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Working with the European Bank for Reconstruction and Development

Presentation to the European Broadcasters Union highlighting the key information about the European Bank for Reconstruction and Development (EBRD), including its objectives, investment profile, financing solutions, and advantages of cooperation.

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Working with the European Bank for Reconstruction and Development

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  1. Working with the European Bankfor Reconstruction and Development Presentation to the European Broadcasters Union 29 October 2012

  2. The European Bank for Reconstruction and Development (EBRD) at a glance 1 International Financial Institution Established in 1991 and owned by 63 countries and the EU and EIB(1) 2 Solid financial position AAA rating and a capital base of EUR 30bn 3 Development mandate To foster transition towards open and democratic market economies and promote entrepreneurship 4 Largest investor in the region In 2011 Annual Business Volume amounted to 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.

  3. The EBRD’s Objectives Promotes projects that expand and improve markets and help build institutions that underpin the market economy Supports, but does not replace, private investment. Provides financing at reasonable terms Project returns are commensurate with risks

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

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

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

  7. EBRD’s objectives achieved through financing the private sector € billion • Invested over €75.2 billion in more than 3,468 projects since 1991 • As at end June 2012: • €3.4 billion invested in 153 projects • Private sector accounted for 79% share • Debt 84% & Equity 16%

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

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

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

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

  12. ICT Sector Investments • Eurovision • Russia Towers - equity investment to finance shared communication infrastructure for mobile and fixed wireless telecom operators in Russia • Emitel – financing an investment programme including (i) new digital terrestrial broadcasting services, and (ii) expansion of telecoms tower services as an independent tower operator

  13. ICT Sector Investments: Financing Digitisation • Broadcaster’s need digital infrastructure, including network and 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 entertainment and local content • Use of the digital infrastructure for non-public purposes: sports, industrial, commercial, etc. • Fees from distribution to cable channels for expatriate viewing

  14. EBRD Legal Transition ProgrammeICT sector support - overview • Focus on development of sector/optimising its impact across the economy • Attraction of investment • Introduction, enhancement or maintenance of competition • Balancing incentive to existing players to invest with access based competition • Helps with identification of investment bottlenecks • Absent or short-sighted policies • Absent or flawed laws • Absent or weak institutions • Absent or outdated methodologies • Absent or weak capacity

  15. EBRD Legal Transition ProgrammeICT sector support - overview • Works with government to modernise policy/regulation to encourage investment • Policy dialogue • Technical cooperation support • Outreach • Linked to actual Bank investment projects, whenever possible

  16. EBRD Legal Transition ProgrammeExamples of activities and locations • Activities • Training and capacity building • ICT policy development • Primary and secondary law drafting and adoption • Regulatory implementation • High-speed broadband roll-out framework • Digital Broadcasting Switchover policy and implementation • Radio frequency spectrum rationalisation • Infrastructure access and sharing • Countries: Albania, Armenia, Azerbaijan, Georgia, Jordan, Kazakhstan, Kyrgyzstan, Moldova, Mongolia, Montenegro, Serbia, Tajikistan, Ukraine

  17. Selected projects the ICT team executed in the past across all countries of operations (1/2) Russia Convertible Loan Russia Turkey Regional Poland Russia Russia Russia Russia Poland Loan Equity Investment Loan Investment in Bond Offering Equity Investment Croatia Convertible Loan Convertible Loan Syndicated Loan Equity Investment Equity Investmentvia Venture Capital Facility Euro 43 million USD 11 million Euro 100 million USD 30 million Euro 258 million Euro 200 million USD 20 million Euro 10 million Euro 4 million 2012 2012 2012 2009 2012 2009 2011 2010 2011 2011 2010 Romania Russia Equity Investment Loan Euro 30 million Euro 15 million 2012 2011 Regional Fund Investment Regional Equity Investment Poland Privatization – Equity Investment Albania Poland & Balkans USD 30 million Loan and Equity Investment Privatization - Syndicated Loan Euro 22 million Euro 20 million Euro 27 million Euro 49 million 2009 2009 2008 2008 2008

  18. Selected projects the ICT team executed in the past across all countries of operations (2/2) Romania Bulgaria Equity Investment Regional Regional Regional Loan and Equity Investment Loan Equity Investment Equity Investment Loan Euro 65 million Euro 81 million Euro 151 million Euro 32 million Euro 3 million 1997 - 2002 1998 1999 1998 Serbia 2006 Russia Ukraine Regional Bulgaria Kazakhstan Loan and Equity Investment Syndicated Loan Privatisation – Loan and Equity Investment Equity Investment Syndicated Loan Syndicated Loan Euro 130 million Euro 22.3 million EUR 50 million USD 72 million Euro 93 million Euro 17 million 2007 2003-2005 2004 2006 2004 2005-2007 Albania Poland Kazakhstan Poland Czech Republic Loan Syndicated Loan Syndicated Loan Loan Syndicated Loan Russia Georgia & Bulgaria Euro 52.5 million USD 110 million Euro 100 million USD 35 million Euro 75 million Loan and Equity Investment USD 35 million USD 35 million 2003 2003 2002 2003 2001 2007-2008 2008

  19. The European Bank for Reconstruction and Development contact Investment Opportunities contact: Director ICT Team Industry, Commerce & Agribusiness Telephone : + 44 207 338 7855 Legal Transition programme contact: Paul Moffatt Legal Transition Team Office of the General Counsel Telephone : + 44 207 338 7453 EBRD One Exchange Square London EC2A 2JN (

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