Transcript OPENING THE DOOR IN THE WEST FOR INVESTMENTS INTO …

A basic economic principle is
that growth requires investment
RAISING CAPITAL OVERSEAS FOR
RUSSIAN COMPANIES:
AN ACG CASE STUDY
Access to Finance is #2 Constraint for
Russian companies after Tax Burden
RAISING CAPITAL OVERSEAS FOR RUSSIAN COMPANIES
Presentation Outline
 What Do Companies Need to Succeed?
 Benefits of Raising Capital Overseas
 Reasons for International Investors/Companies
to Invest in Russia?
 Sample International Financing Options
 What Do Investors Look For?
 Case Study:
How Does The Capital Raising Process Work?
 Conclusion
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What Do Companies Need to Succeed?
 MANAGEMENT
TEAM
Long-term vision, strategy & planning
Professionalism
Creative & Innovative thinking
 MARKET
ACCESS
Demand for products
Value adding competitive product
Presence in markets or ability to establish market presence
 ACCESS
TO CAPITAL
Long-term capital
Affordable capital
SMART Money
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Benefits of Raising Capital Overseas
ACCESS
TO FINANCING
additional opportunity or the only one
Long-term
funds
5-10-15 years
LOWER
COST OF CAPITAL
8-11 % interest rates
SMART
Money
new partners, managerial and technical expertise,
technology, access to global network and new markets
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Reasons for International
Investors/Companies to Invest in Russia?
Opportunity for higher returns
 Diversification of portfolios
 Synergies with other portfolio companies
 Access to new markets
 Supply chain optimization through offshoring

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Sample international financing options

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International development banks
Government organizations
Commercial banks
Investment banks
Private equity & hedge funds
Strategic alliances/Joint Ventures
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What do investors look for?
PROFESSIONAL MANAGEMENT TEAM
SUCCESSFUL PAST PERFORMANCE (Track-record)
 LONG-TERM VISION
 TRANSPARENCY
 DEMAND and COMPETITIVE PRODUCT
 ACCESS TO MARKETS
 SUSTAINABLE BUSINESS MODEL
 RATIO OF OWN TO EXTERNAL CAPITAL (“Skin in the Game”)
 PROFITABLE and VIABLE EXIT FOR INVESTORS
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MARKETING TO INVESTORS
CASE STUDY:
Capital Raising Process
Company
- a leader in the distribution
of food ingredients in Russia and CIS
$50 Mill. in Annual Sales
Wanted to build a plant – $20 Mill.
Raised money from an Investment Fund
$150 Mill. in annual sales in 3 years
Capital Raising Process
INVESTOR
1. DUE DILIGENCE, MARKET
RESEARCH, ANALYSIS,
STRATEGY DEVELOPMENT,
DOCUMENT PREPARATION
2. INVESTOR OUTREACH
YOUR COMPANY
4. NEGOTIATIONS &
INVESTMENT AGREEMENT
3. INVESTOR DUE
DILIGENCE
5. FUNDS TRANSFERED
6. DEVELOPMENT
STRATEGY
IMPLEMENTATION
Capital Raising Process
1. Due diligence-Market ResearchAnalysis-Planning
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Corporate, Financial and Legal Audit
Financial Reporting in GAAP or IFRS
Valuation (Company/Project/Assets)
Market research (Customers, competition, market size,
growth, trends, industry structure, 4Ps marketing mix analysis)

Business Model Description (Product/service,
operations, logistics, 4Ps’ marketing mix)
Financial
Payback)
Projections (Budgeting, Sales, NPV, IRR,
Capital Raising Process
1A. Investor’s Document Kit Preparation
 Due
Diligence Report
 Accounting and Internal Controls Summary
 Market Research Report
 Detailed Business Plan
 Financial Projections
 Valuation Report
 Investment Summary
 Corporate Brochure
 Investor POWER POINT Presentation
 Private Placement Memorandum
 Subscription Agreement
Capital Raising Process
INVESTOR
1. EXPERT
RESEARCH-ANALYS-PLANNING
1a. INVESTORS’ DOCUMENT
KIT PREPARATION
2.INVESTOR OUTREACH
4. NEGOTIATIONS &
INVESTMENT AGREEMENT
3. INVESTOR DUE
DILIGENCE
5. FUNDS TRANSFERED
YOUR COMPANY
6. DEVELOPMENT
STRATEGY
IMPLEMENTATION
Capital Raising Process
2. Typical Investment Terms that
Russian companies should expect
Giving
up a share in the business
Seat on the Board of Directors
Management team is expandable
Preferential rights
Supervision rights
Capital Raising Process
INVESTOR
1. EXPERT
RESEARCH-ANALYS-PLANNING
1a. INVESTORS’ DOCUMENT
KIT PREPARATION
2.COMMUNICATION
4. NEGOTIATIONS &
INVESTMENT AGREEMENT
3. INVESTOR DUE
DILIGENCE
5. FUNDS TRANSFERED
YOUR COMPANY
6. DEVELOPMENT
STRATEGY
IMPLEMENTATION
Capital Raising Process
3. Preliminary Negotiations & Due
Diligence by Investors
Memorandum
of Understanding
Preliminary Agreements (Term sheet)
Due Diligence by Investors
Capital Raising Process
INVESTOR
1. EXPERT
RESEARCH-ANALYS-PLANNING
1a. INVESTORS’ DOCUMENT
KIT PREPARATION
2.COMMUNICATION
4. NEGOTIATIONS &
INVESTMENT
AGREEMENT
3. DUE DILIGENCE
5. FUNDS TRANSFERED
YOUR COMPANY
6. DEVELOPMENT
STRATEGY
IMPLEMENTATION
Capital Raising Process
4. Understanding the terms of the
Investment Agreement
 Convertible
rights (e.g. Debt-into-Equity,
Warrants, Options)
 Management and supervision rights
 Seniority of Obligations
 Risks associated with collaterals
 Requirements to maintain performance
(EBITDA, Leverage, sales) - otherwise margin
calls can follow
Capital Raising Process
INVESTOR
1. EXPERT
RESEARCH-ANALYS-PLANNING
1a. INVESTORS’ DOCUMENT
KIT PREPARATION
2.COMMUNICATION
4. NEGOTIATIONS &
INVESTMENT
AGREEMENT
3. DUE DILIGENCE
5. FUNDS TRANSFERED
YOUR COMPANY
6. DEVELOPMENT
STRATEGY
IMPLEMENTATION
Conclusion
There
are significant benefits in raising
capital internationally
It requires a knowledge of process and
significant preparation
It requires clear communication and
networking capability
Assistance of professionals in the fields of
investment consulting, business planning,
law, accounting
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For a copy of this presentation please contact us directly.
Thank you
Presented by - Kirill Pervun
AGINSKY CONSULTING GROUP, LLC.
WEB: www.aginskyconsulting.com
EMAIL: [email protected]
TEL: 877-WITH-ACG