emerging fintech opportunities...financial technology (fintech) is currently transforming the...

Vostok Emerging Finance LTD

Initiating Coverage 3 March 2016

Please refer to important disclosures on the last 5 pages of this document

Emerging FinTech opportunities

Geographical scope

Source: Vostok Emering Finance, Pareto Securities Equity Research.

Current portfolio


Performance

Source: Factset

Analysts

Vostok Emerging Finance (VEMF) is an interesting opportunity to invest in FinTech where it matters the most: in emerging markets characterised by limited financial infrastructure and vast financially underserved populations. To date, VEMF has made three investments in the emerging market FinTech space and have substantial financial resources to continue build a portfolio. We initiate coverage of VEMF with a Buy recommendation and target price of SEK 1.20.

Attractive emerging market opportunities

VEMF invests in early stage technology and innovation driven financial services that are operating in emerging markets and are able to offer more competitive solutions than those of traditional players. In many emerging markets, limited financial infrastructure currently leaves large parts of the population outside the reach of common services. E.g. in 2014, two billion people were unbanked globally according to the World Bank. New technology driven companies capable of leapfrogging traditional financial infrastructure to offer and serve underserved segments will be able to create substantial value, in our view.

Equity raised with excellent timing

In December 2015, VEMF raised SEK 588m in an oversubscribed rights issue, just ahead of the turbulence striking global financial markets in January 2016. The timing has put VEMF in a position where it has substantial financial resources to invest in markets where we believe that asking prices have slipped in line with the general market and where currencies have depreciated. We believe the growth of financial services in these markets is driven fundamentally by technological progress and thus robust, despite the current economic and financial market headwinds.

Initiating coverage with TP of SEK 1.20 and Buy recommendation

VEMF employs a light and focused organisational setup leveraging on the managements’ and the Board of Directors’ networks and experiences to source, evaluate and enhance the development of its investments. In our view, VEMF appears to be in a favorable position to take advantage of the opportunity presented by FinTech in emerging markets. We initiate coverage with a Buy recommendation and target price of SEK 1.20, corresponding to a cash adjusted discount to NAV of 5% and a 13% upside to the current share price.

Target price (SEK) 1.20

Share price (SEK) 1.06

Markets of current portfolio companies

Potential geographies for investment

20.2 %

10.7 %

5.4 %63.7 %

TCS Group Holding Jumo

REVO/Sorsdata Cash and cash equivalents

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

Jul-15 Sep-15 Dec-15 Feb-16

SEK

VEMF OMXS (Rebased)

Robin Rane

+47 24 13 39 43, [email protected]

Vegard Toverud

+47 22 87 88 24, [email protected]

Vostok Emerging Finance LTD Initiating Coverage

3 Mar 2016 Pareto Securities Research 2(31)

Table of contents

Investment case .................................................................................................................................................. 3

Risk factors .......................................................................................................................................................... 4

Setup to exploit FinTech potential ..................................................................................................................... 5

Opportunity in emerging market FinTech .......................................................................................................... 9

Existing portfolio overview ............................................................................................................................... 15

Valuation ........................................................................................................................................................... 16

Appendix A: Organisational setup .................................................................................................................... 18

Appendix B: TCS Group Holding ....................................................................................................................... 21

Appendix C: Revo and Sorsdata ........................................................................................................................ 23

Appendix D: Jumo ............................................................................................................................................. 24

Appendix E: Vostok New Ventures ................................................................................................................... 25

Appendix F: Swedish Depository Receipts ....................................................................................................... 26



Investment case

FinTech reshaping financial services Financial Technology (FinTech) is currently transforming the financial services industry through technology enabled innovation. New cost-efficient software based platforms with efficient distribution and scalable models are eating into the revenues and profit of existing traditional financial industry players. Significant potential for innovative financial services in the developing world Limited financial infrastructure in emerging markets leaves large parts of the world’s population outside the reach of financial services. E.g. there were two billion people unbanked in the world in 2014, according to the World Bank. New technology driven companies capable of leapfrogging traditional financial infrastructure and serve these segments will be able to create substantial value, in our view. Vast capital flows going into FinTech not reaching emerging markets In 2014, 91% of the USD 12bn global FinTech ventures investments were made in the US or Europe and only 9% in other geographies. Global capital flows has yet to seize the attractive opportunity of the world’s financially underserved populations. We believe that going forward, more capital will enter these markets and increase the valuations of companies with such exposure. Current pressure on certain emerging market currencies and turbulence in financial markets also provide an opportunity for investors able to source and identify the right investments. Vostok Emerging Finance spun-off to capitalize on attractive investment case Vostok Emerging Finance (VEMF) is a spin-off from Vostok New Ventures (former Vostok Nafta), which has a strong reputation and a successful history of investing in emerging markets. VEMF’s management and Board of Directors are well connected and have already built an investment portfolio of three investments. The company is fully listed on Nasdaq First North with the ticker VEMFSDB:SS. Set to increase investment towards 2018 In order to build sufficient scale, VEMF recently raised SEK 588m of new equity in an oversubscribed rights issue. Management states that it is evaluating a pipeline of potential investments ranging from the Middle East to Brazil. It aims to build a portfolio of approximately 10 investments within 18-24 months with an investment horizon of about 5-7 years, diversifying the portfolio across geographies and subsectors. The rights issue in December 2015 was timing-wise very successful, as it provided VEMF with substantial funds just ahead of the current financial market turbulence, which we believe to weigh on the pricing of potential investment targets. In addition currencies in many markets in VEMF’s scope has depreciated recently, further improving VEMF’s purchasing power. Initiating coverage with target price of SEK 1.20 and Buy Being a listed vehicle, we believe that VEMF is an opportunity for investors to get a unique exposure to structural changes in financial services in emerging markets. We believe that VEMF’s setup and management put it in a favorable position to capitalize on emerging market FinTech opportunities. Our target price of SEK 1.20 corresponds to a 5% discount to cash-adjusted NAV. We see 13% upside to the current valuation and initiate coverage with a Buy recommendation.

