Abolmasov_c5_march2011

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Abolmasov_c5_march2011

  1. 1. NewRussiaGrowth <br />Private Equity Advisors<br />Mezzanine opportunities in Russia<br />March 2011<br />
  2. 2. Mezzanine<br />In architecture, a mezzanine - an intermediate floor  or the lowest balcony in a theatre.<br />(from Italian mezzano “middle”)<br /><ul><li>Cash Interest
  3. 3. PIK Interest
  4. 4. Ownership (equity kicker)
  5. 5. Pre-money EV $80m
  6. 6. Equity $60m
  7. 7. Debt $20m
  8. 8. New investments $20m </li></ul>PE – 25% post-money EV$100m<br />Mezz– Debt $20m @ 8-10% plus 10% option call @ $60m Mcap<br />3x growth<br />2<br />
  9. 9. Standard Terms of VRG Transactions<br />Investment Structure<br /><ul><li>Hybrid investments (collateralized debt + equity kickers)
  10. 10. 18-54 month repayment of investment capital
  11. 11. Ticket size: $10 – 50m
  12. 12. Collateralized
  13. 13. Pledge of target companies’ shares, liquid assets
  14. 14. Personal guarantees of the companies’ owners </li></ul>Target Returns<br /><ul><li>10%+ targeted interest/current return
  15. 15. Equity kickers leading to 30%+ targeted gross return</li></ul>3<br />
  16. 16. 2011 NRG Investment Case Study: Begemot<br />Company Description<br /><ul><li>Leading toy retailer in Russia, second only to Detskiy Mir in terms of revenue from toys
  17. 17. Focus on mid-market and low-cost segments with retail prices 40% lower on average than in DetskiyMir
  18. 18. 54 owned shops and 144 franchisees in 192 Russian cities
  19. 19. Key toy supplier for leading retail chains in Russia, such as Magnit, Perekrestok and Sedmoi Continent
  20. 20. In-house ERP system allows daily control of all sales and stocks
  21. 21. Average markup is 75%: Private label markup is 250%, which accounts for 15% of total sales
  22. 22. EBITDA in 2010 has grow by 45% as a result of significant increase in number of franchisees
  23. 23. After new debt, the debt/EBITDA ratio below 2x</li></ul>Key Financials<br />4<br />
  24. 24. 2009 NRG Investment Case Study: Begemot<br />Transaction Structure <br />5<br />
  25. 25. NRG at a Glance<br /><ul><li>Top-5 independent alternative investment manager with focus on Russia & CIS
  26. 26. Currently NRG works with Volga River One Fund, which has successfully invested in various Russian companies from telecoms to baby food producers
  27. 27. NRG completed the 1st closing of Volga River Growth Fund in 4Q 2010</li></ul>PrivateEquity<br />Hybrid Equity<br />Volga River One<br />Volga River Growth<br /><ul><li>Established in 2006
  28. 28. 20 LPs
  29. 29. $177m
  30. 30. Team of 10 professionals
  31. 31. 5 portfolio companies, 1 exit
  32. 32. Established in 2010
  33. 33. 1st closing: Q4 2010
  34. 34. Target size: $250m
  35. 35. Team of 5 professionals
  36. 36. Leading Investor for 1 closing: EBRD </li></ul>6<br />

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