Launch of New Fund

Merchant House Group Plc

("MHG" or the "Company")

Launch of new fund

The Board of MHG is pleased to announce the launch of the Merchant Gemini Turnaround Fund (the "Fund"), a new corporate turnaround fund which is seeking to raise up to £50m. The Fund will be raised by Merchant Financial Funds ICC ("MFF"), an incorporate cell company domiciled in Jersey. MFF is owned as to 50% by MHG and 50% by Jordasic Investment Holdings Limited ("JIHL"), an investment management company based in Jersey. The boards of MFF and the Fund will comprise James Holmes, Chairman of MHG, and John Whittle and Michael McKean, who are based in the Channel Islands.

Merchant Capital Limited ("MCL"), a wholly owned subsidiary of MHG which specialises in corporate turnaround activities including providing turnaround funding and advice, has been appointed as the investment manager of MFF. MCL will receive an annual management fee equal to 2% of the funds under management in MFF and 20% of the annual net capital gain in the value of the fund after all costs.

MFF will establish an advisory board and has agreed to appoint Craig Whyte, the founder and chief executive of Liberty Capital, and David Roberts, CEO of Trimite Group. Messrs Whyte and Roberts are both respected turnaround specialists with over thirty successful transactions between them.

James Holmes said:

"This is a significant development in the strategy of the Group. The Merchant Gemini Turnaround Fund is a natural expansion of our existing corporate turnaround activities currently conducted through Merchant Turnaround plc and Merchant Corporate Recovery plc, which will in turn benefit from the Fund's own projects. The combined experience of our advisory board will make a difference to the many companies that are struggling to secure finance from traditional sources. At the same time, we will be providing an excellent investment opportunity to investors prepared to take a longer-term view."

David Roberts added:

 "I am delighted to be working with Gemini and the Merchant House Group. I really think our combined experience will make a difference in these difficult times for so many companies whilst providing an excellent investment opportunity to investors prepared to benefit from a longer-term view."

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