EBRD in Equity

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• EBRD in Equity
• Raising Capital  New Opportunities
• for Regional Companies
• Krasnodar
• 7th July 2009
• Dmitry Larionov
• Head of Southern Federal District

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What is the EBRD?

• International Financial Institution, promotes
  transition to market economies in 30 countries
  from central Europe to Central Asia
• Owned by 61 countries and two inter-governmental
  institutions
• Capital base of 20 billion

Cumulative commitments 42 billion
January 2009
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EBRD in 2008
billion

• Invested over 41.7bn in more than 2,500 projects
  since 1991
• Private sector gt 77 of portfolio
• Debt 78, Equity 22 of portfolio
• 5.1bn invested in 2008

Annual business volume (ABV)
Net cumulative business volume
December 2008
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In its Operations, EBRD

• Follows Sound Banking Principles
• Supports but does not replace private investors
• Promotes market-oriented changes in its clients
  and reforms in sectors or the whole economy
• Encourages environmentally sound and sustainable
  development
  

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Active in all countries of operations
Cumulative commitments 41.7 billion
Southeast Europe 21
Central Asia 7
Russia 27
Central Europe Baltics 29
Eastern Europe Caucasus15
December 2008
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• EBRD in Russia

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EBRD in Russia 7 offices with approx 130
Professionals
St. Petersburg RO
Moscow RO
Yekaterinburg RO
Krasnoyarsk RO
Vladivostok RO
Rostov RO
Samara RO
High Market Potential
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Growing presence in Russia
billion
Cumulative Business Volume

• Since 1991 the EBRD financed projects achieving a
  Business Volume of 11.3 billion
• Signed 572 projects since 1991
• 69 operations signed in Russia in 2008
• Portfolio stock at 6.6 billion
• Private/State 86/14

December 2008
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Russia Portfolio Stock by Sector
Data as of 31 December 2008
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Southern Federal District

• 16 of Russian population
• 39 below poverty line
• 8 of workforce in SME
• 7 of GDP
• 3 of FDI
• 6 of industrial output
• 20 of agriculture
• 20 of machine building
• 30 of foreign trade routed via the sea ports
• Leading recreational resorts
• FDI grows in Rostov, Krasnodar, Volgograd
• Current agenda
• Increasing FDI friendly climate in Krasnodar
• Increasing local governments attention to
  investments into food processing
• Bottlenecks in sea ports
• SME is mushrooming
• Preparation to Sochi Olympics is under pressure

Potential SME, port infrastructure, resorts,
agribusiness, TAM and GSB activities in the North
Caucasus republics
Risk Average risk area Very high risk in the
southern regions
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EBRD Financing Solutions
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EBRD Financing solutions
Guarantees
Loans
Equity

• of specific risk (i.e. political)
• Commodity-backed instruments
• Increased capacity for Trade facilitation program
  (with participation of local banks)

• Common stock or preferred
• Minority position only (up to 35)
• Through Venture Capital Funds

• Senior, subordinated, convertible
• Long Term (up to 10y or more) or short/medium
  term working capital
• Floating/ Fixed rates
• Choice of currencies
• (EUR, USD, RUB etc.)
• Syndication possible for large amounts

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What do we look for in Equity

• Any sector including infrastructure - energy
• IRR gt 20-25
• Growth Story
• Clear Exit strategy (IPO, put option,
  acquisition-consolidation)
• From USD 1MM to USD 250 MM

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Key areas of focus

• Corporate Structure Ultimate Beneficiary
• Use of Off Shore Jurisdictions
• Financials (Audited? International?)
• Compliance (Integrity)
• Environmental Impact

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What to expect from EBRD

• Due Diligence
• TC Funds TAM/BAS
• No management interference
• Problem resolution
• Brand Value

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PRE - IPO TRANSACTION?

