RigaMarch 2012

© European Bank for Reconstruction and Development 2010 | www.ebrd.com

EBRD supporting cross-border activities of

Czech companiesEBRD in Latvia

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What is the EBRD

AAA/Aaa rated multilateral development bank

Founded in 1991

Owned by 62 shareholders – 60 states, EU and EIB

Invested over €71 billion in more than 3,600 projects since 1991

Record year in 2010 - €9.0 billion invested in 386 projects

In 2011 €9.0 billion in 380 projects 77% in the private sectorDebt 85% and Equity 15%

0

2

4

6

8

10

12

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Ann

ual b

usin

ess

volu

me

(AB

V)

0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

Net cum

ulative business volume

Debt ABV Equity ABV Net Cumulative Business Volume

Note: Provisional data as at 30th June 2011

€ billion

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Annual Business Volume 2011 by Region

Russia33%

Central Europe & Baltics

15%

Turkey10%

Central Asia5%

Eastern europe & Caucasus

20%

South-Eastern Europe

17%

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A network of 33 offices in 29 countries More than half our bankers based in the region

Where we operate

** Expansion of the Bank’s region of operations to include Southern and Eastern Mediterranean, initially Egypt, Morocco, Tunisia and Jordan

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How EBRD adds value

Private sector focused

Wide product range, currency, tenors, innovative financing programmes

Local presence in almost all countries of operations, detailed understanding of local business environment

Involved in policy dialogue with regard to regulatory, investment and policy matters

Work with locally owned companies as well as cross border investors

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EBRD in the Baltics

Annual Business VolumeBaltics 1999 - 2011

0

50

100

150

200

250

€mill

ion

Lithuania 64 108 83 5 26 52 19 21 31 0 29 99 2

Latvia 32 49 34 9 37 3 27 0 21 0 115 104 19

Estonia 49 57 24 73 27 23 8 0 11 1 28 8 20

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

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EBRD and Latvia (1)

Results of active operation

• EBRD closed its office in Riga at the end of 2007, but has remained engaged here.

• Since 1991 EBRD invested EUR 572 million in Latvia in 76 projects of total project value EUR 1.88 billion

• 65 % of the investments have been in the private sector

• Current portfolio represents EUR 271 million in 6 projects with Latvian entities (and 23 regional projects having allocations into Latvia)

• EBRD has invested through equity funds in Latvian 19 companies and is still invested in 8

Portfolio Distribution, €million

Financial Institutions,

100.2Infrastructure,

16.5

ICA, 6.0

Regional, 44.3

Power and Energy, 104.7

Cumulative Business Volume in Sectors

Infrastructure26%

Power and Energy15%

ICA20%

Financial Institutions

39%

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EBRD and Latvia (2)

EBRD prepared to

• Enhance capital investment

• Help develop more technology and skill-intensive products

• Support export-oriented manufacturing and cross border investments

• Finance renewable energy generation

• Strengthen the stability of the financial sector

• Support the development of private equity financing

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EBRD Financing Solutions

• Senior, subordinated, convertible

• Long Term • Working capital• Floating/ Fixed interest

rates• Major currencies and

some local currencies (e.g. Romania, Russia, Poland)

• Political risk guarantees

• Common/preferred shares

• Mezzanine financing• Exclusively minority

participations (up to 35%)

• “Portage Equity”

• In-house syndication unit

• Lender of record• EBRD’s Preferred

creditor status attracts other financiers

99

Syndication EquityLoans

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Financing requirementsFinancing requirements How to obtain finance?How to obtain finance?

EBRD Key Financing Requirements

Ensure appropriate returns by carefully assessing the risks: Management strength and strategyClear business plan and project costsTransparency of operationsDisclosed identity of final shareholders and corporate structureIdentified and limited tax liability riskRecourse to subsidiaries generating profits and holding assets

Ensure appropriate returns by carefully assessing the risks:Management strength and strategyClear business plan and project costsTransparency of operationsDisclosed identity of final shareholders and corporate structureIdentified and limited tax liability riskRecourse to subsidiaries generating profits and holding assets

Provide EBRD with an overview of proposed investmentCommitment to cooperation

clarify role of EBRDmandate to initiate transactionmutual understanding of corporate integrity issues

Project / business plan, market analysis, strategy, ownership structure, financial analysis, risk assessment Exit strategy

Provide EBRD with an overview of proposed investmentCommitment to cooperation

clarify role of EBRDmandate to initiate transactionmutual understanding of corporate integrity issues

Project / business plan, market analysis, strategy, ownership structure, financial analysis, risk assessment Exit strategy

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Examples of Cross Border Investments within the EBRD Region

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E Energija into Latvia and Ukraine

