Investors’ interest in the telecommunication sector increases RBC’s price.

RBC Information Systems JSC has completed the placement of an additional issue of shares, totaling 15m shares. The placement finished with a buying up of 3.84m shares by the management, which was using their preemptive option, at a price of RUR53.49 per share.

Earlier 11.16m shares from the blocks of shares of the company’s major shareholders were sold to foreign investors, and later they bought up the same number of shares during the placement.

Confidence in the market

According to Anatoliy Kaplin, an Aton Capital analyst, following the placement, the share of the major shareholders has decreased from 74 percent to 65 percent, which means that market participants have a theoretical possibility to accumulate a blocking share. In other words, the major shareholders trust investors, and this fact makes the securities more market-oriented.

As a result of the placement, the free float has increased from 26 percent to 35 percent. “If the management had not bought up these securities, they could have appeared on the market, which would have broadened the supply, and the price of the securities would not have risen,” Anatoliy Kaplin believes. “The price of the securities has grown substantially now, possibly, on insider information.”

Growth based on interest in the sector

Experts polled by Delovoy Peterburg, link an increase in the company’s shares (see graph) to a general rise on the market and do not attribute the growth in prices over the past few weeks to either the issue of shares or the release of the company’s business results for the first six months of the year in the middle of September.

“An increase in the price of RBC shares is largely due to the growing interest of investors in the telecommunication sector,” Alexander Pavlov, an analyst of the Energokapital investment company believes. “The entire stock market, including the telecommunication sector as a segment of it, has been growing quite rapidly over the past few weeks. RBC shares have increased along with the market in general,” Yevgeniy Golosnoy, an analyst of Troika Dialog, pointed out, commenting on this situation.

According to RBC Information Systems General Director Yury Rovensky, the structure of the shareholding has changed insignificantly, and the composition of the major shareholders has remained unchanged. “The company’s financial results over the first six months of 2004 were the main factor in the price of RBC shares reaching its historic maximum: the revenues totaled $33.7m, having increased by 86 percent,” Yury Rovensky declared.

New maximums ahead

In the opinion of Artyom Abalov, the chief of the Analytical Department of the Managing Company of the Industrial and Construction Bank, RBC shares are promising securities. “We have kept these shares in our portfolio since the beginning of the year,” he pointed out. “Our interest in these shares is related to the launching of a new TV project by the company, whose financial results have surpassed the initial forecasts. We noticed the first signs of a future increase as long ago as at the end of the first quarter. We used all limits on acquiring these securities during the general summer decline on the stock market. Our target price level for October 1, 2005 is about $3.” The company plans to use the funds that have been obtained for diversifying its business in the sectors it has already developed. The issuer plans to extend its presence in the core business sectors, i.e. the markets of media and information technologies.