European Bank for Reconstruction and Development

1

• European Bank for Reconstruction and Development
• EBRDS ROLE IN IPOS
• AND PRIVATE EQUITY
• Bruno Balvanera,
• Head of Regional Development EBRD in Russia
• LONDON STOCK EXCHANGE
• KHANTY-MANSIYSK
• 1 June 2009

2
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
3
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
4
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
9
Russia Portfolio Stock by Sector
Data as of 31 December 2008
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Urals Federal District

• 8.5 of Russian population
• 7 of workforce in SME
• 16 of GDP
• 14 of FDI
• 68.1 of oil 92.2 of gas
• 40 of steel and ferrous metal
• 45 of refined copper
• 40 of aluminum
• 10 of machine building
• 20 of mining
• FDI growing in Chelyabinsk, Sverdlovsk, Tyumen
• Current agenda
• Sharp decline in Steel and Ferrous
• metals industries
• High refinancing needs of major FIG
• Underdeveloped Infrastructure

Potential Natural resources, SME, GI, FI,
Infrastructure
Risk Average risk area
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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)
• Mezzanine debt
• 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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Portage Equity Finance
Equity
Foreign Investor
EBRD
Russia LLC
Equity

• The EBRD subscribes a XX equity stake in the
  Russian company established by the Foreign
  Company in
• EBRD exits through a put and call arrangement to
  Foreign Investor
• Maturity 7-12 years
• Pricing equal Foreign Investor reference debt
  funding costs plus a margin

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Risk equity
Equity
Risk
International sponsor
EBRD
Project Company

Equity

• EBRD exits through a put to the Sponsors with
  pricing depending on performance of the Company.
  EBRD takes full risk equity after Project
  Completion targets are met.
• As an alternative, EBRDs risk could have been
  limited to specified (such as political risk)
  events with recourse to the Sponsors in all other
  cases.

Local sponsor
Note details are simplified for case study
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EBRD in Private Equity
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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

Note EBRD tracked portfolio only to end December
2007, excludes real estate funds
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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
9
18
Gross Snapshot CIS
16
Note Excluding underlying investments of funds
in which the EBRD sold on its interest.
19
Investments by Country to end 2007
23
20
Investments by Stage Over Time
25
Note CSE and CIS
21
Investments by Sector to end 2007
26
Note since inception, in USD, CSE and CIS
22
Exits by Sector to end 2007
29
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Exits by Country to end 2007
30
Central Asia includes Kazakhstan and
Turkmenistan
Baltics includes Estonia, Latvia and Lithuania
Other CSE includes Albania, Bosnia
Herzegovina, Croatia, Serbia, FYR Macedonia,
Slovenia
Other CIS includes Azerbaijan, Moldova and
Georgia
All exits since inception (fully realised,
partially realised including write-offs)
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PRE - IPO TRANSACTIONS

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

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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 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
• 7 918 558 0879
• 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]