performance of private equity funds in central and eastern europe

© EBRD 2007, all rights reserved

Performance of Private Equity Performance of Private Equity Funds in Central and Eastern Funds in Central and Eastern

Europe and the CISEurope and the CIS

Data to 31 December 2006Data to 31 December 2006


EBRD’s portfolio of funds: 15 years of investing in the asset class

– Investment in 100+ funds

– 62 fund managers

– USD 2.3 billion in commitments (EUR 2 billion ) to funds with capital

of USD 10.3 billion (EUR 8.8 billion)

– 917 underlying investments; 632 exited

Largest PE Fund investment programme dedicated to the region

EBRD in Private EquityEBRD in Private Equity

Note: EBRD tracked portfolio only, excludes real estate funds, includes write-offs

1


EBRD DatabaseEBRD Database

Best available sample of PE performance in central and south east Europe (CSE) and Russia and CIS

Tracks all “gross” investments made by all EBRD invested funds as well as “net” returns to EBRD

Measured in both USD and EUR

Obligatory reporting by fund managers, scrutinised by EBRD

– reflects comprehensive performance

– no survivor bias resulting from only best fund managers reporting

2


DefinitionsDefinitions

EBRD Sponsored Funds or Donor Funds – funds established at EBRD's initiative in countries where no private sector funding was available for private equity funds. These funds are supported with significant donor grants, and EBRD investment represents usually over 90% of fund capital.

Institutional Quality Funds (IQs) – identified based on criteria established by Cambridge Associates. These include thecharacteristics of the investors in the fund, fund size relative to peers, and availability of data.

Survivor Funds – funds managed by managers who have or are expected to raise a follow-on fund.

3


RegionRegion

CSE countries – Albania, Bosnia & Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, FYR Macedonia, Poland, Romania, Serbia (including Kosovo), Montenegro, Slovak Republic and Slovenia

CIS Countries – Armenia*, Azerbaijan, Belarus*, Georgia, Kazakhstan, Kyrgyz Republic*, Moldova, Mongolia*, Russia, Tajikistan*, Turkmenistan, Uzbekistan*, and Ukraine

* There are currently no sub-investments in these countries.

4


Overview and Market EstimatesOverview and Market Estimates


2006 PE Investment as a % of GDP2006 PE Investment as a % of GDP

Source: EVCA and EBRD estimates

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

Sweden

United K

ingdom

The Neth

erlan

dsFran

ceHungary

Europe

Czech

Rep

ublicBelg

iumIre

land

SpainDen

markItaly

German

ySwitz

erlan

dNorw

ayFinlan

dEsto

niaPolan

dKaz

akhsta

nBulgari

aPortu

galRoman

iaRuss

iaAustr

iaCro

atia

Ukraine

MoldovaSlove

niaGree

ce5


Fund Raising Fund Raising vsvs Investments Investments -- CSECSE

Note: CSE only, EBRD tracked portfolio only

0

200

400

600

800

1,000

1,200

1,400

1,600

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

USD

Mill

ions

Annual investments Fund capital raised by year

6


Fund Raising Fund Raising vsvs Investments Investments -- CISCIS

0

100

200

300

400

500

600

700

800

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

USD

Mill

ions

Annual Investments

Fund capital raised by year

7

Note: CIS only, EBRD tracked portfolio only


EBRD Net Portfolio at a GlanceEBRD Net Portfolio at a Glance

Note: CSE and CIS, EBRD tracked portfolio only

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,500

2,750

Funds Committed Paid-In NAV + Returned

USD

Mill

ions

NAV

Returned

8


EBRD Commitments Over TimeEBRD Commitments Over Time

0

50

100

150

200

250

300

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

USD

Mill

ions

CSE Donor / EBRD Sponsored FundCSE Private Fund

Russia/CIS Donor / EBRD Sponsored FundRussia/CIS Private Fund

9


Net Returns DataNet Returns Data


EBRD Horizon Returns: All FundsEBRD Horizon Returns: All Funds

Returns as at 31 December 2006 One Year

Three Years

Five Years

Ten Years

Since Inception

USD EBRD Private Equity Portfolio* 46.9% 46.5% 28.8% 13.8% 13.2%

Cambridge Emerging Markets Venture Capital & Private Equity Index** 26.8% 24.6% 12.8% 6.1% N/A

