Veles Capital Group:

Russian local partner for global investors

ГРУППА КОМПАНИЙ «ВЕЛЕС КАПИТАЛ»:

сложи преиму

Russian private equity and venture capital market

Volumes requested investments

as of September 30, 2013**

2

The form of participation, 1H2013

(volume of the transaction)*

less $ 3 mln 3%

$ 3 mln -$ 15 mln 23%

$ 15 mln -$ 30 mln 24%

$ 30 mln -$150 mln 35%

more $150 mln

15%

participation 38% the

controlling package of

shares 27%

influence 19%

consolidation13%

a minority package of

shares 3%

Innovative companies on growth stage**

The volume of transactions and output by

type exit***

4%

37%

15%

35%

8%

2%

Pre-seed

Seed

Earlygrowth

Growth

PRE-IPO

IPO

-

500

1 000

1 500

2 000

2 500

3 000

2010 2011 2012 9M2013

IPO/SPO Management

Financial sector Strategic investor

* Source RWM Capital **Source IPOboard ***Source PREQVEC

63%

11%

4%

6%

3%

3%

3%

3%

2%

1%

High technology

Real estate

Financial…

Problem asset

Pre-IPO

Mezzanine…

Retail

Agro-industrial…

Pharmaceuticals

Resource sector

3

The amount of funded

companies,

9 months 2013**

* Results of 9 months 2013 **Source PREQVECA

12 funds

worth 4,8 bln USD

116 transactions

with 93 funds

Increase of activity in

Russian regions

37% - share of

foreign investors

on Russian market of

alternative

investments

Leader among foreign investors in Russian market

• Acquisition of 12,5% Uralkali package at Wadge Holdings

• Participation in IPO of the Moscow stock exchange as one of

anchor investors.

Russian private equity and venture capital market*

Russian private equity and venture capital market

The number of transactions the inputs in

stages development, October 2013**

4

Segmentation of the resident companies by

the amount of capitalization*

* Source IPOboard **Source PREQVECA

less $ 1 mln 14%

$ 1 mln -$ 10 mln

20%

$ 10 mln -$ 50 mln

26%

$ 50 mln -$100 mln

15%

$ 100 mln -$1 000

mln 20%

more $1 000 mln

5% Startup/S

eed 30%

Early growth 30%

Growth 20%

PRE-IPO/IPO

20%

80 mln USD – investments of RDIF during IPO of Moscow Exchange

200 mln USD – investments from largest international funds

(VEB subsidiary) - support of the Russian transactions of IPO:

Commercial Real Estate mutual funds as a

stable source of income and capital saving

Real estate funds forming and management

Commercial Real Estate management

Private equity

Private equity mutual funds

M&A

IPO / SPO

Corporate debt financing (bonds, promissory

notes)

Organization and management of closed-end

mutual funds

Veles Capital Group

VELES TRUST

Veles Development

Veles Management

Brokerage services on stock market

Brokerage services on debt market

Electronic trading

Operations on foreign markets

Asset management

Wealth management

Private equity since 1995

Real estate investment since 2004

Veles Capital Investment Company

Veles Management Asset Management

Company

Veles International Limited

Veles Capital Investment Group

Veles Capital Investment Company

Veles Management

5

Equity market since 1995

Total turnover of securities

(bln EUR)

Stock market

turnover (bln EUR) OTC market turnover

(bln EUR)

Veles Capital Investment Group

6

Veles Capital Investment Group is an

investment arm of Veles Capital Group of

companies (since 1995) established in

2008 for the purposes of managing

projects in the field of private equity and

corporate financing.

Today the company manages

investment portfolio in Russia, CIS

countries and Europe exceeding $500

million.

Veles Capital is working with mid-cap

companies and possesses experience of

working with enterprises in such sectors

as: machinery manufacturing, oilfield

services, agriculture, construction

materials manufacturing, pharmaceuticals

and health care, etc.

RUNAСO – holding company of Bugulminskiy electropump Plant (Tatarstan), service enterprises in Russia, Ukraine, Kazakhstan and

Azerbaijan, as well as science and technical center

Smelyansky electromechanical plant - one of the largest post-Soviet enterprises (Ukraine) in the manufacture, repair and

modernization of electric cars of railway and road transport

VBM-group (Volgaburmash, Uralburmash) – manufacture of drill bits for oil and gas and mining industries

DancingGreen - family oriented recreation (Tula region, Zaokskiy raion), 260 hectares

Veles-Detchino – (Kaluga region, Maloyaroslavetsky raion) complex development of the territory of 110 ha.

