Steel Capital has the specialized knowledge and experience required to evaluate the new economic models and strategies that are evolving in the steel industry. Steel Capital understands the relationships between steelmaking raw material supply, production, processing, distribution, marketing, and services as well as the complex regulatory and environmental issues that make evaluating the prospects and risks of steel transactions difficult.

Focusing intensely on a steel sector provides a significant edge in all phases of the investment process:

• Deal Flow: With detailed industry knowledge, transactions are often shown to Steel Capital before entering the public domain and account for many of the Steel Capital transactions executed on a negotiated, non-auction basis. Knowledge of all the players in a given industry also provides a much higher success rate in pursuing deals on a proactive basis, and in creating deals that otherwise might not have transpired. Steel Capital spends a significant amount of time developing its own deal flow in certain steel industry segments which are poised for dramatic restructuring and consolidation today.

• Deal Structuring and Execution: Access to Portfolio Companies in similar industries serves as an additional source of information for analyzing and pricing bids for companies. Steel Capital frequently seeks input from its Portfolio Companies in structuring deals within the same industry. With its intimate knowledge of the key players in selected sectors, Steel Capital has often been successful in recruiting strategic investors to take a minority stake in Steel Capital-led transactions. The strategic investors add operational and product knowledge, and also provide exit opportunities (see below).

• Portfolio Company Management: Financial investors are often thought to provide little more value than the money they invest. The Steel Capital strategy of mastering certain sectors gives Steel Capital better ability to assess and recruit managers within the industry, broad knowledge of the markets for the Portfolio Company's products and better access to strategic acquisition candidates, as well as customary financing advice and direction. In addition, Steel Capital's network of relationships - through its management and Advisory Boards - gives Portfolio Companies much broader reach than financial investors typically might.

• Consolidations: Steel Capital's strong sectoral knowledge combined with extensive operations experience set the stage for aggressive intra and international consolidations under the buy and build strategy. Steel Capital aims to create value through synergistic horizontal acquisitions and integration.

• Exit Opportunities: Steel Capital's knowledge of the key players in its focus industries expands the scope of exit options throughout the trade sale realm. This is particularly significant for sectors where capital markets have not typically been available or, in certain countries, where the equity capital markets are still in the formative stages.

In addition, as cited above under Deal Structuring and Execution, Steel Capital's affinity for structuring deals with a strategic investor may facilitate the possibility of exiting on advantageous terms by way of sale to industry buyers.

Steel Capital intends to augment investments made through its internal resources by making "platform investments" within an industry that can significantly expand Steel Capital's knowledge-base and deal flow within that industry segment, as well as provide access to technical expertise that Steel Capital does not possess.