1. 1 CEE Private Equity Forum London,October 9th 2008 Exit Outlook for Small and Mid-cap Investments Witold Radwanski Krokus PE, Poland

2. 2 Small and mid-caps have more exit options available Foreign trade Foreign financial secondary IPO Liquidation Lower mid-capLarge-cap Foreign trade Local trade Foreign financial secondary Local financial secondary IPO liquidation

3. 3 Exit record of investments by Krokus 1996-2008 Lower mid-cap Foreign trade sale12 Local trade sale23 * Foreign financial secondary1 Local financial secondary2 IPO7 * MBO / MBI8 Redemption1 TOTAL54

4. 4 Local capital accumulation and availability of debt financing Expansion and consolidation strategies of local players Good prices Mild reps Low transaction costs Faster process Local-local M&A is fastest growing segment of M&A market IPO increasingly popular exit route Main market accepts smaller companies New Connect Attractive valuations Liquidity from local institutional capital

5. 5 Dynamics of IPO market is changing Number of IPOs on Warsaw Stock Exchange by year 11 out 24 IPOs debiuted at a loss

6. 6 Number of IPOs on Warsaw Stock Exchange by month Worst prospects for small-caps

7. 7  Accumulation of capital by local institutions: Pension funds’ preference for ever bigger deals  Investors more sophisticated  More complex relations between buyer-seller-broker Exit via IPO Polish style

8. 8 Krokus invested €10m in tranches for 76% of Praterm. Proceeds from capital increases used to finance acquisitions of local heating utilities. IPO on Warsaw Stock Exchange 2004 Following two partial sales, Fund exited to Dalkia in a public tender 4.6x c-o-c and gross IRR of 55% Praterm pre-investment and at-exit: 2002 2007 Nr of heating plants519 Nr bio-energy companies03 Sales (PLN m)58191 Zamo ść PasłękSztum Świdnik Zduńska Wola Chrzanów Bytów Świecie Przasnysz Międzyrzec Podlaski Tarnowskie Góry Lidzbark Warmiński Kraśnik Łańcut Legnica Poręba Nowy Dwór Mazowiecki Sosnowiec Atex BIO ENERGIA EUROBIOMASS AGROFARM Exit via IPO Polish style: Example 1

9. 9 EXIT Exit via IPO POlish style: Example 1

10. 10 Sale of large majority stake – IPO with partial sale leaving 51% residual shareholding for sale to anticipated strategic, 6 month lock-up, and capital increase Broker’s initial valuation very attractive Broker corrects valuation downward Conflict between Company and broker’s analysts over projections Broker corrects valuation downward Broker corrects valuation downward again IPO shelved – Company sold to trade buyer Exit via IPO Polish style: Example 2 Broker’s interest switches to buy side…