Yearly Meeting Istanbul 13-14 October 2010 Fund interests in Food and Agribusiness Recent patterns in ECA .


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Annual Meeting Istanbul 13-14 October 2010 Fund investments in Food and Agribusiness Recent trends in ECA. Outline of Presentation. Key investment drivers What’s being said about investment in agriculture Ways to invest in agriculture Investment structures Fund Investment process
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Yearly Meeting Istanbul 13-14 October 2010 Fund interests in Food and Agribusiness Recent patterns in ECA

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Outline of Presentation Key venture drivers What\'s being said in regards to interest in horticulture Ways to put resources into horticulture Investment structures Fund Investment prepare Target markets Broad order of assets putting Funds dynamic in ECA – review Funds – illustrative cases Farmland reserves – ebb and flow issues/overhauled systems/standpoint Impact of farmland assets Additionality of assets/private value mastery Examples of other store techniques Future patterns/issues

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Key Investment Drivers - Food Sector 1/2 BASIC PREMISE "A approaching irregularity in the free market activity of sustenance items will bring about a delayed time of higher nourishment ware costs" Factors influencing DEMAND POPULATION GROWTH Global populace increment - from 6.5 BLN to 9.0 BLN by 2050 Middle class increment - from 430 MLN to 1.15 BLN by 2030 CHANGING GLOBAL FOOD CONSUMPTION TRENDS - as earnings rise Esp. in China and India Switch from starch-rich to protein-rich weight control plans Professionalization of meat enterprises will request more grain Move towards handled/marked sustenances offers higher net revenues and adds assist stimulus to ventures

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Key Investment Drivers - Food Sector 2/2 Factors influencing SUPPLY CONSTRAINTS: PRODUCTION LIMITS: Industrialization, urbanization, water restrictions, environmental change SLOWING PRODUCTIVITY GAINS: GMO acknowledgment low … just corn (USA) and soya (USA/South America) IMPACT OF BIOFUELS Diversion of harvests and farmland Though affect not exactly at first foreseen

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HJ Heinz Company Anticipated development in Emerging Markets "Developing Markets are on track to convey no less than 20% of our aggregate deals by 2013, more than twofold their commitment of only five years prior," Mr. Johnson said. "Heinz is as of now entrenched in Emerging Markets like China, India, Indonesia, Latin America and Russia, where we have solid brands, nearby showcasing mastery and the framework important to maintain solid development." "Developing Markets are critical to opening future development on the grounds that their economies are developing at an altogether higher rate than created markets; the white collar class in Emerging Markets will in the long run dwarf the consolidated populaces of the U.S. what\'s more, Europe ; and per capita utilization of bundled nourishments in Emerging Markets has huge upside." William R. Johnson, Chairman, President and CEO, H.J. Heinz Company, Pittsburgh, 31 August 2010

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Key Investment Drivers - Farmland Perception that farmland is on a very basic level UNDERVALUED Gains to be accomplished from: CAPITAL APPRECIATION (Russia ~ $700/ha versus Brazil ~ $3500/ha) PRODUCTIVITY IMPROVEMENTS (e.g. wheat yields 2.5t to 5.0t+) LONG TERM HIGHER COMMODITY PRICES Farmland an UNCORRELATED/COUNTER-CYCLICAL ASSET Farmland an INFLATION HEDGE FSU has 13% of worldwide arable land – up to 30 million hectares might be sit out of gear [Farmland is second most established type of venture – after the family cave]

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What\'s being said in regards to interest in horticulture Jim Rogers , the fence stock investments administrator who anticipated the begin of the ware rally in 1999, said an Earth-wide temperature boost will block trims and has exhorted acquiring farmland for no less than 10 years. ``Because of the interruptions, agrarian costs will experience the rooftop,\'\' he told columnists in Melbourne on 7 February 2007 ``I am amazingly bullish on farming.\'\' " The race is on to sustain the world , as well as to create more quality nourishment to meet the changing healthful needs of an inexorably well-off populace ." Bill Barbour, Investment Specialist at DWS Investments . " Sell banks, purchase cheddar ," Crispin Odey, Odey Asset Management . Monetary Times 25 April 2008 " My supervisor needs to make the principal Exxon Mobil of the cultivating area ". Joe Calvin, Altima One World Agriculture Fund

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What\'s being said in regards to farmland "I\'m persuaded that farmland will be one of the best ventures of our time. In the end, obviously, sustenance costs will get sufficiently high that the market likely will be overflowed with supply through improvement of new land or innovation or both, and the buyer market will end. In any case, that is far away yet." - George Soros , June 2009 "People are fixated on genuine resources now. They need things they can touch," said Olivier Combastet, author of Paris-based Pergam Finance , which has $1 billion in resources and two years prior shaped Campos Orientales, a reserve that purchases farmland in Argentina and Uruguay. ``Three years prior individuals were distrustful about putting resources into farmland … . (presently) it\'s turned out to be substantially more hot.\' " – Reuters, 22 June 2009 "Corn Farms Replace New York Lofts as Hottest Property" - Bloomberg 20 Feb 2007

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Ways to put resources into agribusiness Agricultural wares (prospects, choices, ETFs) Direct interest in rural values Publicly cited Private value Direct farmland venture Collective speculation reserves