Technology-driven transformation of the financial services industry

Limited capital chasing emerging market opportunities

SEK 588m investment capital raised

Buy, TP SEK 1.20



Risk factors

Emerging market investments Vostok Emerging Finance invests in emerging markets, which are associated with a higher level of risk compared to developed markets. These risks include political and corporate governance risks and higher volatility of the macroeconomic environment. The company seeks to mitigate these risks by geographical diversification in the emerging market space, over a portfolio of about 10 companies. This however may not be sufficient to overcome these risks. Venture capital Vostok Emerging Finance invests in young companies with very limited financial history and in many cases no historical profits. There are significant execution risks in these investments. As VEMF invests primarily in equity, there is substantial risk that there will be no recoveries for VEMF in case of bankruptcy of individual portfolio companies. Liquidity Vostok Emerging Finance invests in illiquid equity stakes and may not be able to exit its investments according to plan. Key person risks Much of the business case for Vostok Emerging Finance builds on the competence and network of key persons in the company’s management and Board of Directors. Should these persons, for whatever reason, not be able to or be willing to remain, could this significantly damage the prospects of the company. Vulnerability to changing regulatory environment Financial services are generally closely scrutinized by regulators. Currently many new players in the within financial services are not subject to the same heavy regulations as banks are. However, as FinTech players grow increasingly important to the financial system and as regulators become increasingly vigilant, we believe that regulation of FinTech players also will tighten.



Setup to exploit FinTech potential

Vostok Emerging Finance (VEMF) makes early stage investments in modern financial services companies in emerging and frontier markets with limited existing financial infrastructure. VEMF focuses on markets with sizeable populations, limited sector access to capital and high potential for scalability. VEMF was founded in June 2015 as Vostok New Ventures (VNV), former Vostok Nafta, spun-off its investment in TCS Group Holding into a new entity to focus on financial service investments. VEMF is listed on Nasdaq First north with the ticker VEMFSDB:SS. The company aims to build a portfolio of about ten investments up to 2018, seeking to hold 10-20% ownership stakes. VEMF intends to exert positive influence on the development of its portfolio companies and will take board seats where appropriate. The typical target investment horizon is 5 to 7 years. Potential exit strategies for the investments include IPO, sale to a strategic player or sale to a financial investor with mandates for larger and later stage investments than VEMF.

Seeking diversification over sector and geography

Focusing on emerging markets, VEMF targets a broad diversification of its investment portfolio. The current portfolio consists of two investments in Russia and one in Africa. When the portfolio is fully invested, we understand that investment geographies are likely to include Eastern Europe, Middle East, Latin America and South East Asia, in addition to Russia and Africa. Although not ruling out investments in India and China, the CEO of VEMF have stated that these two countries are subject to more competition for investment opportunities than many other emerging economies, and thus less attractive to VEMF as investment geographies. Geographical scope

Source: Vostok Emerging Finance, Pareto Securities Equity Research.

The targeted investments are modern financial services companies that are leveraging on technology and innovation to carve out existing profits as well as to grow the market, reaching previously underserved segments. In addition to geographical diversification, VEMF seeks to diversify its investment portfolio across a number of financial services subsectors. The current portfolio consists of one investment in online retail financial services, one in merchant payment services and credit and data analytics, and one investment in a mobile money marketplace.

Markets of current portfolio companies Potential geographies for investment

Early stage investments in emerging markets

Eastern Europe, Middle East, Latin America and South East Asia



VEMF targets businesses from all sorts of financial services, inclusive of consumer lenders, payment providers, remittance businesses, wealth management services, savings and lending clubs, debt collectors and all forms of financial marketplaces. The company seeks to diversify its investment across these areas over the next 18-24 months.

A friendly, relationship based investment process

Employing a light organisational setup, VEMF seeks to leverage on the extensive network of its management and Board of Directors to source and evaluate deals, make co-investment and contribute operationally to the portfolio companies: The CEO David Nangle has built a strong individual network during his 15

years of working within finance in the emerging market space.

As former CEO and Chairman of Handelsbanken, Chairman of the Board Lars O. Grönstedt has extensive experience from financial services and an extensive network.

Member of the board Per Brilioth is the CEO of Vostok New Ventures and has many years of experience from investing in emerging markets and especially in Russia. Mr. Brilioth has built a strong personal relations network while placing successful investments in Avito and Tinkoff, among others.

The company screens most of the potential investments within the FinTech space in its geographies and proceeds with further due diligence for the most attractive cases. The due diligence process involves auditing, financial forecasting and valuation. During the due diligence process, time is spent together with the potential company for investment, both with management and other staff. Significant time is also spent together with other shareholders in order familiarize with them and their views of the investment. Being welcomed by existing shareholders is a prerequisite for any eventual investment. An external team of legal professionals is employed to go through the legal documentation, draw up the agreements for an eventual investment and arrange for the closing of the deal. In general the investment process takes about three months from initial screening to closing.

Management believes that a majority of the remaining investments will be co-investments together with other emerging markets venture capital investors. By co-investing, VEMF will be able to share ideas, due diligence and risks with other players having similar mandates. For example, the investment in Jumo was a co-investment made together with Leapfrog Investments (not listed), a venture capital investor investing in financial services businesses in Asia and Africa. Leapfrog Investments has over USD 1bn in committed capital, with investors including George Soros and Pierre Omidyar, the founder of eBay. All of the current investments of VEMF has been sourced and initiated out of management’s and members of the board’s personal networks. According to management, a further pipeline of investment opportunities is currently being sourced in the same manner.

Piton Capital

Significant time spent with management and owners

Leapfrog investments



Exit through M&A, IPO or SPO

VEMF targets to invest at a horizon of 5-7 years and as general rule, seeking to exit at the same time as the entrepreneurs. Even though Initial Public Offering or Secondary Public Offering is an attractive option, we consider that M&A is the most probable and most convenient exit strategy for VEMF for most investments. By operating as an incubator, VEMF could work together with the entrepreneurs to develop the portfolio companies into a strategic fit for potential acquirers such as strategic players seeking to consolidate or other financial investors. Potential financial investors are larger funds with mandates to make investments of USD 50-100m into later stage funding rounds or buyouts. Examples of FinTech valuations at exit: Square (SQ), a payments FinTech company went public through an IPO in

November 2015 at a USD 2.9bn valuation. This implies an enterprise value-to-revenues’14 of 3.4x. The company has yet to make profits.

In October 2015, payment processor Worldpay (WPG) went public at a

valuation of USD 7bn. This implies an enterprise value-to-revenues’14 of 4.8x.

In August 2015, EnvestNet (not listed), a provider of wealth management technology and services, announced its acquisition of Yodlee (YDLE), a financial services software company, for USD 590m. The acquisition price implies an enterprise value -to-revenues’14 ratio of 9.4x.

In July 2015 PayPal (PYPL) announced its acquisition of Xoom (XOOM), a digital payments and remittances company, for USD 1bn. The acquisition price implies an enterprise value-to-revenues’14 ratio of 5.2x.

OnDeck, an online platform for small business lending, went public in December 2014 at a USD 1.3bn valuation, implying an enterprise value-to-revenues’14 of 8.2x.

