russia’s ipo pioneers - fertikola · 2007. 10. 9. · rambler media novatek urals energy...

R U S S I A ’ S I P O P I O N E E R S

Table of Contents

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Introduction

Initial Public Offerings

Vimpelcom

Golden Telecom

Mobile TeleSystems

Wimm-Bill-Dann

RBC Information Systems

Pharmacy Chain 36.6

Irkut

Kalina

Mechel

Seventh Continent

Open Investments

Sistema

Lebedyansky

Khleb Altaya (Pava)

Severstal-auto

Pyaterochka

Evraz Group

Rambler Media

Novatek

Urals Energy

Amtel-Vredestein

IMS Group

Novolipetsk (NLMK)

Stock Exchanges

LSE

NASDAQ

NYSE

MICEX

RTS

About the PBN Company

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The PBN Company

Introduction

From VimpelCom to NLMK —From Gas to Grain

The PBN Company's Guide to Russia's IPO PioneersWho would have thought only two years ago thatwe would see so many Russian companies fea-tured so prominently in the global capital mar-kets? Who would have thought that Sistema andEvrazHolding would become household namesin international investment circles? EvenPyaterochka, if only people could pronounce it.

A look at the figures shows just how dramaticallyRussian equity issues have grown in the last two years— a period in which investors have been inundatedwith initial public offerings coming out of Russia.

Market conditions were clearly right. With developedequity markets generally in decline, investors becamewilling to look further afield for attractive returns. Withthe Russian economy growing rapidly, politics stabil-ising, and more companies embracing higher stan-dards of transparency and corporate governance,Russia seemed like a good bet. Looking at thereturns that the majority of the Russia andEastern Europe-dedicated funds have boasted inthe past two years, it becomes even clearer justwhy investor demand for new Russian issues hasbeen so strong, and why in turn so many compa-nies from the region have decided to go public.

While raising capital was certainly one of the fac-tors driving Russian IPOs, in many cases the needto raise equity finance was secondary. The statusand profile which comes with a public listing (par-ticularly on the international exchanges) influencedsome companies to list. And there is also the ideathat attracting foreign investors gives Russian com-panies a degree of political protection at home.

A key driver for rising investor demand has beena notable desire on the part of investors to diver-sify their Russia holdings away from politicallyrisky resource stocks and into more dynamic,rapidly growing consumer companies. It was thisvoracious appetite for new, liquid stocks offeringexposure to Russian growth which made theSistema IPO such a resounding success, andwhich paved the way for numerous other con-sumer-oriented companies — from automotive tointernet to food & beverage — to make their cap-ital markets debuts in 2004-2005.

Many of the consumer companies which fol-lowed Sistema also found strong investordemand. Although not all achieved the high mul-tiples initially projected. A number of investorsconsidered some of the Russian IPOs to bepriced too aggressively.

While diversification and exposure to consumergrowth describe much of the recent investorinterest in Russian equities, it has not all been

Growing Russian Issues

about the consumer story. Lest we forget,resource companies still have the heaviestweighting in the indexes, and many domestic andforeign portfolio investors are still willing to investin the enticing if less predictable “strategic sec-tors.” Novatek's recent London IPO at the end of2005, which was 12 times oversubscribed, bearswitness to this.

And there is plenty more appetite left for some ofthe more attractive natural resource companies.Not least for Gazprom, as the lifting of the ringfence appears at long last to be imminent.

The 2004-2005 period was, by and large, astorming success for Russian issuers. But howlong can this last? How long will investors beready to pay rich multiples for new Russianissues?

Looking ForwardThe trends we have seen in the past year will contin-ue in 2006. Some analysts predict another $10 bil-lion in new issues by the end of 2006.

The total volume of the new issues is difficult topredict, but clearly there are dozens moreRussian IPOs in the pipeline.

It is likely that we will see IPOs from new sectorssuch as banking, meat processing and pipelinemanufacturing. And if investors feel there are notenough steel companies to choose from, theselection should widen in the very near future.With more retail, more telecoms, more technolo-gy on the way as well, investors might be spoiledfor choice.

And the choice will not be limited to Russiancompanies. The overwhelming success ofKazakhstan's Kazakhmys looks set to be fol-lowed by further international listings ofKazakh industrial companies. And there are ahandful of Ukrainian companies waiting in thewings.

At least until a market correction occurs, or the2008 Russian presidential elections come centrestage, investors should brace themselves. TheRussian IPO frenzy is set to continue well into thenew year.


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Russian Equities by Sector

Post-IPO Price Performance

Source: Bloomberg

Source: Deutsche UFG, MSCI

The purpose of this review of Russian IPOs todate was to examine the first wave of Russiancompanies to go public. Which companieswere most successful? Which companiesmissed their price targets? How have investorpreferences and demand evolved over thedecade since VimpelCom floated its shares onthe NYSE? And how might this evolution con-tinue in 2006? Perhaps most importantly, thisreport will enable future Russian issuers to learn

from their predecessors — Russia's IPO pio-neers — as they plan their approach to the cap-ital markets.

20 December 2005

The PBN CompanyPeter B. NecarsulmerChairman & CEO

The PBN Company

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Tom BlackwellVice President

Selected Announced IPO Initiatives

№ Company Industry Date Expected Issue Size, $ million

1. Arbat Prestige Consumer 2006 502. EFKO Consumer 2006 603. Kopeika Consumer 2006 1504. OST Group Consumer 2006 705. Planet Management Consumer 2006 806. Rusagro Consumer 2006 507. Tander (Magnit) Consumer 2006 3008. Energomash Engineering 2006 1309. MDM Bank Finance 2006 25010. Vneshtorgbank Finance 2006 40011. Acron Industrials 2006 10012. Ilim Pulp Industrials 2006 35013. IBS IT / Media 2006 15014. STS IT / Media 2006 30015. Inprom Metals & Mining 2006 7016. MMK Metals & Mining 2006 50017. Rusal Metals & Mining 2006 60018. SUAL Metals & Mining 2006 40019. SUEK Metals & Mining 2006 20020. TMK Metals & Mining 2006 25021. VSMPO-AVISMA Metals & Mining 2006 25022. Rosneft Oil & Gas 2006 150023. Megafon Telecoms 2006 50024. Ruspromavto Transport 2006 20025. SMARTS Telecoms 2006 8026. Evroset Consumer 2007 100


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27. Nevskaya Cosmetics Consumer 2007 5028. Nidan Foods Consumer 2007 10029. Perekryostok Consumer 2007 18030. Razgulay-Ukkros Consumer 2007 5031. Rosinter Consumer 2007 8032. Russian Textile Consumer 2007 5033. Rosno Finance 2007 10034. Zenit Bank Finance 2007 10035. Evrokhim Industrials 2007 10036. Irkutskkabel Industrials 2007 5037. Sibur Industrials 2007 25038. Verysell IT / Media 2007 7039. Belon Metals & Mining 2007 8040. Magnesit Plant Metals & Mining 2007 5041. OMK Metals & Mining 2007 20042. Serveralmaz Metals & Mining 2007 15043. Protek Pharmaceuticals 2007 10044. SIA International Pharmaceuticals 2007 10045. Russian Railways Transport 2007 70046. Sibir Airlines Transport 2007 8047. Russian Product Consumer 2008 5048. Unimilk Consumer 2008 5049. TVEL Engineering 2008 15050. Probiznesbank Finance 2008 5051. Rosbank Finance 2008 15052. Agromashholding Industrials 2008 70

Source: Renaissance Capital

INITIAL PUBLIC OFFERINGS


VimpelCom

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IPO profileVimpelCom's listing on the NYSE in November1996 was Russia's first ever IPO in any form. Thecompany floated at the top of the announcedprice range, which was increased in response tostrong demand from $15.75-$18.75 to $19.50-$20.50 the day before the IPO. The stock wasone of the most actively traded and its price roseby 40% on the first day. Opening at $20.50, the

VimpelCom ADSs closed at $29. By the end of1996 the stock was up 50% from its offer price.The structure of the offer comprised 3.9 millionADSs offered to investors in the U.S. andCanada, while 1.5 million ADSs were offeredoverseas.

"Everyone knows that the cellular business isthe most dynamic, so the combination ofRussia and telecommunications just hypno-tized investors," said Valery Antonov, atelecommunications analyst with CreditanstaltGrant.

The success of VimpelCom's IPO depended onthe results of Russian president Boris Yeltsin'scardiac surgery, which was carried out duringthe road show. “Nobody would buy Russiansecurities in a situation of complete uncertaintyof the country's further political line,” saidVimpelCom's head of IR Valery Goldin in aninterview with Finance magazine.

Key DataDate of IPO November 15, 1996Stock exchange NYSEUnderwriters

Lead managers Donaldson, Lufkin & JenretteCo-managers Renaissance Capital

Form of the offer ADS (each representing three quarters of one share)Number of securities offered 5,400,000Percentage of share

capital offered 17.6%Price range $19.50-20.50Offer price $20.50Total capital raised $110.8 million

“A piece of the new Russia goes on sale today on theNew York Stock Exchange. Russia's leading cellular

telephone company, Vimpel-Communications A.O., is setfor a roughly $90 million initial public offering as the first

Russian company to be listed on the Big Board.VimpelCom, as the company is known, is also a case

study of leveraging political connections into cash in theWild West business atmosphere of today's Russia.”

— The New York Times, November 15, 1996

Source: company info

VimpelCom

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The PBN Company

Company profileVimpelCom is a leading provider of wirelesstelecommunications services in Russia, operat-ing under the 'Beeline' brand, which is one of themost recognized brand names in the country.The VimpelCom Group's license portfolio coversapproximately 94% of Russia's population (136million people). VimpelCom also operates inKazakhstan through its subsidiary, KaR-Tel,

which was acquired in 2004. VimpelCom wasthe fastest growing wireless operator in Russia in2004. The company's subscriber baseincreased from 11.44 million in 2003 to over25.72 million by the end of 2004. The company'smajor shareholders are Norway's leadingtelecommunications provider, Telenor, andRussian financial and industrial conglomerate,Alfa Group.

Stock Performance (NYSE: VIP)Offer price Opening price 1st day 1st week 1st month Current (15/11/96) (15/11/96) close close close (01/12/05)

$ 20.50 — 29.1 29.7 27.0 45.95change — — +41.4% +44.8% +31.7% +124.1%

Market Сapitalization, $ millionPre IPO (estimated) At IPO (15/11/96) Current (01/12/05)450 630 9,298

ValuationsAt IPO (15/11/96) 2005E 2006E

VimpelCom, P/E 231 12.04 9.01

Financials2003 2004

Revenues, $ million 1,335 2,146Net income, $ million 228 350

IR contactsName Valery P. GoldinPosition Vice President, International

and Investor RelationsPhone +7 495 974-5888Address 10, 8 Marta Street,

Moscow, 127083, RussiaEmail [email protected] Web http://www.vimpelcom.ru

Source: Bloomberg

Source: company info, open sources

Source: Factiva, Renaissance Capital Estimates


1 Based on 1995 earnings


Golden Telecom

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IPO profileGolden Telecom was the first Russia-based com-pany since the economic crisis of 1998 to raisecapital through an IPO and the only Russian com-pany to date to list on NASDAQ. GT raised a total ofapproximately $144 million through a combinationof ordinary stock sales amounting to $55.8 million,strategic investor subscriptions for $30 million, and

sales of $50 million in shares to GTS, the parentcompany of Golden Telecom. The issue under-writer exercised an over-allotment option andraised an additional $7.8 million. Among institution-al investors who bought in GT were Baring AssetManagement, Soros Fund Management LLC andthe EBRD. GT floated amid plummeting Russiantelecoms stocks, ruble depreciation and a fallingRTS index. The shares were priced at $12, wellbelow the $16-$18.50 indicative range, anddropped about 30% lower on the first day of trad-ing. Although the next day the stock rose 24% to$10.60. The IPO proceeds were used for the devel-opment of network infrastructure and expansioninto Russia's regions. Analysts suggested that theoffering was a result of Global TeleSystems' interestin spinning off its subsidiary because its WesternEuropean business was not performing well, aspeople associated GTS with its Russian operations.

