Dr. Gerhard Grund

Member of the Board, RCB

November 2006

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M&A Volume in Eastern Europe

Private Equity Activity in Eastern Europe

53,524

24,602

2,952

12,845

0

10000

20000

30000

40000

50000

60000

2004 2005

CEE

Thereof Fin. Sponsors

*CEE: Albania, Bosnia, Belarus, Bulgaria, Croatia, Czech, Estonia, Georgia, Hungary, Latvia, Lithuania, Macedonia, Moldova, Poland, Romania, Russia, Serbia, Montenegro, Slovakia, Slovenia, Ukraine

PE Deals in Volume in Eastern Europe

2004 (mEUR) 2005 (mEUR)

PE12,0%

Strate-gics

88,0%

PE24,0%

Strate-gics

76,0%

Source: Thomson Financial, Bureau van Dijk, Mergermarket, Dealogic

Within growing M&A Volumes (+9%), private equity driven M&A deals grew even faster during the first nine months of 2006 (+28%)

The enlargement of the European Union in 2004 and the upcoming entry of Bulgaria and Romania in 2007 has attracted private equity to enter the Eastern European region

More developed Eastern European markets even attract Venture Capital, although deal sizes remain low

Increasing number of buy-outs with the ability of debt financing (up to 5.0x Debt/EBITDA). Less developed markets such as Russia or Ukraine focus on expansion finance and simpler industries (consumer products, telecoms)

Distressed assets / debt driven M&A deals become attractive to hedge funds

In 2005, overall M&A activity in Eastern Europe doubled, whilst private equity driven M&A has quadrupled, reaching 25% of all M&A transactions

Positive economic and regulatory developments have stirred up interest in private equity in Eastern Europe

Overview

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Focus in Eastern Europe primarily on mature investments (replacement capital, buy-outs)

Compared to Western Europe, early stage financing is less developed

Traditional buy-out sectors in Eastern Europe are:Telecoms (fixed mobile) and telecom

infrastructure (towers, cable)Media (both new and old media)Energy (electricity and heat power, renewables)Heavy industries (mining, heavy manufacturing)Logistics (airports, transport)Food and beveragesReal estate

Private Equity by Type

Start-up1%

Replace-ment Capital

19%

Expansion39%

Buyout41%

Replace-ment Capital

2,5%

Start-up6,0%

Seed0,4%

Buyout69,7%

Expansion21,4%

Private Equity capital in Eastern Europe concentrates mainly on expansion and buyout transactions

In Eastern Europe, seed and start-up investments are almost not existent

EE Investments by Type 2004

European Investments by Type 2004

Comments

Source: European Venture Capital Association

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Key Issues / Trends by Region

Common factors

Sourcing of deals primarily from privatisations and first round “oligarchs“

Only few organically grown businesses critical in size for buy-outs

Venture capital opportunities in niche areas

For early stage companies capital markets exit only in Poland and to a lesser extent in the Czech Republic and Hungary

In many EE-Countries private equity financing is still underdeveloped

Stable economic situation (Growth rate 06e: 5.0%) Despite EU membership and

economic growth political risks remain Venture capital begins to grow Most major international funds

consider opportunities in CEE

Regional dominance by Russia and dependence on Russian trade

Economic growth 06e: 6.1% Unstable political environment as a

major risk Local funds / investment banks

with both local and international funding

Strong economic growth (06e: 5.3%) Ongoing privatizations Expected EU entry of Romania and

Bulgaria in 2007 EU accession process launched in in a

number of SEE countries Low taxes in certain countries (Serbia,

Romania 10%) High level of corruption is a major risk Specialized SEE funds active

SEE

CEE

CIS

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Deals and Funds Raised in 2005 - 2006

