VENTURE CAPITAL IN RUSSIA Case Studies

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VENTURE CAPITAL IN RUSSIACase Studies
Banking on Russia. Investing in Russias
Corporate Growth
Kirill Dmitriev Managing Director

• May 2007

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Delta Private Equity
Delta Private Equity
Financial Services
Consumer Goods/ Retail
Technology/ Media/ Telecom
exit
exit
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Russian PE and VC Market Overview
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Russian Private Equity and Venture Capital
Association

• 29 members with over 2bln under management
• 10 years of activity
• Objectives and goals
• Creation a positive political and entrepreneurial
  environment for investment activities
• Representing the RVCA members interests at the
  government level, in press, in financial and
  industrial markets within the country and abroad
• Information support and communicative grounds
  establishment for the Russian venture market
  participants
• Building a cluster of highly qualified
  professionals for the venture business companies

Source RVCA
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Number of Funds and Capitalization
Source RVCA Analytics, 2005
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Sources of Capital
International Financial Organizations
Source RVCA Analytics, 2005
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Investments in Russian Companies
Source RVCA Analytics, 2005
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Recent PE Transactions
ACQUISITIONS
EXITS
Source DealWatch Russia Database
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Challenges A Pragmatic View

• Challenges are manageable
• Existing funds know how to address them

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Case Studies
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Example of Value Creation in Russian Financial
Sector DeltaBank

• Book 4.3?
• 3rd of 228 banking deals in the world in 2002-2004

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DeltaCredit Bank

• Six-months disbursements 43M, a 65 increase on
  the same period 2004.
• An SPA signed with Societe Generale valuing the
  Bank at 100M.

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DeltaCredit Bank
Sold to Societe Generale Group for 105 mln
Societe Generale SA Bank to Buy Russian Lender
To Expand Retail Operations Societe Generale SA
said it agreed to buy Russian mortgage lender
DeltaCredit Bank from Delta Private Equity
Partners for about 100 million. SocGen, France's
second-largest bank by market capitalization,
said the Russian lender employs 128 people and
has made loans totaling 200 million in the
country's fledgling mortgage market. Pierre
Boursot, head of international retail banking at
SocGen, said the acquisition is an essential
addition to the retail-banking operations it is
developing in Russia. Russia's mortgage market is
in its infancy, accounting for 0.2 of gross
domestic product, Kirill Dmitriev, Delta's
managing director, said. "We think the Russian
mortgage market will be worth between 20 billion
to 30 billion by 2010, compared to around 1
billion now," he said.
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Expected development for 2007-2008

• Increasing number and size of funds
• Larger deal sizes
• More frequent consolidations / LBOs
• Increasing cross-CIS investments
• Several 1 bln IPOs of companies backed by PE
  firms
• Increasing role of domestic PEs ? international
  PE firms will play more of a co-investor
  than a lead role
• Increasing support from the Government through
  the established Russian Venture Capital
  Corporation