S&P 500*** 12.3% 8.6% 6.8% 4.9% 5. 6%

EUR EBRD Private Equity Portfolio* 31.5% 45.5% 18.1% 11.3% 11.1%

EVCA All private Equity** 36.1% 13.0% 5.4% 11.0% 10.8%

FTSE Emerging Markets Eastern Europe*** 12.2% 39.8% 28.9% 19.9% N/A

Source: Cambridge Associates, EVCA, Bloomberg and EBRD* EBRD portfolio pooled end-to-end return, net of fees, expenses and carried interest. Excludes property funds, and includes liquidated partnerships** Pooled end-to-end return, net of fees, expenses, and carried interest.*** Calculated assuming the same investment (cash flow) pattern as EBRD's portfolio of private equity funds since the relevant horizon.

10


EBRD Horizon Returns EBRD Horizon Returns –– BreakdownBreakdown

Returns as at 31 December 2006 One Year

Three Years

Five Years

Ten Years

Since Inception

USD EBRD Private Equity Portfolio 46.9% 46.5% 28.8% 13.8% 13.2%

CSE 34.4% 36.9% 24.7% 11.4% 11.2%

Russia/CIS 60.5% 58.8% 33.4% 16.6% 15.8%

CSE Survivors 27.1% 36.2% 26.2% 15.4% 15.1%

Russia/CIS Survivors 43.4% 56.6% 36.70% 23.9% 23.1%

EUR EBRD Private Equity Portfolio 31.5% 45.5% 18.1% 11.3% 11.1%

CSE 20.3% 36.2% 14.9% 9.6% 9.6%

Russia/CIS 43.5% 57.5% 21.7% 13.4% 12.9%

CSE Survivors 13.8% 35.4% 16.4% 13.8% 13.7%

Russia/CIS Survivors 28.7% 54.7% 25.5% 19.8% 19.5%

11


EBRD Net Cash Flows from Funds EBRD Net Cash Flows from Funds

0

50

100

150

200

250

300

350

400

450

500

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

USD

Mill

ions

Disbursements

Receipts

12


Net Vintage GroupsNet Vintage Groups

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

TVPI

0%

5%

10%

15%

20%

25%

30%

35%

40%

IRR

TVPIDPIIRR

Note: TVPI = Total Value to Paid In, DPI = Distributions to Paid InNote: CSE and CIS

13


Gross Returns DataGross Returns Data


Snapshot: All Funds Snapshot: All Funds

$2,784m $2,009m

$305m

$1,348m

$5,187m

$2,281m

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

USD

Mill

ions

Fully Realised (FR Including WO)Partially Realised (PR)Unrealised (UR)

