1 Proprietary and Confidential — Kroll 2 Proprietary and Confidential — Kroll 3 Proprietary and Confidential — Kroll Market Overview

Melvin Glapion Managing Director, Kroll Advisory Solutions

4 Proprietary and Confidential — Kroll Overview of Private Equity in Southeast Asia

. Southeast Asia has been a bright spot in Asia as the PE industry slowed in both and China in 2012. According to EMPEA figures, capital invested in China fell 33% to US$7.1 billion, a five-year low, and capital invested in India fell 57% to US$2.7 billion, a seven-year low. . However in Southeast Asia in 2012 13 funds raised US$1.4 billion for the region, the largest number of fund closes since 2006 and the most capital raised since 2007 (EMPEA). . Nonetheless, investment is still relatively low, with PE in Southeast Asia representing less than half the proportion of GDP seen in Western economies. Overall the region’s per capita GDP of US$2,300 is also modest (McKinsey). . The markets individually have historically been quite small. Large PE funds struggle to find USD 100mn-plus deals. (Figures for are also somewhat misleading, as it is often a base for companies with operations elsewhere.)

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Fund Closures Over USD 100 million (2012)

. tops the list of largest fund closures in Southeast Asia in 2012

Fund manager Fund Country Total Capital Raised Saratoga Capital Saratoga Asia Fund III Indonesia USD 600 million

Lombard Investments Lombard Asia IV Southeast Asia USD 175 million

VI Group Investments Fund II Vietnam USD 175 million

Dymon Asia Capital Dymon Asia Private Equity Southeast Asia, USD 133 million Singapore F&H Fund Management F&H Singhome Fund I China, USD 101 million Singapore Creador Creador Capital Fund I India, Indonesia USD 101 million and Falcon House Partners FHP Indonesia Fund I Indonesia USD 100 million

KV Asia Capital KV Asia Capital Fund Southeast Asia USD 100 million

Proprietary and Confidential — Kroll 6 Advisory Solutions Top Southeast Asia Investments (2012)

. 2 of the 5 largest investments in Southeast Asia in 2012 occurred in Indonesia

Fund manager, Company Country & Investment co-investors Sector amount Champ Private Miclyn Express Offshore Singapore USD 206 million Equity (Oil & Gas) PT Northstar PT Triputra Agro Persada Indonesia USD 200 million Pacific Partners (Agribusiness) Navis Capital SEG International Bhd (SEGi) Malaysia USD 114 million Partners (Education services) Shaw Kwei & Beyonics Technology Ltd. Singapore USD 110 million Partners (Industrials) Affinity Equity Mitra Pinasthika Mustika Indonesia USD 100 million Partners (MPM) (Retail)

Proprietary and Confidential — Kroll 7 Advisory Solutions Top Southeast Asia Investments (2012)

. Indonesia is second only to Singapore in number and amount of investments; ranks amongst the 10 largest deals in the region

Top 15 investments in Southeast Asia (2012)

USD 45m 3.33% USD 100m 7.44%

Singapore Indonesia USD 222m USD 549m 16.49% 40.88% Malaysia Thailand

USD 428m 31.85%

Proprietary and Confidential — Kroll 8 Advisory Solutions Investment Trends (2008-2012)

Number of deals Number of deals 30 80 52 25 50 70 46 60 20 36 Vietnam 50 Southeast Asia 33 15 Thailand 40 Vietnam Indonesia Thailand 10 30 Southeast Asia Indonesia 20 5 10 0 0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012

Total capital invested, US$ 10,000

8,000 Southeast Asia 6,000 Vietnam 4,000 Thailand 2,000 Indonesia

0 2008 2009 2010 2011 2012

Proprietary and Confidential — Kroll 9 Advisory Solutions Corruption in Southeast Asia

. Corruption is a big problem – countries like Indonesia, Myanmar and Vietnam all languish in the lower reaches of Transparency International’s Corruption Perceptions Index: . Vietnam 123rd out of 176 countries . Indonesia 118th . Myanmar 172nd . Thailand 88th . United Kingdom 17th . United States 19th

. Corruption and bureaucracy also means that legal systems can be unreliable, making disputes difficult to resolve equitably for international investors.

10 Proprietary and Confidential — Kroll Other Risks for Private Equity in Southeast Asia

» Southeast Asia has been more politically stable recently but risks remain in various countries. » Ethnic conflicts and separatist movements appear throughout the region – just recently, Malaysia has been involved in skirmishes in Borneo. Terrorism is still an issue in countries such as Indonesia and the Philippines. » Infrastructure is sometimes poor quality and cities can be subject to floods or typhoons. » Professional management can be difficult to find. » Private equity must compete with deep-pocketed corporates, particularly Japanese companies who (until recently) have benefitted from the strong yen. » Limited capital markets reduce options for exits in a number of countries.

11 Proprietary and Confidential — Kroll Panelist Introductions

Jane Brett Investment Specialist, Asian Development Bank

Douglas Clayton Chief Executive Officer, Leopard Capital

David Do Managing Director, VI Group

Jason Wright Associate Managing Director, Kroll Advisory Solutions

12 Proprietary and Confidential — Kroll PE Environment in Indonesia

. Indonesia has been attracting a lot of attention and deal flow in 2012 was projected to reach USD 1 billion. Saratoga’s USD 600m close was the largest in Southeast Asia in 2012. . It is an archipelago which covers a vast area and highly decentralized, meaning risks can change dramatically in different regions. . Rapid economic growth and lively democracy but the key natural resources sector is barely penetrated by private equity. . Buoyant consumer growth and almost 250 million mostly young inhabitants. . Political jockeying is already intense for the 2014 elections and that may slow foreign investment as uncertainty rises over the next president.