“The purpose of doing the IPO was in getting the shares tradedpublicly, putting a strategic structure around our Russian assets... It'sa risk-reward situation. People that want to take the risk of invest-

ing in Russia are doing that directly through this investment. Wewere not selling the company, we were bringing a different face on it

with new shareholders that were dedicated to that part of the world.”

— Brian Thompson, Chairman and Chief Executive, Global TeleSystems Group Inc.Bloomberg, October 10, 1999

Key DataDate of IPO September 30, 1999Stock exchange NASDAQUnderwriters

Lead managers Deutsche BankCo-managers Bear, Stearns & Co. Inc., ING Barings

Form of the offer Ordinary shares Number of shares offered 4.65 million

By the company 4.65 millionBy existing holders 0

Number of securities subject to the over-allotment option 0.697 million

Number of securities subject to strategic investor subscriptions 2.5 million

Number of securities purchased by GTS 4.17 millionPercentage of the share

capital offered 35%Price range $16 – $18.50Offer price $12Total capital raised $144.2 millionUse of proceeds Acquisitions and business development, development

of network infrastructure, and regional expansion.Source: company info

Golden Telecom

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Company profileGolden Telecom is a leading facilities-basedprovider of integrated telecommunications andInternet services in major cities throughout Russiaand the CIS. Golden Telecom was incorporated inDelaware as a subsidiary of Global TeleSystemsGroup, a U.S.-based company backed by billion-aire George Soros. The Golden Telecom group ofcompanies provides the majority of its services inRussia through its wholly owned Moscow-basedsubsidiary LLC EDN Sovintel.

In 2005 Golden Telecom announced plans torefocus from consumer dial-up Internet services

to Wi-Fi for businesses. The company is alsopreparing to offer long distance services after theliberalization of the long distance market. InSeptember 2005, the company received longdistance and international licenses for Ukraine.

Current shareholders of Golden Telecom repre-sent a balanced mixture of strategic and finan-cial, as well as Russian and internationalinvestors. The main shareholders are AlfaTelecom (30%), Telenor (20%), Rostelecom(11%) and EBRD (8%).

Stock Performance (NASDAQ: GLDN)

NASDAQ: Offer price Opening price 1st day 1st week 1st month Current GLDN (30/09/99) close close close (01/12/05)$ 12 8.56 10.62 10.18 9.12 26.93change — -28.6% –11.5% –15.2% –24% +124.4%

Market Сapitalization, $ millionPre IPO (estimated) At IPO (30/09/99) Current (01/12/05)550 411 986.9

Valuations2004E 2005E 2006E

Golden Telecom, P/E 13.75 14.61 19.47

IR contactsName Anna Chin Go Pin Position Corporate Relations and PR DirectorPhone +7 495 797 9300Address 12, Krasnokazarmennaya st.,

Moscow, RussiaEmail [email protected] Web www.goldentelecom.ru

Source: Factiva


Source: Renaissance Capital estimates

Financials2003 2004

Revenues, $ million 360.5 584Net income, $ million 55.4 64.8



Mobile TeleSystems

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IPO profileMTS decided to go public in 1997, inspired by theperformance of the shares of its rival VimpelCom,which floated on the NYSE in 1996. However, theRussian stock market dropped sharply followingthe August 1998 financial crisis, and MTS's IPOwas postponed until 2000. The offer was five tosix times oversubscribed, raising $305 million,which increased to $371 million after the under-writers exercised an over-allotment option. Thestock was placed in the middle of the projectedprice range and opened at a 14 percent premiumto the offer price. The substantial interest in thecompany likely came from emerging marketsfunds, hedge funds and technology and wirelessfunds. At present, the Company's ADRs are alsotraded on the London Stock Exchange, FrankfurtStock Exchange, Berlin Stock Exchange andMunich Stock Exchange.

Key DataDate of IPO June 30, 2000Stock exchange NYSEUnderwriters

Lead managers Deutsche Bank AG London, ING Barings LtdCo-managers J.P. Morgan

Form of the offer ADS (each representing 20 common shares)Number of shares offered 15 million

By the company 15 millionBy existing holders 0

Number of shares subject to the over-allotment option 2.25 million

Percentage of the sharecapital offered 15.4%

Price range $19–25Offer price $21.5Total capital raised $353 millionUse of proceeds Improvement of service base in Moscow, investment in new

technology and expansion within Russia.

“The IPO was very helpful for MTS. The proceedswere invested in network development and have created abasis for future success. Without that money the compa-

ny would not be worth nearly $12 billion now.”

— Alexey Buyanov, First Vice President of Sistemain an interview with Finance, 2004


Mobile TeleSystems


The PBN Company

Company profileMTS is Russia's leading provider of GSM-based mobile cellular communications servic-es. The company was formed in 1993 after themerger of four Russian telecommunicationsorganizations. Together with its subsidiaries,MTS provides its services to over 44.1 millioncustomers in a service area covering 87 out of89 regions in Russia. MTS's largest sharehold-ers include Sistema, the largest private sector

consumer services company in Russia and theCIS, and T-Mobile, a wholly owned subsidiaryof Deutsche Telekom.

Standard & Poor's recognized MTS as themost transparent Russian company in 2005.

Stock Performance (NYSE: MBT)Offer price Opening price 1st day 1st week 1st month Current (30/06/00) close close close (01/12/05)

$ 21.5 24.5 22.38 21.64 21.24 35.81change — +13.9% +4% +1% -1% +66.6%

Market Сapitalization, $ millionPre IPO (estimated) At IPO (30/06/00) Current (01/12/05)2,000 2,100 14,141


MTS, P/E 23.31 10.2 8.96

Financials2003 2004


IR contactsName Andrei TerebeninPosition Vice-president of communicationsPhone 7 495 911 6553Address 5/1, Vorontsovskaya st.,

109147, Moscow, RussiaEmail [email protected] Web www.mts.ru

Source: open sources




1 Based on the 2000 earnings


Wimm-Bill-Dann

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IPO profileWBD's IPO was awarded Best European EquityDeal of 2002 by EuroWeek and InstitutionalInvestor magazines. Investors striving to gainexposure to the first ever offering of a Russianconsumer goods company were not frightened bythe information disclosed in the IPO prospectusabout the criminal past of the company's biggestshareholder, Gavriil Yushvaev, and about theinvolvement of other shareholders and directorswith Trinity Holding, which Russian media have

linked to organized crime. The issue, which placedin the middle of the announced price range, wasfive times oversubscribed. The stock price rose15.8% on the first day of trading in light of the newsthat Danone SA bought 4% of WBD through theIPO. Among other investors who bought in WBDwere large international investment funds andinvestment banks. The substantial interest fromU.S. investors in WBD's IPO was partly due to thefact that Templeton Strategic Emerging MarketsFund bought about 1.48% in the company earlierin 2002.

“We are the first Russian consumer goods compa-ny to list on the NYSE. In addition to raising capitalto help fund our development, this IPO willenhance our transparency and demonstrate ourcommitment to becoming an international player,”said David Iakobashvili, Chairman of the Board1.

“This is a landmark IPO. It's the first major listing of afast- growing consumer staples company in Russia."

— Peter Grace, Analyst, Gartmore Investment,Bloomberg, February 8, 2002

Key DataDate of IPO February 8, 2002Stock exchange NYSEUnderwriters

Lead managers ING BaringsCo-managers Alfa Bank, Troika Dialog

Form of the offer ADS (each ADS represents a share)Number of shares offered 10,620,001

By the company 7,480,000By existing holders 3,140,001

Number of securities subject to the over-allotment option 1,593,000


Price range $18.50-21.50Offer price $19.50Total capital raised $207 millionUse of proceeds Capital expenditures, including the purchase of dairy and juice

equipment and acquisitions of additional plants; debt restructuring.


1 Source: WBD's press-release, February 8, 2002.

Wimm-Bill-Dann


The PBN Company

Company profileWBD is Russia's largest food company with a37% share of the dairy food market and 27% ofthe juice market in terms of volume.Established in 1992, WBD has grown from aleased production line at the LianozovskyDairy Plant to a publicly listed food conglomer-ate, employing more than 18,000 people.Currently, WBD has 25 manufacturing facilitiesin Russia and the CIS, as well as distributioncenters in 26 cities in Russia and abroad. Thecompany has an extensive and well-balanced

portfolio of brands, including the most wellknown juice brand in Russia — J7. In 2005,WBD faced stagnating juice sales due toincreasing competition in the industry and alack of success in the company's marketingefforts. The largest shareholder in the compa-ny is Gavriil Yushvaev with an 18.8% stake.Groupe Danone holds 8.32% in the form ofADS. Morgan Stanley Investment Managementcontrols 6.3% of WBD. Other principal share-holders are the company's members of theboard.

Stock Performance (NYSE: WBD)Offer price Opening price 1st day 1st week 1st month Current (08/02/02) (08/02/02) close close close (01/12/05)

$ 19.5 22.0 22.6 21.45 23.34 19.75change — +12.8% +15.8% +10% +19.6% +1.3%

Market Сapitalization, $ millionPre IPO (estimated) At IPO (08/02/02) Current (01/12/05)814 - 946 828.4 862.4


WBD, P/E 262 25.94 20.04

Financials2002 2003 2004

Revenues, $ million 824.7 938.5 1,189Net income, $ million 35.7 21.1 22.9

IR contactsName Marina KaganPosition Head of IRPhone +7 495 105 5805Address Solyanka ul. 13, building 2,

Moscow, Russia, 109028Email [email protected] Web www.wbd.ru

Source: Factiva, NYSE

Source: company info, Renaissance Capital estimates

Source: Factiva, Renaissance Capital estimates





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IPO profileRBC made history with the first ever domesticIPO in April 2002. According to preliminary bid-ders applications, the issue was five times over-subscribed. The IPO enabled RBC to raise$13.28 million. Russian and foreign institutionaland corporate investors, includingProbusinessbank, Petrokommerz bank, Yamalfund, regional EBRD funds and the NationalInsurance Group, were among the investors.RBC placed 10.5 million shares on MICEX, andthe remaining 5.5 million on RTS. The stock was

offered near the top of the target price range,valuing the company at $83 million, which someanalysts considered overvalued given that RBC'ssales in 2001 were less than $20 million. Somemarket observers said that the entire offering wassimply a good PR campaign.

“Obviously the underwriters overvalued the com-pany. Additionally, the RBC free float is quitesmall. However, if market players are ready to paysuch a price for RBC stock, it means that thecompany and its underwriters did a good job withthe IPO and proves that the interest in non-extrac-tive sectors is very strong,” said Denis Rodionovof Brunswick UBS1. The offer comprised a publicoffering of ordinary shares in Russia and a privateplacement of pre-IPO convertible bonds inGermany, Sweden, Switzerland and the UK. InJune 2004, RBC placed 15 million new shares at$1.90 per share.

Key DataDate of IPO April 18, 2002Stock exchange RTS, MICEXUnderwriters

Lead managers Aton CapitalCo-managers Alfa Bank

Form of the offer Ordinary shares Number of shares offered 16 million

By the company 16 millionBy existing holders 0

Percentage of the sharecapital offered 16%

Price range $0.75-0.85Offer price $0.83Total capital raised $13.28 millionUse of proceeds Development of media and IT business, particularly the launch

of RBC-TV.

"This represents a landmark transaction for the develop-ment of capital markets in Russia. For the first time a

Russian company will raise capital using the domestic mar-ket rather than relying on foreign markets."

