STATUS OF THE PRIVATE EQUITY MARKET IN THE CEE COUNTRIESC5 CEE PRIVATE EQUITY FORUM

DAVID BERNARD23 MARCH 2009

2

M&A ACTIVITY DROPS EVEN FASTER IN CEE THAN ELSEWHERE

Source: Thomson Reuters / Freeman & Co

0

500

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

0

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Volume ($bn) - left axis

Number of Deals - right axis

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

0

500

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3,500Volume ($bn) - left axis

Number of Deals - right axis

Global M&A Activity M&A Activity With CEE Involvement

0

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

CEE M&A Financial Advisory Fee Pool• Drop in M&A volume more pronounced in CEE

(-44% 2008 vs. 2007) than in rest of the world (-37%)

• Average deal size in CEE goes from $14m in 2000 to $85m in 2007 and $3m in 2009

• Financial advisor fees do not decrease quite as sharply due to deal size effect

• Particularly slow start of 2009 in CEE

NB: Central & Eastern Europe defined as including Austria and Russia;

‘CEE Involvement’ defined as target nation or acquiror nation in CEE

$Mil

3

VOLUME DROP IS REFLECTED ACROSS MOST INDUSTRY SECTORS

IndustryDeal Volume ($mil) Last

6 Months% Change vs. Previous

6 MonthsNumber of

Deals

Consumer Products and Services 45 -96% 111

Consumer Staples 720 -56% 191

Energy and Power 8,511 -21% 232

Financials 9,234 72% 327

Government and Agencies 0 N.A. 3

Healthcare 177 -94% 32

High Technology 118 -74% 74

Industrials 2,597 -21% 294

Materials 1,212 -90% 187

Media and Entertainment 301 -83% 91

Real Estate 1,214 -61% 91

Retail 295 -80% 91

Telecommunications 426 -50% 43

TOTAL 24,850 -44% 1,767

Deal Volume ($mil) Last 6 Months

% Change vs. Previous 6 Months

Number of Deals

8 -99% 3

205 -66% 5

5 -100% 4

0 -100% 1

0 N.A. -

9 N.A. 4

27 117% 9

71 -16% 7

0 -100% 5

22 -91% 5

0 N.A. -

23 N.A. 5

0 -100% 1

370 -93% 49

CEE M&A Activity CEE PE-Backed M&A Activity

Source: Thomson Reuters

4

CROSS-BORDER M&A ACTIVITY IN CEE FALLS IN LINE WITH GENERAL M&A

Target Nation YTD Deal Volume ($Mil)% Change vs.

Same Period 2008Number of

Deals

Albania 62 N.A. 1

Austria 59 -98% 32

Bosnia 0 0% 2

Bulgaria 15 -95% 17

Croatia 0 -100% 3

Czech Republic 217 -3% 12

Estonia 0 0% 7

Georgia 0 0% 1

Hungary 2 -100% 6

Latvia 0 -100% 0

Lithuania 19 -39% 6

Macedonia 0 -100% 0

Montenegro 0 -100% 1

Poland 89 -87% 42

Romania 19 -94% 13

Russia 603 -97% 516

Serbia 63 426% 2

Slovak Republic 7 -99% 2

Slovenia 0 -100% 2

Ukraine 159 -82% 60

TOTAL 1,314 -95% 726

YTD Deal Volume ($Mil)% Change vs. Same

Period 2008Number of

Deals

62 N.A. 1

0 -100% 14

0 N.A. 2

7 -98% 11

0 -100% 2

202 -6% 9

0 N.A. 1

0 N.A. 0

2 -100% 4

0 -100% 0

16 -48% 5

0 -100% 0

0 N.A. 1

10 -98% 9

15 -95% 10

211 -97% 41

63 426% 2

7 -99% 2

0 N.A. 2

158 -82% 41

754 -94% 158

CEE M&A Activity CEE Cross-Border M&A Activity

Source: Thomson Reuters

5

Target NationYTD Deal Volume

(inc. Net Debt of Target) ($Mil)% Change vs.

