1.  2011 Imprimatur Capital www.impcap.com 1 Capital markets for growth AmCham, SSE Riga, 30 June 2011

2. Private & Confidential  2011 Imprimatur Capital www.impcap.com 2 Capital markets  FICIL Capital Markets working group  Role of capital markets  Capital formation  A key element in the financial system  Improve corporate governance  Attract investors  Promote economic growth

3. Private & Confidential  2011 Imprimatur Capital www.impcap.com 3 Where is Latvia’s capital market?  EU-27 av GDP per capita in 2010: € 20,600 (=100)  In Estonia: € 13,400 (=65)  In Latvia: € 10,700 (=52)  If Latvian capital market reaches Estonian level  Then: +1.8% GDP growth per annum  And € 120m per annum additional tax revenue  Closing income gap with Estonia by ⅓ in 5 years www.ec.europa.eu/eurostatwww.ec.europa.eu/eurostat; SSE Riga

4. Private & Confidential  2011 Imprimatur Capital www.impcap.com 4 EE, LT, LV stock exchanges Stock exchange Mkt Cap (€ bn) Nr of Companies Av Mkt Cap (€ m) Tallinn€ 1.6 bn15€ 106 m Vilnius€ 3.9 bn38€ 102 m Riga€ 0.9 bn32€ 30 m www.nasdaqomxbaltic.com

5. Private & Confidential  2011 Imprimatur Capital www.impcap.com 5 Why develop LV capital market?  Capital markets raise capital (equity & debt)  Provide investor liquidity  Increase transparency and disclosure  Improve corporate governance  Broaden investor base (local & foreign)  economic growth

6. Private & Confidential  2011 Imprimatur Capital www.impcap.com 6 Expanding the market CompanyMkt Cap (€ m) Latvian Shipping Company€ 115 m Ventspils Nafta€ 215 m Latvijas Gāze€ 390 m TEO (LT)€ 520 m Stock exchangeMkt Cap (€ bn) Tallinn€ 1.6 bn Riga€ 0.9 bn www.nasdaqomxbaltic.com

7. Private & Confidential  2011 Imprimatur Capital www.impcap.com 7 Capital market candidates  List state-owned enterprises  Telecoms, transport, real estate, forestry, etc  List municipal-owned enterprises  Water, heating, ports, real estate, etc  Cost-efficient issuing for SMEs (equity & debt)  Venture capital  Broaden investor base: local & foreign

8. Private & Confidential  2011 Imprimatur Capital www.impcap.com 8 How?  Govt plan for privatising and listing state- owned and municipal-owned enterprises  Political will to demonstrate best practice in corporate governance, transparency & disclosure  Promote venture capital and capital market investments  Improve legal enforcement end