Presentation by Mr Kārlis Cerbulis, economics expert, Senior Vice President, NCH Advisors Inc. Baltic States at EP ECR group meeting in Riga, Latvia on September, 2010.

1. Latvia
K.Cerbulis
NCH Investment Fund September 2010

2. • PART I: Latvia – Overview
• PART II: NCH Latvia – Experience
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3. Three Laws in Real Estate:
„Location, Location, Location.‟
Distance (km)
to Riga from:
 London: 1,662
 Berlin: 846
 Moscow: 835
 Stockholm 437
 Helsinki: 360
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4. Latvia‟s GDP (% change y-o-y)
Source: Central Statistical Bureau, SEB
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5. Bank Loans & Inflation
25,000 16%
14%
20,000
Bank Loans 12%
Bank loans, mill. Ls
+ 533% ! Inflation 10%
15,000
Inflation
8%
6%
10,000
4%
2%
5,000
0%
- -2%
2003 2004 2005 2006 2007 2008 2009 2010-Q2
Source: Association of Latvian Commercial Banks, Central Statistical Bureau
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6. Bank Loans & Apartment Prices
25,000 100,000
119 Series 2-room apartment (55 m2)
90,000
20,000 Apartment 80,000
price
Bank loans, mill. Ls
70,000
+269%
price, EUR
15,000 60,000
- 73%
50,000
10,000 +32% 40,000
Bank loans
+ 533% ! 30,000
5,000 20,000
10,000
- 0
2003 2004 2005 2006 2007 2008 2009 2010-Q2
Source: Associtaion of Latvian Commercial Banks, Ober-Haus
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7. Wages and Productivity
(seasonally adjusted data, per one working hour, 2004Q1 = 100)
Nominal wages
Productivity
Source: Bank of Latvia
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8. Share of Manufacturing in Economy (% of GDP)
Czech
Republic
Poland
Lithuania
Estonia
Latvia
Source: SEB Bank
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9. Latvia Reacts Quickly
Current Account (% of GDP)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-Q2
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
Source: Bank of Latvia
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10. Latvia Reacts Quickly
Retail Trade (growth % YOY)
60%
40%
20%
0%
Retail turnover
-20%
-40%
-60% Registration of
new vehicles
-80%
-100%
Source: Latvian Association of Authorized Car Dealers, Central Statistical Bureau
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11. Credit Default Swaps: Latvia / Greece / Iceland
Latvia
Iceland
Greece
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12. Credit Default Swaps: Latvia / Romania / Hungary
Latvia
Romania
Hungary
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13. „Swedish Occupation I‟
Estonia and Latvia (1629 – 1700)
“Positive times, during which this period also
acquired fame as golden times.”
Wikipedia
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14. „Swedish Occupation II‟
(1998 - ...)
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15. Rankings on the Ease of Doing Business
(out of 183 countries)
2010 rank Economy
1 Singapore
2 New Zealand
3 Hong Kong
4 United States
5 UK
10 Norway
24 Estonia
25 Germany
26 Lithuania
27 Latvia
72 Poland
Source: Doing Business 2010, World Bank.
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16. The World‟s Best Countries
(A Newsweek study of health, education, economy, and politics ranks;
out of 100 countries)
2010 rank Country
1 Finalnd
2 Switzerland
3 Sweeden
4 Australia
5 Luxemburg
12 Germany
14 UK
32 Estonia
34 Lithuania
36 Latvia
38 Bulgaria
43 United Arab Emirates
Source: Newsweek 16

17. “A crisis is a terrible thing to waste”
Latvia doesn‟t waste crisis opportunities:
 Fourth crisis since re-independence in 1991;
 Country stronger from each crisis
(previous crisis have been EXCELLENT buying
opportunities);
 Latvia dedicated to becoming a regular Nordic / EU
economy;
 International competitiveness restored with falling
wages/costs.
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18. Part II:
NCH in Latvia –
Experience
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19. NCH in Latvia
 14+ years;
 One of the biggest US-based investors in Latvia;
 Initially largest investments in company privatizations
(including „Unibanka‟ – now SEB Latvia);
 Financial services (largest insurance company „Balta‟ –
sold to Codan Insurance, Denmark, 2001);
 ~ 80% of current portfolio in real estate
(www.Domuss.lv, www.RigaPlaza.lv);
 Direct equity investments
(www.Sidrabe.com, www.GroGlass.com);
 Source of farming JV partners for large-scale farming
projects in Ukraine and Kazakhstan (> 200,000 ha
cropland).
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20. NCH Office-building Portfolio
Kungu Str. 1, Offices & Retail, Old Town, Owned
Baznicas Str. 20/22, Offices &
Basteja Str. 16, Offices & Retail, Old Town, Sold (2006)
Retail, Downtown, Owned
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21. „Riga Plaza‟ Retail Mall,
(50% NCH Owned, with partner „Plaza Centers Europe‟)
90,000 m2 GBA, 50,000 m2 GLA
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22. NCH Land Bank Example - „Dreilini‟, Riga
Description:
 52 hectares in developing area at the
inner-Riga Ring road, at a large
intersection with heavy traffic flow.
 15 hectares - excellent
location for a Retail
Project, 37 hectares - zoned
as residential and mixed-use.

23. „GroGlass‟ nano-coating glass factory
(inaugurated 2009)
www.Groglass.com
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24. Latvian JV partners for farming projects in Ukraine
and Kazakhstan
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25. NCH Fields in Ukraine
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26. Positives of Latvia and the Baltics:
 Small and open economies;
 Advantageous location to bridge economies of East &
West;
 Adaptable, multi-lingual workforce;
 Much closer than China;
 Northern European country;
 Quickly adjust to crisis and „learn the crisis lessons‟;
 Competitiveness being restored quickly – costs falling;
Things happen fast here (we live in „dog years‟).
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27. Investment Opportunities
 Real estate;
 Agriculture;
 Forestry;
 Transit (ports, logistics);
 Back office (incl. „call centers‟);
 „Stepping stone‟ offices/partnerships for Russia, Ukraine,
Belarus, ...
 Export oriented industries;
 Small manufacturing plants (closer than China);
 ...
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28. Karlis Cerbulis
Senior Vice President
NCH Capital, Inc.
www.nchcapital.com
karlis@nchriga.lv
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