• Client: E Energija, a Lithuanian, privately owned multi-utility energy company providing heat and hot water services to residential and industrial customers in Lithuania and Latvia

• EBRD Finance: €5 mn equity and €15 mn debt

• Use of Proceeds: To support the company’s expansion in Ukraine and energy efficient investments in Latvia and Lithuania

• EBRD Added Value: country knowledge, local presence, risk sharing (equity), policy dialogue

Signed in 2011

Signed in 2007

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VMG into Belarus

•Sponsor: Vakaru Medienos Grupe, a Lithuanian privately owned wood- processing company with a long history of co-operation with IKEA

•EBRD Finance: Senior loan of €19.5 million and subordinated loan of €6.5 million

•Use of Proceeds: To finance the development of a green-field, integrated wood processing complex in Mogilev FEZ

• EBRD Added Value: Political, encouraging FDI into Belarus, needed maturities not available in commercial market, subordinated feature

•Associated TC: Energy audit and a ‘Belarus Forestry Sector Study’Signed in 2011

Signed in 2011

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SBA into Belarus

• Client: Mebelain, a wholly owned subsidiary of Lithuanian SBA Furniture Group

• EBRD finance: Senior loan of €5 million

• Use of proceeds: to finance a green-field veneer-faced furniture plant in Mogilev FEZ

• EBRD Added Value: Political, encouraging FDI into Belarus, needed maturities not available in commercial marketSigned in 2012

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Graanulinvest into Latvia

Client: Graanulinvest is an Estonian privately owned pellet producer

Project description: Construction of two CHPs adjacent to the company’s pellet plants in Helme and Launkalne and energy efficiency investments in the pellet plants

EBRD Finance: A loan of €34 million, maturity 12 years

EBRD Value Added: long maturity, supporting renewable energy and a privately owned energy producer in Estonia and Latvia

Signed in 2011

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Eskaro into Russia and Ukraine

Signed in 2011

Client: Regional manufacturer of architectural coatings (paints and varnishes) with plants in Estonia, Russia, Ukraine, Belarus and Finland

Project description: Construction of new distribution centres in Russia and Ukraine;completion of a new manufacturing plant in Ukraine;

EBRD Finance: Equity investment of €1.25million and mezzanine loan of €4.75 million

EBRD value added: Supporting further regional expansion into the CIS of an originally Estonia-based company and strengthening of environmental standards in particular in the CIS

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Trade Facilitation Programme

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EBRD Trade Facilitation Programme - TFP

EBRD supports trade by providing

• guarantees that cover risks arising from trade finance transactions

• short-term advances/financing to banks in the Countries of Operation for trade finance purposes

• TC funded trade finance training and advisory service to local banks

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TFP - Two Main Components

Trade Facilitation Programme(EUR 800 million framework)

Trade Finance Guarantee

Facility(fully operational

since 1999)

Trade Finance Cash

Facility(launched in 2000)

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BuyerSeller

Banking InstrumentBanking Instrument

ApplicationConfirmation

EBRD issues a Stand-By Letter of Credit covering the risks of Issuing Bank

towards the Confirming bankObligation Issuing

Bank,Country of Operation

Obligation Receiving Bank,

World Wide

UnderlyingTrade Transaction

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TFP – Cash facility

Local Company

Local Bank (EBRD’s borrower)•Takes local company risk

•Borrows from EBRD•On-lends to the local company

EBRD•Takes local bank risk

•Lends to the local bank againstsub-loan reports

Loan repayment Loan disbursement

Repayment to EBRD EBRD’s disbursement

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Trade Facilitation Programme in numbers

•• Active Issuing banks: 102Active Issuing banks: 102•• Confirming Banks: 800+ in 77 countriesConfirming Banks: 800+ in 77 countries•• Since 1999, more than 11,600 transactionsSince 1999, more than 11,600 transactions•• Supporting Supporting €€7.8 billion trade volume and 7.8 billion trade volume and •• Effectively covering Effectively covering €€7.1 billion worth of trade finance.7.1 billion worth of trade finance.

LatviaLatvia in particularin particular:

–– 24 export transactions from and via Latvia totalling 24 export transactions from and via Latvia totalling €€ xxx millionxxx million

–– 3 Latvian Confirming Banks (as of January 2012)3 Latvian Confirming Banks (as of January 2012)

SEBSEB

SwedbankSwedbank

UnicreditUnicredit

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Contact details:

Viesturs BernansPhone: +370 5 2638502E-mail: BernansV@ebrd.com

Matti HyyrynenHead of BalticsPhone: + 370 5 2638480Fax: + 370 5 2638481E-mail: HyyryneM@ebrd.com