— Peter Halloran, Executive Chairman, Aton CapitalEuroWeek, April, 2002


1 Source: Kommersant, April 19, 2002



The PBN Company

Company profileRBC's core business commenced in 1993 withthe establishment of ZAO RosBusiness-Consulting in Moscow, Russia as a domesticfinancial news media business. The company'smain Internet resource www.rbc.ru was one ofthe first Russian Internet media outlets to pro-vide real-time business and financial informa-tion. RBC's media business consists of

Internet-based information media, advertisingand research reports, analytical reviews andconsulting. The IT business includes turnkeysolutions, general programming, system inte-gration, research and development, and ITconsulting. In 2003, RBC launched Russia'sfirst and only business TV channel, RBC TV.The unlisted stake in the company is held by itsmanagement.

Stock Performance (RTS: RBCI)Offer price Opening price 1st day 1st week 1st month Current (18/04/02) (06/05/02) close close close (01/12/05)

$ 0.83 0.94 0.92 0.95 0.77 6.3change — +13% +10.8% +14.4% -7.2% +654.03%

Market Сapitalization, $ millionPre IPO (estimated) At IPO (18/04/02) Current (01/12/05)75-85 83 730.3


RBC, P/E 132 15.09 10.75

Financials2003 2004

Revenues, $ million 46.6 74.1Net income, $ million 3.6 10.8

IR contactsName Natalia MakeevaPosition Investor relations officerPhone +7 495 363 1111Address 78, Profsoyusnaya st., 117393,

Moscow, Russia Email [email protected] Web www.rbcinfosystems.com

Source: RTS






Pharmacy Chain 36.6

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IPO profilePharmacy Chain 36.6 is the only Russian publiccompany in the retail health & beauty market andthe second company to list on a domesticexchange. 36.6 postponed its IPO for a week.According to the company, this was due to unfa-vorable market conditions. Some analysts, how-

ever, suggested that the delay was due to theoverestimated price coupled with investors' con-cerns about the structure of the company'sassets, significant amount of debt, and lack oftransparency (for example, 36.6. did not providefull-year audited financial results). As a result,36.6 sold 20% of its shares at an 18% discountto the bottom of the announced range, andraised $14.4 million, half of the planned amount.The company, however, was happy with theresults of the offering as it raised funds for debtrestructuring and for financing the opening ofnew stores. The stock traded initially at a P/Eratio of 69, more than two times the average ofemerging markets pharmacies — 27.71. 36.6shares were listed on the RTS and MICEX inDecember 2004. In August 2005, 36.6 launcheda GDR program for 20% of its ordinary shares.

Key DataDate of IPO January 29, 2003Stock exchange MICEX, RTSUnderwriters

Lead managers ING Group NVCo-managers MDM-Bank

Form of offer Ordinary sharesNumber of securities offered 1.6 million

By the company 0By existing holders 1.6 million

Number of securities subjectto the over-allotment option 0.4 million

Percentage of sharecapital offered 20%

Price range $11–16Offer price $9Total capital raised $14.4 millionUse of proceeds Debt restructuring, retail chain expansion.

“The IPO strengthened our competitive advantages on thecapital market and within the industry. As a result of

the offering we were able to decrease the cost of borrowingand to get access to new opportunities for growth.”

— Andrey Slivchenko, Director of Corporate Financeand Investor Relations, Pharmacy Chain 36.6

Finance, June 2004


1 Renaissance Capital

Pharmacy Chain 36.6


The PBN Company

Company profilePharmacy Chain 36.6 is a leading pharmaceu-tical and health and beauty retailer in Russia interms of turnover with a chain of 350 pharma-cies in 8 regions. Pharmacy Chain 36.6 wasthe first pharmaceutical retailer to introduce amodern retail format. The chain has the highestsales per store and per square meter of selling

space among domestic pharmacies and thehighest brand awareness among other retail-ers. The company has a production unit,Veropharm, of which it sold 19.99% to TroikaDialog, investing the money it raised into theregional development of its retail chain.Seventy-six percent of the company's stock isheld by management.

Stock Performance (RTS: APTK)Offer price Opening price 1st day 1st week 1st month Current (29/01/03) close close close (01/12/05)

$ 9 N/A N/A N/A N/A 26.5change — N/A N/A N/A N/A +194.47

Market Сapitalization, $ millionPre IPO (estimated) At IPO (29/01/03) Current (01/12/05)88 72 204


36.6, P/E 692 24.2 10.9

Financials2003 2004

Revenues, $ million 147 291Net income, $ million 1.04 0.72

IR contactsName Andrei SlivchenkoPosition Director of Corporate Finance and IRPhone 7 495 792 5207Address 36, Bolshaya Pochtovaya st.,

105082, Moscow, RussiaEmail [email protected] www.pharmacychain366.com

Source: RTS





IPO profileIrkut Corporation is the only company in theRussian defense sector to have listed itsshares on the stock exchange. Despite lossesin 2003, Irkut raised $127 million in what atthat time was the largest flotation on theRussian market. The offer, priced in the middleof the announced price range, was significant-

ly oversubscribed. According to industrysources, the majority of the stock was takenby foreign aircraft building companies. Forty-three percent of the offered share capital wasborrowed by the underwriters from sharehold-ers and 57% was sold by the management.Through such an IPO scheme, Irkut avoided a45-day delay before beginning the trading ofnewly issued shares, which is imposed by theRussian regulatory authorities.Industry analysts were skeptical that some 90%of the company's portfolio consisted of Su-30 jetfighters. In line with announced plans to developnew planes to diversify from Sukhois, Irkut usedIPO proceeds for the acquisition of 75.46% ofthe Yakovlev Design Bureau, which has consid-erable expertise in developing combat (Yak-130)and civil aircraft, as well as for the production ofBe-200 amphibious firefighters. In December2004, Irkut issued level one ADRs, becoming thefirst company in the Russian military-industrialcomplex whose shares are traded abroad.

Key DataDate of IPO March 26, 2004Stock exchange RTS, MICEX

"We have demonstrated that to raise $100 million you don't necessarily have to go to London or New York. You can do



Irkut

20

The PBN Company

© Copyright 2005

IPO profileIrkut Corporation has been the only company inthe Russian defense sector to list its shares onthe stock exchange. Irkut raised $127 million inwhat at that time was the largest flotation on theRussian market. The offer, priced in the middleof announced price range, was significantlyoversubscribed. According to industry sources,the majority of the stock was purchased by pri-vate and institutional investors. Of the 23.3% of

shares placed though the IPO, 10% were initialissued shares and 13.3% were existing sharessold by management. Through such an IPOscheme, Irkut avoided a 45-day delay beforebeginning the trading of newly issued shares,which is imposed by Russian regulatoryrequirements.

Industry analysts were skeptical that some 90%of the company's portfolio at the end of 2003consisted of Su-30 jet fighters. In line withannounced plans to develop new planes todiversify from Sukhois, Irkut used IPO proceedsfor acquisition of 75.46% of Yakovlev DesignBureau, which has considerable expertise indeveloping combat trainer (Yak-130) and civilaircraft, as well as for production of Be_200amphibious firefighters. In December 2004,Irkut issued level one ADRs, becoming the firstcompany in the Russian military-industrial com-plex whose shares are traded abroad.

Key DataDate of IPO March 26, 2004Stock exchange RTS, MICEXUnderwriters CSFB, MDM BankForm of the offer Ordinary sharesNumber of shares offered 205 million

By the company 88 million(new share issue)By existing holders 117 million


Price range $0.54—0.68Offer price $0.62Total capital raised $127 millionUse of proceeds Diversification of production; acquisition of Yakovlev Design Bureau.

"We have demonstrated that to raise $100 million you don't necessarily have to go to London or New York. You can do

it at home. It's a breakthrough that opens the door for other companies."

— Mikhail Leshchenko, Deputy Head of Corporate Financeat MDM Bank, The Moscow Times, March 29, 2004


Irkut


The PBN Company

Company profileIrkut Corporation is a vertically integrated hold-ing dealing with production, R&D, marketingand sales of aircraft. Irkut is a major manufac-turer of the Sukhoi fighter family (30K/Su-30MK), with 10% of Russia's defense exportsand major customers in Southeast Asia andNorth Africa. Irkut is currently increasing itscivil aviation share in total production volume,and it is developing production of Be-200amphibious aircraft, Yak-130 combat trainer

fighter, cargo aircrafts, and civil aircraft com-ponents. Irkut cooperates with EADS on themarketing of amphibious planes and produc-ing aircraft components for A318, it is in talkswith Airbus on production of parts for the A350also. Irkut's order portfolio at the end of 2004was $3.9 billion. The major shareholders in thecompany are its management (44%), SukhoiAviation Holding Company (12%) and theEuropean Aeronautic Defence and SpaceCompany (EADS) (10%).

IPO Stock Performance (RTS: IRKT)IPO offer 1st day 1st week 1st month Current (26/03/04) close close close (01/12/05)

$ 0.62 0.66 0.65 0.62 0.65change -- +6.4% +4.8% 0% +4.8%

Market Сapitalization, $ millionPre IPO (estimated) At IPO (26/03/04) Current (01/12/05)500 522 566


Irkut, P/E 7.6 1 8.74 7.58

Financials2003 2004

Revenues, $ million 522 622Net income, $ million 2 2 68.4

IR contactsName Alexey ChernushkinPosition Head of IR DepartmentPhone +7 495 777 2101Address Bld. 1, 68, Leningradsky prospekt,

Moscow, Russia, 125315Email [email protected] www.irkut.com

Source: RTS

Source: open sources, Renaissance Capital estimates




2 In 2003 Irkut decided to switch from US GAAP to IFRS, which enables the company to treat R&D as investments influencing its profitability indicators. According to

US GAAP, net losses in 2003 were $14.4 million. According to IFRS, net profit in the same period comprised $2 million.


Kalina

22

The PBN Company

© Copyright 2005

IPO profileThe offering of the country's largest cosmeticsproducer, known as the Russian Procter &Gamble, drew huge demand from domestic andforeign investors and was completed in one dayinstead of the three that had been planned.

According to the underwriter, approximately 45 ofthe 70 investors that bought into Kalina were for-eign investment funds. Kalina sold existingshares of the management and EBRD as well asadditionally issued shares at $19 each, whichwas in the middle of the announced price range.Some industry analysts said that the offer was ini-tiated by EBRD in order to exit its investment,although the bank retained a minority interest inthe company of 5.7%. IPO proceeds were usedfor the development of current brands and acqui-sition of new ones, including brands of theGerman cosmetics producer, Dr. Scheller and forthe expansion of the distribution network and theupgrade of production facilities. In late 2004,Kalina launched an ADR level 1 (OTC) programfor 20% of its existing shares.

Key DataDate of IPO April 28, 2004Stock exchange MICEX, RTSUnderwriters

Lead managers Renaissance CapitalCo-managers Troika Dialog, Alfa Bank

Form of the offer Ordinary shares Number of shares offered 2.77 million

By the company 1.38 millionBy existing holders 1.38 million

Number of securities subjectto the over-allotment option Not anticipated

Percentage of the sharecapital offered 33

Price range $18.41-20.46Offer price $19Total capital raised $26 millionUse of proceeds Development of existing brands, acquisitions of new brands;

expansion of distribution chain; modernization of productionfacilities.

“An IPO is a logical move in Kalina's development strategy.We are striving to be an etalon company — public, rapidly

growing.”

— Alexander Petrov, CFO, Kalina Expert, May 10, 2004


Kalina


The PBN Company

Company profileKalina is the leading Russian producer of cos-metics, household and personal care productswith a total market share of 2.8% in value termsin 2004. The company controls 23% of theRussian market for skin care products and13% of the oral care segment. Kalina has astrong portfolio of well-recognized brands,including Black Pearl, Mia and Clear Line

brand names. In 2005, Kalina acquired 58.4%of German cosmetics manufacturer, Dr.Scheller, which will improve Kalina's brandportfolio and provide an entrance to highvalue-added markets for color cosmetics andpremium skin care and oral care products. InDecember 2005 the company's CEO, TimurGorayev, controled a 30.03% stake.