In December 2014, peer-to-peer lender Lending Club went public at a valuation of USD 5.4bn, corresponding to an enterprise value-to-revenues’14 of 9.5x.

Listings of emerging market FinTech and modern financial services companies include: Russian online financial services group TCS Group Holding (TCS), listed in October 2013 at a valuation of USD 3.2bn; Russian payments company Qiwi (QIWI), listed in May 2013 at a valuation of USD 884m; Polish lender Alior Bank (ALR), listed in December 2012 at a valuation of about USD 1.2bn.

M&A most likely exit



Large long-term sponsors

Among VEMF’s largest shareholders with significant ownership are well-known institutional investors with a long-term investment horizon. Key shareholder list as of 31 December 2015


Incentivised management

CEO David Nangle owns 1,425,000 shares in VEMF and is entitled to 750,000 call options with a strike price of SEK 3.70 and vesting period of 5 years from 2015. Member of the Board Per Brilioth owns 2,790,000 shares in VEMF. In total the management and the board of directors of VEMF owns 5,901,802 shares, corresponding to 0.9% of the total number of shares (including the 750,000 call options of Mr. Nangle. We notice that Chairman of the Board Lars O. Grönstedt has a rather low economic exposure to the company with only 13,500 shares. Given the rights issue in December and the significant increase in the company’s assets and number of shares, we understand the incentive programs for the management and the Board are being recalculated and will be proposed to increase at the next Annual General Meeting. Management says that any changes to the incentive program will be communicated in connection with the Q4’15 reporting. In general, we consider increasing incentives for the management and Board of Directors to be positive for VEMF’s valuation, given reasonable conditions.

Treasury management of unemployed cash

Currently VEMF has about USD 60m of cash on its balance sheet deposited at two different banks, which will be invested gradually towards 2018. In order to generate yield and fund some of the annual operating costs of USD 1.5-2m annually, VEMF will seek to partly invest unemployed cash into fixed-income instruments. Management plans to invest about USD 20-25m in low risk low duration treasuries of maturities up to two years. It may also invest in high rated fixed-income securities or portfolio company debt. Management says it is considering investing USD 1-2m in TCS Group Holding bonds. The remaining cash liquidity will be held in about 75% USD and 25% SEK.

Shareho lder Shares H o ldings

Libra Advisors 114,504,957 17.3 %

Robur 64,694,308 9.8 %

Alecta 60,725,332 9.2 %

Finstarr 54,639,569 8.3 %

Boston based asset manager 41,608,098 6.3 %

Ruanne Cuniff 32,942,501 5.0 %

Handlesbanken 20,704,825 3.1 %

Fidelity 17,331,195 2.6 %

Other 254,345,210 38.5 %

T o tal shares 661,495,995 100.0 %



Opportunity in emerging market FinTech

New technologies disrupting the financial services industry

The financial services industry is currently undergoing a profound change caused by the rise of technology enabled innovations and software solutions. Numerous new specialized start-up companies offering innovative solutions in areas such as payments, lending, deposits, wealth management and security, are now competing with traditional players. New software based platforms are generally more cost efficient, have more efficient distribution models, are more scalable and are able to achieve a higher degree of diversification than traditional business setups. The traditional financial services business model is built upon maintaining a close customer relationship, cross selling a number of high-margin financial services in addition to core services such as lending. This model is threatened by a technology and transparency driven change of customers’ behavior, reducing the customer’s loyalty and unbundling their consumption of financial services. Even though traditional banks generally have the resources to invest in new technology, they are to a high degree disadvantaged by regulations as well as fragmented and ineffective legacy IT systems that make it costly and time consuming for them to develop and implement new solutions. Selection of FinTech unicorns

Source: Pareto Securities Equity Research.

Examples of FinTech unicorns – technology start-ups with a valuation of more than USD 1bn – include: Klarna (not listed), a Swedish e-commerce company providing payment services for online storefronts, valued at USD 2.25bn in its latest funding round; Lending Club (LC), a listed US peer-to-peer lending company with a market capitalization of USD 3bn; and Stripe an internet payments company, valued at USD 5bn in its latest funding round.

Traditional models for financial services challenged



Vast capital flow into FinTech not reaching emerging markets

In 2014, a total of USD 12bn was invested in FinTech ventures globally, increasing from USD 4bn in 2013. Of these USD 12bn, about USD 9.5bn was invested in the United States. 2014 global FinTech investment by geography

Source: Finovate, CB Insights, Accenture, Pareto Securities Equity Research.

Globally, the average deal size increased in 2014 and during the first three quarters of 2015. In Q3’15 the average deal size in FinTech funding was about USD 23m, up from USD 5m in 2011. The increase is partly driven by rising valuations in later stage financing rounds. Global FinTech investing activity

Source: Finovate, CB Insights, Accenture, Pareto Securities Equity Research.

Given the opportunities of technology driven financial services to meet previously untapped demand in developing economies and an increasingly maturing market for FinTech investment in the US and Europe, we expect FinTech investment in emerging markets to accelerate going forward, driving valuations.

79 %

12 %

6 % 3 %

US Europe Asia-Pacific Other

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Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2010 2011 2012 2013 2014 2015

#USDbn

Tho

usa

nd

s

FinTech investment Number of deals

Increasing capital flows going forward to drive valuations



FinTech players currently unhampered by bank regulation

Following the financial crisis of 2008 regulators around the world have imposed stricter regulations on banks in order to decrease the risks inherent in the financial system. For banks, this has meant higher regulatory capital requirement and tougher compliance obligations. The higher regulatory capital needed to be held against the loan portfolio has had a dampening effect on the banks’ lending, especially to corporates. Tougher compliance obligations have increased costs and diverted internal resources away from innovation. Taken together, this has decreased the banks’ returns and forced them to focus on cost savings programs. Even though the need for efficiency improvements have pushed banks to develop technological solutions internally, new FinTech players unburdened by the regulations and compliance obligations of the banks, have been able to innovate and grow at a much faster pace. Where banks’ operations have retreated, for example in certain emerging markets, these new players have taken advantage of their unburdened position to grow their market share. However, as FinTech players grow increasingly important to the financial system and as regulators become increasingly vigilant for actors other than traditional banks, we believe that regulation affecting FinTech players also will increase. A fast changing regulatory environment could pose risks to FinTech companies, depriving them of their current regulatory advantage to banks, or ultimately rendering their business models obsolete.

Underserved demand for financial services in emerging markets

In 2014, the number of unbanked persons globally amounted to two billion, compared to two and a half billion in 2011. Between 2011 and 2014, 700 million persons became account holders at a bank or other financial institution. The increase is mainly driven by FinTech solutions enabling the distribution of financial services to previously unserved segments. New technology enabled distribution solutions include internet and mobile based platforms. Bank account penetration 2014

Source: World Bank Global Findex Database 2014, Pareto Securities Equity Research.