Overall 2.03x, 21.1%

FR 2.27x, 20.4%

PR 4.42x, 32.8%

UR 1.39x, 16.0%

Investments at Cost $4,595m

Total Value $9,319m

Excluding underlying investments of funds in which the EBRD sold on its interest

14


Snapshot: CSESnapshot: CSE

1,943m $1,386m

$174m

$439m

$3,599m

$1,654m

0

500

1,000

1,500

2,000

2,500

3,000

USD

Mill

ions



FR 2.18x, 19.6%

PR 2.52x, 22.0%

UR 1.40x, 14.8%


Total Value $5,981m

15



Snapshot: CIS Snapshot: CIS

$841m $ 624m

$130m

$909m

$1,588m

$627m

0

500

1,000

1,500

2,000

2,500

3,000

USD

Mill

ions



FR 2.53x, 22.1%

PR 6.98x, 39.9%

UR 1.35x, 20.4%


Total Value $3,338m

16



Snapshot: SurvivorsSnapshot: Survivors

$2,641m $1,882m

$271m

$1,186m

$4,270m

$1,608m

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

USD

Mill

ions



FR 2.66x, 25.7%

PR 4.38x, 35.2%

UR 1.40x, 18.3%


Total Value $8,097m

17



Snapshot: CSE SurvivorsSnapshot: CSE Survivors

$1,821m $1,271m

$151m

$360m

$3,104m

$1,246m

0

1,000

2,000

3,000

4,000

5,000

USD

Mill

ions



FR 2.49x, 23.9%

PR 2.38x, 22.0%

UR 1.43x, 17.3%


Total Value $5,285m

18



Snapshot: CIS Survivors Snapshot: CIS Survivors

$820m $611m

$120m

$826m

$1,165m

$362m

0

500

1,000

1,500

2,000

2,500

3,000

USD

Mill

ions



Total Value $2,811m


FR 3.22x, 30.6%

PR 6.90x, 43.5%

UR 1.34x, 21.5%

19



Aggregate USD Gross Results: CSEAggregate USD Gross Results: CSE

All Survivors IQ Private

TVPI IRR TVPI IRR TVPI IRR TVPI IRR

Fully Realised 2.18 19.6% 2.49 23.9% 2.24 20.4% 2.2 19.9%

Fully Realised and Partly Realised

2.21 19.8% 2.48 23.8% 2.27 20.5% 2.24 20.1%

All (including Unrealised) 1.86 18.9% 1.98 22.8% 1.89 19.7% 1.86 19.2%

20


Aggregate USD Gross Results: CISAggregate USD Gross Results: CIS

All Survivors IQ Private

TVPI IRR TVPI IRR TVPI IRR TVPI IRR

Fully Realised 2.53 22.1% 3.22 30.6% 3.06 27.4% 2.82 24.3%

Fully Realised and Partly Realised

3.3 25.5% 4.14 33.2% 4.01 30.7% 3.83 28.0%

All (including Unrealised) 2.42 25.1% 2.57 32.2% 2.5 30.4% 2.48 27.7%

21


Gross Cash Flow Gross Cash Flow -- CSECSEU

SD M

illio

ns

0

200

400

600

800

1,000

1,200

1,400

1,600

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Annual Investments by funds (cash out)

Annual Proceeds to funds (cash in)

22


Gross Cash Flow Gross Cash Flow -- CISCIS

0

100

200

300

400

500

600

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

USD

Mill

ions

Annual Investments by funds (cash out)

Annual Proceeds to funds (cash in)

23


Investments by Country Investments by Country –– to end 2006to end 2006

Central Asia4%

Western CIS andCaucasus**

2%

Bulgaria4%

Other*2%

Baltics4%

Hungary10%

Czech Republic andSlovakia

12%

Russia24%

Romania8%

Poland30%

* Other includes: Albania, Bosnia, Croatia, FYR Macedonia, Kosovo, Serbia and Montenegro, Slovenia** Western CIS and Caucasus includes: Azerbaijan, Georgia, Moldova and Ukraine*** Central Asia includes: Kazakhstan and TurkmenistanNote: CSE and CIS, since inception

24


Investments by Country Investments by Country -- 20062006

25

Ukraine5%

Russia30%

Poland27%

Romania5%

Kazakhstan8%

Other2%

Czech Republic17%

Bulgaria3%

Croatia3%

Other includes: Estonia, Hungary, Moldova, Slovenia

Note: CSE and CIS, vintage year 2006 only


Investments by Stage Over TimeInvestments by Stage Over Time

26

0

100

200

300

400

500

600

700

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Inve

stm

ent C

ost

USD

Mill

ions

ExpansionOther

Sec. Purchase / BuyoutSeed/Early Stage


Investments by Stage Over Time: CSEInvestments by Stage Over Time: CSEIn

vest

men

t Cos

t U

SD M

illio

ns

0

50

100

150

200

250

300

350

400

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Expansion

OtherSec. Purchase / BuyoutSeed/Early Stage

27


Investments by Stage Over Time: CISInvestments by Stage Over Time: CISIn

vest

men

t Cos

t USD

Mill

ions

0

50

100

150

200

250

300

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Expansion

Other

Sec. Purchase / Buyout

Seed/Early Stage

28


2006 Investment Stage 2006 Investment Stage vsvs EVCAEVCA

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CIS (EBRD) CSE (EBRD) EVCA

% o

f Inv

estm

ent C

ost

OtherSeed/Early StageSec. Purchase / BuyoutExpansion

29


2006 Investment Sectors 2006 Investment Sectors vsvs EVCAEVCA

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CIS (EBRD) CSE (EBRD) EVCA

% o

f Inv

estm

ent C

ost TIM

ServicesPrimary & EnergyPharma & MedicalManufacturingConsumer/RetailConstructionAgriculture & Forestry

30


Investments by Sector Investments by Sector –– to end 2006to end 2006

Note: CSE and CIS, since inception

Services22%

TIM29%

Wholesale & Retail11%

Agriculture & Forestry1%

Construction5% Consumer

14%

Pharma & Medical3%

Manufacturing10%

Primary & Energy5%

31


Investments by Sector Investments by Sector –– 20062006

Services40%

TIM40%

Wholesale & Retail5%

Construction6%

Primary & Energy3%

Manufacturing2%

Consumer4%

Note: CSE and CIS, vintage year 2006 only

32


Exits by Sector Exits by Sector –– to end 2006to end 2006

33

Note: fully realised investments, including partial realisations, excluding write offs, CSE and CIS