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Issues and Risks for PE in Indonesia

. Corruption is a big issue, and stretches all the way from minor officials to top politicians. The KPK (Anti-corruption agency) is credible but understaffed. It does have public support though, as demonstrated by a recent run-in with the Indonesian police. . According to official KPK statistics, from January 2008 to December 2011: » There were 269 preliminary investigations resulting in 139 prosecutions with a 100% conviction rate. » From 2009 to 2011, the electronic whistle-blower system received 38,000 complaints from the public.

. The legal system is corrupt and judgments from abroad are very difficult to enforce. Although Indonesia is a signatory to the New York Arbitration Convention, in practice foreign arbitration awards are often indefinitely delayed. . Large-scale investment is difficult without alliances with key players and politicians, many of whom are the same as in the Suharto era. TPG chose to invest via a share swap with Northstar Pacific Partners, giving them real local presence and connections.

14 Proprietary and Confidential — Kroll Opportunities in Myanmar

. Up until a couple of years ago FDI into Myanmar was almost wholly dominated by China. Since sanctions have been lifted a gold rush mentality has developed but the economy is still small by regional standards. • Large, untapped frontier market in strategic position between ASEAN, India, and China . Excellent potential for energy supply to both markets, ports access for China to Indian ocean.

15 Proprietary and Confidential — Kroll Opportunities in Myanmar

. Low labor costs create ideal environment for textiles/ light manufacturing investment. . Economy still reliant on gas and minerals

Sector No. Approved %

Power 4 14,530 40.30% Oil and gas 104 13,815 38.30% Mining 64 2,794 7.80% Manufacturing 159 1,752 4.90% Hotel and tourism 45 1,065 2.90% Real estate 19 1,056 2.90% Livestock and fisheries 25 324 0.90% Transport and communication 16 313 0.80% Industrial estate 3 193 0.50% Agriculture 7 173 0.50% Construction 2 39 0.10% Construction 2 39 0.10% Total 454 36,078 100.00% . Large natural gas reserves; large areas of unexplored medium to high potential geographies. Excellent agricultural potential; rising issues of land-grabbing. . Rapid growth in real-estate and property related investments.

16 Proprietary and Confidential — Kroll Myanmar: Trends and Risks

. What will happen in 2015 elections if NLD wins? Will the generals really relinquish power? . Ongoing ethnic conflicts and disparate populations and cultures . Recent introduction of a managed float exchange rate system . Extremely weak infrastructure. Low access to electricity. Poor road network, ancient rail network . Weak governance; nascent, still-forming institutions. New investment laws have not resolved some points of ambiguity . Poor/underdeveloped human resources; weak local education . Significant corruption issues at all levels of state interaction . Practical necessity for a foreign partner (although investment law says that some businesses can be 100% foreign-owned) but due diligence needed given the on-going sanctions lists and the role of the army

17 Proprietary and Confidential — Kroll PE Environment in Thailand

. In 2011 and 2012, as private equity activity has increased in other Southeast Asian markets, Thailand has become less active. However multiples have been lower so there is value to be exploited. . The investment environment has been affected by ongoing clashes between the two main political factions and by uncertainty over what will happen following the death of the 85 year-old King. . There have also been mooted revisions to the Foreign Business Act but the economy remains open. The structural position of the country within global supply chains does make it vulnerable to weakness elsewhere. World Trade Volume Growth and Thai Exports to EU, ASEAN and Thai Export Growth China

. PE is underexploited while demand for growth capital is rising. Automotive, food manufacturing and distribution, and healthcare are the most attractive industries for private equity investment.

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Thailand: Trends and Risks

. Thai companies have been expanding and investing outside Thailand. GDP is predicted at 5% in 2013. FDI is growing again, particularly from Japan.

Foreign Direct Investment in Thailand Thai Direct Investment Abroad

. On the other hand, several risks factors remain, among which the most significant is corruption. Thailand scored 37 in Corruption Perceptions Index and ranked 88th over 174 countries. » Cronyism is an on-going concern for investors. For example, investors raised concerns when the government appointed people connected to former PM Thaksin Shinawatra to Thai Airways International » A heritage of patronage is left from the administration of former Prime Minister Thaksin. Corruption among officials undermines the effectiveness of the government.

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PE Environment in Vietnam

. Vietnam has the third largest population in Southeast Asia (87.8 million) and more than 50% are below 30, with a growing middle class. . High inflation has been a problem, the real estate market is still distressed and the banking sector is fragile.

. Education, healthcare, pharmaceutical, and agriculture are the most attractive industries for private equity investment.

. For the period from 2006 to 2011, there were 1,072 transactions registered in Vietnam, with median price-earnings multiples at 9.8. Most deals fall in the USD 35m-50m range. . In January 2013, KKR signed an equity deal of USD 200 million into Masan Consumer, a food product distributor, the largest private-equity investment in Southeast Asia this year.

20 Proprietary and Confidential — Kroll Vietnam: Trends and Risks

. The secondary buyout market has become the biggest single source of deals in Vietnam as several funds approach their exit phase. There are also opportunities among foreign invested companies or joint ventures where the parent company has lost interests in the local operations. . Public sector corruption, government red tape, infrastructure, and the legal system continue to be a source of major concern amongst investors when investing in Vietnam. . Corruption is also widespread among private companies. The problem is compounded by the government’s strict control of the media: journalists, bloggers, lawyers who are outspoken about corruption of government officials could face jail terms. . There have been signs over the last year of an ongoing struggle between rival factions close to the prime minister and the president respectively. There is also real debate about economic reforms and the role of the party in the economy. . Vietnam lacks a well-run private sector, and privatization of state-owned enterprises has been slow. When it comes to state-linked assets, many foreign investors remained uncomfortable with the complex ownership structures and legal uncertainties in Vietnam.

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