Financial inclusion is least advanced in developing economies in the Middle East and Sub-Saharan Africa. In these regions, the unbanked populations tend to be poor and live mainly in rural areas. To a large extent, financial services in these markets are accessed through informal channels other than financial institutions, such as family and friends or informal private actors. The use of informal channels comes with security issues, lack of transparency and high transaction costs.

Risk of changing regulatory environment

Two billion people unbanked worldwide



According to a survey performed by the World Bank, important barriers to having an account at a financial institution among unbanked populations were: accounts are too expensive, financial institutions are too far away, lack of necessary documentation and lack of trust. Unbanked population in developing economies

Developing economies are defined as those in which 2010 GNI per capita was less than $12,276. Source: World Bank Global Findex Database 2014, Pareto Securities Equity Research.

Mainly due to high distribution costs, traditional financial infrastructure (such as bank branches) has been unable to serve these segments. Hence, there is a significant opportunity for new technology enabled services to take part in and be a driver of substantial structural growth of the market. The two billion people currently unbanked worldwide represents a vast untapped fundamental demand for financial services. Barriers to financial inclusion are reduced as simple solutions to banking are offered to these segments. The rate of financial inclusion has the potential to increase at an even faster pace going forward, driven by technological progress and notwithstanding macro-economic cycles.

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OECD East Asia &Pacific

(developing)

Europe &Central Asia(developing)

Latin America& Caribbean(developing)

Sub-SaharanAfrica

(developing)

Middle East(developing)

%

2011 2014



FinTech utilizing new distribution channels and business models

Low-cost distributions models provide reach to dispersed populations. In many developing economies with limited financial infrastructure, mobile has emerged as the platform of choice for the financial services companies, leveraging on relatively high telecom connectivity and increasing penetration of mobile phones. Other distribution channels used to reach previously underserved segments include stalls, kiosks and grocers. Technology enabled solutions including biometrics and big data helps to overcome barriers to financial inclusion of populations previously considered unbankable due to elevated cost of risk.

Mobile subscriptions per 100 inhabitants Bank account penetration

Source: World Bank, Pareto Securities Equity Research.

In Sub-Saharan Africa, financial services based on mobile platforms are helping to rapidly expand access to financial services. In some countries such as Kenya, Uganda and Tanzania, the penetration mobile accounts for accessing financial services is higher than the penetration of accounts at financial institutions. These markets are examples of where new technology based mobile distribution is leapfrogging traditional financial infrastructure to serve previously unbanked populations

Money mobile account penetration

Source: World Bank Global Findex Database 2014, Pareto Securities Equity Research.

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2006 2007 2008 2009 2010 2011 2012 2013 2014

Kenya Ghana Tanzania

Uganda Zambia Rwanda

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Mobile account only

Both mobile and financial institution account

Account at a financial institution only



Current emerging markets opportunity window

Given the trends discussed, we see significant potential for further structural increases in the consumption of financial services in currently underserved markets. These structural changes are and will be driven primarily by the new solutions in providing financial services to new segments, rather than the overall economic development. Even as some emerging markets currently face financial headwinds due to falling oil and other commodity prices, we see these trends to be robust. In addition, the expansion of financial services in these markets is in itself an important contributor to economic growth. Deterioration in the emerging market economies where VEMF has exposure could of course severely increase the risk inherent in the investments in these markets, and significantly reduce the prospect for healthy returns to VEMF shareholders. This is particularly the case where weak economic conditions may destabilize the societies and increase the political risks.

MSCI Emerging and Frontier markets index Currency development relative to SEK

Source: Factset, Pareto Securities Equity Research.

However, the weak currencies of many emerging markets, depressed by slumping commodity prices and capital outflows, provide yet another window of opportunity. As these currencies weaken, investments become relatively less expensive and VEMF’s purchasing power increase.

Structural trend notwithstanding EM financial headwinds



Existing portfolio overview

Please see Appendix B, C and D for further description of the current portfolio companies.

TCS Group is a provider of online retail financial services operating in Russia through a branchless online platform. Value of investment as of 2 Mars 2016


Revo is a Russian company focusing on merchant payment services, by offering instant in-store and online finance to customers at point of sale. Sorsdata, its sister company, is a data analytics and consumer marketing company. Value of investment as of 2 Mars 2016


Jumo is an African mobile money market place. The company is able to reach large previously unbanked segments with financial services through its mobile platform. Value of investment as of 2 Mars 2016


Value of investment USDm 18.8

Share of total portfolio % 20.2

Ownership stake % 3.5

REVO Sorsdata

Value of investment USDm 4.7 0.3

Share of total portfolio % 5.0 0.3

Ownership stake % 25 25

Value of investment USDm 10.0

Share of total portfolio % 10.7

Ownership stake % 7.6

Online retail financial services in Russia

Russian instant in store financing

African mobile money market place



Valuation

Net asset value of SEK 1.22 per share

VEMF disclosed its latest estimated Net Asset Value on 31 October 2015, based on the market value of TCS Group Holding and the amount invested in REVO, Sorsdata and Jumo. Given the rights issue in December 2015, the two additional investments announced in December 2015, the closing price of TCS Group Holding on 2 Mars 2016, and estimated operating expenses of SEK 1.4m per month (USD 2m per year), we estimate the current NAV to per share to SEK 1.22 and the total NAV to SEK 804m as of 2 Mars 2016. Of this, 20.2% was TCS Group Holding, which shares are listed and thus its

value contribution corresponds to that of the closing market value of the given day.

Jumo accounted for 10.7% of the total NAV, corresponding to the amount of USD 10m invested by VEMF in the company in October and December 2015.

REVO and Sorsdata contributed 5.4% of the NAV, corresponding to the amount of USD 5m invested in the two companies by VEMF in September and December 2015.

Cash and cash equivalents are estimated to SEK 513m, corresponding to 63.7% of the NAV.

Estimated portfolio as of 2 Mars 2016


Given the closing share price on 2 Mars 2016 of SEK 1.06, the shares traded at a discount to the estimated NAV of 13%. If we extract cash and cash equivalents from the calculation we get a discount to estimated NAV of 35%.

Upside to current market valuation

If we assume that the present value of the TCS Group Holding investment is equal to its current market value, but that VEMF will be able to exit its investments in Jumo, REVO and Sorsdata in five years with a multiple on invested capital of 5x, which is in the lower end of management’s targeted range, the upside to VEMF’s current market valuation is 26%, using a cost of capital of 20%. Discounting with a 10% cost of capital we arrive at an upside to current market valuation of 44%.

