The single overriding criterion for a fund investment is clearly the expected future financial performance of the fund. Additional considerations include fit with the client's mandate and interests, target allocations to industry sectors, geographies and types of private equity, as well as ensuring overall portfolio balance and diversification.

While past relative financial performance is the single best predictor of future relative performance, it is important to also take into account that many of the brand name teams are going through substantial leadership transitions which may impact their stability, while many of the teams with the most promising current performance are relatively new and less well-known. Utilizing our private equity operating experience and proprietary industry contacts, GSA focuses on assessing both the stability and the recent unrealized performance of a prospective team in order to assess the financial attractiveness of the investment.

Grove Street's General Criteria

For teams with verifiable track records:

• Superior financial performance from the realized portfolio
• Continued strong performance apparent in unrealized investments
• A credible ongoing investment strategy in an attractive sector
• A high quality, stable investment team with appropriate qualifications for the strategy

For new and/or emerging teams:

• A credible strategy for achieving superior performance in an attractive sector
• A high quality team with an appropriate mix of domain expertise and the resources and capability to differentiate and add value
• A critical mass of proven private equity investment experience