Same Period 2008Number of

Deals

Albania 0 0% 0

Austria 0 0% 2

Belarus 0 0% 0

Bosnia 0 0% 0

Bulgaria 2 -62% 1

Croatia 0 0% 0

Czech Republic 0 0% 0

Estonia 0 0% 0

Georgia 0 0% 0

Hungary 2 N.A. 1

Latvia 0 0% 0

Lithuania 0 0% 0

Macedonia 0 0% 0

Moldova 0 0% 0

Montenegro 0 0% 0

Poland 0 -100% 0

Romania 0 -100% 2

Russia 0 -100% 3

Serbia 0 0% 0

Slovak Republic 0 0% 1

Slovenia 0 0 0

Ukraine 0 -100% 2

TOTAL 3 -99% 12

YTD Deal Volume(inc. Net Debt of Target) ($Mil)

% Change vs. Same Period 2008

Number of Deals

62 N.A. 1

59 -98% 30

0 0% 0

0 0% 2

13 -96% 16

0 -100% 3

217 -3% 12

0 0% 7

0 0% 1

0 -100% 5

0 -100% 0

19 -39% 6

0 -100% 0

0 0% 0

0 -100% 1

89 -87% 42

19 -85% 11

603 -97% 513

63 426% 2

7 -99% 1

0 -100% 2

159 -82% 58

1,310 -95% 714

PRIVATE EQUITY BACKED M&A ACTIVITY FALLS EVEN FASTER THAN STRATEGIC M&A

PE-Backed M&A Activity M&A with Strategic Buyer

Source: Thomson Reuters

6

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Number of Issues - right axis

ECM ACTIVITY DROPS EVEN FASTER IN CEE THAN ELSEWHERE

Source: Thomson Reuters / Freeman & Co

Global ECM Activity CEE ECM Issuers

CEE ECM Issuance Fee Pool• Drop in equity issuance more pronounced in

CEE (-29% 2008 vs. 2007) than in rest of the world (-17%)

• Average equity deal size in CEE is stable in 2008, and about 80% higher than in rest of the world

• Particularly slow start of 2009 in CEE

$Mil

7

IN NUMBER OF EQUITY ISSUANCE DEALS, THE SLOWDOWN IS MUCH HIGHER IN CEE

0

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2008 YTD 2009 YTD

Convertible

IPO

Follow -On

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2008 YTD 2009 YTD

Convertible

IPO

Follow -On

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2008 YTD 2009 YTD

Convertible

IPO

Follow -On

Global ECM Activity EMEA ECM Activity CEE ECM Activity

Source: Thomson Reuters

Nu

mb

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of

Iss

ue

s

8

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120

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

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Number of Issues - right axis

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Volume ($bn) - left axis

Number of Issues - right axis

DEBT ISSUANCE IN CEE MIRRORS OTHER REGIONS

Source: Thomson Reuters

Global Syndicated Loan Issuance Activity CEE Syndicated Loan Issuance Activity

Global DCM Activity CEE DCM Activity

0

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

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18,000Volume ($bn) - left axis

Number of Issues - right axis

9

THE 2008 SURGE IN EQUITY INVESTED REFLECTED A HANDFUL OF LARGE DEALS

2008 Disclosed PE Investments by Company Location

-

200

400

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800

1,000

1,200

1,400

1,600

Aus

tria

Bel

aru

s

Cro

atia

Cze

chR

epub

lic

Est

onia

Hun

gary

Lat

via

Lith

uani

a

Mac

edon

ia

Mol

dova

Pol

and

Rom

ania

Rus

sia

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bia

Slo

vaki

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a

Ukr

ain

e

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llars

Inve

sted

($M

il)