20.2 %

10.7 %

5.4 %63.7 %

TCS Group Holding Jumo REVO/Sorsdata Cash and cash equivalents



Potential upside calculation with unemployed cash reserve


This calculation, discounting with 20% cost of capital, gives a present value per share of SEK 1.34, compared to the share price SEK 1.06 as of 2 Mars 2016. If we use the same assumptions as above with 20% cost of capital and employ SEK 400m of the cash reserve into investments returning 5x in 5 years, the present value per share amounts to SEK 1.95 and the upside to today’s share price 84%. Potential upside calculation with employed cash reserve


Peer valuation

For comparison, we look at other listed investment companies mainly focusing on technology investments. Vostok New Ventures (VNV), investing in unlisted network driven companies, trades at a discount to NAV of 13.7%. Kinnevik (KINV.B), a listed investment company, with both listed and unlisted holdings in Communication, E-commerce & Marketplaces, Entertainment, and Financial Services, trades at 18% discount to NAV. MCI Capital (MCI), a listed Polish VC/PE company trades at 43% discount to NAV. Fondul Proprietatea (FP), a listed Romanian PE company, trades at 33% discount to NAV. However if we deduct cash from NAV and market price, VEMF trades at a discount of 35%. The corresponding number for VNV is 14%, for KINV.B is 21%, for MCI is 44% and for FP is 34%. Hence, VEMF currently trades at the lower end of peers’ risk adjusted NAV.

TCS Jumo REVO/Sorsdata Cash Op. ex. Total

Investment SEKm - 86 43 - - -

Multiple on invested capital at exit x - 5 5 - - -

Value at exit SEKm - 432 216 - - -

Years to exit # - 5 5 - 5 -

Cost of capital % - 20 20 - 20 -

Mark-to-market SEKm 162 - - 513 - -

Op.ex per year (USD 2m p.a.) SEKm - - - - -17 -

Present value " 162 173 87 513 -51.6 884

Current NAV " 162 86 43 513 - 804

Potential upside to current NAV % 0 101 101 0 - 10

Current market discount to NAV " 13 13 13 13 - 13

Potential upside to discounted NAV " 15 131 131 15 - 26

Shares million 661.5 661.5 661.5 661.5 661.5 661.5

NAV per share SEK 0.25 0.13 0.07 0.77 - 1.22

Present value per share " 0.25 0.26 0.13 0.77 -0.08 1.34

Share price " - - - - - 1.06

Upside to share price % - - - - - 26

TCS Jumo REVO/Sorsdata Employed cash Cash Op. ex. Total

Investment SEKm - 86 43 400 - - -

Multiple on invested capital at exit x - 5 5 5 - - -

Value at exit SEKm - 432 216 2000 - - -

Years to exit # - 5 5 5 - 5 -

Cost of capital % - 20 20 20 - 20 -

Mark-to-market SEKm 162 - - - 113 - -

Op.ex per year (USD 2m p.a.) SEKm - - - - - -17 -

Present value " 162 173 87 804 113 -51.6 1,287

Current NAV " 162 86 43 400 113 - 804

Potential upside to current NAV % 0 101 101 101 0 - 60

Current market discount to NAV " 13 13 13 13 13 - 13

Potential upside to discounted NAV " 15 131 131 131 15 - 84

Shares million 661.5 661.5 661.5 661.5 661.5 661.5 661.5

NAV per share SEK 0.25 0.13 0.07 0.60 0.17 - 1.22

Present value per share " 0.25 0.26 0.13 1.22 0.17 -0.08 1.95

Share price " - - - - - - 1.06

Upside to share price % - - - - - - 84

Significant upside potential

Significant upside potential



Peer discount


Target price of SEK 1.20 and Buy recommendation

Being a listed vehicle, we believe that VEMF is an opportunity for investors to get a unique exposure to structural changes in financial services in emerging markets. We believe that VEMF’s setup and management put it in a favorable position to capitalize on the emerging market FinTech opportunity. Our target price of SEK 1.20 corresponds to a 5% discount to cash-adjusted NAV. We see 13% upside from the current valuation and initiate coverage with a Buy recommendation. Target price vs. Share price, NAV and PV of discounted 5x ROI (5y)

Source: Factset, Vostok Emerging Finance, Pareto Securities Equity Research.

13%

43%

33%

18%

14%

35%

44%

34%

21%

14%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

VEMF MCI FP Kinnv VNV

Discount to NAV Discount to NAV adj. for cash

Avg. peers

0.77 0.77 0.77

0.17

0.290.42 0.44 1.78

1.061.20 1.22

1.95

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

Share price Target price NAV per share Disc. 5x ROI (5y)

SEK

Cash reserve Invested



Appendix A: Organisational setup

Organisation

By leveraging on management’s and the Board of Director’s network for sourcing and evaluating potential investments, management seeks to employ a light organisational setup with the CFO and legal counsel functions shared with Vostok New Ventures. The company is currently in the process of recruiting an investment analyst to support the CEO. Management estimates operating expenses to USD 1.5-2m per year, corresponding to about 2% of assets under management. Organisational setup


Management

David Nangle, CEO and Member of the Board of Directors David Nangle has spent his career focusing on the emerging markets financials sector. He has spent the majority of his professional career at Renaissance Capital, helping the firm develop and grow its financials and research footprint from a strong Russia base to a leading pan-EMEA and frontiers franchise. David was head of research at Renaissance Capital for the majority of his time at the firm. He holds a Bachelor’s degree of Commerce in International Business from University College Dublin. SDRs: 1,425,000. Number of warrants: 750,000. Anders F. Börjesson, Company General Counsel Anders F. Börjesson is the General Counsel of Vostok Emerging Finance in legal issues. He holds the same position in Vostok New Ventures and is the CEO of Rusforest AB and RusForest Holding AB. Prior to joining Vostok Emerging Finance, Anders worked as an associate at Mannheimer Swartling’s offices in St. Petersburg and Moscow and led the group on mergers, acquisitions and corporate law in Moscow between 2006-2008. Anders is also member of the New York State Bar Association. He holds a law degree from Stockholm University and an LL.M. from NYU School of Law. SDRs: 250,000.

