Private Equity

1
Private Equity Venture CapitalinCentral
Eastern Europe

• Robert J. Manz
• Partner
• Enterprise Investors
• September 20, 2005

2
Enterprise Investors - Overview

• Enterprise Investors is the leading private
  equity fund manager in Central Eastern Europe
• Capital 1.1 billion raised to date in 5
  investment funds
• Experience actively investing since 1990
• Regional investments in Poland, Slovakia,
  Romania, Bulgaria and Czech Republic
• Track Record 955 million invested in 100
  companies to date
• Professional team of 30 investment
  professionals headquarters in
  Warsaw and office in Bucharest
• Active actively work with investee companies to
  create additional value, improve
  corporate governance and build world-class
  corporations
• Sectors consumer goods, retail, financial
  services, telecom, IT, manufacturing,
  healthcare, energy

3
Private Equity in Central Eastern Europe

• Over 7.5 bln raised to date for CEE private
  equity funds
• Approximately 75 fund managers actively investing
  in CEE companies
• 30 can invest in Slovakia
• Since 1990, almost 6 bln invested in over 1,000
  companies in CEE
• Investment levels are rising each year
• But, investment levels are below European
  averages by a factor of 3x

Source EVCA, EI estimates
4
Private Equity in Central Eastern Europe

• PE/VC investments by CEE country 2002 2004
  (1.3 bln)
• In 2001, one of the top 5 largest PE/VC
  transactions in CEE was the 180m investment in
  Orange Slovensko

5
Types of CEE transactions

• Distribution of 2004 Investments
• Buyouts
• MBO/MBI purchase of company with current or
  outside management
• Secondary Purchase purchase of shares, no
  special cooperation from management
• Public to Private purchase of quoted company
• Examples entrepreneurs exit, spin-off,
  ownership change, privatization
• Expansion Capital
• Capital increase to finance development/growth/tur
  naround
• Examples new production capacity, new products,
  debt re-payment, acquisitions/expansion
• Start-up/seed
• Financing for companies at an early stage of
  development
• Examples RD, bring first product to market,
  cover initial losses

6
Case Study Lukas (Poland)

• Pre-investment
• Developed by 3 entrepreneurs
• Started as chain of electronic stores
• In 1992 started offering installment loans
• Became intermediary offering consumer financing
  with funding from banks
• By 1997 present in 16,000 retail outlets
  nationwide
• 285 mln of loans revenues of 19m net profit
  7m 600,000 customers
• Investment
• Enterprise Investors provided 15 mln of
  expansion capital for 28 of shares (1997)
• Founders sought EIs prior banking experience and
  contacts
• Allowed founders to maintain independence and
  control of the company

7
Lukas - continued

• Development
• Goal was to transform Lukas into an integrated
  personal finance banking institution
• EI identified a small bank and helped Lukas
  acquire a controlling stake
• EI brought in specialized banking managers and
  new financial management
• A new banking strategy was developed, rolling out
  100 modern mini-branches, telebanking and
  e-banking
• Products were diversified to include cash loans,
  car loans and retail deposits
• Importantly, Lukas developed its own funding base
  with 700 mln of deposits

8
Lukas - continued

• Performance ( mln)
• Value Creation
• Lukas became a leading nationwide retail
  financial institution with household brand
  recognition
• By 2001, international institutions were very
  interested to take over Lukas as an entry into
  Poland (more than 30 interested buyers)
• Credit Agricole purchased EI and founders for a
  total value of 340 mln, 5.6 times the 1997
  valuation

9
Case Study Comp Rzeszów (Poland)

• Pre-investment
• Small but growing provider of banking software
• 50 owned by Comp S.A., leading Unix-based IT
  systems integrator
• Separate management organizations for both
  companies
• Investment
• EI invested 5.2 mln of expansion capital for 55
  of Comp S.A. in 1999
• Comp interested in EIs IT experience and company
  development know-how
• New capital used to develop new products (eg.
  encryption technology) and acquisitions
• Development
• Comp Rzeszów developed quickly in banking
  software products
• 17 overall market share in banking segment
• 35 market share of cooperative banks
• 45 market share of small and medium size banks
• Product development into transaction systems,
  electronic banking, date warehousing, outsourcing

10
Comp Rzeszów - continued

• Performance ( mln)
• Value Creation
• EI designed and negotiated separation of the two
  companies became 50 owner of Comp Rzeszów
• EI helped analyze acquisition of Asset Soft
• IPO on Warsaw Stock Exchange (Sept. 2004) led by
  EI to raise capital for acquisition
• IPO allowed founder to sell small portion yet
  retain effective control EI exited fully
• Most successful private company IPO in 2004 10
  times oversubscribed
• Valuation of 101 mln 25 times 2004 net profit
  20 premium to Polish IT companies
• Post IPO, Comp Rzeszów making more acquisitions,
  valuation now 134 mln

11
Dakujem

• Robert J. Manz
• Partner
• Enterprise Investors Sp. z o.o.
• ul. Emilii Plater 53
• 00-113 Warsaw, Poland
• e-mail robert.manz_at_ei.com.pl
• www.ei.com.pl