Private Equity
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Private Equity Private Equity Presentation Transcript

  • May 30, 2006 Zindel Investment Partners Emerging Markets Private Equity Conference Alexander Abolmasov www.zindelfund.com Private Equity Problems and Opportunities in Russia
  • Investments in USA and EU Private Equity Funds are growing, returns – decreasing Funds invested in European Private Equity Funds Average yield among European PEF Source : EVCA , SRC , PWC Private Equity Investments as a percentage of GDP for Europe, CEE (2004) -5 0 5 10 15 20 25 30 35 1986 1988 1990 1992 1994 1996 1998 2000 2002 IRR (5 years ),% Venture funds Buy-out funds
  • Comparing of investment structure in UK and Russia Investments in small projects area Underinvested area (Russia vs. UK) Overinvested area (Russia vs. UK) Size of bubble – Share of investments in Russia: % equal to difference in shares of investment in a certain industry in Russia and UK View slide
  • Investment directions: Cinema Source: Neva-film , In-Chart Research Group
      • Cinema market is surging by 40-50% annually (it’s increased by ten fold from 2000 to 2005).
      • In the course of time profitability of Russian movies is growing (average budget in 2006 is about 25% of box office vs. 40% in 2005).
    Average budget vs box office per top five Russian films, mln.USD 100 000 150 000 200 000 250 000 300 000 350 000 Box office structure, Russia (th, USD) 34 500 50 000 111 700 190 000 268 000 349 000 0 50 000 2000 2001 2002 2003 2004 2005 0% 5% 10% 15% 20% 25% Total box office Share of Russian films View slide
  • Value Drivers: The number of theaters and screens Source: Cinema d’Europa Media Salles, Neva-film; MPAA; Federal state statistic service
    • Modern theaters construction is rising by 30-33% annually.
    • Most of the theaters are 4-7 screen multiplexes
    • Frequency per capita keeps climbing rapidly (in 2004 – 71% ) in Russia.
    Frequency per capita, Eastern and Central Europe The number of modern theatres and screens, forecast Spain Russia Hungary Poland Czechia Italy Germany UK France 0,21 0,25 0,28 0,48 0,66 1,19 1,34 1,71 1,8 2,82 2,92 3,31 2000 2001 2002 2003 Eastern and Central Europe Western Europe
  • Value Drivers: Film quality Source: Company data, ZIP Estimates, open sources
    • Private investments enhance Russian film production to soar 30-35% per annum.
    • Some Russian commercial movies outperformed Hollywood films in Russian release (top 3 in box office – Russian ones).
    • The movie quality is improving today, the average budget per film (top five) has increased (by 2,5 times for the last 5 years).
    Films produced, Russia (titles) Average budget per movie, Russia (mln. USD) $34,7m. $25,6m.
  • Case study: Moscow doesn’t believe in tears 2
    • Recognized brand Producing company was established on the basis of 'Film studio 'Slovo'. Which means support from Federal Culture and Cinematography Agency, 'Mosfilm studio'.
    Eliminates shortage of adequate scenarios and producing of low-quality films. Controls film budget and film-making process. Offers high-standard services, using modern digital equipment and latest technologies. Creates promotion opportunities and increase cash flows from films.
    • Strong management team . Experienced professionals: Raymond J. Markovichr Esq developer of Kodak Kinomir, founder of Cascade Film; Chernikh Valentin - famous Russian producer and scriptwriter, a winner of Oscar Award (film ‘Moscow does not believe in tears’); his works include more than 30 scripts.
    • And new creative team: Dmitriy Dobujinskiy, Peter Anurov.
    • Project pipeline contains 15 films and 7 serials till 2010. Thus, t he company plans active expansion , project s to acquire 17% of Russian film market by 2010.