0

500

1000

1500

2000

2500

3000

Agriculture &Forestry

Construction Consumer Manufacturing Pharma &Medical

Primary &Energy

Services TIM Wholesale &Retail

Investment ProfitabilityInvestment Cost

USD

Mill

ions


Exits by Sector 2006 Exits by Sector 2006 -- CSECSE

34

0

50

100

150

200

250

300

350

400

450

Agriculture& Forestry

Construction Consumer Manufacturing Pharma& Medical

Primary & Energy

Services TIM Wholesale & Retail

USD

Mill

ions

Investment Profitability

Investment Cost

Note: fully realised investments, including partial realisations, excluding write offs, CSE only


Exits by Sector 2006 Exits by Sector 2006 -- CISCIS

35

0

100

200

300

400

500

600

Agriculture & Forestry

Construction Consumer Manufacturing Pharma& Medical

Primary & Energy

Services TIM Wholesale & Retail

USD

Mill

ions


Investment Cost

Note: fully realised investments, including partial realisations, excluding write offs, CIS only


Exits by CountryExits by Country

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Russia

Poland

Roman

iaCen

tral A

sia***

Czech

Rep

ublic

Hunga

ry

Slovak

ia

Bulgari

a

Other C

SE*

Estonia

Lithu

ania

Ukraine

Other C

IS**

USD

Mill

ions


Investment Cost

*Other CSE includes: Albania, Bosnia, Croatia, Kosovo, FYR Macedonia, Slovenia and Latvia**Other CIS includes: Azerbaijan, Moldova and Georgia***Central Asia includes: Kazakhstan and Turkmenistan All exits since inception (including fully realised, partially realised and write-offs)

36


Exit by Country Exit by Country -- 20062006

37

0

100

200

300

400

500

600

700

800

900

1,000

Russia CentralAsia*

Poland Bulgaria Romania Baltics** CzechRepublic

& Slovakia

Ukraine Hungary Other***

USD

Mill

ions


Investment Cost

***Other includes: Albania, Bosnia, Croatia, Kosovo, FYR Macedonia, Slovenia**Central Asia includes : Kazakhstan and Turkmenistan * Baltics includes; Estonia, Latvia, and Lithuania,Exits in 2006 for fully realised and partially realised deals (including write-offs)


Exits Over Time by Investment Stage Exits Over Time by Investment Stage -- CSECSE

0

100

200

300

400

500

600

700

800

900

1,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Exit Year

Exit

Proc

eeds

(USD

Mill

ions

)

ExpansionOtherSec. Purchase / BuyoutSeed/Early Stage

Note: Fully realised and partially realised investments (excludes write-offs)

38


Exits Over Time by Investment Stage Exits Over Time by Investment Stage -- CISCIS

0

100

200

300

400

500

600

700

800

900

1000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Exit Year

Exit

Proc

eeds

(USD

Mill

ions

)

Expansion

Sec. Purchase / Buyout

Seed/Early Stage

39

Note: fully realised and partially realised investments (excludes write-offs)


Type of Exits Over Time Type of Exits Over Time -- CSECSE

0

200

400

600

800

1000

1200

1400

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

USD

Mill

ions

MBO

Other

Public Market

Trade Sale

Note: fully realised investments, including partial realisations, excluding write-offs

40


Type of Exits Over Time Type of Exits Over Time -- CISCIS

0

100

200

300

400

500

600

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

USD

Mill

ions

MBO

Other

Public Market

Trade Sale

Note: fully realised investments, including partial realisations, excluding write-offs

41


Performance by Exit TypePerformance by Exit Type

42

Note: CSE and CIS fully realised deals, including write-offs

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Write Off MBO OTHER Public Market Trade Sale0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Investment Cost

Exit Proceeds & Cash Returns

Multiple

USD

Mill

ions


Performance by Investment Stage and Performance by Investment Stage and Exit TypeExit Type