Stock Performance (RTS: KLNA)Offer price Opening 1st day 1st week 1st month Current (28/04/04) price close close close (01/12/05)

$ 19 19 19 19.35 19.8 37.8change — 0% 0% +1.8% +4.2% +98.9%



Kalina, P/E 9.81 10.86 9.72

Financials2003 2004

Revenues, $ million 157 182.6Net income, $ million 10.8 19

IR contactsName Dmitry A. ArgunovPosition Head of corporate finance departmentPhone +7 343 262 26 85Address 620138, 80 Komsomolskaya Str.,

Ekaterinburg, RussiaEmail [email protected] Web www.kalina.org

Source: RTS





Mechel



24

The PBN Company

IPO profileMechel's IPO made it the first Russian company inmore than two years to list shares in the U.S. as wellas Russia's first metals firm to list on the NYSE. Theoffering came amid growing world steel prices,which helped Mechel to place the stock at the topof the expected price range and to raise $291 mil-lion. About 20% of the offered ADRs representedexisting shares and 80% — new shares. A monthlater, the lead underwriter of the offering, UBSLimited, exercised its option for an additional 1.5%stake. According to UBS, 90% of the offering wastaken by foreign investment funds, mainly from theUnited States. Mechel planned to use the proceedsto take part in an auction for a 17.8% stake in MMKbut later decided not to bid, choosing instead to sellits own stake in MMK to the plant's current manage-ment. It will invest the proceeds into developing itscoal capacity as well as modernization of its steelfacilities.

Key DataDate of IPO October 29, 2004Stock exchange NYSEUnderwriters

Lead managers UBS LimitedCo-managers JP Morgan, Troika Dialog, Morgan Stanley

Form of offer ADS (each ADS represents 3 common shares)Number of securities offered 13.88 million




Price range $19—$21Offer price $21Total capital raised $335 millionUse of proceeds Capital expenditures, including equipment purchases and mod-

ernization of facilities; acquisition of additional operations andsubsoil licenses.

"There is a big, wide investor base that can't access the steelsector. These shares are a good way to get access to an

under-represented sector and diversify a Russia portfolio”

— Anton Khmelnitsky, Brunswick Asset Management Bloomberg, October 29, 2004

© Copyright 2005

Mechel

Company profileMechel is one of Russia's leading mining andmetals companies. It produces coking coal inRussia, with a 12% market share in 2004. It isRussia's largest exporter of coking coal con-centrate. It is the largest and most comprehen-sive producer of specialty steels and alloys inRussia, producing 39% of total Russian spe-

cialty steel output. In the first quarter of 2005,almost 90% of Mechel's net income came frommining. The major shareholders of the compa-ny are its founders Igor Zyuzin, Chairman of theBoard, and Vladimir Iorich, CEO. J.P. MorganInvestment holds 1.62% of the company.

Stock Performance (NYSE: MTL)Offer price Opening price 1st day 1st week 1st month Current (29/10/04) (29/10/04) close close close (01/12/05)

$ 21 21.5 20.5 21.6 20.2 29.6change -- +2.3% -2.3% +2.8% -3.8% +41%


Valuations2004 2005E 2006E

Mechel, P/E 5.5 4.84 11.13

Financials2003 2004

Revenues, $ million 2,028 3,635Net income, $ million 143 1,342

IR contactsName Irina OstryakovaPosition Director of External

CommunicationsPhone +7 495 258 1828Address 12, Krasnopresnenskaya Nab., World Trade

Center Office Building, №1002, Moscow, 123610, Russia

Email [email protected] Web www.mechel.com

Source: Factiva, NYSE





The PBN Company


Seventh Continent

26

The PBN Company

© Copyright 2005

IPO profileSeventh Continent's debut on the RTS inNovember 2004 was Russia's first retail flotation,providing investors an opportunity to diversify theirRussian portfolios away from the natural resourcessector. The company sold 13% of its shares for$80.7 million. At the time of the IPO, the companyrented a number of its stores from a separatecompany, Stolichniye Gostronomi, at competitiverates. After the IPO, Seventh Continent's manage-ment decided to acquire stores under its own name.The underwriters successfully marketed the compa-ny to foreign portfolio investors, marketing the com-pany as the only way to gain exposure to the boom-

ing Russian retail market. The issue was 3.5 timesoversubscribed.

Since the IPO, Seventh Continent shares have con-tinued to grow, reaching $21 in October 2005, a120% increase from the offer price. In H2 2005Seventh Continent outperformed the RTS and allother Russian consumer stocks. The company'scapitalization increased 2.5 times in less than a yearand amounted to over $1.558 billion in October2005.

IPO proceeds were invested into the expansion ofthe company's retail chain, including the construc-tion of its first hypermarket. In September 2005, thecompany raised $90 million in long-term debt andplans to sell new shares in Q2 2006. "We are inter-ested in having a larger free float, to be a real pub-lic company," said one of the company owners,Vladimir Gruzdev1. Seventh Continent is also imple-menting a program of stock options for the compa-ny's managers.

Key DataDate of IPO November 12, 2004Stock exchange RTS, MICEXUnderwriters

Lead managers Deutsche UFGForm of offer Ordinary sharesNumber of shares offered 8.4 million


Percentage of the share capital offered 13%

Price range $9.20-10.25Offer price $9.59Total capital raised $80.7 millionUse of proceeds Development of existing retail formats and launch

of hypermarkets.

“The company that goes public first usually gets maximum valua-tions. Those that follow Seventh Continent will most likely be

valued lower.”

— Alexey Yazykov, Consumer Goods and Retail Analyst at Aton

Sekret Firmy, November 22, 2004

1 Source: Bloomberg, August 5, 2005


Seventh Continent


The PBN Company

Company profileFounded in 1994, Seventh Continent was oneof the first domestic supermarket chains. In theMoscow and St. Petersburg areas, the chaincurrently operates over 100 stores using fourdifferent retail formats: deluxe stores, super-markets, convenience stores, and hypermar-kets. In H1 2005, Seventh Continent opened 12

new stores and showed a revenue increase of45.6% y-o-y. In July, Seventh Continentopened its first hypermarket in Moscow andacquired a Kaliningrad-based chain of 12supermarkets. 87% of the company’s sharesare controlled by CJSC “7K-Invest-Holding.”

Stock Performance (RTS: SCON)Offer price Opening price 1st day 1st week 1st month Current (12/11/04) close close close (01/12/05)

$ 9.59 9.59 9.59 10 9.96 26change — 0% 0% +5.3% +4.9% +171.1%

Market Сapitalization, $ millionPre IPO (estimated) At IPO (12/11/04) Current (01/12/05)595-660 621 1,710


Seventh Continent, P/E 22.92 17.36 15.56

Financials2003 2004

Revenues, $ million 342 496Net income, $ million 8.7 27.1

IR contactsName Dmitry PopovPosition Press SecretaryPhone +7 495 933 4363 ext. 349Address 18, bld.2, Miklukho-Maklaya str.,

Moscow, Russia, 117437Email [email protected] Web www.7cont.ru

Source: RTS






Open Investments

28

The PBN Company

© Copyright 2005

IPO profileOpen Investments was the first real estatedevelopment, management and investmentgroup to go public. Having already raised asignificant amount of money in debt capital,the company took a decision that it would notbe able to absorb all the investment opportuni-ties in the Russian property market through

debt alone, which led to the decision to tap theequity markets.

The company raised over $68 million, while theshares were floated at close to the top of theprice range at $49.75. Approximately 50% ofshares were allocated to UK investors, whilethe remaining 50% went to investors fromRussia, Austria, Switzerland and Germany.

This strong interest from foreign investors borewitness to the ever growing appetite for the“Russian consumer play”, and the desire todiversify away from the more politically sensi-tive resource stocks.

Key DataDate of IPO November 16, 2004 Stock exchange RTSUnderwriters

Lead Manager and Sole Book-Runner ING Investment BankingSenior Co-Lead Manager RosbankCo-Lead Manager Troika Dialog

Form of offer Ordinary shares and Global DepositaryNumber of securities offered 1,383,358Percentage of share

capital offered 38.5%Price range $42.75 — $52.25Offer price $49.75Total capital raised $68.8 millionUse of proceeds Investments into property development projects.

“We welcome Open Investments’ IPO, as it will giveinstitutional and private investors access to the growing

Russian property market.”

— ATON Research


Open Investments


The PBN Company

Company profileOpen Investments is a Moscow-based realestate development, management and invest-ment group with a business focus on develop-ing investment grade, Class A office buildings,luxury residential housing, and commercialreal estate (primarily large retail and entertain-

ment complexes and hotels). OpenInvestments was established in September2002 by the Interros Group, one of Russia'slargest financial and industrial groups.

Stock Performance (RTS: OIVS) Offer price Opening price 1st day 1st week 1st month Current

(16/11/04) close close close (01/12/05)$ 49.75 55 55 63 61 100.00change — +10.5% +10.5% +26.6% +22.6% +101%

Market Сapitalization, $ millionPre IPO (estimated) At IPO (16/11/04) Current (01/12/05)— 178.6 341.1

Financials2003 2004

Revenues, $ million 14.49 36.74Net income, $ million 8.3 13.99

IR contactsName Natalia GoncharovaPosition Head of Capital Markets & IRPhone + 7 495 363 1457/58 Fax +7 495 363 1457/58Email [email protected] www.open-investments.com

Source: RTS




Open Investments, P/E — 18.8 9.1

Source: ING


Sistema

30

The PBN Company

IPO profileSistema conducted Russia's largest IPO to dateand the biggest London float by a non-UK com-pany since 2001. The company raised $1.56 bil-lion, more than all previous Russian IPO’s com-bined. The offer, priced at the middle of theannounced $15-$19.5 range, was 2.5 times over-subscribed. Sistema's GDRs, representing main-ly new shares, rose 5.5% by the end of the firstday of trading in London. Two days after the

offering, lead underwriters Morgan Stanley andCredit Suisse exercised the over-allotment optionfor additional shares of existing shareholders,raising Sistema's free float to 19%. In total,Sistema's shareholders received about $240 mil-lion. The market capitalization of Sistema wasestimated at $8.2 billion based on its IPO price,significantly less than the capitalization of its mainasset, MTS, which was valued at about $13 bil-lion on the day of Sistema's IPO. The main moti-vation for Sistema to go public was the upcomingprivatization of state-owned telecommunicationholding Svyazinvest, in which Sistema planned toparticipate. While it remains unclear when theSvyazinvest privatization will take place, Sistemahas used part of its IPO proceeds to fund otheracquisitions. In October 2005, Sistemaannounced the acquisition of minority stakes insix Bashkir energy companies, which it plans todevelop and then sell off to a strategic investor.

Key DataDate of IPO February 9, 2005Stock exchange LSEUnderwriters

Lead managers Morgan Stanley, CSFBCo-managers ING Financial Markets, Renaissance Capital Group,

Troika Dialog, Deutsche BankForm of the offer GDRs (50 GDRs per 1 share)Number of shares offered 1,831,563

By the company 1,550,000By existing holders 42,663

Number of securities subject to the over-allotment option 238,900 shares of existing holders


Price range $15—$19.5Offer price $17Total capital raised $1,560 millionUse of proceeds Development of existing non-telecommunications businesses;

Acquisitions in the telecommunications industry, particularly possi-ble privatizations of Svyazinvest, Ukrtelecom and Kazakhtelecom.

“Sistema represents an alternative investment to MTS, alow risk bet on liberalisation and privatisation of the fixedline sector and an option on exposure to growing consumer

spending on insurance, banking and real estate services.”

