OPENING THE DOOR IN THE WEST FOR INVESTMENTS INTO …
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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
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
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
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