The Moscow Times, November 27, 2001

Drumming up support on an investor roadshow, RosBusinessConsulting is taking steps to become the country's first Internet company to go public, with plans to tap Russian equity markets early next year.

RBC, which operates an eponymous news web site, will issue additional shares, and 10 percent to 15 percent will be offered on the Russian Trading System and Moscow Interbank Currency Exchange by the end of the first quarter of 2002. Company management will retain a controlling stake.

In a run-up to the issue, the company is planning a private placement of convertible bonds. Its roadshow started in Geneva on Monday.

RBC general director Yury Rovensky said the planned volume of the bond issue could not be publicized until next week but that the placement was partly necessary to acquire "small IT companies" now.

The jury was still out on how attractive RBC will be to investors in Russia. Though many are looking to diversify from oil, gas or metals into non-traditional sectors, they might not go for such a small company.

"Generally, investors would love to invest in a tech company, but it's just too small," said Alexander Andreyev, analyst at Brunswick UBS Warburg.

"The question is really not about the business, the industry, it's a question of size."

While some industry players painted the move as brave and said they were likely to watch the initial public offering closely, there were few indications that they would soon follow in RBC's footsteps.

Olga Uskova, executive director of Cognitive Technologies, said the market won't be ready for Russian high-tech companies for another three to four years. By that time, she said, the domestic economy will be more prepared and Russian IT will be better marketed as an industry.

"But it's good retail marketing for them," she said of RBC's move.

Management-owned RBC, founded in 1992 to distribute financial and economic information and still viewed by many as chiefly a news agency, has more recently shifted to IT as well, including consulting and programming.

Like others hesitant to dub RBC solely an IT company, Arkady Volozh, general director of the Yandex Internet portal, said he would keep tabs on RBC's performance, even if it wasn't an exact model for other Russian IT companies.

"I think it will be very educative for everybody," he said.

"In general, this move is in the right direction. The market should have more than energy companies on it."

RBC's annual turnover was $8 million in 2000 and is expected to hover just above $16 million this year, split almost evenly between media and IT, Rovensky said.

While some analysts did not venture to guess the company's current market capitalization, others estimated it to be from $10 million to $20 million, with a possible rise to $30 million to $40 million in the future.

Rovensky said several factors encouraged the company to push ahead with IPO plans, including its doubling of revenues and the interest it has seen since 1999 from investors wanting to buy all or part of the company.

KPMG is serving as auditor, with Ernst & Young in Moscow as consultant.

By Elizabeth Wolfe, Staff Writer