Renaissance Capital“AFK Sistema: A Consumer Story, or Just

Another Telecom Stock”. April 6, 2005

© Copyright 2005

Sistema

Company profileSistema is the largest Russian non-resourcebased financial-industrial group, which managesand develops businesses in consumer servicerelated industries. Sistema holds a 50.5% stakein MTS, Russia’s largest mobile telecommunica-tions provider, which was listed on NYSE in 2000.MTS accounts for about 80% of Sistema's rev-enues. Sistema owns 49% in ROSNO, the fourthlargest non-life insurer in Russia, which is runjointly with Germany’s Allianz. Sistema's otherbusinesses include fixed line telecoms, realestate, retail, technology, banking, and media.Sistema is pursuing an active investment policy

of expanding its presence in strategic areas aswell as exercising investment opportunities inother industries. Among Sistema's recent acqui-sitions are a controlling stake in a regional cableoperator, minority shareholdings in six energycompanies in Bashkortostan, as well as addition-al stakes in its subsidiaries Telmos, MTT andMBRD. Sistema is also looking for opportunitiesto expand into the Indian mobile telecommunica-tions market. The major shareholder in the com-pany is its founder and president EvgenyYevtushenkov with a 63.1% stake, while its tentop-managers hold 18% of Sistema's shares.

Stock Performance (LSE: SSA)Offer price Opening price 1st day 1st week 1st month Current (09/02/05) (14/02/05) close close close (01/12/05)

$ 17 17.8 17.94 17.8 16.65 22.5change — +4.7% +5.5% +4.7% -2% +30.3%



Sistema, P/E 19.91 8.5 6.6

Financials2003 2004


IR contactsName Alexey KurachPosition Head of IRPhone +7 495 629 2747Address 10 Leontievsky Pereulok,

125009 Moscow, RussiaEmail [email protected] www.sistema.ru, www.sistema.com

Source: Factiva, LSE

Source: company info, Factiva

Source: Factiva, Renaissance Capital estimates




The PBN Company


Lebedyansky

32

The PBN Company

© Copyright 2005

IPO profileLebedyansky raised $151 million on RTS inMarch 2005, representing the largest domesticIPO to date. In response to considerabledemand the company decided to increase theamount of the offer from a 16.4% to 19.9%stake, representing shares of existing holders.The offer was priced near the top of theannounced range, and valued the company at$760 million. Following the IPO, Lebedyansky's

market capitalization reached $800 millionovertaking its main rival, juice and dairy pro-ducer Wimm-Bill-Dann, which has three timesLebedyansky's sales. The success ofLebedyansky's IPO exemplifies investors' hugeinterest in Russian consumer markets, whereper capita juice consumption levels arepresently significantly lower than those in otheremerging and developed markets. More than100 investors bought in Lebedyansky, about75% of which were international organizations.Prior to the IPO, Lebedyansky announced thatit plans to launch production of mineral water,and industry experts expect the company toenter the dairy market in the near future aswell. The selling shareholders, however, didnot specify how they plan to use the IPO pro-ceeds.

Key DataDate of IPO March 11, 2005Stock exchange RTSUnderwriters

Lead managers Deutsche UFGForm of the offer Ordinary shares Percentage of the share

capital offered 19.9%Price range $34.78-$38.46Offer price $37.23Total capital raised $151 millionUse of proceeds —

“Investors were excited with the opportunity to buyshares of juice producer Lebedyansky. After the IPOthe company surpassed Wimm-Bill-Dann in terms of

market capitalisation.”

— Vedomosti, March 14, 2005


Lebedyansky


The PBN Company

Company profileLebedyansky is a leading Russian manufactur-er of juice and one of the industry’s mostdynamically developing enterprises.Lebedyansky's annual turnover grew from $18million in 1998 to $376 million in 2004, andmarket share from 4% to 30% during the sameperiod. The company's success is due toeffective brand promotion, marketing policyand distribution. Lebedyansky has a strong

portfolio of brands with a presence in all pricesegments. It also produces branded baby foodand private juice labels for leading Russianretail chains. Lebedyansky's major sharehold-ers are State Duma Deputy Nikolay Bortsov,the former General Director of the company,his son and several top-managers.

Stock Performance (RTS: LEKZ)Offer price Opening price 1st day 1st week 1st month Current (10/03/05) (11/03/05) close close close (01/12/05)

$ 37.23 38.25 39 39.30 38.37 62change — +2.7% +4.7% +5.6% +3% +66.5%

Market Сapitalization, $ millionPre IPO (estimated) At IPO (10/03/05) Current (01/12/05)720-770 760 1,282


Lebedyansky, P/E 14.21 13.6 10.3

Financials2003 2004

Revenues, $ million 272.6 376Net income, $ million 34.4 53.3

IR contactsName Alexander KostikovPosition Director of Public and Investor RelationsPhone 7 495 933 6250Address 11, Timura Frunze st.,

119021, Moscow, RussiaEmail [email protected] Web www.lebedyansky.ru

Source: RTS






Khleb Altaya (Pava)

34

The PBN Company

© Copyright 2005

IPO profileKhleb Altaya was the first floatation of a Russianagricultural company and the smallest RussianIPO to date, raising $8 million on RTS andMICEX. The company offered investors 10% ofits share capital, half of which consisted of newlyissued shares and was placed on MICEX, whilea stake of existing shareholders was placed onRTS. According to the underwriter, FinamInvestment Company, most of the shares werebought by foreign investors. The stock floated at$0.9, at a 5% discount to the bottom of theannounced price range, which was attributableto high risks and low level of awareness aboutthe company. Khleb Altaya plans to increase itsfree float up to 30% by 2007.

Key DataDate of IPO March 22, 2005Stock exchange MICEX, RTSUnderwriters

Lead managers FinamForm of the offer Ordinary shares Number of securities offered 8.84 million


Percentage of the sharecapital offered 10%Price range $0.95-$1.1Offer price $0.9Total capital raised $8 millionUse of proceeds Acquisition of strategic assets in the food industry.

“The latest 'no-name' company to appear from left fieldand persuade investors to take a punt.”

— The Banker, April 5, 2005


Khleb Altaya (Pava)


The PBN Company

Company profileKhleb Altaya is one of Russia's leading grainprocessors and the largest in Siberia. KhlebAltaya controls about 2.5% of the domesticflour market. Following its IPO in 2005, KhlebAltaya received a loan from the IFC for about$20 million and completed a bond issue forRUR350 million ($12.5 million). The companyplans to acquire grain processing plants in theEuropean part of Russia, which will help it to

expand its activities beyond the Siberian mar-ket. In June 2005, in order to avoid the 'region-al flavour' in its name, the company changedits name to 'Pava'. Khleb Altaya (Pava) is con-trolled by its founders, Andrey Igoshin,Chairman of the Board, and Pavel Igoshin.

Stock Performance (RTS: AKHA)Offer price Opening 1st day 1st week 1st month Current (22/03/05) price close close close (01/12/05)

$ 0.9 0.91 0.91 0.91 0.91 8change — +1.1% +1.1% +1.1% +1.1% +12.5%



Khleb Altaya, P/E 17.41 12.38 8.46

Financials2003 2004

Revenues, $ million 39 80.2Net income, $ million 1.9 4.6

IR contactsName Larisa BannikovaPosition Head of PR departmentPhone +7 3852 63 01 55Address 38, Pushkina st.,

Barnaul, RussiaEmail [email protected] Web http://www.apkhleb.ru/

Source: RTS


Source: company info, Centre Invest Bank




Severstal-auto

36

The PBN Company

© Copyright 2005

IPO profileSeverstal-auto sold 30% of its shares at a 4% dis-count to the bottom of the expected price range.The company said that the situation was attribut-able to unfavorable market conditions caused bynegative news on the world automotive market.Investors were concerned about the prospects

for automotive manufacturing in Russia andincreasing competition from foreign car makers.Some analysts suggested that the low pricingwas due to the size of the offer, which was rela-tively large for a domestic IPO. The companysold 8.94 million shares that were held by theexisting shareholder, New Deal Investments, at$15.10 per share, raising $135 million. Followingthe IPO, NDI bought back 4.47 million shares ofadditional issue, while Severstal-auto's free floatincreased to 37.4%, making it one of the most liq-uid stocks in the Russian automotive sector.More than 60 investors have bought intoSeverstal-auto, about 85% of which were foreignfunds.

“This has been a good opportunity for investors to buy attrac-tive shares at a reasonable price. Moreover, it's going to be

the most liquid stock in the Russian automotive sector,”

— Vyacheslav Smolyaninov, UralSib.Kommersant, April 25, 2005

Key DataDate of IPO April 22, 2005Stock exchange RTS, MICEXUnderwriters

Lead managers Deutsche UFGCo-managers Troika Dialog

Form of the offer Ordinary sharesNumber of shares offered 8.94 million



Price range $15.80—$17.80Offer price $15.10Total capital raised $135 millionUse of proceeds Development of the joint venture with SsangYong;

Facilitation of production growth.


Severstal-auto


The PBN Company

Stock Performance (RTS: SVAV)Offer price Opening price 1st day 1st week 1st month Current (22/04/05) close close close (01/12/05)

$ 15.1 15.3 15.8 15.6 15.3 17.05change — +1.3% +4.6% +3.3% +1.3% +12.9%

Source: RTS

Company profileSeverstal-auto is an automotive holding controlling81% of Ulyanovsky Automotive Plant (UAZ), amanufacturer of off-road vehicles, light truck andminibuses, and 91% of Russia's leading automo-tive engine maker Zavolzhsky Motor Works (ZMZ).Both companies are traded on the RTS. In 2004,Severstal-auto established a 50-50 joint venturewith the Korean automotive company SsangYongto assemble SsangYong Rexton SUV off-road carsand possibly other models of the Korean carmak-er in Russia. In addition, Severstal-auto is an exclu-sive distributor of the entire SsangYong model

range in Russia. In 2004, the company's consoli-dated net income increased by 49%, making it themost profitable domestic car maker.

Severstal-auto is the automotive division ofSeverstal Group. The major shareholder inSeverstal-auto is Cyprus-registered New DealInvestments (NDI), which is 85% controlled byAlexei Mordashov, chairman of the board atSeverstal-auto and CEO of Severstal, and 15% iscontrolled by Vadim Shvetsov, general director ofSeverstal-auto.

Valuations2004 2005E 2006E

Severtal-auto, P/E 7.6 5.5 4.43

Financials2003 2004

Revenues, $ million 632 799Net income, $ million 36 58

IR contactsName Elena MilinovaPosition Head of Corporate Reporting

and Investor RelationsPhone +7 495 540 7766Address 2/3 Klari Tcetkin st.,

Moscow, RussiaEmail [email protected] Web www.severstalauto.ru






Pyaterochka

38

The PBN Company

© Copyright 2005

IPO profileThe IPO, valuing the company at about $2 bil-lion and representing Russia's third largestpublic offering, underscored investors'appetite for the country's consumer-relatedcompanies. The offshore registered holdingcompany helped the retailer avoid the FSFM's

requirement to list first on the domestic market,although the company denied that the choicewas linked to the regulatory environment.Pyaterochka's GDRs were priced at the bottomof the target $13-$16 interval. A 4.5% stakewas subject to the over-allotment option, butunderwriters sold only a 2% stake. The IPO wasviewed as favorable by the company. Theoffering was placed with institutional investorsin Europe, the UK and North America. With afree float of over $600 million and better liquid-ity than any other shares in the sector,Pyaterochka became the first Russian bluechip retail stock. The two owners of the com-pany sold 30% of their equity, keeping the pro-ceeds.

Key DataDate of IPO May 6, 2005Stock exchange LSEUnderwriters

Joint global coordinatorsand bookrunners CSFB, Morgan StanleyCo-lead managers UFG, INGCo-manager Gazprombank

Form of offer GDR (each representing 0.25 shares)Number of securities offered 46 million

By the company 0By existing holders 46 million

Number of securities subjectto the over-allotment option 6.9 million (of which only 3.2 million were sold)

Percentage of share capital offered 32%

Price range $13-16Offer price $13Total capital raised $639 millionUse of proceeds The company received no proceeds from the sale of GDRs.

