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Adam Smith 4 th Annual Ukrainian Investment Summit London, UK March 11, 2008

Adam Smith 4 th Annual Ukrainian Investment Summit London, UK March 11, 2008. Leading private equity firm in the Region. RUSSIA. BELARUS. UKRAINE. MOLDOVA. HORIZON CAPITAL. GEOGRAPHIC FOCUS.

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Adam Smith 4 th Annual Ukrainian Investment Summit London, UK March 11, 2008

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  1. Adam Smith 4th Annual Ukrainian Investment SummitLondon, UKMarch 11, 2008

  2. Leading private equity firm in the Region RUSSIA BELARUS UKRAINE MOLDOVA HORIZON CAPITAL GEOGRAPHIC FOCUS • Horizon Capital is the leading private equity fund manager in Ukraine, Moldova and Belarus, managing three funds: • EEGF II – $300 million target • EEGF I – $132 million • WNISEF – $150 million • Over 13 years of investment experience in the region • Entrepreneurial team of professionals with long common track record • Superior network of relationships creates pipeline and due diligence value In 2008, Horizon Capital launched Emerging Europe Growth Fund II (EEGF II) with a target of $300 million. EEGF II will focus on mid-cap companies in fast growing sectors of Ukraine and the region. Investment size is expected to range from $15-30 million per deal. HC INVESTMENTS UKRAINE FDI BELARUS BELARUS

  3. Per Capita Disposable Income, $ 7,000 6,000 Poland ’03-’08 CAGR=12% 5,000 Russia ’03-’08 CAGR=24% 4,000 3,000 Belarus ’03-’08 CAGR=22% 2,000 Ukraine ’03-’08 CAGR=32% 1,000 Moldova ’03-’08 CAGR=18% 0 2003 2004 2005 2006e 2007f 2008f (base year = 2003) Source: Euromonitor Statistics/ Country Fact sheet

  4. Per Capita Cumulative Direct Investment, $ 2,000 1,500 1,000 500 0 Belarus Moldova Ukraine Russia Poland 19% CAGR 2,088 Year 2006 Year 2000 36% CAGR 43% CAGR 722 23% CAGR 601 15% CAGR 435 306 253 112 94 88 50 Source: IMF, Balance of Payments database (except for Russia) World Investment Report, UNCTAD (for Russia only) EBRD country statistics

  5. GDP Growth Comparison 2000-2006 15% 10% 5% 0% Ukraine Moldova Belarus Russia Poland GDP (PPP) CAGR ’00-’06 11% 10% 9% 9% 6% Source: International Monetary Fund, World Economic Outlook Database, October 2007

  6. Consumer Bank Loans, $ per capita 500 400 Ukraine=97% 300 Russia=121% Poland=79% 200 China*=28% 100 India=33% 0 2002 2003 2004 2005 2006 CAGR 02-06: * Note: CAGR for China is 2002-2005 Source: National Bank of Ukraine, Central Bank of Russia, National Bank of Poland, The People’s Bank of China, Reserve Bank of India

  7. M&A Banking

  8. M&A Other Sectors

  9. M&A Activity in CEE in 2006 M&A Activity in CEE 2006 • Extremely active market: +2,500 transactions; 12% of European market, $163 billion • M&A activity doubled over 2005; tripled 2004 value • Top 3 countries by value: Russia, Czech Republic, Poland • Top 3 growth countries by volume: Ukraine, Russia, Slovakia • Top 3 growth countries by value: Croatia, Hungary, Russia • Top 3 investors in region: UK, Germany, US • Proportion of deals ↓ $100 mn: 82% • Average deal size of deals ↓ $100 mn: $20 mn. Source: PricewaterhouseCoopers CEE M&A Survey 2006

  10. M&A Activity in CEE in 2006 • Top target industries: manufacturing, financial services, food & beverages, utilities • Total value of privatizations down – much of CEE is more mature • Investment flows moving east: 75% of financial services transactions (397) closed were in Russia, Ukraine, Serbia, Bulgaria Source: PricewaterhouseCoopers M&A Survey 2006

  11. Private Equity in CEE • Since 1990 €9 bn. raised specifically for CEE (excluding Ukraine, Russia) • Annual investment levels exceeding €550 mn. • Private equity investments across CEE totaled €508 mn. in 2005 • More than 85% of activity concentrated in Hungary, Czech Republic, Poland, Romania • On average private equity investment is equivalent to 7% of GDP (in contrast to Europe on the whole ~40%) Source: EVCA Special Paper, Central and Eastern Europe Statistics 2005 EVCA Symposium, June 2006

  12. Private Equity in CEE • Buyout largest category and increasing in 2005 • Together buyouts and replacement capital 72% of value, similar to Europe as a whole • Expansion capital deals over 2% (higher than in Europe) • Starting and seed deals under 2% (lower than in Europe) • Leverage becoming ever more available Source: EVCA Special Paper, Central and Eastern Europe Statistics 2005 EVCA Symposium, June 2006

  13. Private Equity in CEE • Exit activity (measured by cost of investment) ↑ 244% over 2004 • Public market exits ↑ 70% over 2004 • Secondary sales to other private equity houses not yet significant • Poland largest exit market, 25% of total activity Source: EVCA Special Paper, Central and Eastern Europe Statistics 2005 EVCA Symposium, June 2006

  14. Shostka – Leading Producer of Hard Cheeses • Buyout followed by infusion of growth capital • Low entry multiple (2.5x EBITDA) • Executed plan to grow aggressively while improving brand and distribution • Exit at 5.9x cash on cash and over 470% IRR

  15. IMB Group – Pure Play Consumer Lending Platform • Identified growth area – started mortgage bank • Created expansion opportunity – management spin-out of leading consumer intermediary • Attracted high quality, experienced management and Non-Executive Board Chairman • Private placement in July 2006 attracted $31.5 mn. for a 46% equity stake – 6x NAV pre-money • Completed $100 mn. equity increase in June 2007 for a 38% equity stake – 6x NAV pre-money

  16. Ergopack – Market Leader Manufacturer of Household Disposables • Identified under penetrated growth area – non-food consumer spending • Improved transparency enabling access to credit • Provided capital for new manufacturing site and recycling center – cost savings created • Growing 50% year on year • Product line extensions next step

  17. What Does the Future Hold? • ↑ Fundraising for the region • ↑ Competition • ↑ Average enterprise value • ↑ Buyouts/controlling stakes • ↑ Use of leverage • ↑ IPO’s • ↑ Secondary purchases • ↓ Holding periods

  18. Contact Information Natalie A. Jaresko, Managing Partner 4 Muzeyny Provulok, 3rd Floor 01001 Kyiv, Ukraine Tel.: +38 044 490-5580 Fax: +38 044 490-5589 njaresko@horizoncapital.com.ua www.horizoncapital.com.ua

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