43

Note: all fully realised and partially realised deals, excluding write-offs

Investment Stage

Exit TypeExpansion Sec Purchase

BuyoutSeed/Early

Stage

Sale to Management 1.75x 0.87x 0.71x

Flotation/SS 4.37x 2.88x 3.23x

Trade Sale 3.13x 3.30x 1.49x

Other 2.00x 2.41x 1.98x


Gross Vintages and Money MultiplesGross Vintages and Money Multiples

0

200

400

600

800

1000

1200

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

USD

Mill

ions

Vintage Year

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5Investment Cost All Total Investment Value AllTVPI All TVPI FR only

Note: Includes write-offs

44


Gross Vintages and Money Multiples: Gross Vintages and Money Multiples: CSECSE

45

0

100

200

300

400

500

600

700

800

900

1,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

USD

Mill

ions

Vintage Year

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00Investment Cost All

Total Investment Value AllTVPI All

TVPI FR only



Gross Vintages and Money Multiples: Gross Vintages and Money Multiples: CISCIS

46

0

100

200

300

400

500

600

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

USD

Mill

ions

Vintage Year

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00Investment Cost All Total Investment Value AllTVPI All TVPI FR only



2006 Exits by Vintage2006 Exits by Vintage

47

0

100

200

300

400

500

600

700

800

900

1000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

USD

Mill

ions

UR FR exited in 2006

FR 2006 4.06x

FR 2006 2.18x

FR 2006 3.07x

Note: CSE and CIS, all fully realised deals in 2006 (including write-offs)


Exit Performance Over TimeExit Performance Over Time

48

USD

Mill

ions

0

500

1,000

1,500

2,000

2,500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Exit Year

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50Investment Cost

Exit Proceeds & Cash Returns

TVPI

Note: fully realised deals, including partial realisation and excluding write-offs


Exit Performance Over Time: CSEExit Performance Over Time: CSE

49

0

200

400

600

800

1,000

1,200

1,400

1,600

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

USD

Mill

ions

Exit Year

0.00

1.00

2.00

3.00

4.00

5.00

6.00Investment CostExit Proceeds & Cash ReturnsTVPI



Exit Performance Over Time: CISExit Performance Over Time: CIS

50

USD

Mill

ions

0

200

400

600

800

1,000

1,200

1999 2000 2001 2002 2003 2004 2005 2006Exit Years

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00Investment CostExit Proceeds & Cash ReturnsTVPI



Unrealised ValuesUnrealised Values

0

200

400

600

800

1000

1200

1400

Expansion Sec. Purchase / Buyout Seed/Early Stage

USD

Mill

ions

Investment Cost

Total Investment Value

CSE and CIS

51


Unrealised Values Unrealised Values -- CSECSE

100

200

300

400

500

600

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Vintage Year

Inve

stm

ent C

ost U

SD M

illio

ns

Sum of Investment Cost

Sum of Total Investment Value

0

52


Unrealised Values Unrealised Values -- CISCISIn

vest

men

t Cos

t USD

Mill

ions

50

100

150

200

250

300

350

400

450

500

1998 1999 2000 2001 2002 2003 2004 2005 2006

Vintage Year

Sum of Investment Cost

Sum of Total Investment Value

53


Investor DataInvestor Data


Investors By Type Investors By Type -- TrendsTrends

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1992-2005 2006

Banks & Insurance

IFI and Gvt

Funds of Funds

Pension Funds

Corporate Investors

Other

54


Investors By Type By Region Investors By Type By Region -- 20062006

0

50

100

150

200

250

300

Other Banks CorporateInvestors

Fund of Funds

IFI & Govt Insurance PensionFunds

Private Investors

USD

Mill

ions

CSE FundsCIS Funds

Note: includes EBRD (in IFI/Govt)

55


Investors By Origin Over TimeInvestors By Origin Over Time

0

200

400

600

800

1000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

USD

Mill

ions

Other USA Europe

Note: Excludes EBRD (from Europe)

56


Copyright 2007 EBRD. All rights reservedCopyright 2007 EBRD. All rights reserved

This material is for the recipient’s private information. No part of this document may be reproduced or transmitted in any form or by any means, including photocopying and recording, without the written permission of the Bank. Such written permission must also be obtained before any part of this publication is stored in a retrieval system of any nature. While the information contained herein was compiled by the EBRD, we do not guarantee its accuracy or completeness. We accept no liability in relation to use of this information. Copyright 2007 European

Bank for Reconstruction and Development. All rights reserved.

performance of private equity funds in central and eastern europe

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