“Pyaterochka does not need money, and none of the pro-ceeds of the IPO will go back into the company.”

— Member of the company's supervisory board.Financial Times, July 20, 2005

Source: company info, Aton Research

Pyaterochka


The PBN Company

Company profilePyaterochka is the leading grocery retailer inRussia in terms of sales, with a chain of 296company-managed stores located in theMoscow and St-Petersburg areas as ofOctober 1, 2005.

In addition to the company’s own stores, fran-chisees operate Pyaterochka-branded stores

in the Russian regions outside the Moscow andSt. Petersburg areas and in Kazakhstan andUkraine (349 franchised stores as of October1, 2005).

Stock Performance (LSE: FIVE)Offer price Opening price 1st day 1st week 1st month Current (06/05/05) close close close (01/12/05)

$ 13 — 12.5 12.38 13.15 24.5change — — -3.8% -4.7% +1.1% +88.5%

Market Сapitalization, $ millionPre IPO (estimated) At IPO (06/05/05) Current (01/12/05)1,900 - 2,450 1,991 3,523


Pyaterochka, P/E 26.91 19.1 12.9

Financials2003 2004

Revenues, $ million 760 1,106Net income, $ million 34 74

IR contactsName Tanja DjurdjevicPosition Investor RelationsPhone +7 495 783 9794 Fax +7 495 203 0098Address Sechenovsky per., 6-1, Pyaterochka Holding NV

Moscow 119034, Russia Email [email protected] Web www.e5.ru

Source: Factiva


Source: Factiva, Aton Estimates




Evraz Group

40

The PBN Company

© Copyright 2005

IPO profileUnlike its domestic peer, Mechel, which placed its

shares on the NYSE amid booming world steel prices

in October 2004, Evraz's IPO came in unfavorable

market conditions. In the first half of 2005, metal stocks

globally fell by 10-20%, as they were undermined by

decreasing steel prices. As a result, Evraz Group float-

ed close to the bottom of the announced price range,

at $14.50 per GDR, although the offer was oversub-

scribed by 1.5 times. In Q3 of 2005, global steel stocks

have recovered on average by 15% with Evraz's price

up to $18 by September 30, which suggests that the

timing of the offering was unlucky.

Morgan Stanley, the lead underwriter of the issue,

has not exercised its option for a 1.23% stake due

to the falling stock price. At the same time, industry

analysts considered the IPO successful given the

market situation.

“A non-Russian metals company couldn't make such

an offering in the current market conditions,” accord-

ing to Renaissance Capital.1 Evraz's acquisition of the

Czech Republic's Vitkowice Steel in July 2005 was

funded with IPO proceeds. The company granted

three independent directors hired prior to the offering

options to buy shares for up to $5 million at the IPO

and with 1-year options for $800,000 at IPO prices.

Prior to the IPO, Evraz Group consolidated its assets

at the offshore company Mastercroft, whose shares

were subsequently transferred to Evraz Group S.A.,

which is registered in Luxemburg. In order to avoid

possible conflicts with the FSFM, shares of five of the

Group's enterprises were listed on the RTS. The hold-

ing company, however, is not listed in Russia.

“We did not need money, but we needed shares as acquisitioncurrency. Small factories and plants are more interested in

our shares than in our money.”

— Alexander Abramov, President, Evraz GroupFinancial Times, July 20, 2005

Key DataDate of IPO June 2, 2005Stock exchange LSEUnderwriters

Global coordinator Morgan StanleyLead managers Morgan Stanley, CSFB, Renaissance Capital

Form of the offer GDR (3 GDRs per ordinary share)Number of securities offered 29.1 million




Price range $13.5-$17Offer price $14.5Total capital raised $422 millionUse of proceeds Acquisition of Palini e Bertoli and Vitkowice Steel.

Source: company info, open sources1 Source: Bloomberg

Evraz Group


The PBN Company

Company profileEvraz Group is a vertically integrated steel andmining company and is Russia's largest steelproducer. The group's principal assets includethree of the leading steel plants in Russia: NizhnyTagil (NTMK) in the Urals region, West Siberian(ZapSib) and Novokuznetsk (NKMK) in Siberia.Evraz also has several ore mining and process-ing companies, coal mines and transport assets.As a result of assets consolidation carried out in2004, Evraz has increased total revenue threetimes and net income by almost five times overthe previous year. In July-August 2005 Evraz

announced the acquisition of two large Europeansteel producers, Vitkowice Steel (CzechRepublic) and Palini e Bertoli (Italy), which willenable the Group to enter the high value-addedEuropean steel plate market. In September 2005,Evraz established a joint venture with Mitsui forthe development of the Denisovskoye coalfield inYakutia.

Evraz's president, Alexander Abramov, holds a59.11% stake in the company, and his deputies,Alexander Frolov and Valery Horoshkovsky, hold28.18% and 1.88% respectively.

Stock Performance (LSE: EVR)

Offer price Opening price 1st day 1st week 1st month Current (02/06/05) close close close (01/12/05)

$ 14.5 — 14.0 14.45 14.40 17.00change — — –3.4% –0.7% –0.3% +17.2%

Market Сapitalization, $ millionPre IPO (estimated) At IPO (02/06/05) Current (01/12/05)4,700 - 6,000 5,100 6,015


Evraz, P/E 5.12 5.0 4.5

IR contactsName Nikolay Arutyunov Position Director, Investor RelationsPhone +7 495 232 1370Address 15, bld. 4 and 5, Dolgorukovskaya st.,

127006, Moscow, RussiaEmail [email protected] Web www.evraz.com

Source: Factiva




Financials2003 2004




Rambler Media

42

The PBN Company

© Copyright 2005

IPO profileRambler came to the markets at a time of con-tinued investor demand for new Russianissues, particularly companies offering expo-sure to the Russian growth story. In this case,

raising money was a secondary issue for thecompany. The London listing was more aboutgaining status and enhancing Rambler's inter-national profile.

At the time of the listing, some analysts andinvestors expressed some concerns about thecompany, and specifically its level of financialdisclosure. Nevertheless, the company suc-ceeded in raising $40 million (albeit to a limitednumber of investors). And while the IPO waspriced at $10.25, at the lower end of theexpected range, Rambler has seen the price ofits shares increase by close to 40% since thelisting.

Key DataDate of IPO June 15, 2005Stock exchange AIMUnderwriters

Sole Book Runner Deutsche Bank, UFGJoint-lead Managers Deutsche Bank, UFG, ATON

Form of offer Ordinary sharesNumber of securities offered 3,891,029

By the company 3,000,000By existing holders 891,029

Number of securities subjectto the over-allotment option 466,924

Percentage of sharecapital offered 26%

Price range $10.00–$12.50Offer price $10.25Total capital raised $40 million

“We wanted to enhance the profile of our company. Wehave international partners and when we tell them that

Rambler is a media company listed in London we feel acompletely different level of trust towards us.”

— Irina Gofman, CEO, Rambler Media


Rambler Media


The PBN Company

Company profileRambler Media is an integrated and diversifiedRussian language media, entertainment, serv-ices and content delivery company with threemain segments: internet services; mobile valueadded services; and television broadcast.Rambler Media operates businesses includingthe Russian language internet portal andsearch engine rambler.ru; on-line news site

'Lenta.ru'; broadband ISP 'Rambler Telecom';interactive advertising company 'Index20';mobile content service provider 'SMXCOM';and entertainment TV network 'RamblerTV'.

Stock Performance (AIM: RMG)Offer price Opening price 1st day 1st week 1st month Current (15/06/05) close close close (01/12/05)

$ 10.25 11.20 11.55 12.15 12.25 14.75change — +9.3% +12.7% +18.5% +19.5% +43.9%

Market Сapitalization, $ millionPre IPO (estimated) At IPO (15/06/05) Current (01/12/05)1,900 - 2,450 153.50 220.90


Rambler Media, P/E — — 37.8

Financials2003 2004

Revenues, $ million 4.950 12.505Net income, $ million –3.956 –4.412

IR contactsName Nikolas DuperrierPosition IR ManagerPhone +44 (0) 20 7321 5024 Fax +44 (0) 20 7321 5020 Address 30, St. James Square

London, UKEmail [email protected] Web www.rambler.ru

Source: LSE





Novatek

44

The PBN Company

© Copyright 2005

IPO profileVoracious demand for Novatek's IPO suggestedthat foreign investors are not as worried about theRussian government's increasing oversight in thenatural resources sector as the Western mediaalleged after the Yukos affair. Novatek's ownerssold 17.3% of equity in London at $16.75 for eachGDR, getting the maximum price of the expectedrange. On the first day of trading, Novatek closed

at $19, up 13% from the sale price. Following therush, UBS AG and Morgan Stanley, which man-aged the offer, exercised an option to sell an addi-tional 1.7% stake, raising total IPO proceeds to$966 million and the company's free float to 19%.The offer, representing the second largest RussianIPO to date after Sistema's $1.56 billion floatation inFebruary, was more than 12 times oversubscribedand valued the company at nearly $5.5 billion.Notwithstanding investors’ concerns about thecompany’s relationship with Gazprom, Novatek’sIPO was a success. It was largely due to the com-pany's appeal to a broad range of investors seek-ing exposure to the world's largest market for gas.According to the IPO prospectus, the capital raisedwill be used for payment of the debt whichemerged in the process of the company's consoli-dation at the end of 2004.

Key DataDate of IPO July 21, 2005Stock exchange LSEUnderwriters

Lead managers Morgan Stanley, UBS AG, CSFBCo-managers Troika-Dialog, Alfa Capital Markets, Vnesheconombank

Form of the offer GDR (each representing 0.01 shares)Number of shares offered 52.44 million


Number of shares subject to the over-allotment option 5.25 million


Price range $14.75-16.75Offer price $16.75Total capital raised $966 millionUse of proceeds Debt restructuring.

"The demand for this transaction in terms of size andquality was among the best seen for any transaction in

the last 24 months."

— Henrik Gobel, Head of European EquitySyndicate at Morgan Stanley.

Bloomberg, July 21, 2005


Novatek


The PBN Company

Company profileOAO Novatek is Russia's largest independentgas producer and second-largest natural gasproducer. The company's upstream activitiesare concentrated in the Yamal-Nenets Region,which is the world's largest natural gas produc-ing area and accounts for over 90% of Russia'snatural gas production and one third of theworld's gas production. Novatek has about 583billion cubic meters of natural gas reserves,enough for more than 20 years at current pro-

duction rates. Novatek will produce about 25-27billion cubic meters of gas in 2005 comparedwith 20.9 billion cubic meters produced in 2004.Production will nearly double by 2010, reaching45 billion, according to industry analysts' projec-tions. Structures linked with the managementcontrol 68.3% of the company, 29% of which isheld by its CEO Leonid Mikhelson.Vnesheconombank and IFC have minority inter-ests of 5.6% and 1%, respectively.

