Working with the European Bank Working with the European Bank for - PowerPoint PPT Presentation

Working with the European Bank Working with the European Bank for Reconstruction and Development Presentation to the Presentation to the European Broadcasters Union 29 October 2012 1

The European Bank for Reconstruction and Development The European Bank for Reconstruction and Development (EBRD) at a glance International 1 Established in 1991 and owned by 63 countries and Financial (1) the EU and EIB Institution 2 Solid financial AAA rating and a capital base of EUR 30bn position 3 Development To foster transition towards open and democratic mandate market economies and promote entrepreneurship 4 Largest investor In 2011 Annual Business Volume amounted to in the region EUR9.1bn comprising 380 projects (1) 57% of shareholding is G7 and 84% is OECD country based. EU27 countries hold 62.8% of the shareholding. 2

Th The EBRD’s Objectives EBRD’ Obj i P Promotes projects that expand and t j t th t d d improve markets and help build institutions that underpin the market economy Transition Impact Supports, but does not replace, private investment. Provides financing at reasonable terms Project returns are EBRD commensurate with risks Sound Addition- Banking ality 3

EBRD operates across 33 countries, 40 regional offices EBRD operates across 33 countries, 40 regional offices and 3 continents Central Asia and Mongolia Kazakhstan Kyrgyz Republic Mongolia Tajikistan Turkmenistan Turkmenistan Uzbekistan Eastern Europe and the Caucasus Armenia Azerbaijan Belarus Georgia Moldova Ukraine Central Europe and Baltics Southern and eastern South-Eastern Europe EBRD Croatia Albania Mediterranean headquarters Estonia Russia Bosnia and Herzegovina Egypt Hungary Bulgaria EBRD country of Jordan Latvia FYR Macedonia Turkey y Morocco Lith Lithuania i operation Romania Tunisia Poland Montenegro Slovak Republic Serbia Slovenia 4

..throughout a number of industries and sectors h h b f i d i d Agribusiness Property and Manufacturing Natural Tourism and Services Resources Power and Transport Financial Municipal Energy Institutions Infrastructure Climate Equity Funds Information and Fi Finance Communication Technologies (ICT) 5

EBRD EBRD provides wide financing solutions id id fi i l i “Typical” investment profile Typical investment profile  Ticket size from a low single digit EUR mn amount to over EUR 100 mn Typical Size Term/Holding  Debt instruments: typically from 7 to 10 years  Equity Investments and Guarantees: typically from 3 to 7 years  Equity Investments and Guarantees: typically from 3 to 7 years period period  Debt: public and private instruments, fixed and floating, syndicated loans, bonds Instruments  Equity: Private Equity, IPO  Quasi Equity: mezz, convertible loans, subordinated loans q y  Local and major currencies (US$, EUR, RUB, etc.) Currency  EBRD typically acts as a co-investor along other sponsors Investments  EBRD’s stake typically does not exceed 35% of the total investments (equity approach/Limits approach/Limits and debt) or 50% in case of syndication with other international banks  Growth capital, acquisition and consolidation, non-exclusive bidding support, Applications working capital, green/brown fields, JVs, privatization Exact financing terms are defined by specific project circumstances 6

EBRD’s objectives achieved through financing the EBRD s objectives achieved through financing the private sector € billion 12 80  Invested over 75 €75.2 billion 70 10 in more than 65 Net c BV) 60 3,468 projects 3,468 projects ness volume (AB cumulative busi 55 since 1991 8 50 45  As at end June 6 40 2012: 35 35 ness volume Annual busi 30 – €3.4 billion 4 25 invested in 20 153 projects p j 15 2 2 10 – Private sector 5 accounted for 0 0 79% share – Debt 84% & Debt ABV Equity ABV Net Cumulative Business Volume Equity 16% 7

