Vedomosti, April 17, 2002

The first IPO in Russia will begin at the Moscow Inter-Bank Currency Exchange and the RTS stock exchange tomorrow. The RBC Information Systems Joint-Stock Company will offer its shares to investors at $0.83 per share. Today is the last day when the ATON investment company, which is the underwriter for the placement, takes orders. Nonetheless, it has already remarked on the high demand for the RBC shares. At the same time, analysts of other investment banks have been warning about high liquidity risks for these shares.

Yesterday ATON set the price of $0.83 at which shares in the RBC Information Systems would be placed. Therefore, after selling 16m shares, making up 16% of the authorized capital, during the initial placement, RBC will attract $13.3m, and the company's capitalization will reach $83m. The remaining 84% of the shares belong to six individuals; three of them, German Kaplun, Alexander Morgulchik and Dmitri Belik own 26.23% of the shares each.

Before the IPO, ATON analysts estimated RBC's value at $82m, which is equal to $0.82 per share. As ATON President Yevgeny Yuryev told Vedomosti, orders from investors were taken within the range of $0.75-$0.95, and the demand exceeded the supply by several times. According to Yuryev, orders from Western investors currently make up about 35% of the total amount, and the remaining 65% are divided between 145 Russian investors.

In the opinion of Alexei Yakovitsky, an analyst of the United Financial Group, fundamentally, RBC looks rather attractive, being highly profitable in contrast to many similar Western companies. The main risk of purchasing shares in RBC deals with liquidity: there will be very few shares available after the IPO, Yakovitsky pointed out. "No global Western fund would buy these shares," the analyst believes. "Such non-liquid shares are bought not by large funds, but by small Western investors," Tom Adshead, an analyst of Troika Dialog, agreed. He did not rule out the possibility that after the initial placement, "the shares will be hard to find in the market," and, accordingly, their price might grow substantially. At the same time, prices may drastically fall, following a relatively small one-time sale. "The shares will be very volatile," Yakovitsky believes. "Even in the event that all [placed] shares in RBC will be freely floating on the market, this amount is extremely small to guarantee sufficient liquidity. Therefore, before further IPOs are conducted, RBC shares will be regarded as second-tier shares," MDM-Bank's analysts wrote in their report. Yuryev says that RBC's capitalization is so far insufficient for shareholders in the company to sell their shares. Nonetheless, he promises to support the liquidity on the secondary market, although ATON has no obligations in that respect. "As an underwriter, we are interested in RBC shares' liquidity and will facilitate it," Yuryev pointed out.

What is RBC?

The RBC Information Systems holding company owns 100% of the shares in the RosBusinessConsulting closed corporation, RBC Holding, RBC SOFT, RBC Centr and the RosBusinessConsulting publishing house. Business operations are in fact conducted by these subsidiaries: mass media bring 48.1% of the revenues, and programming and system integration give 49.4%. The best known project of RBC is a business newsline, displayed on the Internet. Revenues to RBC reached $16.1 million in 2001, and the net profit amounted to $6.3m (the profitability rate was 39%), EBITDA was $7.7m (the profitability rate was 48%).

Nikolai Mazurin