• Objective Support the road to IPOs for
  Medium Size Companies
• Benefit - EBRDs Due Dilligence and
  preparation vs. IPOs
• Company continues growing
• Maximise value at IPO
• Wait for better market conditions
• WIN-WIN

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EBRD through VC and Regional Funds
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• EBRDs portfolio of funds over 15 years of
  investing in the asset class
• 114 funds
• 70 fund managers
• USD 2.7 billion in commitments (EUR 2.3 billion)
  to funds with capital of USD 13.4 billion (EUR
  11.1 billion)
• 976 underlying investments 697 exited
• Largest PE Fund investment program dedicated to
  the region

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2007 PE Investment as a of GDP
5
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
Italy
Spain
France
Baltics
Ireland
Other
Finland
Austria
Poland
Greece
Russia
Europe
Sweden
Norway
Ukraine
Belgium
Hungary
Portugal
Denmark
Germany
Romania
Switzerland
Czech Republic
United Kingdom
The Netherlands
Estonia, Latvia, Lithuania Croatia,
Slovakia, Slovenia
Source EVCA / PEREP Analytics, RVCA and EBRD
estimates
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EBRD Commitments Over Time
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Investments by Country to end 2008
Other includes Albania, Bosnia Herzegovina,
FYR Macedonia, Slovenia
Western CIS and Caucasus includes Armenia,
Azerbaijan, Belarus, Georgia, Moldova and Ukraine
Central Asia includes Kyrgyz Republic,
Mongolia, Tajikistan, Kazakhstan, Uzbekistan and
Turkmenistan
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Investments by Sector to end 2008
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• EBRD Case Studies

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Lenta Hypermarkets, St Petersburg

• Borrower Lenta Group, one of the leading
  Russian food retailers
• EBRD Finance 125m investment in the ordinary
  shares (a capital increase) for a minority stake
  of Lenta Inc.
• Tenor If after 3 years there is no IPO, then
  EBRD will have a Put Option to sell its shares to
  Key Shareholders
• Use of Proceeds funds will be used to pay for
  construction and buy land plots, or re-finance
  short term debt incurred for these purposes
  strengthen Lentas balance sheet and help it
  approach the IPO market.
• EBRD added Value competition and market
  expansion by increased efficiency in the food
  distribution sector market facilitation through
  financial resources mobilisation corporate
  governance requirements will be strengthened

Signed in 2007
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EBRD takes equity stake in Russias largest
diversified industrial and consumers electronics
manufacturer

• Client JSC Sitronics, Russia
• EBRD finance USD 80 million in the equity
  issuance of Sitronics
• Use of proceeds Pre-IPO financing of JSC
  Sitronics to facilitate capital expenditure
  programme MA activity of the client
• EBRD added value Equity investment into a
  leading Russian electronics conglomerate.
  Increase the flow of private investment

Signed in 2006
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How to contact us Regional Offices
Head of Regional DevelopmentBruno
Balvanerae-mail BalvaneB_at_ebrd.comTel 7
495-787 1111 Fax [phone]

• Vladivostok Resident Office
• Elena Danysh, Head of Office
• e-mail DanyshE_at_ebrd.com
• Tel [phone] Fax [phone]
• Yekaterinburg Resident Office
• Tatyana Yemboulaeva, Acting Head of Office
• e-mail Yemboult_at_ebrd.com
• Tel [phone]Fax [phone]
• Samara Resident Office
• Michael Hoffmann, Head of Office
• e-mail HoffmanM_at_ebrd.com
• Tel [phone]Fax [phone]

• Krasnoyarsk Resident Office
• Nikolay Sorokin , Head of Office
• e-mail Sorokinn_at_ebrd.com
• Tel [phone]
• Rostov Resident Office
• Dmitry Larionov, Head of Office
• e-mail Larionod_at_ebrd.com
• Tel [phone]
• St Petersburg Resident Office
• Marina Petrov, Head of Office
• e-mail petrovm_at_ebrd.com
• Tel (until April 09) 7 495 787 1111
• Tel [phone]
• Fax [phone]