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Superinvestor Conference, November 2009, Paris
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  • 1. NewRussiaGrowth
    Private Equity Advisors
    Landscape and Evolution of Private Equity in Russia
    Andrey Dobrynin
    Managing Partner
    November 2009
  • 2. Presentation roadmap
    • Russian economy: what has happened over the past 12 months?
    • 3. What was Russian PE industry before the crisis?
    • 4. What happened with portfolio companies, GPs and LPs during the crisis?
    • 5. Whatnew financial products were developed?
    • 6. How will Russian PE industry evolve in the next few years?
    2
  • 7. Russian macro picture
    Industrial production, y-o-y %
    Real disposable income, y-o-y %
    Source: State Statistics Committee
    Source: Central Bank of Russia
    RTS index
    USD/RUB
    Source: RTS
    Source: Central Bank of Russia
    3
  • 8. What was PE industry in Russia before the crisis
    • 18 Professional GPs (with assets of more than $150m) with total AUM $6bn
    • 9. Only few are local and independent
    • 10. Most are subsidiaries of investment banks, family offices or foreign PE groups
    • 11. Growth capital is main investment strategy
    • 12. Target industries: retail, financial sector, consumer services, telecoms
    4
  • 13. What is NRG
    • Independent alternative investment manager
    • 14. Volga River One: size - $177m, first closing - 2006; number of LPs – 20
    • 15. 6 investments: telecoms, retail, food production
    • 16. Valuation : 116% of invested capital (E&Y)
    • 17. Volga Credit Opportunity – fundraising $250m
    5
  • 18. What happened to PE investments?
    % of bad loans to total portfolio of Russian banks
    Retail trade turnover, y-o-y %
    Source: NRG estimates
    Source: State Statistics Committee
    Food & beverage production, y-o-y %
    Broad-band Internet subscribers, m
    Source: PWC, NRG estimates
    Source: State Statistics Committee
    6
  • 19. NRG Private Equity Portfolio: Case study
    Ufanet: sales & EBITDA, $ m
    Genser: sales & EBITDA, $ m
    Source: company data
    Source: company data
    Ufanet: number of subscribers, ths
    Genser: debt, $ m
    7
    Source: company data
    Source: company data
  • 20. NRG Credit Opportunity case study
    • Begemot is the second biggest toy retailer in Russia
    • 21. Focus on mid and low price segments
    • 22. 50 own and 32 franchisee shops in 81 cities across Russia
    • 23. Secured debt $20m with current interest 18% and equity kickers
    • 24. Expected IRR: 42-48%, floor IRR is 30.5%
    8
  • 25. Russian PE industry outlook
    • Limited number of opportunistic deals in the next 6 – 12 months
    • 26. Return to classic “growth capital” model in 12-24 months
    • 27. Limited availability of debt
    • 28. Poor track record will create difficulties in fundraising for many GPs
    • 29. Low deal competition
    • 30. Attractive valuations and high IRRs
    9
  • 31. Summary
    • Russian economy has started recovering after the crisis
    • 32. 18 institutional GPs with AUM of more than $150m before the crisis
    • 33. Only a couple of GPs left with significant amounts of dry powder
    • 34. Most PE portfolios have been hit hard
    • 35. Interesting opportunities are available in the credit market
    • 36. Few successful GPs will enjoy low competition in the next couple of years
    10