Definitions

Allocation target

Level of net proceeds of the fund where after the net proceeds are paid according to set profit sharing arrangement. This level is typically set to 80–20 meaning that 80% of the net proceeds are paid to investors and 20% are paid to East Capital.

Alpha

The result of active asset management measured in generated return in excess of a relevant benchmark index.

Catch-up

Allocation of the net proceeds of the fund, once hurdle has been reached. May be set to 50/50 meaning that 50% of the net proceeds are paid to investors and 50% to East Capital up to a given allocation target of the total net proceeds of the fund. Purpose is to incentivize the manager to create good returns (above hurdle).

Clawback

Upon termination of the fund, if East Capital has received profit share distribution in excess of 20% of the fund’s net profits from all portfolio investments, East Capital will return the excess amount to the fund. This can for example occur if a portfolio investment is sold at a loss at the end of the fund term, and profit share has been paid out to East Capital in prior divestments of the fund.

Commitment

An investor’s pledge to investing a specified sum of money in a private equity fund over a specified period of time.

Draw-down

When a private equity fund has decided on an investment for the fund, it will approach its investors for part payment of the money the investors have already pledged to the fund. A draw-down is the actual act of transferring the money to the investment target.

GAV

The gross asset value (GAV) of a fund at a certain point in time.

High Watermark

Level of NAV above which performance fee is paid.

Hurdle

Net return on fund or investment, calculated on a cumulative annual basis, to be paid to investors before catch-up and profit share/performance fee can be paid to East Capital.

IPEVC (formerly EVCA)

International Private Equity and Venture Capital. A member-based, non-profit trade association that represents the interests of the private equity and venture capital industry. Has published guidelines for valuation of unlisted companies that is widely used as an industry standard.

Management fee

Fee paid to Investment Manager. Calculated monthly and subtracted in the monthly net asset value calculation of each fund.

Market capitalisation

Total number of outstanding shares times price per share.

Net asset value (NAV)

Corresponds to the value of East Capital Explorer’s net assets, i e total assets less net debt.

Performance fee

Fee paid to encourage East Capital to create better returns for the fund investors. A high watermark ensures that only performance above level of investment or the latest previous “highest value” is remunerated.

Private Equity

Unlisted companies, meaning companies which shares are not listed on a stock exchange or other market place.

Profit share

Arrangement where future proceeds are divided according to pre agreed level. Typically set to 80–20 meaning that after hurdle has been reached and full catch-up has been paid, East Capital is entitled to a 20% preferred profit share of the returns generated above this and the remaining 80% is distributed among investors.

Public Equity

Companies listed on a stock exchange or market place.

Redemption fee

Fee paid to the fund (not to East Capital) to compensate the fund for redeeming capital which may lead to the fund divesting assets to meet redemption. The redemption fee compensates the other fund investors for the possible loss of returns that the fund makes from divesting the investment.

Semi-public Equity

Companies that, despite being listed on a stock exchange or market place, have shares with very limited trading volumes, and therefore are inaccessible for most investors. Trading is done on the so called second and third tier markets.

Sharpe-ratio

Risk-adjusted measurement used to compare how well the return of an investment compensates the investor for the risk taken. The higher the Sharpe ratio, the better the investments historical risk-adjusted performance.

Short-term investments

Investments that have the potential to generate attractive returns while remaining available for future investments.

Subscription fee

Fee paid upon investment in a fund, amounting to a certain percent of invested capital. East Capital Explorer has been waived all subscription fees.

Definitions of indices - benchmarks against which financial or economic performance is measured

Please note that the benchmark indices are provided solely as reference to evaluate fund performance. Although the provided indices may be regarded as the most suitable available benchmarks for the different funds in which we invest, these indices are not fully comparable benchmarks as the sector and country weighting in these indices currently are significantly different from the weighting in the respective funds.

KASE Index

Main index of the Kazakhstan stock exchange.

MSCI EM Europe Index

Includes Russian, Polish, Hungarian, Czech and Turkish equities.

OMXSPI

Includes all shares listed on NASDAQ OMX Nordic Exchange Stockholm.

PFTS Index

Includes equities traded on the largest marketplace in Ukraine.

RTS Index

Includes the 50 largest companies traded on the Russian Trading System (RTS).

RTS 2 Index

Includes 78 companies on the RTS that have limited trading volumes.

RTSeu Index

Sector index that includes 14 electric utility equities listed on RTS.