Expert (Moscow), September 1, 2003

RosBusinessConsulting was founded in 1993. It started with issuing printed information bulletins that were disseminated by curriers to companies operating on the stock market. With the emergence of the Internet, RBC gradually turned to the electronic delivery of news and new business branches began to develop around the company. As it turned out, the default of 1998 helped to significantly boost the company, i.e. subscribers were looking to reduce costs and the company risked providing free access to its news on the Internet. Almost immediately, RBC became the most visited Russian-language resource on the Internet and in several days it concluded the first contract for placing advertisements on its web site.

Since then the company has been working on the edge of media and IT businesses. Advertising brings about half of the revenues to the company (44 percent, or $12.9m in 2002), and news, provided on a fee basis, bring 7.7 percent in revenues. About a third of the revenues come from offshore software engineering and various system integration. The company's total sales volume reached $29m in 2002, which was 59 percent more than in 2001 and sevenfold more than in 1999. RBC is one of the fastest growing IT companies in Europe. It was rated 72 on the European Technology Fast 500 list drawn by Deloitte & Touche Tohmatsu.

In the spring of 2002, the holding RBC Information Systems conducted an IPO (Initial Public Offering) and attracted $13.3m. The largest share of these funds was invested in the television project RBC TV.

According to some sources, this IPO, organized by the Moscow investment bank Aton Capital (it acted as the lead manager and market maker) and Alfa Bank (acting as co-lead manager), was held with the participation of well-known investment banker Hans-Joerg Rudloff. Market participants believe that, in fact, it was in a larger degree a direct private placement and was called IPO for PR purposes and for better presentability. The company's shares were placed by financial advisors directly among their clients and the listing in the Russian Trading System and on the MICEX exchange, as it was reported later, was completed separately several weeks later. The following dynamics of these shares on the open market testified to the latter opinion. At the beginning, they demonstrated insignificant but stable liquidity, i.e. two or three transactions a day with a maximal daily trade volume surpassing $500,000. As organizers of the issue reported, as a result, the company was five times oversubscribed and the issue's volume reached $64m. However, despite the fact that the initial market price was significantly higher than the offering price, only a small share of funds from unsatisfied bids transferred into RBC's shares on the secondary market. Several weeks after the offering, sales activities began to fall and the number of daily transactions dropped to one or two and the share price reduced almost by half. In May and June 2002, the total trade volume was only $3.9m and, in the course of the year, the market paid almost no attention to these securities.

A new boost of interest to these shares was provoked by Aton Capital that placed a bid for purchasing RBC's shares at a price 13 percent higher than current quotes. As a result, the share prices surged 70 percent to $1.4-1.5 on this deal and on rumors about the upcoming issue of ADRs of RBC Information Systems. The company's capitalization reached $150m. Currently, trade of RBC shares remains quite active amid a very low trade volume. Transactions total $10,000 to $25,000, which is typical for a situation when some investors are forming their portfolios and buying shares of minor shareholders. RBC's securities look like standard second-tier shares, with seldom periodical sales and a wide spread in quotes. They are not of much interest to traders now while the attention from portfolio investors is quite logical: the business television channel RBC TV is being created not just similar to Bloomberg but, as they say, with plans of further partnership with this one of the world largest suppliers of business information.

Yury Ammosov