    Park Film Group is an Integrated film holding : PRODUCING COMPANY POST- PRODUCTION DISTRIBUTION PRODUCTION
  • Oil companies Western Siberia Gazprom Western Siberia ПГ НГК Surgutsky Pl-t Tobolsky PCP Astrahangazprom Orenburgazprom Severgazprom Astrahansky GPP Orenburgsky GPP Sosnogorsky GPP НГК НГК НГК Uralorgsintez Permsky GPP Novokuybishevsky PCP ПГ Tomsky PCP ШФЛУ, ГБ Кстовский НХЗ GPP SIBUR - Tumen ШФЛУ, ГБ ШФЛУ, ГБ Neftegorsky GPP , Otradnensky GPP Nignekamsneftehim ШФЛУ ШФЛУ,СНГ Smarneftegaz Samarskiy OPP Н ГБ Toliati SK СНГ Noyabrsneftegaz Omsky OPP Н ГБ Tatneft Minibaevsky GPP Н ШФЛУ,СНГ,ГБ СНГ Omskauchuk ГБ бутадиен изобутан этилен пропилен Basic organic synthesis изопрен МТБЭ бутадиен Stirol (Perm ) СНГ бензол стирол МТБЭ Etanol этан СНГ Tomskneft Angarskaya PCP этилен,пропилен бутадиен,стирол окись этилена этиленгликоли, бензол Н этилен пропилен стирол Kazan NOS СНГ бензол этилен пропилен Salavat NOS Nignevolgskneft VolgorodNP Н Stavrolen Korobovsky OPP ГБ ПГ этилен пропилен СНГ бензол Permneft PermNOS Н бензол Chemicals blockbuster: Empire strikes back (Sibur campaign)
  • Oil companies Western Siberia ПГ НГК Tobolsky PCP НГК НГК НГК Uralorgsintez Permsky GPP Novokuybishevsky PCP ПГ Tomsky PCP ШФЛУ, ГБ Kostovsky PCP GPP SIBUR-Tumen ШФЛУ, ГБ ШФЛУ, ГБ Neftegorsky GPP , Otradnensky GPP ШФЛУ ШФЛУ,СНГ Н ГБ Toliati SK СНГ Н ГБ Н ШФЛУ,СНГ,ГБ СНГ ГБ бутадиен изобутан этилен пропилен Basic organic synthesis изопрен МТБЭ бутадиен Stirol ( Perm ) СНГ бензол стирол МТБЭ Etanol этан СНГ этилен,пропилен бутадиен,стирол окись этилена этиленгликоли, бензол Н этилен пропилен стирол СНГ бензол этилен пропилен Salavat NOS Н ГБ ПГ этилен пропилен бензол Н бензол Chemicals blockbuster: Empire strikes back (Sibneft campaign) Noyabrsneftegaz Omsky OPP Omskauchuk Smarneftegaz Samarskiy OPP Gazprom Western Siberia Surgutsky Pl-t Astrahangazprom Orenburgazprom Severgazprom Astrahansky GPP Orenburgsky GPP Sosnogorsky GPP Nignekamsneftehim Tatneft Minibaevsky GPP Tomskneft Angarskaya PCP Kazan NOS Nignevolgskneft VolgorodNP Stavrolen Korobovsky OPP Permneft PermNOS
  • Neftegorsky GPP , Otradnensky GPP ПГ НГК НГК НГК НГК ПГ Tomsky PCP ШФЛУ, ГБ ШФЛУ, ГБ ШФЛУ, ГБ ШФЛУ ШФЛУ,СНГ Н ГБ СНГ Noyabrsneftegaz Omsky OPP Н ГБ Н ШФЛУ,СНГ,ГБ СНГ Omskauchuk ГБ бутадиен изобутан этилен пропилен Basic organic synthesis изопрен МТБЭ бутадиен Стирол (Пермь) СНГ бензол стирол МТБЭ этан СНГ этилен,пропилен бутадиен,стирол окись этилена этиленгликоли, бензол Н этилен пропилен стирол СНГ бензол этилен пропилен Н ГБ ПГ этилен пропилен СНГ Н бензол Chemicals blockbuster: Empire strikes back (Yukos and Tatneft?) Gazprom Western Siberia Surgutsky Pl-t Astrahangazprom Orenburgazprom Severgazprom Astrahansky GPP Orenburgsky GPP Sosnogorsky GPP Nignekamsneftehim Tatneft Minibaevsky GPP Tomskneft Angarskaya PCP Kazan NOS Nignevolgskneft VolgorodNP Stavrolen Korobovsky OPP Permneft PermNOS Novokuybishevsky PCP Etanol Smarneftegaz Samarskiy OPP Oil companies Western Siberia Tobolsky PCP Uralorgsintez Permsky GPP Kostovsky PCP GPP SIBUR-Tumen Toliati SK Stirol ( Perm ) Salavat NOS
    • State companies expansion
    • Monopolization of value chain
    Waste Management Loops elimination The Phantom Menace: Main Trends Chemicals blockbuster: Empire strikes back Value creation Cost-effective innovative technology Big stocks of cheap raw materials (150 m tons) Quality and price advantages of final production A New Hope: Main Opportunities Production of MonoChloroacetic Acid Value creation: Added value through import substitution Existing distribution control Recycling of phosphogypsum in construction materials (cement industry) 2003 Gazprom acquired Sibur 2005 Rosneft acquired Yukos 2005 Gazprom acquired Sibneft 2006 Rumors-Tatneft acquisition?
    • Opportunities :
    • Asia demand drives prices up
    • housing sector is growing
    • Scandinavians are shutting the mills
    • cost reduction – imported technologies
    • “ cheap” timber assets
    • Threats :
    • nature & fires
    • quality of labor forces
    • hostile takeovers
    Russian timber industry: opportunities outweighs threats
  • Overproduction in Europe has been pressing on prices deteriorating margins so far USSR was filling the gap Russia back into play Collapse of USSR pushed Scandinavians to start new facilities … but since last year European capacities are starting to decrease, while demand continue to increase Russian timber companies: margins begin to improve Stora Enso, UPM announce capacity reduction
    • Description: Tsar Timber Group is a vertically integrated holding engaged in production of construction materials, consisting of:
      • logging companies;
      • saw-mills;
      • distribution.
    • The holding’s assets are located in the UK, the Republic of Karelia, Krasnoyarsk and Irkutsk Region.
    • The company has been nominated for the T imber T rade J ournal 2005 awards in the category: Softwood Trader of the Year in UK .
  • Zindel Investment Partners [email_address] www.zindelfund.com Thank You!