Kardan N.V. (Kardan) announces that its financial services group company, TBIH Financial Services N.V. (TBIH), has entered into an agreement with an affiliate of Englefield Capital LLP, a private equity fund based in the UK, which will acquire, through capital increase, a 17.16% stake in TBIH, for a total consideration of USD 40.4 million. This transaction is estimated to generate an equity gain of approximately USD 9 million for Kardan.

This equity investment in TBIH will be the third capital injection agreement entered into this year. In April and in May 2004, TBIH signed agreements with a Bulgarian investors group for investments in TBIH’s Bulgarian subsidiaries.

The purchase price reflects a company value of USD 235 million post investment. TBIH will use the proceeds from this transaction for further growth in the current countries of operations by additional acquisitions, and to expand its operations in new countries.

Out of the total purchase price, which is fixed in EUR, USD 25.4 million will be paid at Closing of the transaction, and USD 15 million will be paid in installments, within a year following the Closing. The agreement with the investor contains certain customary provisions regarding mainly the appointment of supervisory directors, managing of the company, rights in the event of IPO, an exit and transfer of shares. The Closing will take place after the receipt of the relevant formal regulatory approvals.

The transaction is expected to generate an equity gain of approximately USD 5 million at Closing for Kardan. Payment of the installments is estimated to generate an additional equity gain of approximately USD 4 million for Kardan, within one year of Closing.

Kardan indirectly holds approximately a 59% equity interest in TBIH. Following the completion of the transaction, Kardan will continue to be the majority shareholder of TBIH and will (indirectly) hold approximately 49% interest.

Englefield Capital is a private equity fund with assets under management of EUR 700 million, making European private equity investments in buyout and development capital.

TBIH is a leading investor in financial services, including the fields of general insurance, life insurance, pension fund management, asset management and financing services (leasing, consumer finance and mortgages) in several CEE countries such as Bulgaria, Romania, Slovakia, Croatia and Serbia.