BUSINESS CLICK ¹09/2002, June3,2002

(May 28) Having launched Russia’s first domestic Initial Public Offering (IPO) on the country’s stock exchanges earlier this month, IT and media company RosBusinessConsulting (RBC) is now preparing to break new ground again by using the proceeds to open the first financial news television channel in Russia. Established in 1993 to provide IT and media services, RBC now has nearly 600 employees and 20,000 clients. The company produces financial, business and general news on its various sites, which number over a dozen, and provides IT research and development services. It also claims to be the leader of Russia’s fledgling online advertising market, with 1,000 clients annually. Now the company says it is relying on growth in Internet penetration, an increase in its business audience and consolidation in the media industry to increase shareholder value. RBC currently has 5,000 subscribers for its business information.

Chief Investment Officer Igor Lanskoy told Russia bc the IPO had been a landmark event for the Russian equities markets. The company sold 16 million ordinary shares on the Russian Trading System (RTS) and Moscow Interbank Currency Exchange (MICEX).

“We decided to do the IPO simultaneously on the RTS and MICEX, as they both have specific audiences,” he said. “The decision to carry out the IPO was made at the end of 2000. We thought it would be a good signal for our clients and partners to show that the market had developed and also that it would be a great plus if we could transform into the first fully transparent company on the market. It is an important signal for the market that capital can be raised here in Russia.”

He highlighted corporate governance and transparency as two areas where RBC leads the way © 2002 baltic consult NEWS among Russian companies. “We had to be very careful with all our decisions, because there were no previous examples of IPOs in Russia. We are taking more steps to be transparent and have 4 foreign independent directors on our board.”

RBC’s market capitalisation is now around USD 100 million, up from its USD 83 million worth on the day of the IPO. With revenues of USD 17 million in 2001, the company is predicting the figure will rise to at least USD 27 million this year.

A 30 percent chunk of the proceeds from the IPO, said Lanskoy, worth between USD 3-5 million, would be set aside to launch Russia’s first financial news channel. “The channel will be along the same lines as Bloomberg or CNBC and developed by the first half of 2003,” he said. “It will be broadcast on cable and satellite and we’re already negotiating with (cable channels) NTV and Cosmos. It will be a free channel, without subscription, so the income will come from advertising. We think the main audience will be in Moscow and St Petersburg, and it should be profitable in 3-5 years. It will broadcast 18 hours a day, 7 days a week.”

With industry experts predicting the Russian online ad market is due to grow 80 percent this year, RBC says it is now well placed to exploit new opportunities in the sector.

“Here we’re seeing growth in the IT sector and the figures are positive,” said Lanskoy. “We are now growing quite fast, and take on 20 new staff each month. Of the 20 around 10 remain after 3 months’ evaluation.” Aton bokerage, which acted as lead manager in the IPO, said RBC could expect several years of strong, possibly triple digit growth. “RBC is a unique business in terms of growth and risk,” it said in a report on the IPO. “All the business segments in which the company is active are new in Russia. In addition, synergies generated by its two distinct businesses – media and IT – enhance the company’s potential substantially. No truly comparable companies exist on either the domestic or international markets.”

However, with its stock valuation at around USD 100 million, analysts say RBC still has one of the smallest market capitalisations of any listed Russian company.