Chairman

4 members incl. CEO

CEO

Legal CounselCFO AssistantAnalyst

Board of Directors

Shared with Vostok New Ventures

Expected USD 2m operational expenses annually



Nadja Borisova, CFO Nadja Borisova is the CFO of Vostok New Ventures Ltd. and has previously worked as CFO for Varyag Resources, a Russia-focused private equity company, and has also held finance positions at Cloetta-Fazer, The Coca-Cola Company and Coca-Cola Bottlers Eurasia, both in Sweden and in Russia. She holds a Certified Accountant Degree from ACCA in England and a diploma in engineering from the St. Petersburg Institute of Mechanics. SDRs: 13,302.

The Board of Directors

Lars O. Grönstedt, Chairman of the Board of Directors Lars O Grönstedt has spent most of his career at Svenska Handelsbanken. He was CEO of the bank 2001–2006, and Chairman of the Board 2006–2008. Currently, he is Senior advisor to Nord Stream, Chairman of the Board of Vostok New Ventures and East Capital Explorer, Vice Chairman of the Swedish National Debt Office, speaker of the elected body of representatives of the Trygg Foundation and Director of the Institute of International Economics at Stockholm University. He holds a BA in languages and literature from Stockholm University and an MBA from the Stockholm School of Economics. SDRs: 13,500. Per Brilioth, Member of the Board of Directors Between 1994 and 2000, Per Brilioth was head of the Emerging Markets section at Hagströmer & Qviberg and has worked close to the Russian stock market for most of his career. Current assignments: Member of the Board and CEO of Vostok New Ventures. Member of the Board of Tethys Oil AB, RusForest AB, Svenska Fotografiska museet AB and Avito AB. Deputy member of the Board of Avito Holding AB and Digital Agency Ryssland AB. He holds a Bachelor’s degree in Business Administration from Stockholm University and a Master of Finance from London Business School. SDRs: 2,790,000. Milena Ivanova, Member of the Board of Directors Milena Ivanova served as the deputy head of Equity Research for Renaissance Capital and the firm’s strategist for Russia, based in Moscow until the end of 2012. Since 2013, Ms Ivanova has acted as an independent advisor, mentor and business angel to start-up businesses, mostly based in Bulgaria. She holds an MBA from INSEAD and a Bachelor’s degree in European Business Administration from the University of Lincolnshire and Humberside, UK. SDRs: 600,000.



Appendix B: TCS Group Holding

TCS Group (Tinkoff) is a provider of online retail financial services operating in Russia through a branchless online platform. The group, that includes Tinkoff Bank and Tinkoff Insurance, was founded by Russian entrepreneur Oleg Tinkov in 2006 and is listed on the London Stock Exchange since 2013. Senior management consists of a team of professionals with experience from Visa, McKinsey and several Russian banks. Founder and Chairman of the Board Oleg Tinkov is one of Russia’s best known entrepreneurs and has previously launched several successful businesses across a range of industries. The group’s product offering includes consumer lending, debit and credit cards, deposits and insurance products. The business model leverages on a centralized internet based platform and a nationwide courier network for distribution. It is the second largest credit card issuer in Russia with a market share of 8.3% in 2015. Despite current challenging market conditions in Russia, the company has managed to grow both credit card volume and market share. Over the period 2007 – 2015 the Russian credit card market grew with a CAGR of 24%. During the same period Tinkoff grew with a CAGR of about 80%. Russian credit card market

Source: TCS Group Holding, Pareto Securities Equity Research.

Vostok Emerging Finance holds 6,379,794 Class A shares in TCS Group, which corresponds to approximately 3.5 percent of the share capital in TCS Group. The investment is worth SEK 162m, given the closing price on 2 Mars 2015. The initial investment of USD 31m in TCS was made in 2007 and 2008 by VEMF’s precursor Vostok Nafta and has had a multiple on invested capital of 8x including proceeds from sales of USD 232m worth of shares in connection to the IPO in 2013. TCS Group Holdings was listed on the London Stock Exchange in October 2013. Priced at USD 17.5 at the IPO, the share trading price closed trade at USD 3.0 on 2 Mars 2016. The share price has been weighted by troubles with the Russian economy, a depreciating ruble and capital outflows from Russia following the political tensions between the Russian and Western governments and the drop in the price of oil and other commodities.

177 206 193228

368

671

990

1,156

1,019

0

200

400

600

800

1,000

1,200

2007 2008 2009 2010 2011 2012 2013 2014 2015

RUBbn

SBERBANk

Tinkoff Bank

VTB24

Russian Standard

Alfa-Bank

otpbank

Other consumerbanks

Other Banks

39.0%

12.4%

14.7%

3.3%7.1%

7.3%

7.9%

8.3%



Earnings per share in 2014 amounted to USD 0.3 (RUB 18.8) and USD 0.2 (RUB 10.1) in 2015. Consensus estimates of EPS’16 to USD 0.4 (RUB 20.5) and EPS’17 to USD 0.5 (RUB 28.9). This corresponds to 10.8x P/E’16c and 7.6x P/E’17c. In comparison, listed Nordic consumer finance bank Nordax currently trade at a valuation of P/E’16e 13.7x and P/E’17e of 11.7x.

TCS Group Holding share price history EPS TCS Group Holding


0

5

10

15

20

25

No

vD

ec Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

gSe

p

Oct

No

vD

ec Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

gSe

p

Oct

Dec Jan

Feb

Mar

2013 2014 2015 2016

USD

34.2

18.8

10.1

20.5

28.9

1.1

0.5

0.2

0.4

0.5

0

0.2

0.4

0.6

0.8

1

1.2

0

5

10

15

20

25

30

35

40

2013 2014 2015 2016c 2017c

USDRUB

RUB USD



Appendix C: Revo and Sorsdata

REVO is a Russian company offering instant in-store finance services, such as short term instalment plans for merchants and health services providers. The business model is similar to that of the Swedish financial services company Klarna (not listed), but is currently serving mostly offline in-store transactions, in contrast to Klarna’s focus on e-commerce. The business integrates mobile and cloud software technology solutions and leverages existing market infrastructure (credit bureaus, collection agencies, call centers, etc.) to deliver paperless and integrated solutions for merchants and consumers via own tablets installed at cash registers. Online storefront solutions are also being developed, and the company is currently rolling out pilot projects with major Russian e-commerce players. REVO has during the last two years had a strong growth of business. As of December 2015 the number of stores connected to REVO had increased to an estimated 1,623 (1,551 in November 2015 confirmed) from 67 at the end of 2013. The cumulative number of instalment plans granted was 296,249 at end of 2015, compared to 51,524 at end of 2014 and 6,402 at end of 2013. The annual percentage rate (APR) of instalment plans for December 2015 was 95.9%. According to VEMF management, during Q4’15 REVO reached break-even and had a positive bottom line result. Key figures

* Estimate for month of December 2015. Source: Vostok Emerging Finance, Pareto Securities Equity Research.

