103.What do you know about Ukrainian credit rating agency and its ratings?

“Credit-Rating” is the first rating agency in Ukraine (since 2001) that provides

services of independent assessment, assigns credit ratings pursuant to the National rating scale and specializes in assignment of bank deposit ratings.  Since 2003 the agency's rating estimations have been officially recognized by Ministry of Finance of Ukraine.

Rating Agency “Credit-Rating” is an independent private company. It does not incorporate governmental departments, financial institutions neither investment companies. To remain unbiased, the agency does not act as a participant of financial market or a creditor of the companies rated..

Ukrainian Credit Rating Agency (UCRA) is an independent, privately-owned credit rating agency. It was founded in 2008 and is located in Kiev (Ukraine). Originally the company was involved in development, implementation and support of complex IT-solutions for financial market, including solutions for assessment of creditworthiness of companies and financial institutions.

In the beginning of 2011 UCRA introduced specialized methodologies aimed at assessment of banks' financial stability and companies' creditworthiness and started to assing credit ratings by the Ukrainian National Rating Scale. Later, the agency introduced methodologies for insurance companies and municipalities. At present, UCRA covers the whole range of entities in financial, municipal and corporate sector. Currently, the rating list of UCRA contains over 20 credit ratings assigned to Ukrainian banks and companies. UCRA is also offering tailor-made credit related and market research.

Today in the rating list of the "Ukrainian debt rating agencies," more than 20 credit rating of banks and businesses on the National rating scale. In February 2012 the "Ukrainian credit rating agency" headed by Stanislav Dubko previously for 10 years headed the agency "Credit-Rating". The basic management and analytical positions adopted a new agency experienced professionals also have many years of experience in the agency "Credit-Rating". The development strategy of the "Ukrainian debt rating agencies' aims at providing leadership, above all, the quality and objectivity of rating research.

April 10, 2012 the National Commission on Securities and Stock Market (NKTSBFR) of Ukraine in its decision № 528 approved the results of the competition to determine the authorized rating agencies, according to which "the Ukrainian credit rating agency» (UCRA) was one of the winners received a certificate and authorized rating agency number 7. This status confirms compliance with all the requirements of the agency NKTSBFR and provides the right to assign mandatory by law to credit ratings.

104) What do you know about private equity funds?

A private equity fund is a collective investment scheme used for making investments in various equity securities according to one of the investment strategies associated with private equity.

Legal structure and terms

Most private equity funds are structured as limited partnerships and are governed by the terms set forth in the limited partnership agreement or LPA. Such funds have a general partner (GP), which raises capital from cash-rich institutional investors, such as pension plans, universities, insurance companies, foundations, endowments, and high net worth individuals, which invest as limited partners (LPs) in the fund. Among the terms set forth in the limited partnership agreement are the following:

Term of the partnership. The partnership is usually a fixed-life investment vehicle that is typically 10 years plus some number of extensions.

Management fees. An annual payment made by the investors in the fund to the fund's manager to pay for the private equity firm's investment operations (typically 1 to 2% of the committed capital of the fund).

Distribution Waterfall. The process by which the returned capital will be distributed to the investor, and allocated between Limited and General Partner.

Transfer of an interest in the fund. Private equity funds are not intended to be transferred or traded; however, they can be transferred to another investor. Typically, such a transfer must receive the consent of and is at the discretion of the fund's manager.

Restrictions on the General Partner. The fund's manager has significant discretion to make investments and control the affairs of the fund, concerning the type, size, geographic focus and term of investments permitted.

Private equity investments and financing

A private equity fund typically makes investments in companies (known as portfolio companies). These portfolio company investments are funded with the capital raised from LPs, and may be partially or substantially financed by debt. Some private equity investment transactions can be highly leveraged with debt financing—hence the acronym LBO for "leveraged buy-out". The cash flow from the portfolio company usually provides the source for the repayment of such debt.

Such LBO financing most often comes from commercial banks, although other financial institutions, such as hedge funds and mezzanine funds, may also provide financing.

Portfolio company sales (or exits)

A private equity fund's ultimate goal is to sell or exit its investments in portfolio companies for a return, known as internal rate of return (IRR) in excess of the price paid. These exit scenarios historically have been an IPO of the portfolio company or a sale of the company to a strategic acquirer through a merger or acquisition (M&A), also known as a trade sale. A sale of the portfolio company to another private equity firm, also known as a secondary, has become common feature of developed private equity markets.