parts of the world, Pemberton and LGC believe that this environment creates an opportunity to selectively originate loans to established mid-market European companies with sound business models and trading franchises.
LGC was founded in 2013 to help invest L&G Group's capital strategically, improving its shareholders' returns by increasing the business' exposure to direct investments. To date L&G has invested over £6.3bn in direct investments. LGC is focused on four main asset classes - housing, urban regeneration, energy and alternative finance - continuing to return value to shareholders through the realisation of completed investment strategies and its strong income streams.

Paul Stanworth, Managing Director of Legal & General Capital, said: "Mid-market corporate loans are attractive investments because compared to many other asset classes, including traditional fixed income products, as they offer higher yields, combined with stable performance and strong downside protection. In Pemberton we have a strong strategic partner, with the long standing relationships necessary to access attractive deal flow, extensive knowledge of working in all major European markets, and the expertise in credit underwriting and risk management." Keith Jones, Chairman of Pemberton, commented: "With the balance sheet constraints faced by European banks, mid-market corporates are struggling to gain the funding they need to deliver business growth. Pemberton, with the backing of L&G, has built an on-the-ground presence in six European countries, which is providing us with a strong pipeline of lending opportunities. The backing of L&G and other institutions will allow Pemberton to continue to make investments in companies with high growth potential." - Ends - For further information, please contact:

Olivia Bayliss
Head of Communications, Legal & General Capital
020 3124 2777

Notes to editors: Legal & General Capital

Legal & General Capital (LGC) was founded in 2013 to help actively invest L&G Group's balance sheet, improving its shareholders' returns by increasing the business' exposure to direct investments. Managing £6.3bn in Group Capital

PRESS RELEASE LEGAL & GENERAL CAPITAL


funds (as at 31 March 2015), through its investments, LGC contributed £203m (16%) to the Group's Operating Profit in
2014.
Identifying new institutional asset classes and long term macro trends, it acts as a catalyst of economic growth, executes strategies that take advantage of the strong returns that exist for long term, forward thinking capital. As such, utilising its expanding network of strategic partnerships and in-house talent base, it has continued to make strong progress in the origination and development of alternative finance, housing and urban regeneration asset classes, often applying innovative solutions to unlocking complex deal flow.
Noteworthy investments to date include:
- Alternative finance:

o LGC holds a 40% strategic stake in pan-European mid-market lending business, Pemberton Asset

Management.
- UK housing:

o L&G has entered the UK Build to Rent market, acquiring a regeneration site in Walthamstow, London, with planning for over 300 flats.

o L&G holds a 50% stake in CALA Homes, alongside Patron Capital, one of the UK's top 10 biggest

housebuilders by revenue.

o LGC has planning consent to build 1,000 new much-needed houses and related infrastructure on a 250 acre site at Crowthorne.

- UK urban regeneration:

o LGC holds a 50% interest in MediaCityUK, Salford, alongside the Peel Group, which together they plan to strategically develop, regenerating the wider area.

o English Cities Fund - in partnership with the HCA and Muse Developments, it is delivering over 5.4m sq ft of mixed-use space, including hundreds of new homes, bringing back into productive use acres of brownfield land across schemes in Salford, Canning Town, Plymouth, Wakefield and Liverpool.

o Bracknell Regeneration Partnership - in partnership with Schroder UK Property Fund, LGC is regenerating Bracknell.

Generating value across L&G Group, LGC maximises synergies across the business in order to drive multi-stranded profit lines and enhance L&Gs wider impact and influence. Providing stability, as well as supporting the Group's growth trajectory, LGC ensures that it retains enough capital to withstand tough market conditions. Using the highest levels of risk management and corporate governance, it provides shareholders with a strong, stable income stream throughout market cycles.

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