Stock Performance (LSE: NVTK)Offer price Opening price 1st day 1st week 1st month Current (21/07/05) close close close (01/12/05)

$ 16.75 — 19 20.85 22.6 23.40change — — +13% +24.5% +34.9% +39.7%



Novatek, P/E 10.61 14 12.7

Financials2003 2004

Revenues, $ million 562.8 877Net income, $ million 107 198

IR contactsName Alexey IvanovPosition Investor Relations OfficerPhone +7 495 730 60 20Address 8, 2-nd Brestskaya street,

125047, Moscow, RussiaEmail [email protected] www.novatek.ru

Source: Factiva quotes, LSE




1 Based on 2005E earnings ($479.9 million)


Urals Energy

46

The PBN Company

© Copyright 2005

IPO profileBooming world oil prices and the limited numberof Russian oil & gas stocks available have con-tributed to investors' enthusiasm toward UralsEnergy's offering in London, which has one of thehighest derivatives among Russian IPO stock.Despite the fact that Urals Energy's largest oil

reserves are unproven, the offering valued thecompany’s proven reserves at approximately $4per barrel, among the most expensive given thatin July 2005 the company had purchased theArcticneft oil company from LUKoil at $1 per bar-rel. Urals Energy sold 26.7 million new shares,representing 31% of its capital, close to the highend of the $3.2–$4.45 indicative range. The stockwas 5 times oversubscribed and opened with a5% premium to the offer price. Several largeinternational investment funds purchased thecompany's shares. Following the IPO, leadunderwriter Morgan Stanley exercised an over-allotment option for an additional 4 million shares,increasing the free float to 35% and raising capi-tal to $132 million. Urals Energy aims to increasemarket capitalization up to $1 billion in two years.

Key DataDate of IPO August 4, 2005Stock exchange AIMUnderwriters

Lead managers Morgan StanleyCo-managers

Form of offer Ordinary sharesNumber of securities offered 26.7 million


Number of securities subjectto the over-allotment option 4 million

Percentage of share capital offered 35%

Price range $3.2–$4.45Offer price $4.2Total capital raised $131.7 millionUse of proceeds Development of existing projects, particularly exploration of

Arcticneft's oil reserves; financing further acquisitions.

“Exploration drilling is a kind of activity that could not befunded by borrowing. If we don't find anything, it will be a

problem to pay off the debt. That is why we don't financegeological exploration with loans, but raise money through

share capital.”

— William Thomas, CEO and Co-founder of Urals Energy.

Vedomosti, August 23, 2005


Urals Energy


The PBN Company

Company profileUrals Energy is an independent exploration andproduction company, incorporated in Cyprus. Itsprincipal assets and operations are on SakhalinIsland, the Komi Republic in Timan-Pechora andthe Republic of Udmurtia. The company's five pro-duction subsidiaries in Russia have proven andprobable reserves of 15 million tons of oil (112 mil-lion barrels). They produced approximately 9,900barrels of oil per day as of the end of 2005. Thecompany exports approximately 80% of its output.Urals Energy's largest asset is Petrosakh, theowner of an exploration license at the Sakhalin-6oilfield, which has gross prospective oil reserves of

approximately 110 million tons (850 million bar-rels). Urals Energy is actively increasing and diver-sifying its reserve and production portfolio throughacquisitions of additional assets. The companyplans to participate in auctions for new subsoilfields in the Nenets Autonomous District and theRepublics of Komi and Udmurtia.

The company's largest shareholders are ChairmanVyatcheslav Rovnenko and Director GeorgyRamzaitcev, holding 22% and 20%, respectively.The former son-in-law of Boris Yeltsin, LeonidDyachenko, a director and president of the compa-ny, holds 7.5% of Urals Energy.

Stock Performance (AIM: UEN)Offer price Opening price 1st day 1st week 1st month Current (04/08/05) close close close (01/12/05)

$ 4.2 4.41 4.38 4.52 4.57 —change — +5% +4.2% +7.6% +8.8% —


Financials2004 1H 2005

Revenues, $ million 8.18 28Net income, $ million - 3.67 – 0.365

IR contactsName Stephen BuscherPosition Chief Financial OfficerPhone +7 495 795 0391Address 6 Oktyabrskaya st.,

Moscow, 127018, RussiaEmail [email protected] Web www.uralsenergy.com

Source: Factiva




Amtel-Vredestein

48

The PBN Company

© Copyright 2005

IPO profileAmtel-Vredestein is one of the largest tyre manu-facturers in Europe, and the first of the tyre com-panies with large manufacturing facilities in thecountries of the former Soviet Union to do an IPO.

The company's recent flotation in London actual-ly bucked the trend of Russian public offeringsthis year, most of which were met with stronginvestor demand. The shares were placed at$11, which was below the expected price range.

One person close to the transaction attributedthe lower than expected pricing at least in part tothe negative financial results from Finland'sNokian Tyres, a competitor to Amtel-Vredestein.Notwithstanding the low price, the growthprospects in Russia and in Amtel-Vredestein'sstrong industry make the company an attractivebuy for investors looking to gain exposure to thedeveloping automotive sector.

Key DataDate of IPO November 18, 2005Stock exchange LSEUnderwriters

Joint Global Coordinators UBS Investment Bank, Alfa Capital MarketsCo-managers ING Bank and Troika Dialog

Form of offer Global Depositary ReceiptsNumber of securities offered 18.3 million



Percentage of share capital offered 27.1%

Price range $13.00–$16.00Offer price $11.00Total capital raised $201 million Use of proceeds To pay down debt

"The placement appears to have been done at 15 percent below the lower end of the indicative price range dueto an initial overvaluation, as the asking price implied a

premium to global peers."

—Tatiana Kapoustina, Analyst at Aton Capital, The Financial Times, November 15, 2005


Amtel-Vredestein


The PBN Company

Company profileAmtel-Vredestein Group is one of the largest tyremanufacturers in Europe. Operational facilities ofthe Group are located in Russia and Holland. TheGroup currently comprises a total of six enterpris-es: three tyre complexes in Russia (Amtel-Povolzhe, Kirov; Amtel-Chernozemye, Voronezh;Amtel-Sibir, Krasnoyarsk); a tyre plant in Holland(Vredestein Banden); and two chemical plants inRussia (Amtel-Kuzbass, Kemerovo and Amtel-Carbon, Volgograd).

The Group's Russian enterprises produce a widerange of tyres for passenger cars, trucks and lighttrucks, agricultural, aviation and other specializedmachinery, as well as motorcycles and bicycles.

In April 2005, the Group acquired the Dutch pre-mium-class tyre manufacturer, VredesteinBanden. Vredestein's primary operating facilitiesare based in Holland; it further outsources itsoperations to Malaysia, India, Thailand andIndonesia. Vredestein

Banden produces UHP (Ultra High Performance)and HP (High Performance) tyres. The compa-ny's distribution network extends through Europewith about 30% of sales realised in Germany; thecompany's products are also sold in NorthAmerica and South-East Asia.

Stock Performance (LSE: AMV) Offer price Opening price 1st day 1st week 1st month Current (18/11/05) close close close (01/12/05)

$ 11 — 11 11.15 N/A 10.75change — — -1.3% +1.4% N/A -2.3%

Market Сapitalization, $ millionPre IPO (estimated) At IPO (18/11/05) Current (31/10/05)— 742.5 725.6

Financials2003 2004

Revenues, $ million 407 499Net income, $ million 10 5

IR contactsPosition Public and Investor RelationsPhone +7 495 981 9818 Address 45, Kutuzovskiy prospect,

Moscow, RussiaEmail [email protected] www.amtel-vredestein.ru

Source: LSE




IMS Group

50

The PBN Company

© Copyright 2005

IPO profileIMS Group is one of the very latest IPOs relatedto the Russian consumer boom. The Company'sshares were admitted to trading on AIM on 6December 2005.

IMS Group raised $26.3 million through a placingof 8 million ordinary shares at a placing price of$3.3 per share. The company's market capital-ization comprised approximately $100 million fol-lowing admission to trading.

The issue was oversubscribed and the placingprice was fixed at the middle of price corridor. Inthe 10-day period after the IPO, the share priceincreased by 7.6%.

The management considers the IPO to have beena success, with the very solid base of Europeanfinancial institutions invested into the company.The company's valuation at IPO was one of thehighest among its peers in the international mediasector that reflects both the company's past per-formance and its significant potential for growth.

One of the most important IPO objectives of thecompany was to stimulate and retain its keyemployees, most of which are young Russians of35 years and below. As a result of the IPO, 5 topexecutives of IMS Group were valued at $1 mil-lion and higher. Another 20 employees haveshares and share options ranging in value from$50 to $1,000,000.

Key DataDate of IPO 6 December 2005Stock Exchange AIMLead manager Canaccord Capital EuropeForm of the offer Ordinary sharesNumber of shares offered 8 million

By the Company 4,215,000By existing shareholders 3,875,000

Percentage of the share capital offered 26.4%

Price range $3.11 - $3.46Offer price $3.29Total capital raised $26.3 millionUse of proceeds Acquisitions of marketing businesses in Russia, India, Turkey,

Hungary and other emerging markets

“IMS Group is one of the leading marketing and sales servicesgroups operating in Russia and the CIS and the AIM listing

will enable the Group to build out the business developmentplan, to grow our emerging markets business whilst also consid-

ering acquisition opportunities”

Greg Thain, Chairman, IMS Group,The IMS Group's First Day of Trading Press release,

6 December 2005


IMS Group


The PBN Company

Company profileInternational Marketing & Sales Group Plc, incor-porated in Ireland, is one of the leading compa-nies offering a range of sales and marketing serv-ices to the Russian market and increasingly toemerging CIS markets.

The company was founded in 1996 by its currentChairman and Chief Executive Officer, GregoryThain. Over the last three years, IMS Group hasdeveloped rapidly with growth in EBITDA at a ratein excess of 100% per annum.

The company's clients are blue-chip multination-al and Russian companies operating in FMCG,telecommunications, retail trade, banking andfinance, automotive, consumer electronics andpharmaceutical industries. The portfolio of servic-es includes merchandising and sales support,consumer and trade promotions, consulting andmarket research, direct marketing and CRM.

IMS Group currently has twelve offices in Russiaand the CIS and employs over 450 full-time pro-fessionals.

Stock Performance (AIM: IMSG.L) Offer price Opening price 1st day 1st week 1st month Current (06/12/05) (07/12/05) close close close (16/12/05)

GBp 190 190.5 191.5 208 N/A 204.5change — +0.3% +0.8% +9.5% — +7.6%

Market Сapitalization, $ millionPre IPO (estimated) At IPO (06/12/05) Current (16/12/05)65 99.6 109.7

Financials2003 2004 2005 2006

Turnover, $ million 12.05 21.95 43.78 69.06Net income,$ million 0.40 1.43 3.69 6.00

IR contactsName Alexander UtochkinPosition Senior EconomistPhone +7 495 380 0727 Address 13, 2nd Zvenigorodskaya st., building 43,

6th floor, 123022, Moscow, RussiaEmail [email protected] www.imsg.co.uk


Source: LSE, Bloomberg, company info



IMSG, P/E — 27.1 16.7

Source: Canaccord Capital estimates


Novolipetsk (NLMK)

52

The PBN Company

© Copyright 2005

IPO profileNovolipetsk was the third Russian steel companyto come to market, following Evrazholding earlierin 2005 and Mechel in 2004. The offer, whichwas more than three times oversubscribed, metreasonable investor demand and was priced inline with most analyst expectations at $14.50.

The offer was taken up predominantly by globalemerging markets investors and industry funds.Investor enthusiasm for the stock was held back tosome extent by instability in the world metal mar-

kets and forecasts for steel prices to fall in 2006. NLMK's listing prompted significant coverage inthe financial press about the risks of investing inthe company. There were several references tothe “26 pages of risk factors” in the companyprospectus, which covered risks ranging from aprice-fixing investigation, potential conflicts ofinterest and substantial commitments to fundpublic services in Lipetsk.

Nevertheless, the IPO was generally seen as asuccess. The decision to list in London was lessabout raising capital than it was about raising theinternational profile of the company. However,while in London, Chairman Vladimir Lisindescribed the company's extensive investmentplans in the near and medium-term.

"We plan to continue to consider acquisitions ofother businesses and assets, including steel pro-ducers and suppliers of raw materials, in accor-dance with our development strategy", said Lisin.

