JSC Liberty Finance | High Yield | Georgia | May 2014

GEL/US$ 1.7700
Not a bank deposit or a regulated investment product | Not insured | May lose value
2/5/2014

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Permissible Investments
Maximum permissible % of the NAV
Georgian issued instruments >80%
Georgian Treasury bills <25%
US$ denominated bank deposits & CDs <25%
GEL denominated bank deposits & CDs <50%
Promissory notes issued by non-bank lenders (GEL & US$) <75%
Loans to non-bank lenders (GEL & US$) <90%
Working capital credit facilities <75%
Managed P2P lending opportunities (GEL) <75%
Preferred shares <25%
Similar instruments in Azerbaijan & Armenia <20%
Other instruments <10%
Long only, no leverage, no derivatives, no currency hedging

Investment Team & Governance


Relevant experience
Supervisory Board
Tengiz Lashkhi, Chairman 7 years
Victor Meskhi 5 years
Vano Barbakadze 8 years
Director
Vano Barbakadze 8 years

Vano Barbakadze served, from July 2008 through June 2013, as portfolio manager at Abbey
Asset Management, a leading asset management company in Georgia, managing Aldagi
Pension Fund, the largest pension fund in Georgia by AUM.


2H 08 2009 2010 2011 2012 1H 13
Gross Returns (GEL) -16.6% 81.6% 17.1% 17.2% 15.4% 7.8%
Net Returns (GEL) -18.1% 68.8% 13.2% 13.4% 11.7% 5.9%
Gross Returns (US$) -29.0% 79.6% 11.4% 24.4% 16.4% 8.1%
Net Returns (US$) -30.3% 66.9% 7.6% 20.3% 12.6% 6.2%
AUM
2
, US$ mln 1.0 2.2 2.8 4.1 4.9 5.5
Georgian CPI 1.0% 3.0% 11.2% 2.0% -1.4% 0.3%
JPM EMBI+ -9.1% 25.9% 11.8% 9.2% 18.0% -9.4%
MSCI FM 100 -55.2% 4.2% 21.1% -22.5% 4.1% 7.2%
S&P Frontier BMI -52.4% 9.1% 18.9% -18.7% 5.4% 7.6%
FTSE Frontier 50 -51.7% 2.2% 12.6% -27.1% 12.4% 6.4%
MSCI EM -47.8% 74.5% 16.4% -20.4% 15.1% -10.9%
Since 1 November 2013, Vano Barbakadze and the individuals comprising the Supervisory Board
of Liberty Finance have been managing the Georgia & The Caucasus High Yield Individual
Account Strategy (currently closed for new subscriptions), which has an investment mandate
similar to that of Liberty Finance, with the same list of the Permissible Investments and portfolio
construction principles.
Georgia High Yield Individual Account Strategy (IAS)
Net Return GEL US$
Cumulative (since 1 November 2013) 18.6% 11.9%
Annualised 37.4% 24.1%
Risk Metrics (IAS)
GEL US$
Volatility 0.10% 0.14%
Sharpe Ratio
3
0.8 0.3

NAV per notional IAS Investment Unit
4
(rebased)


Contact Details

Liberty Securities Ltd
The Liberty Tower, 74 I. Chavchavadze Ave., Tbilisi 0162 Georgia
www.libertysecurities.ge
Sales
Temur Iremashvili Mobile: +995 591 158 877
temur.iremashvili@libertysecurities.ge
sales@libertysecurities.ge
Skype: temur_75
Investment Manager
Vano Barbakadze Mobile: +995 591 604 040
vano.barbakadze@libertysecurities.ge
Skype: vano_barbakadze

1. Gross annualised yield
2. As at period end
3. The current yield (6.895%) of the 12-month Georgian Treasury Bills used as the risk-free rate
4. The notional IAS Investment Units are set out for illustrative purposes only for the ease of
tracking and assessing the historical performance of the Individual Account Strategy. The NAV
per notional IAS Investment Unit is calculated on a daily basis and equals the aggregate NAV of
the Individual Account Strategy divided by the total number of the notional IAS Investment Units
Investment Objective & Philosophy
JSC Liberty Finance (LF, unlisted) seeks to provide high total return from current income by
offering investors high-yield participating promissory notes, the proceeds of which LF intends to
invest in a range of fixed-income assets, principally situated in Georgia and mostly denominated
in the local currency.
LF has commenced the issuance of GEL and US$ denominated participating Promissory Notes
(the PNs).
Key terms & conditions of the PNs are set out below:
Liberty Finance GEL Denominated Participating Promissory Notes
Issuer JSC Liberty Finance
Instrument Participating Promissory Notes
Currency GEL (Georgian Lari)
Term 12 and 24 months
*
; principal repaid within 30 calendar days
Minimum Investment GEL 100 per PN
Maximum Investment GEL 0.5 mln
Issue Size Up to GEL 5 mln for each of the 12-month and 24-month PNs
Interest The sum of the Base Interest Rate and the Participating Interest
Base Interest Rate 12.5% p.a. for the 12-month PNs, 14.5% p.a. for the 24-month PNs, payable
together with principal within 30 calendar days from the relevant maturity date
Participating Interest** 20% of any distributable net income accrued monthly on a pro rata basis of the
GEL equivalent (as of the relevant end-of-month date) aggregate principal of all
the PNs outstanding and payable together with principal within 30 calendar days
from the maturity date