Cooperation with EBRD offers companies numerous Cooperation with EBRD offers companies numerous advantages • • 1 1 EBRD aims to develop long term relationships EBRD aims to develop long-term relationships - typical investment horizon is up typical investment horizon is up Long-term to 10 years with longer financing available • The Bank relies on a buy-and hold approach, which decreases its dependence investor on the short term market fluctuations 2 • • Transactions are tailored to the needs of the clients and a variety of financial Transactions are tailored to the needs of the clients and a variety of financial Structured St t d structures are considered solutions • Non-standard structures are welcome and a large range of transaction sizes 3 Sector knowledge Sector knowledge • • Deep knowledge and sector expertise proven by more than 140 executed Deep knowledge and sector expertise proven by more than 140 executed projects in the ICT sector & local expertise 4 Strong ties with • EBRD has established strong and long lasting connections with Local and g g g Local & Federal Federal Governments that allow the Bank to promote and defend interests of its portfolio companies Governments • EBRD has a Preferred Creditor Status, which exempts payments to EBRD 5 Preferred Creditor generalised moratoria and foreign exchange controls. It allows EBRD to provide li d t i d f i h t l It ll EBRD t id Status financing even in the hardest market conditions 8

Transparency, sound business principles and TI are the Transparency, sound business principles and TI are the key criteria for the projects financed by EBRD 1 • Full transparency of the ownership structure and complete disclosure of the end Transparent beneficiaries Shareholding • High level of integrity both among owners and managers and high standards of Structure corporate governance 2 Strong Business • Sound business model with a clear return to the Bank from the main operations rather than from alternative sources Fundamentals 3 Audited Financial • At least 3 years of financial statements audited by reputable international or local auditing firms and prepared in accordance with IFRS Statements 4 Transition Impact • Impact on the local economy in line with the Bank’s mandate to facilitate transitioning to the market economy (TI) ( ) 9

P Project Timeline j Ti li EBRD project cycle 1 2 3 4 5 Project Final Board of Concept Structure Structure Directors Signing Review Approval Approval Approval  Contact initiated  Due Diligence: Financial, Legal and  The Board makes  Funds are  Define concept Technical a final review and ready to be  Initial company  Finalizing the deal terms approves the disbursed  Drafting legal documentation (term sheet) and project project information review  Mandate letter to initiate transaction Mandate letter Term sheet Legal Documents Signed Signed Signed The whole process timing is dependent largely on the various specific circumstances and the availability of relevant information. y 10

ICT S ICT Sector Comments Selected Subsectors Cumulative Financing to date: • Content production  • Mobile & fixed line ca. €4bn • B2B publishing • ISPs • Cinema chains • Cinema chains C Current Portfolio: €1bn t P tf li €1b • Cable TV  • Outdoor advertising • Towers 140 transactions from low • IT services  • Satellites single digit million to €200mn • Software developers • Data centres amount amount • Systems integrators • Systems integrators • Fibre • Call centres 15 dedicated employees • Wireless broadband  • Internet • MVNO • Cleantech • Pay-TV • Semiconductors • Semiconductors • Mobile payments M bil • FDIs Investments into the ICT sector are viewed as a key tool in modernizing the local Investments into the ICT sector are viewed as a key tool in modernizing the local economy and increasing its innovation and competitiveness 11

ICT S ICT Sector Investments I  Eurovision  Eurovision  Russia Towers - equity investment to finance q y shared communication infrastructure for mobile and fixed wireless telecom operators in Russia  Emitel – financing an investment programme including (i) new digital terrestrial broadcasting including (i) new digital terrestrial broadcasting services, and (ii) expansion of telecoms tower services as an independent tower operator se ces as a depe de t to e ope ato 12

ICT Sector Investments: Financing Digitisation ICT S I Fi i Di i i i • Broadcaster’s need digital infrastructure, including network and g , g digitisation equipment, to respond technological changes and ensure preservation of existing cultural heritage. • EBRD financing available for bankable operations (i.e., revenue generating project and/or sovereign guarantee) that are consistent with mandate. • Potential revenue streams: • Fees for use of digital library • Creation of cinema pre shows mixing advertising branded • Creation of cinema pre-shows mixing advertising, branded entertainment and local content • Use of the digital infrastructure for non-public purposes: sports, industrial commercial etc industrial, commercial, etc. • Fees from distribution to cable channels for expatriate viewing 13