YOUR PRIVATE EQUITY PARTNER IN THE BALTICS

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1 YOUR PRIVATE EQUITY PARTNER IN THE BALTICS ESTONIA Tartu mnt. 2, Tallinn, Tel , Fax LATVIA Ulmana gatve 119, Marupes pag., Rigas raj, LV-2167, Tel , Fax LITHUANIA J.Jasinskio 16B, 1112 Vilnius, Tel , Fax

2 One of the leading private equity and venture capital firms in the Baltics Local investor with offices in all three Baltic countries 11 investment professionals 130m in four fund generations Baltcap has done 38 investments, 23 exits Solid institutional investors (EIF, EBRD, SEB and Swedbank pensions, Gjensidige, Erste Bank, etc.) LITHUANIAN PRIVATE EQUITY & VENTURE CAPITAL ASSOCIATION Finnish team + local advisers Baltic offices & teams established Management moved to Baltics, new team established in Lithuania MBO, BaltCap team fully independent BaltCap Baltic Investment Fund I & II $25.0m Baltic Investment Fund III 36.1m 2001 Baltic SME Fund 13.8m 2007 BaltCap Private Equity Fund 58m Under the EIF s JEREMIE initiative BaltCap seeks to establish two new VC funds with target size 30m to make investments into SMEs in Latvia and 20m to make investments in Lithuania 1

3 Investments in Baltics mainly SMEs in various industries UAB Voira Retail of children s goods UAB Kraitene Frocen foods Entry: 2001 Exit: 2006 UAB Ashburn International Electronic payments opertor Entry: 2001 AS Klaipeda Invest Hotel Entry: 2000 AS Western Invest Shipyard Entry: 1999 Exit: 2001 AB Snaige White goods Exit: 2001 Informacines Tehnologijos Information tehnology Entry: 1999 Exit: 2004 SIA Hanzas Elektronika Electronic component Entry: 2002 SIA DEPO DIY DIY retail chain AS MicroLink Information technology Entry: 1999 Exit: 2005 UAB Interinfo Yellow pages, book and portal Entry: 2008 AB Svyturys Brewery Exit: 1999 UAB Savy Construction AB Kauno Audiniai Textile Entry: 1997 AB Naujoji Ringuva Chemical Entry: 1996 Exit: 2002 UAB Daily Service Retail of office supplies Exit: 2007 Quattromed HTI Laborid Medical Laboratories Entry: 2008 SIA DT Mobile Retail of moblile phones Entry: 2003 Exit: 2006 SIA Zetcom Virtual mobile operator Exit: 2007 INTRAC Group AB Machinery trade Entry: 2002 OÜ Energate Gas distribution Entry: 2008 Koolitööde AS (E-School) Software solution for schools NutriTech Baltics OÜ Sports drinks AS Ecometal Batteries recycling Entry: 2001 Exit: 2007 AS V&K Holding (Videoplanet) Video rental chain Entry: 2003 Exit: 2004 AS Vipex Wholesale of construction materials Exit: 2005 AS EMV Construction Entry: 1996 Exit: 1997 SIA V.L.T. Moulded fiber packaging SIA Papifabrika Ligatne Papermill SIA JLM Group Bakery Exit: 2006 AS NeoQi Body care equipment EGeen International Clinical research organisation OÜ Tallinna Pesumaja Laundry house Entry: 2006 AS A. Le Coq Brewery Exit: 2001 AS Standard Office furniture Entry: 1996 Exit: 2004 AS Teede-REV 2 Road construction IT Koolitus keskuse OÜ IT training Exit: 2008 SIA Adam Auto Car dealership

4 Fund status Baltcap was selected by EIF to establish VC funds in Latvia and Lithuania in a thorough selection process that ended in July Latvian VC fund status: Initial closing at EUR 20 million planned for November 6 8 million of private money in various stages of commitment (majority of investments shall come from local pension funds) LPA agreement in finalization stage with EIF and negotiations opened with private investors Latvian limited partnership structure being put in place Lithuanian VC fund status: Initial closing at EUR 14 million planned for December 4-6 million of private money in various stages of commitment (majority of investments shall come from high net worth individuals and local pension funds) LPA agreement negotiations opened with EIF Lithuanian limited partnership structure being put in place 3

5 Investment strategy Investment per company shall be between 300k to 3m with average being 1.7m Expect to make investments in Latvia and in Lithuania until end of 2013, on average 3 to 4 per country per year Reviewed sectors which Baltcap considers interesting to invest in: Manufacturing Industries underdeveloped by EU standards Energy (renewable) and utilities Services (B2B, B2C, outsourcing) ITC Actively working on pipeline in both funds since June Formal application process being put in place due to high interest Additional people fully dedicated to Jeremy are being recruited 4

6 Investment strategy Selection criteria: Professional and experienced management Product / service with strong local demand or globally competitive Clear and defendable core competencies Clear growth prospects / expansion potential Innovative approach Transparent operations Exit strategy Reasonable valuations Expect to take significant minority / majority shareholding in investee companies Historically have invested in 3 to 5% of cases shown to us 5

7 Healthy pipeline being built up in both countries Industry Description Country Initial investment ( m) Add-on equity Competitive process Source EqV EV Manufacturing Food / capacity expansion LAT No Entrepreneur Healthcare/Manufactu ring Medical equipment / capacity expansion LIT Yes Entrepreneur Manufacturing Electronics / capacity LAT No Entrepreneur expansion Manufacturing Ingredients for food & LIT No Related business Ceo beverage industry / capacity expansion Energy (several) Co-generation / start-ups LAT/ LIT No/Yes Entrepreneurs/Investment Bank Utilities Waste management/ LIT Yes Investment bank recycling / expansion ITC Specialized IT solutions / new LIT No Entrepreneur product ITC Information services / new LAT No Entrepreneur / Baltcap product Healthcare Clinic / expansion LAT Yes Investment Bank Services Vending / expansion LIT No CEO 6

8 Market gap Supply of Financing Economic recessions Bank credit crunch Low availability of institutional private equity and venture capital Demand for Financing Entrepreneurs seek to sustain, strengthen and develop further their businesses Credit crunch increases the need for equity capital Expanding deal flow, both quality and quantity wise The JEREMIE program shall be an important vehicle in supporting local entrepreneurs in Latvia and Lithuania to help reviving local economies Baltcap will operate in a market gap with the high demand for equity financing and shall have opportunity to pick attractive investments at good terms Baltcap aims to provide attractive returns to private investors for them to continue investing in venture capital in general and JEREMIE programs in particular in the long-run 7