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No

. of

Co

mp

anie

s

2007 Dollars Invested

2008 Dollars Invested

No of Companies 2007

No. of Companies 2008

Source: Thomson Reuters

10

THE 2008 SURGE IN EQUITY INVESTED REFLECTED A HANDFUL OF LARGE DEALS

Source: Thomson Reuters

2008 Disclosed PE Investments by Company Industry

0

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1200

1400

1600

1Q 06 2Q 3Q 4Q 1Q 07 2Q 3Q 4Q 1Q 08 2Q 3Q 4Q 1Q 09to date

Do

lla

rs I

nv

es

ted

($

Mil

)

Information Technology Medical/Health/Life Sciences Non-High Technology

11

BUYOUT ACTIVITY DOMINATES ALL OTHER INVESTMENT STAGES IN CEE

Source: Thomson Reuters

2008 Disclosed PE Investments by Company Stage

-

200

400

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800

1,000

1,200

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1Q 07 2Q 3Q 4Q 1Q 08 2Q 3Q 4Q 1Q 09 todate

Do

llar

s I

nv

es

ted

($M

il)

1 Startup/Seed 2 Early Stage 3 Expansion 4 Later Stage 5 Buyout/Acquisition 6 Other

12

FUNDRAISING HAS GONE DOWN AS IN OTHER REGIONS

CEE Private Equity Fundraising

$0

$500

$1,000

$1,500

$2,000

$2,500

1Q02

2Q 3Q 4Q 1Q03

2Q 3Q 4Q 1Q04

2Q 3Q 4Q 1Q05

2Q 3Q 4Q 1Q06

2Q 3Q 4Q 1Q07

2Q 3Q 4Q 1Q08

2Q 3Q 4Q 1Q09

Fu

nd

s R

ais

ed

($

Mil

)

0

1

2

3

4

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6

7

8

Nu

mb

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of

Fu

nd

s

Fund Raised ($Mil), Other Private EquityFunds Raised ($Mil), BuyoutsFunds Raised ($Mil), Venture CapitalNo. of Funds, Buyouts + Other PENo. of Funds, Venture Capital

Source: Thomson Reuters

13

EUROPEAN PRIVATE EQUITY FUND PERFORMANCE AS OF 31-DEC-2008

Since Inception

3-year IRR

5-year IRR

10-year IRR

20-year IRR

Early Stage -1.1% -1.7% -0.2% -2.4% -1.1%

Balanced 3.3% 1.7% 2.7% 0.6% 3.3%

Development Stage 7.4% 0.3% 4.2% 3.7% 7.4%

All Venture Funds 3.1% 0.0% 2.1% 0.4% 3.1%

All Buy-Out Funds 14.2% 8.5% 14.1% 13.3% 14.1%

Generalist 9.1% 5.5% 7.9% 8.0% 9.2%

All Private Equity 10.3% 6.3% 10.5% 9.3% 10.4%

Source: Thomson Reuters / EVCA

Based on cashflows from 1314 funds

14

CEE PRIVATE EQUITY FUND PERFORMANCE AS OF 31-DEC-2008

Since Inception

3-year IRR

5-year IRR

10-year IRR

20-year IRR

Early Stage -0.2% -2.0% 3.2% -0.1% -0.2%

Balanced -3.6% -2.1% -0.8% -3.6% -3.6%

Development Stage 5.0% 4.7% 11.8% 5.5% 5.0%

All Venture Funds 1.5% 1.9% 7.2% 1.9% 1.5%

All Buy-Out Funds 36.4% 24.4% 20.8% 45.9% 36.4%

Generalist 7.7% 13.4% 15.3% 8.9% 7.7%

All Private Equity 4.9% 7.4% 10.3% 5.9% 5.0%

Source: Thomson Reuters

Based on cashflows from 61 funds

15

CONTACT DETAILS

• david.bernard@thomsonreuters.com, +33 6 87 97 87 81

• Data contributions & surveys: rosette.tyers@thomsonreuters.com, +44 20 7542 9066

• www.thomsonreuters.com

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