EMAlliance – financial consultant of Dura Dukovich (Croatie) buying, listing organization on RTS

Orion – financial consultant of 60% of company’s stocks portfolio buying

Yamalgeofizika – financial consultant of 65% of company’s stocks portfolio selling to Integra group

Tyumengeofizika – financial consultant of 75% of company’s stocks portfolio selling

Blagoveshensk valves plant – financial consultant of controlling stocks portfolio selling

Don-Agro – financial consulting of purchasing of Don Agro company by the group of private investors

Shaturatorf – consolidation of 38% of stocks portfolio for strategic investor

Omskavia – consolidation of 16% of stocks portfolio for private investor

Belorechenskoe agricultural plant – consolidation of 9% stocks portfolio

Ukrrechflot – consolidation of 70% portfolio for strategic investor

Pharmsintez – co-organizer of IPO (30% of authorized capital was placed on MICEX)

Projects in private equity and corporate financing

Private equity and financial consulting

M&A, IPO, stock portfolio consolidation

. 7

12 current private equity projects in real economy enterprises

RUNAСO, Republic of Tatarstan

8

A multi-specialized holding company for developing, manufacture

and maintenance of submersible equipment.

It comprises:

“Bugulminskiy Electropump Plant” - manufacturing of electrical submersible

centrifugal pump units (ESP units), sucker rod pumping units, gas separators, motor

protectors and electric motors.

“Raduga R” – manufacturing and maintenance of telemetry systems and control

stations included in a ESP unit.

«NORIS» – manufacturing of hyper thermal cable products.

«Antikor» – coating by oxyfuel gas spraying method.

Oilfield services complex – services on operating lease, services on boreholes,

services on overhaul repair, maintenance and support of ESP units and sucker rod

pumping units.

Trade promotion offices (Usinsk, Izhevsk, Kogalym, Nefteyugansk, Buzuluk) – sale

services and after-market support.

70% of oil in Russia

is produced by means of ESP

units

$160 million

expected sales revenue in

2015

$46 million

consolidated proceeds in

2012

Main customers:

Bugulma electric pump plant: the history of revival

9

Launch of new projects in the group of companies: release cable products

and creating a plant spray coatings by a method of the Plasma Air-gas

Supersonic Dusting. Organization of the enterprise on the release.

2009

2010

2011

2012

An extremely difficult financial situation. The plant is out of structure of JSC

“ALNAS” and went to the structure Investment venture capital fund RT

Control of plant is transferred by Veles Capital Investment Group. The

large-scale work on restoration of production.

The plant is a part of Runaсo Group and is the main production site of

holding. Dynamic development, development of innovative production.

Beginning of consolidation of assets of Group.

RUNAСO, Republic of Tatarstan

10

«NORIS» – manufacturing of hyper thermal cable products.

Creation on production of high-temperature cable KIEKB-260

with application of a high-temperature material of

POLIEFIRKETON

out in I quarter

The basic essence of an

innovation:

application instead of lead (or

fluorine plastic) a new insulating

material – polyester-ketone

(further – PEEK);

replacement zinced armoring

type by a combination of an

uniform substrate from fiber

glass and by armoring type from

stainless steel.

3 years – the simple time of

recovery of outlay of the

project

69.6 % internal norm of

profitableness (IRR)

60 km of a cable a month

(720 km a year).

7 mln USD Investments into the equipment and

circulating assets

5 mln USD credit from

«Investment venture

fund of Republic

Tatarstan»

2 mln USD own means

DancingGreen, Tula region

11

Investment project for creation a high quality all-ear round

family resort with the area of 260 hectares, Tula region,

Zaokskiy region

Easily accessible from Moscow and within two hours drive from

the City Centre. It enjoys lengthy water frontage on the River

Oka and distinctive flora and fauna.