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Example: Investment Structures Example: Alpcot Agro Examples: Trigon Agri, Black Earth Farming Funding sources – may incorporate private value, sovereign riches stores, high total assets people, family workplaces, other institutional speculators, and so forth

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Fund Investment Process Optional structures: exceptional reason subsidize versus coordinate speculation Returns made through one or blend of three components: obligation reimbursement, or money gathering through money streams from operations operational changes that increment profit over existence of speculation different extension - offering ventures for higher numerous of income than initially paid Fund ventures normally acknowledged after some timeframe, shifts relying upon the venture procedure (farmland 5-7, now up to 12 years ?) Investments commonly acknowledged through: Initial Public Offering (IPO) Merger or obtaining Recapitalization

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Typical reserve venture structure

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Target markets - Global SEGMENTS/SECTORS Land and harvests Food preparing Agri-division linkages (manure, coordinations, different data sources) Commodities (ETFs and so forth) GEOGRAPHIC FOCUS DEVELOPED MARKETS USA/Canada Australia/New Zealand EU EMERGING MARKETS ECA (Russia, Ukraine, new EU nations) Latin America (Brazil, Argentina, Uruguay, Paraguay) Asia (India/China) South Africa FRONTIER MARKETS Africa (Sudan, DRC, Angola)

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Target Markets - ECA LAND AND CROPS Russia and Ukraine – huge scale cultivating Farming in Romania, Slovakia, Bulgaria (e.g. AgroTerra North) – target chance to adventure EU sponsorships Bulgaria REITs (e.g. Progress Terrafund) (IFC a speculator) Latvia, Lithuania (existing agro property) GENERAL FOOD AND AGRIBUSINESS Russia and Ukraine, recorded values (no particular district centered assets) New EU nations (e.g. REEEP subsidize – incompletely targets sustenance organizations) CENTRAL ASIA/CAUCASUS Generally just SEAF reserves Recent illustration: East Capital Explorer putting resources into Georgian nourishment retail chain Populi

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Broad Classification of assets Typical Defining Features BY MANDATE Direct Mandate (private value stores) Discretionary (e.g. SEAF) how to portray REEEP BY STRUCTURE Fund structure Direct speculations (through venture administrator) BY INVESTMENT FOCUS Land and products Equities – recorded/unlisted Combinations (recorded/unlisted values, or physical resources) REITs/just farmland BY GEOGRAPHIC FOCUS Country/locale particular Global BY DEVELOPMENT FOCUS: SEAF

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Funds dynamic in ECA – General Food and Agri reserves Examples of GENERAL FUNDS focusing on nourishment and agri in ECA ( and all inclusive ): GAIA – puts resources into "up-stream cultivating organizations, farmland, gear and innovation, and related organizations in rising districts where scale and costs offer upper hands and development rates are high" Altima One World Agriculture Fund – contributes "essentially in farmland and in world class cultivate administrators ("agro champions" with solid establishment esteem), both in recorded and unlisted ventures" [IFC contributed $75m] Pharos Miro Fund – makes returns "through procuring agrarian land, supporting framework resources, and upset operational homestead property" Trigon Emerging Sector Agri Fund – puts resources into recorded sustenance and agri coys DWS Global Agribusiness Fund - an oversaw arrangement of worldwide agribusiness organizations (right now 2.6% in Ukraine) There are no committed geographic/topical subsidizes in nourishment division in ECA, as such

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Funds/PE dynamic in ECA - Land and Crops Examples of assets dynamic in LAND AND CROPS in ECA: NCH (Russia/Ukraine). Finance. ~ 425,000 ha +. Unlisted Black Earth Farming (Russia). Coordinate. ~ 330,000 ha. Recorded FirstNorth Rencap (UAFL) (Ukraine). Coordinate. ~ 330,000 ha. Unlisted Alpcot Agro (Russia/Ukr). Finance. ~ 175,000ha. Recorded FirstNorth. Trigon Agri (Russia/Ukraine). Coordinate. 169,000 ha. Recorded FirstNorth Landkom (Ukraine). Coordinate. ~ 74,000 ha. Recorded AIM. Volga Farming (Russia). Coordinate. ~ 60,000 ha. Unlisted Agro Generation (Ukraine). Coordinate. ~ 50,000 ha. Unlisted First Farms (Slovakia/Romania). Coordinate. ~ 15,400 ha. Recorded FirstNorth. Northbridge (France/Romania). Reserve of FUNDS. ~ 550 ha. Unlisted Bulgaria REITs (6 reserves). Reserves. ~ 50,000 ha. [Ceres Agrigrowth Investment Fund recorded on Bulgaria Stock Exchange (IFC an investor)]

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Context of land possessions by assets inside Russia and Ukraine Total arable land in Russia: 121 million ha (45m ha grains) Total arable land in Ukraine: 32 million ha Total land obtained by assets: ~ 1,7 million ha (~1.1% of aggregate) Top 10 Russian agro property control ~ 3.5 million ha + Largest store/PE financial specialist: Black Earth Farming (~323,000 ha) Largest land holder in Russia ~ 570,000 ha (Prodimex) Largest land holder in CIS ~ 1.1 million ha (Ivolga) Definitions of land in control and l

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