Technology sector investment opportunities in the Baltics

Private equity investor’s view

Vygandas JurasPartnerBaltCap Management

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BaltCap Management

www.baltcap.com

Profile of BaltCap Management Largest private equity fund management company in the

Baltics

Four funds of 90 mEUR under management in the Baltics

Offices in Helsinki, Riga, Tallinn & Vilnius (10 professionals)

Investment criteria: Investment size from 1 to 5 mln EUR (SME less than 1) Preference for growth capital financing Both minority (min 15%) and majority positions All basic industries 3-5 year investment horison Exit through sale to a strategic investor

Technology exposure: Microlink, Informacines Technologijos, Ashburn International, Hansa Electronics

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BaltCap Management

www.baltcap.com

Outline

• Introduction to our firm

• How venture capital/private equity works

• What does it take to have a star in the

Baltic technology sector?

• Sector challenges and opportunities

• Investment trends

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BaltCap Management

www.baltcap.com

Levels of private equity investment

Time

Money

Startup

Expansion

Mezzanine

Established

Seed

Financing available in the Baltics

BSEF

Balaef

BaltCap

VBRKV

ŠBIV

Startup

BaltCap

LHV

ESTAG

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BaltCap Management

www.baltcap.com

Economics of venture capital/private equity fund

EUR 26EUR 10

0.0Total loss1

0.0Total loss1

0.5Dying dead1

0.5Living dead1

1.0Living dead1

2.0Average performer1

3.0Average performer1

4.01

5.0Star1

10.0Superstar1

Distributed, EURPerformanceInvestment, EUR

Star

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BaltCap Management

www.baltcap.com

Investor targets

• A leading local/regional

company

• A local company-specialist

with an innovative, globally

competitive product

• Laser technology

• Medical devices

• GSM-related services

• …..?

FASTER, BETTER, CHEAPER THE BRAVE NEW WORLD

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BaltCap Management

www.baltcap.com

Global competitiveness defined

Global competitiveness is an ability of Baltic companies to

offer unique goods and services marketable in international

markets:

Products/services that have current utility in foreign

markets;

Capability to commercialise, market and sell.

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BaltCap Management

www.baltcap.com

Major challenges in gaining competitive advantage

• Gaining international managerial expertise

• Developing a global perspective

• Adjusting current valuation expectations

• Overcoming control or “my baby” syndrome

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BaltCap Management

www.baltcap.com

Future Baltic technology investment trends

• More private equity, less venture capital• M&A, consolidation financing

– Systems integrators– Automation consultants– Network infrastructure companies– Telecom services providers

• Buyouts– Family businesses– Fund exits