Period Target Country Status PE Investor PE Seller Deal size % stake Target Business2006 ULTIMO Poland Completed Advent AIG Capital EUR 60m 100% Debt purchase and collection2006 KEK Kosovo Bidding Contour Global n.a. n.a. n.a. Kosovo's electricity monopoly2006 BorsodChem Hungary Pending Permira n.a. EUR 836m 48% Chemicals company 2006 Polmos Lublin Poland Announced Oaktree Capital n.a. USD 31m 41% Distiller2006 Tatra CZE Completed KBC n.a. USD 26m 81% Truck manufacturer 2006 Westdia Media Russia Completed Baring Vostok n.a. USD 60m 100% Outdoor advertising 2006 Romexterra Bank Romania Bidding PPF Investments n.a. n.a. n.a. Bank2006 SkyEurope Slovakia Announced York Global Finance II n.a. EUR 39m 30% Low -cost airline 2006 NEWS MEDIA Russia Completed UFG PRIVATE EQUITY n.a. USD 40m 50% Media, new spaper2006 Kamax + Kestone Poland, Germany Completed Advent n.a. USD 60m 100% Polish + German rail equipment makers 2005 Aster Group Poland Planned n.a. Hicks Muse USD 300m 100% Cable operator2005 OKD CZE Completed Investors group n.a. EUR 400m 66% Coal mining2005 Grisoft CZE Completed Investors group n.a. USD 52m n.a. IT

Recent Private Equity Deals

In 2006, more than EUR1.5bn of new funds are expected to be raised for private equity investments in the region

One of the largest deals in Eastern Europe is the ongoing bid by Permira to acquire the Hungarian chemicals company BorsodChem

Source: Factiva

Period Fund Volume Regional focus Focus2006 Balkan Accession Fund USD 110m SEE Retail, logistics, distribution, consumer goods, f inance, IT, telecom2006 Carlyle Group Planned CEE n.a.2006 Enterprise Investors EUR 660m CEE Corporate buyouts 2006 Innova Capital EUR 200m CEE + SEE Telecom, f inances and media 2006 Capexit EUR 100m CEE n.a.2006 Societe Generale EUR 100m CEE + SEE Manufacturing and services companies 2005 East Capital EUR 350m CIS Financial institutions 2005 Troika Dialog + Temasek EUR 150m CIS Retail, consumer goods, telecom, media2005 Baring Vostok USD 400m CIS Medium-sized companies

Recenty Raised Private Equity Funds

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Outlook / Potential Investment Areas

Telecom Planned & ongoing privatizations in the Balkan countries Upcoming liberalisation of the telecom market will open opportunities for alternative

providers

Energy Upcoming privatisations in Romania, Turkey and later in other SEE countries Greenfield construction opportunities in B&H, Kosovo Hydro-energy opportunities in Montenegro, Macedonia, Albania

Heavy Industry Ongoing privatisations in Serbia, Turkey

Food & Beverages / Pharma Opportunities in the retail sector in fast growing and unsatisfied markets

Venture capital Mostly in CEE, selected opportunities in Bulgaria, Romania, Slovenia, Croatia Technology Renewables Services

Distressed assets Expected non-performing loan opportunities in Ex-Yugoslavia Initial buy out phase completed in CEE

Real estate Opportunities in SEE countries EU accession

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Dr. Gerhard GrundMember of the Board

E-mail: grund@rcb.atT +43 (0) 1 515 20 301F +43 (0) 1 515 20 5301

Raiffeisen Investment AG

A-1015 WienTegetthoffstraße 1

E-mail: office@raiffeisen-investment.comT +43 (0) 1 710 54 00 60F +43 (0) 1 710 54 00 25

For further information please contact:

Heinz SernetzMember of the Board

E-mail: h.sernetz@raiffeisen-investment.comT +43 (0) 1 710 54 00 13F +43 (0) 1 710 54 00 25

Peter KöhlerDirector, Financial Sponsors

E-mail: p.koehler@raiffeisen-investment.comT +43 (0) 1 710 54 00 46F +43 (0) 1 710 54 00 69

Raiffeisen Centrobank AG

A-1015 WienTegetthoffstraße 1

E-mail: office@rcb.atT +43 (0) 1 515 20 0F +43 (0) 1 513 43 96