Sorsdata is REVO’s sister company, seeking to leverage proprietary customer data and digital marketing technologies to deliver personalized marketing services for merchants. Currently the only external investor, VEMF invested in the two companies in two rounds in September 2015 and December 2015 with a total amount of USD 5m, corresponding to 25% ownership in both companies. In comparison, Klarna was in its latest funding round valued to USD 2.25bn, corresponding to a price-to-revenues’14 ratio of 7x.

Metrics (EOP) Dec 2013 Dec 2014 Dec 2015

No. of connected stores # 67 572 1,623*

No. of insta l lments granted (cumulative) # 6,402 51,524 296,249

Avg. insta l lment plan RUB 2,442 3,852 4,103

Avg. duration of insta l lment plan Months 4.5 4.9 4.6

Avg. APR of insta l lment plans % 64.2 83.8 95.9



Appendix D: Jumo

JUMO is a mobile money marketplace currently active in Kenya, Tanzania, Zambia, Uganda, Rwanda and Ghana targeting entrepreneurs, small businesses and individuals. The company facilitates access to financial services through mobile wallets with no need for a bank account, collateral or physical infrastructure. Partnering with local Mobile Network Operators such as Airtel, Tigo and MTN, Jumo collects and analyses data on mobile wallet and GSM usage to asses creditworthiness and suitability for loan. The data-driven loans process gives millions of people without a bank account and a formal credit history access to finance through their mobile phones. To date, Jumo has distributed 6 million loans to more than 2 million unique customers. The Peer-to-Peer business model is similar to that of Lending Club and Kabbage, but employing a mobile based platform, in-contrast to web-based. According to VEMF management, Jumo’s platform can relatively swiftly be rolled out in new markets through integration with existing telecom operators. Potential markets are therefore not limited to Africa, but other markets with limited financial infrastructure could also be considered fit for Jumo’s platform. Jumo was founded in 2014 by Andrew Watkins-Ball, an entrepreneur with previous experience in technology and financial services. He successfully built various businesses including Gateway Telecommunications, a satellite service provider sold to Vodafone for $675m in 2008. Andrew also has seven years of experience from Salomon Brothers in London and New York. Shareholder base includes private equity investors Athena Capital, GEMCORP and Leapfrog. Chairman of the board is Tom Boardman, who is former CEO of South African bank Nedbank. VEMF has invested in total USD 10 million in Jumo in October 2015 and December 2015 in connection with a larger equity-funding round. VEMF ownership stake is 7.6% (fully diluted for management option scheme) and CEO David Nangle will become a member of the Board of Directors of Jumo in 2016.



Appendix E: Vostok New Ventures

Vostok Emerging Finance was founded in June 2015 as Vostok New Ventures (VNV), former Vostok Nafta, spun-off its investment in TCS Group Holding into a new entity to focus on financial services investments. VNV is a listed investment company investing in technology driven companies with network effects, with portfolio companies including: Avito, the largest classified advertisement platform in Russia; BlaBlaCar, a long distance ridesharing service; and Delivery Hero, a network of food ordering sites. Vostok New Ventures’ history dates back to 1996, when Adolf H. Lundin founded Vostok Nafta, with the business idea of investing in the former Soviet Union. Vostok Nafta initially conducted investments in the oil, gas and mining industries, whereof Gazprom was a significant investment. In 2007 Vostok Nafta was restructured and its Gazprom investment was spun-off into another entity, Vostok Gas. Since then Vostok Nafta invested increasingly into technology driven companies, notably Avito and TCS Group Holding. In 2015 the strategic decision was taken to split Vostok Nafta by spinning-off the TCS Group Holding investment into a new entity. The two separate entities, Vostok Emerging Finance and Vostok New Ventures, would have different and narrower focus on their investments, making it easier for investors to pick their preferred exposure. The CEO of Vostok New Ventures Per Brilioth, remain an active board member in Vostok Emerging Finance.

Vostok New Ventures share price and NAV per share Avito and TCS investments

Source: Vostok New Ventures, Pareto Securities Equity Research.

Vostok New Ventures’ investment in the Russian classified advertising website Avito made in 2007 and 2008 have had a multiple on invested capital of more than 20x including proceeds from sales. The investment in TCS Group Holding (Tinkoff) made in 2007 and 2008 have had a multiple on invested capital of 8x including proceeds from sales of USD 232m worth of shares in connection with the IPO in 2013.

0

10

20

30

40

50

60

70

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2010 2011 2012 2013 2014 2015

SEK

NAV per share Share price

0

50

100

150

200

250

300

350

400

Gross investment Valuation as of Dec'15 includingproceeds from sales

USDm

TCS Avito



Appendix F: Swedish Depository Receipts

The common shares in Vostok Emerging Finance Ltd are represented by Swedish Depository Receipts (SDRs). The SDRs are traded on Nasdaq First North with the trading symbol VEMF SDB. Vostok Emerging Finance Ltd, having domicile in Bermuda, has entered into a deposit agreement with Pareto Securities AB that Pareto Securities AB will hold shares on behalf of the shareholders of Vostok Emerging Finance Ltd in a depository account and issue one SDR for each share deposited. Each SDR represents one common share in Vostok Emerging Finance Ltd. One SDR carries the same right to dividend as one underlying share and SDR holders have the same voting rights at the General Meeting as holders of common shares. All SDRs carry equal rights to the VEMFs assets and profit as well as the right to take part of potential surplus in the event of liquidation.



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CopyrightThis publication or report may not be mechanically duplicated, photocopied or otherwise reproduced, in full or in part, under applicable copyright laws. Any infringement of Pareto Securities Research s copyright can be pursued legally whereby the infringer will be held liable for any and all losses and expenses incurred by the infringement.



