The Moscow Times
March 29, 2002

RosBusinessConsulting hopes to give Russian markets two firsts at the same time.

Gearing up as the country's first Internet media initial public offering, RBC plans to be the first company to go public on the Russian Trading System and the Moscow Interbank Currency Exchange, Aton Capital, the lead manager for the deal, said Thursday.

The shares of most companies listed domestically were distributed during privatization through auctions and other mechanisms. Several high-profile companies, such as Wimm-Bill-Dann, went public on foreign exchanges.

RBC, whose primary businesses are online financial news and information technology services, plans to float a 16 percent stake in April, RBC president German Kaplun said by telephone Thursday. The initial target valuation for the entire company is $82 million, according to Aton.

RBC decided to issue locally because of the company's size and market.

"A domestic company should enter the national market first. The brand is better known in Russia, so the liquidity should be higher," Kaplun said. "We expect interest not only from professional market participants, but from private individuals as well."

Defying the Internet bubble stereotype, RBC had revenues of $17 million under international accounting standards in 2001 and forecast revenues of $26 million in 2002. The company's net profit margin was 37 percent in 2001, and its cash flows are positive. According to the company, it holds about 25 percent to 30 percent of the Internet news market.

RBC's prospectus was registered with the Federal Securities Commission on Wednesday evening. The company is planning a two-week book-building period, with road shows in Moscow, Geneva and New York. In the runup to the IPO, RBC issued $4.5 million of convertible bonds in November 2001. The debt will be retired during 2002.

The company is 100 percent owned by management through a Russian-registered holding company. In an uncommon display of corporate governance principles, RBC has four independent members on its 10-member board of directors, as well as audit and compensation committees.

Although the IPO is small compared to Wimm-Bill-Dann's $207 million offering on the New York Stock Exchange in February, it shows that the local markets are maturing and is a good sign for medium-sized companies looking to raise financing at home, analysts said.

"Companies are finding Russian markets to be a reasonable place to raise capital," said Neil Greer, director of international sales at Aton. "We believe the RTS and MICEX are excellent venues for medium-sized companies to raise money."

Ten years after opening their floors, RTS and MICEX have yet to see any IPOs. But the time is right to tap the local market, analysts said, following two years of outstanding market and general economic growth domestically.

"There is a huge appetite right now for Russian stocks," said Peter Boone of Brunswick UBS Warburg. "It's a start and a very good sign. If it's a success, there'll be many other companies that would think about doing it, too."