Baring Vostok Capital Partners

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Baring Vostok Capital Partners
Lessons Learned in Russian Private Equity
Baring Vostok Capital Partners
November 2005
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Contents

• Background on BVCP
• How is Russia Different?
• How is Russia Similar?
• Organization/Culture
• Investment Strategy
• Operating Management Philosophy

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Background on BVCP
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Baring Vostok Proven Results Over Ten Years in
Russia

• Baring Vostok has been dedicated full time to
  private equity in Russia for over 10 years. Fund
  I (160 million) was launched in 1994, Fund II
  (205 million) was launched in 2000, and Fund III
  (400 million) was launched in 2004.
• Aggregate track record
• 41 direct investments made with aggregate cost of
  397 million
• 23 fully/partially realized at 4.4x money and
  44.7 gross IRR (30 September 2005)
• 712 million dividends distributed to date
• Estimated 415 million remaining portfolio Gross
  NAV (with 8 of 19 companies held at cost)
• BVCP has been a lead investor in many of Russias
  biggest private equity success stories, including
  Vimpelcom, Golden Telecom, Syktyvkar Forestry,
  Burren Energy, Borjomi, and others.
• BVCP is owned and managed by 11 partners based in
  Moscow, each with 10 years of investment or
  business experience. Prior to BVCP, the partners
  had diverse and complimentary backgrounds from
  industry, finance, or Russian government
  structures.
• Part owner and member of Baring Private Equity
  Partners International, a global investment
  network.

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How is Russia Different?
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Nice Climate
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How is Russia Different?

• Misdeveloped Country - Not Really Developed or
  Developing
• Single Country With Critical Mass/Scale
• Large Number of Entrepreneurial Local Investors
  With Substantial Capital

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How is Russia Similar?
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Inefficiency Creates Barriers and Opportunities

• Non-Transparency
• Wealth of Natural Resources
• Weak Banking Sector
• Unpredictable Politics

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Organization, Strategy, Management
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BVCP Organization/Culture

• Russian Firm with International Perspective
• Reputation, Reputation, Reputation
• Relentless Realism
• Encourage Challenging 360 Debate

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BVCP Investment Strategy

• No Such Thing as a Bad Deal We Didnt Make
• Start By Knowing What You Dont Want To Do
• Focus on Core Industries and Develop Deep
  Expertise
• Follow-on Investments in Best Existing Companies
• Re-Positioning Companies to Capture Value

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Burren Energy
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BVCP Operating Management Philosophy

• Proactive Lobbying Before the Fire Starts
• Hands-On Owner, Not Hands-On Manager
• Be Flexible and Dont Have Template Approach
• React Quickly to Changes in Environment
• Bad News Should Travel Fast

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SladCo
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Conclusion Russian Lesson 1
??? ?? ???????, ??? ?? ???? ??????????.
He who takes no risk, drinks no champagne.
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Conclusion Russian Lesson 2
?????? ???????, ? ?????? ???????.
Friendship is friendship, but business is
business.
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Conclusion Russian Lesson 3
???? ?? ??????, ????? ??? ????? ??????????? - ??
???!
If you want your dreams to come true, dont
sleep.