International Council of Institutional Investors Presentation to

1. International Council of Institutional Investors International Council of Institutional Investors Presentation to Russian Chamber of Commerce and Industry Confidential

2. World in the Past Globalization - The World is Flat Thomas L. Friedman

3. World in the Future Strategic triangle Russia-India-China Evgeny Primakov (1998)

4. BRIC CountriesThese 4 large countries account for more than 40% of the world’s populationand almost a third of the world’s land mass.

5. Largest Economies in 2050 The economies of Russia, India and China would become much bigger shares of the global economy Already the RICs Economies are having a huge influence

6. Next Decade is the Peak for Global Growth because of the RICs phenomena The middle Class in the RICs could Grow Fourfold in the Next Decade • Global Demand Growth for Energy and other commodity is likely to remain very strong over the next decade

7. The Global Economy has Passed a Tipping Point Reform & Growth have Transformed the Global Economy • The global economy has been transformed

8. Why PE in the Emerging PE Markets? Under-Penetrated PE Markets Private equity capital raised as percent of GDP (2005) Source: NVCA, EVCA, EMPEA, Asia PE Review, Thompson Venture Economics; EIU 5.3x potential 5.6x potential $71B $17.5B $2.7B $113B Est. PE Fundraising: GDP: $12T $13T $10T $1.7T

9. Overview of Regions Characteristics & Strategies • Although there are some similarities, each market has unique characteristics and requires granular analysis of the appropriate strategies. • For most, a focus on mid-market expansion opportunities provides the most compelling opportunity.

10. Executive Summary CHINA: MACROECONOMIC DATA AND FORECAST Attributes • China’s economy grew at an average rate of 9.6 percent from 1990-2006. GDP is forecast to grow at 9 percent per year over the next three years. Goldman Sachs projects that China will become the world’s largest economy by 2041. • China’s accession to the WTO in 2001 set the stage for an increase in manufacturing capacity and further explosive export growth. • China is the largest recipient of FDI in the world. FDI was $90 billion in 2006, and has totaled $710 billion since 1979. • China’s Foreign Exchange Reserves increased to $737 billion by the end of 2005. • China has the sixth largest economy in the world. On a PPP basis, it has the world’s second largest economy. • While there were no privately-owned companies before 1980, the Chinese economy has been reshaped by entrepreneurial dynamism and market capitalism. The output of China’s private sector increased fivefold from 1998 to 2003. Although the government is still heavily involved in the economy, China’s private sector accounts for two-thirds of the economy, according to the OECD. • Domestic consumer demand is increasing with the rise of a middle class. In 2006, private consumption, which is more than 40 percent of GDP, grew by 8 percent. Source: Economist Intelligence Unit 2005 Issues • Political risk: no democracy or political freedom. • Social risk: income disparities, corruption, and unemployment lead to social unrest and could breed crime; environmental deterioration persists, with soil contamination as well as air and water pollution. • Legal and regulatory risk: legal system gives bureaucrats certain discretionary powers; inadequate dispute resolution mechanisms breed corruption; lax law enforcement is especially troubling for entrepreneurs and smaller companies, particularly those operating in remote parts of China where local officials’ power may go unchecked. • Corporate governance has improved but significant challenges remain such as enhancing legal protection for investors and creditors.

11. Investment Opportunities China PE/VC Investment (US$ million) • High Level Trends • Digitization: IT, telecom, digital media • Globalization: exports industries, manufacturing base • Traditional economy: healthcare, housing, education, entertainment, life-style, and sports • Privatization: M&A and MBO opportunities in state-owned enterprises (SOEs) (340,000 SOEs will be reduced to 200,000 in 10 years) • Industry Focus (TMT) • Technology: IT services, software and solutions, storage solutions, and network security solutions • Currently, technology comprises 5.4 percent of China’s GDP. According to the China Center for Information Development (CCID), IT will account for 12 percent of China’s GDP in 2010. This increase represents a 19 percent CAGR. • Media: publishing, and content production • Telecom: wireless, Wi-Max, communications infrastructure, OSS software, and enabling software • Other sectors: environmental protection industries (i.e., water pollution treatment), consumer products & retail (i.e., food & beverage), and biotech & pharmaceutical industry • Sources of Spending • Government: infrastructure, environmental protection, and “e-government” • Corporate: IT infrastructure & security, system integration, and ERP & CRM • Individuals: entertainment, housing, medical services & healthcare, wireless communications, and education & media • Other • There are more than 8 million small and medium sized companies in China. However, only several hundred of them receive venture capital investment every year. Source: zero2ipo China PE/VC Investment by Industry ( US$ million) Source: zero2ipo

