1. Russian M&A Market Outlook 2013 Alexander Nadmitov Helsinki, 27/08/2013

2. Main Trends in 1H 2013 Twofold decrease in M&A activity: US$13,4 bln. against US$27 bln. in 1H 2012 Most investors – from Russia, less international buyers (85% buyers – Russian companies) Foreign investors active in oil&gaz/real estate: – BP buys 5,66% in Rosneft for US$4,87 bln. as part of TNK-BP deal – Morgan Stanley Real Estate buys Metropolis retail mall in Moscow for US$1,2 bln.

3. Dominance of state-owned corporations Acquisitions by state-owned companies on rise (hidden nationalization) – US$54 bln. purchase for 96,51% of TNK-BP (oil) by Rosneft, 03/2013 – US$2,9 bln. for 49% in 100% consolidation of Itera (gaz) by Rosneft, 06/2013 – US$2,3 bln. purchase of Russian assets of Tele2 by VTB (2013, telecom); Expansion of Russian state corporations abroad: purchase of DenizBank by Sberbank;

4. International expansion Russian companies going global (recent example: acquisition of stake in Jokerit hockey team and Hartwall Areena in June 2013)

5. Divestures Metals and mining companies are divesting of loss-making foreign subsidiaries – restructuring their businesses (Mechel sold a number of assets in USA, Romania, Bulgaria, Ukraine, Kazakhstan) Russian companies become mature like other international players IT/Internet business gradually replacing traditional industrial sector

6. Rise of IT / Internet sector In 2011 Russian Internet market became the largest in Europe and online trade shows two-digit growth every year Rise of venture and private equity deals in Internet/IT sector: (US$700 mio. purchase of 48% in Vk.com, popular Russian social network, valuing it at US$ 1,5 bln.) IT companies going public: – Qiwi IPO on NASDAQ, 05/2013 at valuation of US$884 mio. – Luxoft IPO on NASDAQ, 06/2013 at valuation of US$550 mio..

7. Venture Investments: 2012 201 reported deals of US$910mio. in total – US$792 mio. invested in IT startups – US$108,4 mio. (18) in industrial technologies – US$10,2 mio. (15) in biotechnologies – 12 exits for US$372 mio. – 3 deals above US$100 mio. (2 cleantech: JV on energy- saving glass, polysilicon manufacturing, microchips) More competition among startups, more specialization among funds, funds invest more in startups who survived early stages of development, lack of angel investors

8. State Development Agencies and Investment Funds Skolkovo Fund (gives grants) in 2012: – Industrial technologies –US$75,8 mio. – IT – US$26,5 mio. – Biotech – US$16,7 mio. Rusnano (prefer investments over US$100 mio., particularly in nanotechnologies) Russian Venture Corporation (state fund of funds) Russian Direct Investment Fund Vnesheconombank (VEB)

9. Most of transactions under English law through offshore SPV/ holding companies – mostly Cyprus (following Cyprus crisis – switch to other jurisdictions) Russian law issues to consider: – antimonopoly filings – investments into strategic companies – notary certification for transfers of participation shares in limited liability companies – mandatory offers for open joint stock companies

10. Antimonopoly requirements Thresholds for RF FAS clearance: – by total value of assets – 7 bln. rubles (EUR 162 mio.) or by total revenue – 10 bln. rubles (EUR 233 mio.) – total value of assets of targets group – 250 mio.rubles (EUR 5,8 mio.) Acquisition of: more than 25%, 50% or 75% shares in Russian joint stock company, or 1/3, 1/2, 2/3 participation shares in Russian limited liability companies

11. Investments into Strategic Companies Acquisition of control over a strategic company by a foreign company requires preliminary clearance by the Russian government Acquisition: more than 50% of the voting shares of a strategic company; more than 25% of the voting shares of a strategic company owning a subsoil plot of the federal importance. Other transactions aimed at the transfer to a foreign investor a right to determine decisions of the management of a strategic company.

12. Strategic types of activity geological studies and (or) exploration and mining operations on subsoil plots of federal significance; extraction (catch) of aquatic biological resources; activities related to production, development, distribution, etc. of aviation equipment and arms; work on modification of hydro meteorological or geophysical processes and phenomena; activities related to use of infectious diseases; activities related to nuclear energy and materials;

13. development, production, distribution, maintenance (except banks) of encryption (cryptographic) means; identification, development, production, sale of electronic devices intended for secret information; implementation of the television and radio broadcasting; activity of a natural monopoly entity; provision of communication services by entity with dominant position at the market; printing activities or activities of the editors and (or) publisher of the periodical publication. Strategic types of activity

14. Statistics for 5 years None of the FAS Russia decisions was appealed to court.

15. Recent experience Acquisition of US$100 mio. minority stake in Russian bank, June 2013 Acquisition of 40% in microfinanicng organization, June 2013 Sale of startup company in electronic payments to two venture funds, December 2012 Sale of sea port under construction for US$100 mio., November 2012 35 antimonopoly filings in 1H 2013

16. Our contact details Alexander Nadmitov Managing Partner Nadmitov, Ivanov and Partners Law Firm LLC Address: Office 1302, Entrance 6, 12 Krasnopresnenskaya Nab., Moscow, 123610, Russia, Phone: +7 (495) 649-87-12 Fax: +7 (495) 649-87-21 Email: alexander.nadmitov@nplaw.rualexander.nadmitov@nplaw.ru Website: www.nplaw.ruwww.nplaw.ru