IFR (International Financing Review) RUSSIA
Issue 1427, March 28, 2002

RosBusiness Consulting, Russia's leading media and IT company, is planning an US$10m-US$12m domestic IPO in April. Bankers believe that, if the right local share price is achieved, the deal will be a stepping stone to a level 3 ADR issue which could rake in a great deal more money. Aton Capital, a local broker and investment bank, is lead manager.

The deal is the first time ever that a Russian company has raised capital on local equity markets. Next month, following a two week bookbuild, RosBusiness Consulting will offer 16% of its shares simultaneously on the Russian stock exchanges RTS and MICEX.

"I hope that the company here in Russia will be as successful with its IPO as the public offering we saw recently with Wimm-Bill-Dann in New York," said Ivan Tirishkin, president of RTS. The US$207m Wimm-Bill-Dann international IPO and New York listing, led by ING Barings, was a landmark deal for Russia, and has traded up impressively since.

RosBusiness Consulting is too small to launch an international share offering at this stage. But the company's growth has been impressive. In 2001, it reported net profit of US$6.3m, up from US$2.6m the previous year, on revenues that rose from US$8.8m to US$16.9m.

Nonetheless, there are significant advantages in going onto the local markets, as it enables the company to gain access to Russian pension funds and institutions. These make up 50% of turnover in Russian stocks, according to brokers close to the deal.

The local interest is likely to be strong given RosBusiness Consulting's profile. It is a well diversified company. In total, 60% of its revenue derives from media, and Internet content provision for the Internet. The remaining 40% derives from IT services, where the company is a direct competitor of IBS. Later this year, IBS itself plans a level 3 ADR, with UBS Warburg as bookrunner.