12. Buyout • Affinity (t) • Carlyle Asia Partners • CPE/VC (t) • CCMP (t) • MBK (t) • Newbridge (t) • Warburg Pincus (t) • KKR • Bain Capital • Expansion • AIG • DFJ • HSBC • Primus Pacific • SOFTBANK Asia Infrastructure Fund • Walden Int’l China Private Equity / Venture Capital Landscape 500+ • Distressed Debt (DD) • Avenue (t) • Lone Star • Colony (t) • Pangaea-Pequot • Proprietary • Goldman Sachs • Morgan Stanley Expansion/Growth • Funds • Accel/IDG • ChinaVest/Shandong High-Tech • DCM/Legend Capital • DFJ/Dragon Ventures • Mayfield/GSR Ventures • Sierra/Gobi • Sycamore/Canton Venture • Trident/Mustang Ventures • UOB/Canton Venture • UOB/Shandong High-Tech • UOB/Shenzhen Capital Expansion/Growth • 3i • Actis • Baring Asia (t) • Carlyle Asia Ventures (t) • ChinaVest • Citic Capital • Clearwater (DD) (t) • Crimson • Darby (Mezzanine) • Excelsior (t) • Fortune Ventures • Granite • Henderson • H&Q • Intel Capital • Olympus • Orchid • Pacific Venture Partners • Qualcomm • Sycamore • UOB (t) • Others (~15) • AsiaVest • Capital Today • CDH (t) • Chengwei (a) • Dragon Ventures (a) (t) • EBICC • IDG/Accel (a) • iD TechVentures (t) • Leaguer PE/VC • VentureTDF (a) • Others (~10) Estimated Active Fund Size ($mm) 100-500 Growth/Early Growth/Early • Affiliations • KPCB/Infotech • Sequoia/Infotech • SMC/Milestone • Sutter Hill/Chengwei • Sutter Hill/Venture TDF Growth/Early • ChinaEquity • Gobi (a) (t) • GSR Ventures (a) • Infotech (a) (t) • Milestone (a) (t) • Mustang Ventures (a) • NewMargin • Northern Light (t) • Others (~120) • Canton Venture (a) • Legend Capital (a) (t) • Shandong High-Tech (a) • Shenzhen Capital (a) • Tsinghua Unigroup (t) • Tsinghua Venture (t) • Zhangjiang Ventures • Others (~70) • AsiaTech • Shaw Kwei (t) • WI Harper • Whitesun T2C • Others (~15) <100 Greater China Affiliations (a) China Independent Pan-Asian GPs China Captive

13. Executive Summary INDIA: MACROECONOMIC DATA AND FORECAST Attributes • From 1981 to 2006 the Indian economy grew by an annual average of 6%. GDP is forecast to grow at approximately 7 percent per year over the next two years. Goldman Sachs projects that India’s GDP will eclipse Japan’s by 2032. • India is the world’s largest democracy with a robust democratic federal system. It also has the advantage of a long established legal and accounting system, an independent judiciary, a free press and a strong tradition of entrepreneurship. The use of English is widespread in business and commerce. • India has advantageous demographics, with approximately 60 percent of the population at optimal working age. India’s engineers, technicians and skilled personnel are among the best in the world. • There is a growing middle class with substantial purchasing power. UN and AT Kearney estimate that the middle class and the emerging class will reach 310 million and 628 million by 2015, respectively. • The Indian stock market is among the top five markets in the world in terms of number of transactions per day, indicating relatively high liquidity. Between yearend 2002 and May 2006, the Bombay Stock Exchange index has more than tripled, and now boasts a universe of more than 4,600 listed companies. Over the same period, market capitalization has increased over 350% to $625bn. • India is the world’s second most populous country, with more than 1 billion people and 15% of world population. It is expected to overtake China as the world’s most populous country by 2030, with the population stabilizing at around 1.5 billion. India has a young population, with 70 percent below the age of 36, and half of those under the age of 18. • India has renowned technology institutions producing highly educated people, with more than 1 million information technology workers. However, only 52% of the population is literate, suggesting severe inequalities in education. Source: Economist Intelligence Unit 2005 * 06/26/06 Issues • The Government of India has changed six times since 1996. Political instability disrupts policy-making and economic liberalization. • India’s high fiscal deficit leads to high indirect taxes, low public savings and expenditures on education, health and welfare, which will adversely impact long-term growth potential and social stability. • India’s poor infrastructure is a major obstacle to economic growth. Real progress has only occurred in the telecommunication sector. • India’s rigid labor laws prohibit an increased role for manufacturing. It also ranks poorly on primary and secondary education. According to World Bank, youth male illiteracy in India is 20 percent. • The predominance of inefficient state-owned enterprises, particularly in the banking sector, remain a brake on growth. Corruption is also a serious concern. Bureaucracies and vested interested have long impeded banking reform.

