NewRussiaGrowth Private Equity Advisors

Mezzanine opportunities in Russia

March 2011

Mezzanine

In architecture, a mezzanine - an intermediate floor or the lowest balcony in a theatre.

(from Italian mezzano “middle”)

• Cash Interest

• PIK Interest

• Ownership (equity kicker)

2

• Pre-money EV $80m• Equity $60m • Debt $20m• New investments $20m

1. PE – 25% post-money EV $100m

2. Mezz – Debt $20m @ 8-10% plus 10% option call @ $60m Mcap

60

210

20

70

20

20

0

50

100

150

200

250

300

350

EV = US$ 100m EV = US$ 300m

PE

Founders PE Debt

60

240

20

20

20

20

20

0

50

100

150

200

250

300

350

EV = US$ 100m EV = US$ 300m

Mezz

Founders Equity Kicker Mezz Debt Debt

3x growth

Standard Terms of VRG Transactions

Investment Structure

• Hybrid investments (collateralized debt + equity kickers)

• 18-54 month repayment of investment capital

• Ticket size: $10 – 50m

• Collateralized

- Pledge of target companies’ shares, liquid assets

- Personal guarantees of the companies’ owners

Target Returns

• 10%+ targeted interest/current return

• Equity kickers leading to 30%+ targeted gross return

3

2011 NRG Investment Case Study: Begemot

Company Description

• Leading toy retailer in Russia, second only to DetskiyMir in terms of revenue from toys

• Focus on mid-market and low-cost segments withretail prices 40% lower on average than in DetskiyMir

• 54 owned shops and 144 franchisees in 192 Russiancities

• Key toy supplier for leading retail chains inRussia, such as Magnit, Perekrestok and SedmoiContinent

• In-house ERP system allows daily control of all salesand stocks

• Average markup is 75%: Private label markup is250%, which accounts for 15% of total sales

• EBITDA in 2010 has grow by 45% as a result ofsignificant increase in number of franchisees

• After new debt, the debt/EBITDA ratiobelow 2x

Key Financials

Sales Breakdown 2010

60%23%

5%

12%

Branded Cash& Carry shops Leading general retail chains Franchisees

Large wholesale

2007A 2008A 2009A 2010A 2011F

Sales, $m 57.6 126.7 100.0 125.1 173.8

EBITDA 2.9 12.2 12.3 17.9 31.8

EBITDA margin 5.0% 9.7% 12.3% 14.3% 18.3%

Debt/ EBITDA 6 2 1.5 1.91 1.1

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2009 NRG Investment Case Study: Begemot

Transaction Structure

Amount $7m

Term 24 months

Date June 2009

Security 100% of shares and shareholders guarantees

Use of funds Refinancing of bank loans, working capital

Interest rates Market level

Equity kicker < 5%

ControlBoard seat and veto rights

5

NRG at a Glance

6

• Top-5 independent alternative investment manager with focus on Russia & CIS

• Currently NRG works with Volga River One Fund, which has successfully invested in various Russian companiesfrom telecoms to baby food producers

• NRG completed the 1st closing of Volga River Growth Fund in 4Q 2010

Private Equity Hybrid Equity

• Established in 2006

• 20 LPs

• $177m

• Team of 10 professionals

• 5 portfolio companies, 1 exit

• Established in 2010

• 1st closing: Q4 2010

• Target size: $250m

• Team of 5 professionals

• Leading Investor for 1 closing: EBRD

Volga River One Volga River Growth