Benefits of DancingGreen

• Creation of new workplaces (more than 1400)

• Opportunity to appearance of related business on the territory of the

DancingGreen

• Turnover more than 100 mln dollars per year

A new standard for short

holiday and all - year

round resorts

260 hectares of highly

potential natural space

capable of withstanding

recreational loads

Over 200 activities

designed for 4000 guests

Sustainable development:

technologies + green

minds

«DancingGreen», designers and consultants

12

Role Company

Concept and guest experience design

methodology ITEC (USA)

Brand Design Komandor (Russia)

Water Engineering PACE (USA)

AWater (Russia)

Operational Audit Locum Consulting (Great Britain)

Overall master plan Foster + Partners (Great Britain)

Anchors Design (planning)

Coverpoint (Great Britain)

Huettinger (Germany)

Kay Elliott (Great Britain)

Ohlson Lavoie Collaborative

(USA)

Partners in Retail (Great Britain)

Schletterer (Austria)

SCG (Great Britain)

WhiteWater (Canada)

Landscape Design Latz + Partners (Germany)

Cost Consultancy Davis Langdon (Great Britain)

Similar successful project:

Center Parcs, UK:

• owned by Blackstone

since 2006

• 4 destinations (5th on the

way)

• 95-98%% occupancy rate

for last 5 years

• operational model and

business idea are very

resistant to crisis

DancingGreen - special offer for UAE investors

13

SPV with Tula Region DVPT Corporation (state entity) is

to be formed within 2 months and inviting Arabian

investors

+

Agreement between the GVNT of RF and GVNT of UAE

on taxation of income from investments…

=

NO TAX ON PROFIT IN RUSSIA

Key Project Indexes

Investments required -

app. $350 million (equity

+ debt)

Current capitalization –

> $120 million

Project IRR - > 25%

EBITDA – $110 million

Veles-Detchino Industrial Park, Kaluga region

14

6 Industrial parks on

the territory of

Kaluga region

• Grabtsevo Industrial

Park

• A-Park Project

• Vorsino Industrial Park

• Kaluga-South

• Industrial Park

• Rosva Industrial Park

• B-Park Project

Esteblished in 2007 by Government of the Kaluga region

to provide effective interaction between the

administration and the investors, by creating the

conditions for territorial and economic development of

the region.

Major automobile concerns in Kaluga region

Veles-Detchino Industrial Park, Kaluga region

15

Investment project for creation of industrial Park with the area

of 110 hectares, Kaluga region, Maloyaroslavetsky region

Veles-Detchino Benefit - Village with all the social infrastructure

nearby – human resources

Energy supply - Is expected to build a stand-alone unit 100 MW

electrical energy and 200 Gcal/hour thermal energy, which will enable

the Veles-Detchino Industrial Park competitive cost electrical and

thermal energy (more than twice lower than the average for Ontario).

Logistics – Park is located in the immediate vicinity (40-45 km) of

urban regions and decay. At a distance 45 km the Kaluga international

airport is situated.

Will be created in the

wilderness lands

Large enterprises are

interested in it and engaged

in active negotiations

Guaranteed by the Kaluga

region Administration in

overcoming administrative

barriers

An opportunity to buy land as

well as the communications

and to order overgrowth area

"under the key"

Veles-Detchino Industrial Park, Kaluga region

16

Veles Capital Investment Group and the Government of

the Kaluga region signed the agreement about

establishment of long-term partnership and mutually

beneficial cooperation on realization in the territory of the

Kaluga region of the investment project on creation and

development of industrial park

According to the agreement:

• The production and office buildings, structure, constructions of

the industry, utilities should be built in the industrial park

• The initial volume of investment about 9 million USD

• Guaranteed assistance of Administration of the Kaluga region in

overcoming administrative barriers to entry of new business

(investment) in the region

• Previously specifications on engineering support of Industrial

park by necessary capacities are coordinated

• Syndicated Loans

• Project financing with limited regress

• Transactions with participation of export and

credit agencies

• Structural products

Veles Capital Group of companies competences

• Development of optimal financial and

commercial schemes

• Financial model

• Optimal financing strategy

• Organization of the work of consultants

Provision debt funds

17

Financial consulting

• Providing equity capital

• The subordinated shareholder loans

• Project Management

Participation in the equity capital

• Development of criteria and parameters of

successful release of bonded loans within

Concession projects

• Attraction the long-term and rather available

ruble resources

Organization of bonds issue

Contacts

12 Krasnopresneskaya emb., ent. 7, fl. 14,

Moscow, 123610

ig@veles-capital.ru

www.veles-capital.ru

Veles Capital IG

Tel.: +7 (495) 258-19-88 (Sergey Zhdanov)

+ 7 (495) 967-07-70

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