14. Investment Opportunities • BPO and IT Services • India has become the dominant offshore destination for the global IT services business. The demand for offshore delivery is growing rapidly because of its cost-effectiveness. This will enable Indian companies to increase market share in traditional IT services such as application development and maintenance. • Indian companies are also entering new segments such as IT infrastructure outsourcing and IT consulting to provide a broader of services and expand their share of the client’s addressable IT budget. • Healthcare, logistics, finance and accounting BPO are expected to show significant growth. • Infrastructure • More than $170 billion investment is needed irrigation, power and urban development. • With demand for power expected to increase at a CAGR of 6.3 percent over the next 15 years (Ministry of Power), the government has implemented important policy changes to restructure the sector and foster rapid growth, calling for more private participation. The government has also set a goal to electrify all villages by 2007 and all households by 2012. • Proposals for 100 percent FDI in electricity generation, transmission and distribution projects up to around US$300m receive automatic approval. • Powertransmission has also been opened to the private sector. • Real Estate • Spurred by government reforms, increased FDI and improved corporate governance, this sector is expected to grow 25-30 percent per year to $90bn in 10 years. In Q-1 2006, PE firms made at least eight investments worth about $359mn. • Recent reforms permit 100% FDI in housing, townships, built-up infrastructure and construction development, subject to certain minimum requirements. • According to Consolidated Toll Network India, within the next five years more than $88 billion is required to invest in housing, $2 billion and $48 billion is required to invest in commercial and industrial respectively. • India has a serious housing shortage. Under a Special Action Plan on housing, 2 million units will be built each year - 700,000 in urban areas and 1.3 million in rural areas. • There is also a shortage of hotel rooms. Special tax incentives have encouraged projects targeting middle-range business clients and tourists. BSFI: Banking, Financial Services and Insurance Source: TSJ Media

15. India Private Equity / Venture Capital Landscape Expansion/Growth Buyout Expansion • AIG EM fund • DFJ ePlanet • HSBC • Walden Int’l • SOFTBANK Asia Infrastructure Fund • Warburg Pincus (t) • GAP • Blackstone • Newbridge (t) • Carlyle Asia Partners • Citibank Private Equity (c) • JPMP Asia (t) • ICICI Venture (t) • TCG India (t) 500+ Proprietary • Goldman Sachs • Morgan Stanley Expansion/Growth Expansion/Growth Estimated Active Fund Size ($mm) • ChrysCapital • IDFC Venture (c) • WestBridge • IL&FS • iLabs • Acer Tech (c) • Carlyle Asia Ventures (t) • CLSA • Crimson (t) • Darby Asia (Mezz.) • DFJ • JAFCO Asia • Schroder • Actis (t) • Baring India (t) • Henderson (t) • Intel Capital (c) • NYLIM (t) • Standard Chartered 100-500 Growth/Early Growth/Early • APDC Ventures (c) • Blue River Capital • Electra Partners Asia • Frontline Ventures • GVFL (c) • GW Capital • IndAsia Fund • Indian Direct Equity • Infinity • JumpStartUp • JS Capital Partners • SEAF (Kotak) • SIDBI (c) • TDA • UTI Venture • Battery Ventures • Bessemer • Matrix • NEA • New Vernon <100 Domestic GPs Global / Pan-Asian GPs

16. 2005 FDI Inflows 34,755 16,700 7,550 5,000 3,700 Total Azerbaijan Kazakhstan Russia Ukraine Key Economic Indicators - Russia Executive Summary - Russia • Overview • Russia is a leading producer and exporter of minerals, gold, and all major fuels. • Much of the revenues from high oil prices have been channeled into a Stabilization Fund (created to help soften the effects of downturns in commodity prices). • According to Goldman Sach’s BRICs report, Russia will catch up with the lower end of the G6 countries in terms of income per capita by 2050. • On a per capita basis, Russia has by far the most tertiary graduates. • Russia's federal budget surplus for 2005 amounted to $58bn or 7.5% of GDP • FDI • According to data from the Russian Central Bank (RCB), foreign direct investment (FDI) inflows averaged some US$15bn annually in 2004-05, compared with US$8bn in 2003 and negligible annual totals before that. • Russia’s judicial system is still relatively weak and unpredictable. Corruption is rife among law-enforcement bodies and judges, and court decisions are often difficult to implement. • The Government has been taking possession of “strategic assets” such as energy and aviation. • Russia’s demographic profile is very unfavorable: a falling and ageing population (average contraction of .5% per year), low life expectancy and a declining working-age population. • Russia’s FDI is heavily dominated by the oil and gas sector. • An underdeveloped infrastructure and corruption remain key impediments to FDI, as does the unpredictability with which regulations are often applied. Issues

17. Foreign Capital Domestic Capital Investment Strategies

18. Educational Growth

19. ConferencePlan • Host:International Council of Institutional Investors (ICII) • US Partner:Pacific Corporate Group (PCG) Asset Management • Russian Partner:Chamber of Commerce and Industry of the Russian Federation • Support:Ministry of Economic Development and Trade of Russian Federation,US Department of Commerce, Russian Venture Capital Association • Where:Congress Center of the Russian Chamber of Commerce and Industry • When:June 4-5, 2007

20. In the short term, strong overall macroeconomic fundamentals sustained in China, India and Russia. This will continue to attract substantial flows of foreign investment, further boosting potentials for the future output growth. The RICs are likely to maintain their comparative advantages in the long term. This will help to ensure relatively high growth rates and therefore increasing share of these economies in the world market. Russia must have a commitment to leadership in "intellectual resources" by funding of basic research, and the creation of regulatory environments conducive to entrepreneurial activity must be the priority in Russia. Conclusions

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