C ompany A nalyst ho ld ings Tot al ho ld ings C ompany A nalyst ho ld ings Tot al ho ld ings

AF Gruppen - 1,675 Orkla - 20,659

AINM T - 59,000 Pareto Bank - 1,286,950

AKVA Group - 1,100 Pareto Eiendomsinvest Nordic - 190,234

American Shipping Company - 2,500 Pareto Growth Invest - 9,000

Austevoll Seafood - 15,265 Pareto World Wide Shipping - 2,980

Avance Gas Holding Ltd. - 3,133 Petroleum Geo-Services - 23,184

Awilco LNG - 40,000 Prosafe - 20,810

B2Holding - 860,400 Protector Forsikring - 534,000

Bonheur - 46,800 Questerre Energy - 110,275

BW LPG Ltd. - 2,169 REC Silicon - 438,087

Det norske oljeselskap - 4,002 SalM ar - 400

DNB - 34,784 Sandnes Sparebank - 15,001

DNO Internat ional - 92,607 Seadrill - 15,462

DOF - 193,500 Selvaag Bolig - 50,000

Farstad Shipping - 16,700 Solstad Offshore - 10,000

Fred Olsen Energy - 21,200 Sparebank 1 Nord-Norge - 130,251

Front line - 6,783 Sparebank 1 SM N - 44,190

Gjensidige Forsikring - 7,751 Sparebank 1 SR-Bank - 54,082

Helgeland Sparebank - 2,000 Sparebanken M øre - 10,764

Hexagon - 6,000 Sparebanken Sør - 7,800

Höegh LNG - 1,290 Sparebanken Vest - 48,326

Jæren Sparebank - 1,000 Sparebanken Øst - 10,000

Kongsberg Gruppen - 3,700 Statoil - 9,219

Lerøy Seafood Group - 13,040 Stolt-Nielsen - 2,335

M arine Harvest Group - 800 Storebrand - 4,064

M onobank - 3,713,000 Subsea 7 - 14,406

Nordic Semiconductor - 4,700 Tanker Investments - 6,881

Norsk Hydro - 101,895 Telenor - 1,481

Norske Skogindustrier - 30,040 TGS-NOPEC - 2,050

Norwegian Air Shutt le - 9,869 Vardia Insurance Group - 387,899

Ocean Yield - 27,568 XXL - 6,022

Odfjell Drilling - 82,742 Yara Internat ional - 9,891

Opera Software - 2,000 Zenterio - 236,817

This overview is updat ed mont hly ( last updat ed 29.02.2016)

Appendix A

Disclosure requirements pursuant to the Norwegian Securities Trading Regulations section 3 -10 (2) and section 3-11 (1), letters a-b

Pareto Securities AS does not alone or - together with affiliated companies or persons – owns a portion of the shares exceeding 5 % of the total share capital in any company where a recommendation has been produced or distributed by Pareto Securities AS.

Pareto Securities AS or its affiliates own as determined in accordance with Section 13(d) of the Exchange Act, 1 % or more of the equity securities of Equinox Offshore Accommodation Ltd

Pareto Securities AS may hold financial instruments in companies where a recommendation has been produced or distributed by P areto Securities AS in connection with rendering investment services, including Market Making.

Please find below an overview of material interests in shares held by employees in Pareto Securities AS, in companies where a recommendation has been produced or distributed by Pareto Securities AS. "By material interest" means holdings exceeding a value of NOK 50 000.



Advanzia Bank Golar LNG Paret o Bank

Af r ica Energy Goodt ech Paret o Eiendomsf elleskap II

AINMT Gulf Keyst one Pet roleum Philly Tankers

Aker ASA Haf nia Tankers Pioneer Marine

Arendal Harkand Finance Prosaf e

At lant ic Of f shore Havnegården Rocksource

At lant ic Pet roleum Höegh LNG Scana Indust r ier

Aust evoll Seaf ood It haca Pet roleum Sea Trucks Group

Axis Of f shore KNOT Of f shore Seaf arms Group

Blue Ocean Drilling Kolon Wat er & Energy Selvaag Bolig

BoDo Const ruct or Komplet t Bank Sept em Of f shore

Cecon Kongsberg Gruppen Sevan Marine

Deep Drilling Libert y Bulkers Sikuki Nuuk Harbour

Denison Mines Magseis Solør Bioenergi

Det Norske Oljeselskap Marine Harvest Group St erling Resources

DigiPlex Monobank St olt -Nielsen

DNO Int ernat ional Navig8 Chemical Tankers Technip

EnergyOpt imal Navigazione Mont anari TiZir

Exmar Nordisk Company TRD Campus

Faroe Pet roleum Noreco Tryg

Fornebu Gat eway Ocean Rig UDW Inc. TTS Group

Front line Ocean Yield Vardia Insurance Group

Genel Energy OSA Goliat h West ern Bulk

Gener8 Marit ime Oslo Helsebygg AS World Wide Supply

GlobalConnect PA Resources Ya Bank

This overview is updated monthly (this overview is for the period 31.01.2015 – 31.01.2016).

Appendix C

Disclosure requirements pursuant to the Norwegian Securities Trading ST Regulation § 3-11 (4)

R ecommendat ion % d ist r ibut ion

Buy 57 %

Hold 32 %

Sell 11 %

R ecommendat ion % d ist r ibut ion

Buy 75 %

Hold 20 %

Sell 5 %

* Companies under coverage with which Pareto Securit ies Group has on-going or completed public investment banking services in the previous 12 months

This overview is updated monthly (last updated 31.01.2016).

D ist r ibut ion o f recommendat ions

D ist r ibut ion o f recommendat ions ( t ransact ions*)

Appendix B

Disclosure requirements pursuant to the Norwegian Securities Trading ST Regulation § 3-11, letters d-f, ref the Securities Trading Act Section 3-10

Overview over issuers of financial instruments where Pareto Securities AS have prepared or distributed investment recommendat ion, where Pareto Securities AS have been lead manager/co-lead manager or have rendered publicly known not immaterial investment banking services over the previous 12 months:



M agnolia Bostad NGEx Resources Stillf ront Group

Nobina AB SciBase

Africa Oil Kallebäck Property Invest OrganoClick Tethys Oil

Byggmästare Anders J Ahlström Lundin Gold Rusforest Tribona

Cavotec M agnolia Bostad Saltängen Property Invest Trigon Agri

DDM Holding NAXS SciBase

Delarka Holding Nexst im ShaM aran Petroleum

Episurf NGEx Resources Stillf ront Group

Appendix D

This section applies to research reports prepared by Pareto Securities AB.

Disclosure of positions in financial instruments The beneficial holding of the Pareto Group is 1 % or more of the total share capital of the following companies included in P areto Securities AB’s research coverage universe: Rusforest

The Pareto Group has material holdings of other financial instruments than shares issued by the following companies included in Pareto Securities AB’s research coverage universe: None

Disclosure of assignments and mandates Overview over issuers of financial instruments where Pareto Securities AB has prepared or distributed investment recommendation, where Pareto Securities AB has been lead manager or co -lead manager or has rendered publicly known not immaterial investment banking services over the previous twelve months:

Members of the Pareto Group provide market making or other liquidity providing services to the following companies included in Pareto Securities AB’s research coverage universe:

Members of the Pareto Group have entered into agreements concerning the inclusion of the company in question in Pareto Securi ties AB’s research coverage universe with the following companies: NoneThis overview is updated monthly (last updated 15.02.2016).

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