Choosing the Right Underwriter

1. Choosing the Right Underwriter 24 November 2011

2. Syndicate Selected The First Steps RFP Process • Request for Proposal (RFP) • Can either be written by the company or by an already closely-associated bank • In case of Russian equity transactions, some key criteria are the following: • Experience in Russian IPOs / all equity transactions • Experience in IPOs / equity transactions in the relevant sector • Research analyst and ranking • Marketing and distribution capabilities • Team on the ground to execute the transaction • References from previous transactions • Fees and syndicate structure Draft RFP Banks Submit Responses Short-list Top Banks “Bake-off” Presentations 2

3. 6 4 6 4 16 4 4 8 24 4 4 24 5 23 How Experienced are the Banks? Sorting through the maze of credentials Russian IPOs since 2005 • Key Elements to Take into Account when Assessing Credentials • Russian equity market effectively opened in 2005 • Just as important is to ask for most recent (last 12 months) list of transactions executed by the bank • You want to hire a bank, which has not only relevant but also recent experience in selling deals • League tables: • Likely to show that every bank is #1 in every area • Set out very clear parameters for league tables such as specific number of years, exact region, IPOs only / all equity / including, excluding equity – linked transactions Number of Deals Source Dealogic Russian IPOs last 12 months Number of Deals Source Dealogic 3

4. The Transaction Team It’s a long process ahead, so make sure you feel comfortable with the working group • Team on the Ground to Execute Your Transaction • Important to know which individuals will be running the deal • Determine the relevant language requirements; will the project be run in Russian? • Make sure not only the coverage banker speaks the language, but ideally equity capital markets and industry bankers as well. This will ease the communication day to day • Do not be afraid to hire teams of advisers that will disagree with you, they are not being paid to be your “yes men” • References: • Ask for these and actually call the people whose contact details were provided 4

5. Selling the Deal to Investors A bank’s relationship with key investors is often crucial for closing a deal • Key Criteria for Research and Distribution • Research: • Analyst ranking (Institutional Investor Survey, Extel) • Experience of deal research • Distribution: • Russian banks traditionally have higher trading share, especially when it comes to local lines of stock • Most banks have good access to fund managers • What is key however, is up-to-date knowledge of investors, which are willing to invest money at any particular moment in time • This knowledge comes only from doing recent deals 5

6. Average Syndicate Size for Russian Equity Deals(1) Average Syndicate Size for European Equity Deals(1) Deals <$750 MM Deals <$750 MM Deals >$750 MM Deals >$750 MM 2011 YTD 2011 YTD 2.7 1.8 3.5 3.3 2005–2010 2005–2010 1.5 1.8 2.6 3.0 Syndicate Size and Fees • Fees: • Cheapest does not mean best: “you pay peanuts, you get monkeys” • Market rate is fair • Be fair about payment of the incentive • Syndicate size & composition • Depends on size of the transaction, though the tendency for Russian deals has been toward larger syndicates, with Europe exhibiting a similar trend • Larger syndicate does not mean better syndicate. Find a balance • At least one Russian bank in the syndicate has become the norm • 73% of deals in 2011 have had a Russian bank as opposed to 48% from 2005 to 2010(1) • Global coordinators / Bookrunners / Co-bookrunners / Co-lead managers • Look at precedents and speak to your trusted advisor to create right syndicate structure • Notes • Deals larger than $100 MM and excluding rights issues 6