Financial Russia (Moscow), 11 April, 2002 г.

We did it! The Russian stock market starts fulfilling its main duty - to create the opportunity for companies to attract capital by placing their own shares on the stock market. Those companies, whose shares are already on the market, pay little attention to the market, and most major Russian corporations still don't see the point of increasing their capitalization. And of course, only a few of businessmen considered the stock market a mechanism for attracting investments. But there are exceptions. In particular, one Russian food producer Wimm-Bill-Dann has issued its shares recently. But it did not do it in Russia, but on the New York stock exchange. Until recently, it was considered unpromising to place shares on Russian trading floors. So, here is the first robin. At the beginning of last week, RosBusinessConsulting (RBC) arranged a presentation of the first IPO (Initial Pubic Offering) in Russia. The company will issue 16 million common stocks at a par value of 0.001 rubles, which makes 16% of its authorized capital. The offering price will be fixed according to the results of the bookbuilding period that has started on April 5 and will last two weeks. The pricing was scheduled for April 16 and on April 18, the shares will be listed simultaneously on the MICEX and RTS stock exchanges. At the end of April or the beginning of May, RBC's shares will be traded on the two stock exchanges. The underwriter of the IPO - the Aton investment company, estimated RBC's net worth as equal to $82m. Taking this into consideration, it can be assumed that RBC is planning to attract $12-13m that will be spent on the expansion of its media and IT businesses. In addition, it was declared that RBC would be expanding its business through acquisition of its competitors. Taking into consideration RBC's financial data (2002 net profit is expected to amount to $9m and revenues - $26m), 82m-dollar predictions seem a little overestimated. However, the issuer is convincing investors that it will manage to increase its revenues and profit by many times over the next several years. The main attention will be paid to the development of the IT business, that deals with programming and system integration. Putting accents in the following way, RBC is trying to deny its image as an Internet company, as it is considered by the majority of people. The above mentioned net worth of RosBusinessConsulting is comparable with that of several regional energy and telecommunication companies that possess of significant financial assets (according to RBC's balance drawn at the end of 2001, its fixed assets were equal to only $2.1m). This also makes investors feel concerned about that, since they are used to dealing with oil giants, electricity-generating stations, steel factories and other real assets in Russia. In general, it seems very interesting to invest in RBC's shares, but very risky as well. Most of the risks deal with low liquidity and possible overestimation of the perspectives of IT development in Russia, especially in view of unconvincing tendencies in the world economy. Nevertheless, I have no doubts about the success of the IPO. In general, it is the only opportunity to diversify Russia's portfolio with hi-tech shares. I believe that RBC's IPO will be the first step to the situation when international investors won't be considering Russia and the Russian stock market as only in the raw material segment of the world economy.

Kirill Tremasov,
leading analyst of the MDM-bank's investment department