Liberty Finance US$ Denominated Participating Promissory Notes
Issuer JSC Liberty Finance
Instrument Participating Promissory Notes
Currency US$ (United States Dollar)
Term 12 and 24 months
*
; principal repaid within 30 calendar days


Minimum Investment US$100 per PN
Maximum Investment GEL 0.5 mln equivalent
Issue Size Up to GEL 5 mln equivalent for each of the 12-month and 24-month PNs
Interest The sum of the Base Interest Rate and the Participating Interest
Base Interest Rate 8% p.a. for the 12-month PNs, 10% p.a. for the 24-month PNs, payable together
with principal within 30 calendar days from the relevant maturity date
Participating Interest** 20% of any distributable net income accrued monthly on a pro rata basis of the
GEL equivalent (as of the relevant end-of-month date) aggregate principal of all
the PNs outstanding and payable together with principal within 30 calendar days
from the maturity date
Why Georgia High Yield?
Georgia, a top reformer in the world in 2006-2011 according to the World Bank, has experienced
a long period of high economic growth rates in 2004-2012 and has evolved into an attractive low-
tax jurisdiction with full currency convertibility and attractive business climate (currently ranked
by the World Bank as No. 8 in the Ease of Doing Business global rankings and No. 22 in the WSJ-
Heritage Foundation Economic Freedom Index).
Georgias economic openness, attractive location, and liberal visa and trade regime have
contributed to Georgias ongoing transformation into a regional tourism, trade and financial hub.
Due to the growing receipts from tourism and remittances, export growth and stable FDI,
portfolio and donor inflows, Georgia has been comfortably financing its current account deficit in
the past decade. Its currency, the Lari (GEL), has depreciated by less than 10% against the US$
since the beginning of 2009, and inflation is currently at 3.4%, down from the historical high
single-digits level.
The Georgian banking sector is among the most stable, dynamic and innovative in the FSU/SEE
and has grown by over 1,000% since 2003; nonetheless, the banking penetration rate remains
low, with bank credit to GDP at 37% and bank credit to individuals to GDP at 17% at YE 2013.
The historically high interest rates on bank loans and deposits have decreased considerably in the
past 12 months, with 12-month bank term deposits in US$ currently yielding no more than 5%-
6% (compared with 8%-10% attainable in 2002-2012).
The current outstanding stock of private banking deposits in Georgia is estimated at US$500 mln,
with at least half of this amount contributed by non-resident clients. As these term deposits
expire, it will be impossible to reinvest the funds in bank term deposits at anywhere near the
yield levels of 2010-2012.
The Georgian non-bank lending sector has experienced robust growth in the past five years, with
the aggregate loan book of non-bank lenders exceeding US$400 mln in 2013 (up from less than
US$30 mln in 2006). The non-bank lending sector comprises over 70 microfinance companies
licensed by the National Bank of Georgia, and up to 20 other traditional and newly-established
online lenders that do not require a regulatory license. Given their lending rates that typically
exceed 30% p.a. for secured loans and 60% for unsecured loans, these lenders attract funds at
the rates reaching, and sometimes exceeding, 10% p.a.
Why Liberty Finance?
Founded and managed by individuals at the forefront of the financial services sector
development in Georgia for over 10 years
Rigorous bottom-up driven investment screening process to identify the best reward-risk
opportunities based on the investment teams superior understanding of the banking and non-
bank lending markets in Georgia
Investment discipline and risk controls ensuring the diversification insofar as possible within the
set boundaries of the investment strategy
Access to attractive opportunities, such as, for instance, certificates of deposit issued by Liberty
Bank, promissory notes and loans yielding over 10% in selected leading non-bank lenders, and
access to the managed P2P lending platform (eLoan.ge) owned and operated by eCapital, a
Liberty Securities affiliate
*The repayment of principal will occur within 30 calendar days from the maturity date of the PNs
**20% of the annual distributable net income will be accrued monthly and paid out to the PN holders within 30
calendar days from the maturity date of the PNs
100
104
108
112
116
120
Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14
NAV per Unit, GEL NAV per Unit, US$


