INVESTMENT FUND The Central & East European Environmental Investment Fund is a venture capital fund investing in companies that profit from selling environmental goods and services. The Fund operates in Central and Eastern Europe with special emphasis placed on Poland, Hungary, Slovak and Czech Republics, and Romania. The Fund operates under the abbreviated name: Environmental Investment Partners (EIP) and is managed by the joint venture firm Environmental Assets Management EIP was established in March 1998 for a period of 10 years. Amongst its shareholders are such renowned institutions as The European Bank for Reconstruction and Development, CDC Participations (the leading French venture capital firm with 13,4 billion FF under management, including three energy and environmental funds), VMH from Belgium, and the Swiss government. The initial value of the fund is 22 million ECU. As there are many attractive environmental investment opportunities the shareholders, plan to increase the size of the Fund up to 50 million ECU. EIP's Mandate The Fund provides growth capital to dynamic companies in the environmental industry. The following sectors are particularly interesting: Efficient use of resources Products, components, or materials such as filters, test equipment, pumps, insulation and building materials Recycling services or utilizers of recycled materials Construction or operation of power plants, landfills, and waste water treatment plants Environmental design and construction services Environmental consulting services The Fund invests across all stages of development including start-up, expansion, pre-IPOs and buyouts. The geographical scope of the Fund does not impose any limitations on the investee companies which may operate beyond the territory of Eastern and Central Europe. The equity investment size ranges from 0.5 to 3.5 million ECU. The Fund always is a minority shareholder. EIP does not take an active role in day to day management but it intends to assist management, through its representatives on the Supervisory Board, in developing strategy and growth plans of the company. Through its international network, the Fund may help investee companies identify possible strategic investors, joint venture partners, and access international distribution channels. Investment criteria The following basic criteria are applied to the potential portfolio companies: Participation in a target sector The Fund invests in environmental companies whose products or services control or improve the environment. The exact profile of the Fund's companies vary significantly from company to company. Compliance with environmental regulations Candidate companies must comply with all environmental regulations and sell goods or services which allow their clients to operate in accordance with applicable EU directives. Quality of the management Experienced and dynamic management determines, to a large extent, the attractiveness of the investment. The management should have significant expertise in its industry, good market orientation, drive and maturity necessary to manage a rapid growth company. Exceptional growth potential Candidate companies should have the potential to sustain very high growth. The Fund expects its companies to significantly increase their sales and profitability consistently over a period of 5 years or more. High return on equity The Fund invests in the companies capable of generating high returns for all investors. Portfolio companies should offer unique products, services, technologies, or strategies which ensure a competitive market position, significant market share, or high margins. Multiple opportunities for future development As the Fund has a maximum investment period of ten years the Fund prefers investments that offer the opportunity for the company to be listed on a stock exchange, expanded, recapitalized, acquired or merged within a five year horizon. EIP's decision process The Fund evaluates investment opportunities by using a rigorous but flexible decision making process. Companies seeking financing should provide a thoroughly developed business plan specifying how the business will grow and the new capital will be used, financial projections for the coming five years and audited financial statements for the last three years. In addition, the company should suggest how it envisions the Fund eventually leaving the company. Following an initial analysis and due diligence process, the investment proposal is submitted to EIP's Investment Committee. Upon the Committee's acceptance, detailed negotiations with the investee company are carried out. The decision making process does not need to take long. In the case when the company provides complete documentation as required, the initial decision may be made within the period of 3 weeks EIP's Address
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