JSC Liberty Finance | High Yield | Georgia | May 2014


Not a bank deposit or a regulated investment product | Not insured | May lose value
2/5/2014

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Key Terms & Conditions

The charter of JSC Liberty Finance can be accessed at http://bit.ly/1dUypKG

Capital Structure
65,000 Class A ordinary shares, each carrying two voting rights
35,000 Class B ordinary shares, each carrying one voting right
Other than voting rights, all ordinary shares carry equal rights, including the economic participation rights, regardless of the class
Nominal Value GEL 0.01 each, regardless of the class
Ownership structure

Liberty Securities Ltd 100.0% of Class A shares outstanding
Vano Barbakadze 57.1% of Class B shares outstanding
Tengiz Lashkhi 14.3% of Class B shares outstanding
Victor Meskhi 14.3% of Class B shares outstanding
Temur Iremashvili 14.3% of Class B shares outstanding

Annual General Meeting (AGM)
All AGM decisions will be passed with 50% + 1 simple majority of the votes of the ordinary shares present

Governance
Director:
Makes all decisions (investments/disposals) of up to the lower of (i) GEL 250K or (ii) 10% of LFs assets as of the end of the previous fiscal quarter

Supervisory Board:
Decides on all investments/disposals exceeding in size the Directors thresholds and up to the lower of (i) GEL 500,000 and (ii) 20% of LFs assets as of the end of the
previous fiscal quarter
Simple majority decisions on all issues

AGM:
Decides on all investments/disposals exceeding the lower of (i) GEL 500,000 or (ii) 20% of LFs assets as of the end of the previous fiscal quarter
Issuance of any debt instruments

Investment Strategy/Permissible Investments
Investment Strategy/Permissible Investments may be changed (as to the maximum permissible limits of any instruments/securities classes, as well as with regard to the geography)
by the AGM; such changes may not occur more frequently than once a year.

Fees & Expenses
Investors in the PNs pay no fees of any kind.
Annual expenses of LF will be capped at the greater of GEL 3,600 and 0.1% of the aggregate principal amount of the PNs outstanding as at the year-end. The shareholders of LF
expect to subsidise the annual expenses in 2013-2014 or until such time when the aggregate principal amount of the PNs outstanding exceeds GEL 3.6 mln equivalent.

Taxation
Interest received by the holders of the PNs is subject to a 5% tax withheld at the source. However, as the payment of variable income in addition to the fixed annual interest rate of
the PNs is unprecedented in Georgia, the Participating Interest payable to the PN holders may be taxable, through withholding at the source, as follows:
Resident individuals 20% Non-resident individuals 10%
Resident legal entities 15% Non-resident legal entities 10%
Liberty Securities will withhold the relevant tax amounts at the source. Accordingly, there is no need for the PN holder to make any tax filings in Georgia.
As a joint stock company registered in Georgia, LF is subject to a 15% corporate profit tax.

The Calculation Of The Participating Interest
The distributable net income shall be equal to the interest income accrued or received from the underlying investments, less the sum of (i) Base Interest expense, (ii) any provisions
for the impairment of the underlying assets, (iii) accrued annual expenses set at the estimated annual cap, and (iv) accrued corporate profit tax of LF. 20% of the distributable net
income so calculated shall be accrued on a monthly basis for the benefit of the PN holders.

Statements and Disclosures
The PNs are transferable to any third party by their holders, subject to the registration of the transfer by Liberty Securities.
The PNs are not regulated by the Law of Georgia on Securities, and, therefore, may not be listed or admitted to trading on the Georgian Stock Exchange or any other organised
exchange.
There may be no assurance that the over-the-counter secondary market in the PNs will develop.
The Georgian Lari is freely convertible and there are no restrictions whatsoever on the transfer abroad of either the interest income received by the PN holder or the principal
amount of the PN once it is repaid by the issuer.
LF does not intend to be audited by a Big Four accounting firm, but intends to publish audited annual results. Additionally, LF has committed to issuing to all the PN holders its
summary quarterly unaudited financial results and the portfolio disclosure/analysis. Holders of the PNs with the principal amount exceeding US$100,000 (or its GEL equivalent) may
inspect the books and records of LF at any time at their own cost and upon reasonable notice. Liberty Securities intends to update and publish this document monthly or more
frequently if deemed necessary.








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