Key DataDate of IPO 9 December 2005Stock exchange LSEUnderwriters

Joint Bookrunners UBS Limited, Merrill Lynch InternationalCo-lead managers Alfa Capital Markets

Form of offer GDS (each representing ten ordinary shares)Number of securities offered 420,000,000Percentage of the share

capital offered 7%Offer price $14.50Total capital raised $609 million

“We are delighted that [our] secondary offering has attractedsuch strong interest from international institutional investors.

Novolipetsk Steel has a clear growth strategy and a deep com-mitment to continuing to create significant value for all our

shareholders."

— Vladimir Lisin, Chairman, Novolipetsk


Novolipetsk (NLMK)


The PBN Company

Company profileNLMK is a vertically-integrated steel producer. Ithas a 97% stake in Stoilensky GOK, Russia's third-largest iron ore producer, a 33% stake in KMA-Ruda and 12% in Lebedinsky GOK. The companyis becoming increasingly self-sufficient in electrici-ty, and in 2004 supplied 37% of its own energyneeds. In 2005, NLMK acquired from the Russianstate a license for a large coking coal deposit thatis expected to be operational by the end of 2008.

The company's product mix includes pig iron,slabs, hot- and cold-rolled steel, and a variety ofvalue-added products, such as galvanized steel,pre-pained steel, electrical steel and other spe-cialty flat products. In 2004, NLMK had thelargest share (34%) of Russia's cold-rolled steelmarket, and was one of Europe's largest produc-ers of electrical steel.

Stock Performance (LSE: NLMK)Offer price Opening price 1st day 1st week 1st month Current (09/12/05) close close close (16/12/05)

$ 14.50 — — N/A N/A 14.34change — — — N/A N/A -1.1%

Market Сapitalization, $Pre IPO (estimated) At IPO (09/12/05) Current— 8,689 N/A

IR contactsName Anton BazulevPosition Deputy General Director, External RelationsPhone +7 (495) 915-15-75Address 1/15 Kotelnicheskaya nab., building B, 6

Moscow 109240 RussiaEmail [email protected], [email protected] www.nlmksteel.com




NLMK, P/E — 6.16 10.63


Financials2003 2004



STOCK EXCHANGES


LSE

56

The PBN Company

© Copyright 2005

The London Stock Exchange is one of the world'sforemost equity exchanges and a leading providerof services that facilitate the raising of capital andthe trading of shares. There are over 3,000 compa-nies listed in London, with a total market capitalisa-tion of more than £3.7 trillion. The Exchange is themost international equities exchange, by trading, inthe world, and Europe's largest pool of liquidity.

The Exchange offers a choice of two markets tosuit the differing needs of its customers: the MainMarket and AIM. The Main Market is theExchange's principal market for more establishedcompanies and is currently home to some 1,362UK companies and 334 overseas companies witha total market capitalisation of more than £3.5 tril-lion. A listing on the Main Market gives companiesa ranking alongside some of the world's leadingcompanies and also boasts a concentration of

experienced institutional fund managers keen toinvest in larger, established companies and high,yet less prescriptive standards of regulation whichmake it attractive to both companies and investors.

AIM is the Exchange's market for growth companiesand since its launch in 1995 has become the world'smost successful growth market, enabling more than2,000 companies to raise over £20 billion in capital.

The success of AIM is built on a simplified regulato-ry environment, designed specifically for the needsof smaller and growing companies. AIM enablessmaller and growing companies to gain access tointernational investors, to raise capital for growth andacquisition, and to enhance their global profile.Currently there are more than 1,330 companiesadmitted to AIM (of which 196 are international), witha combined market capitalisation of £37 billion.

International companies can list a number ofproducts in London, including shares, depositaryreceipts and debt instruments ranging from sim-ple eurobonds and credit-linked notes to com-plex asset-backed issues, high yield bonds andconvertible bonds.

The Exchange has a long association with com-panies from the CIS and Russia, with seven com-

panies joining the Exchange in the past year,raising £2.9 billion in total. At the same time,Russian companies also have an opportunity tobe traded on one of the world's leadingexchanges for smaller and growing companies.There are 23 AIM companies with assets andoperations in the CIS, including Rambler Mediaand Urals Energy which joined AIM raising £26million and £76 million respectively.

1Not applicable to reverse takeovers

The main differences in the admission criteria for the Main Market and AIM are:

Main Market AIM• Minimum 25% shares in public hands • No minimum shares to be in public hands • Normally 3 year trading record required • No trading record requirement• Prior shareholder approval required • No prior shareholder approval for transactions1

for substantial acquisitions and disposals • Pre-vetting of admission documents by the UKLA • Admission documents not pre-vetted by

Exchange or UKLA• Sponsors needed for certain transactions • Nominated adviser required at all times• Minimum market capitalisation • No minimum market capitalisation

LSE


The PBN Company

Main Market “We are delighted to be listed on the Main Marketof the London Stock Exchange and were verypleased to receive such a positive reaction to ourcompany from the international investment com-munity. Our decision to join the growing numberof leading Russian companies to be listed on theLondon Stock Exchange reflects our desire toattract a broad institutional investor base,” —Mark Gyetvay, CFO of Novatek.2

Admission processTo be admitted to listing on the Exchange's MainMarket the issuer must:• satisfy the UK Listing Authority's listing rules —this is a set of specific regulatory requirements foradmission to the Official List, and• apply to the Exchange to be admitted to trad-ing on the Main Market.More detailed information about the listingrequirements for the Main Market can beobtained from the Exchange's website and theUKLA's website.

AIM“We are very pleased to be admitted to tradingon AIM, the right market for a company likeRambler Media, which operates in a high growthmarket, and would like to thank investors for theirstrong support and interest in our business,” —Irina Gofman, CEO of Rambler Media.

Admission process • All prospective companies need a nominatedadviser from AIM's approved register, who willco-ordinate the admission process and carry outdue diligence to ensure the company is suitablefor AIM and that all the necessary informationabout the company is included within the admis-sion document.•An applicant must provide an admission docu-ment that includes information about the compa-ny's directors, their promoters, business activitiesand financial position. • AIM offers a simplified fast-track admissionprocess for international companies meeting cer-tain criteria known as the AIM Designated

Russian and CIS companies on the London Stock Exchange's Main Market

List date Company Sub sector18/11/2005 Amtel-Vredestein Tyres & Rubber13/12/1996 AO Tatneft Oil & Gas - Exploration & Production21/10/2004 Efes Breweries International N.V. Beverages - Brewers08/06/2005 Evraz Group SA Steel28/10/1996 Gazprom OAO Oil & Gas - Exploration & Production16/09/1999 JSC Kazkommertsbank Banks01/12/2005 Kazakhgold Group Gold Mining12/10/2005 Kazakhmys Other Mineral Extractors & Mines04/11/2005 Kazkommertsbank Banks07/05/1997 Lukoil OAO Oil - Integrated27/07/2005 Novatek OAO Oil & Gas - Exploration & Production30/09/2003 OMZ Engineering - General11/05/2005 Pyaterochka Hldg N.V. Food & Drug Retailers14/02/2005 Sistema JSFC Diversified Industrials30/09/2003 Utd Heavy Machinery Uralmash-Izhora Engineering - General

2 Source: www.londonstockexchange.com


LSE

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Markets Route. This means that companies whohave had their securities traded upon an AIMDesignated Market for at least 18 months prior tothe date of admission to AIM can apply to beadmitted without having to publish an admissiondocument. The current AIM Designated Marketsare the main markets of: Australian StockExchange, Euronext, Deutsche Börse,Johannesburg Stock Exchange, Nasdaq, NYSE,Stockholmsbörsen, Swiss Exchange, TorontoStock Exchange and the UKLA Official List.

FeesMain MarketAdmission fees are payable on all applications forsecurities to be admitted to trading on theLondon Stock Exchange, based on the marketcapitalisation of those securities at admission.

Annual fees are payable by all companies whichhave either equity securities or certificates repre-senting shares admitted to trading. Fees varyaccording to the type of security being admittedto market and the domicile of the company beingadmitted to market.

AIMAn admission fee of £4,180 is payable by all com-panies seeking admission to AIM, and an annualfee of £4,180 is payable by all AIM companies.

A fees calculator is available on the LondonStock Exchange website for the calculation ofadmission and annual fees for the Main Marketand AIM at:www.londonstockexchange.com/feescalculator

London Stock Exchange ContactsJon Edwards, Head of CEE & CISTel: +44 (0) 20 7797 1599Email: [email protected]

Svetlana Rozanova, Manager RussiaTel: +44 (0) 20 7797 4081Email: [email protected]

Arabela Militaru, AnalystTel: +44 (0) 20 7797 4208Email: [email protected]

Regulatory authoritiesFinancial Services Authority (FSA)http://www.fsa.gov.uk

UK Listing Authority (UKLA) — a division of the FSA, which maintains the Official List of the LondonStock Exchange's Main Market. http://www.fsa.gov.uk/Pages/Doing/UKLA/

NASDAQ

NASDAQ is the largest U.S. electronic stock mar-ket. With approximately 3,200 companies listed,of which about 10% are non-US listings, NAS-DAQ lists more companies and on average,trades more shares per day than any other U.S.market. It is home to category-defining compa-nies that are leaders across all areas of businessincluding technology, retail, communications,financial services, transportation, media andbiotechnology. NASDAQ is the primary market fortrading NASDAQ-listed stocks. Approximately54% of NASDAQ-listed shares traded are report-ed to NASDAQ systems.

NASDAQ is committed to the Russian market.In March 2005, it signed agreements with theleading Russian Stock Exchanges. AMemorandum of Cooperation was signed withthe Moscow Interbank Currency Exchange(MICEX) and a Memorandum of Understandingwas signed with the RTS Stock Exchange(RTS). NASDAQ has two Russian companieslisted in on its market, Golden Telecom, with amarket cap of £1 billion and Moscow CableCom (MOCC), which has a market cap of £50million.

NASDAQ National Market Listing RequirementsRequirements Initial Listing Continued Listing

Standard 1 Standard 2 Standard 3 Standard 1 Standard 2

Marketplace Marketplace Marketplace Marketplace Marketplace

Rule 4420 (A) Rule 4420 (b) Rule 4420 (c) Rule 4450 (a) Rule 4450 (b)

Stockholders' equity $15 million $30 million N/A $10 million N/A

Market value of N/A N/A $75 million1,2 N/A $50 million

listed securities or or or

Total assets $75 million $50 million

and and and

Total revenue $75 million $50 million

Income from continuing $1 million N/A N/A N/A N/A

operations before income

taxes (in latest fiscal year

or 2 of last 3 fiscal years)

Publicly held shares3 1.1 million 1.1 million 1.1 million 750,000 1.1 million

Market value of publicly $8 million $18 million $20 million $5 million $15 million

held shares

Minimum bid price $5 $5 $57 $1 $1

Shareholders 400 400 400 400 400

(round lot holders) 4

Market makers5 3 3 4 2 4

Operating history N/A 2 years N/A N/A N/A

Corporate governance6 Yes Yes Yes Yes Yes

1. Issuers listed as of June 29, 2001, may qualify for continued listing under either the new minimum $10 million stockholders' equity standardor the old minimum $4 million net tangible asset standard until November 1, 2002. 2. For initial listing under Standard 3 or continued listing under Standard 2, a company must satisfy one of the following to be in compliance: (a)the market capitalization requirement, or (b) the total assets and the total revenue requirement. 3. Seasoned issuers must meet the market capitalization requirement and the bid price requirement for 90 consecutive trading days prior toapplying for listing.4. Excluding extraordinary and non-recurring items. 5. Public float is defined as total shares outstanding less any shares held by officers, directors, or beneficial owners of 10 percent or more. 6. Round lot holders are considered holders of 100 shares or more. 7. Electronic Communications Networks (ECNs) are not considered active Market Makers. Source: NASDAQ. See www.NASDAQ.com for footnote explanations.


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Listing Fees

NASDAQ Capital Market Listing Requirements

Requirements Initial Listing Continued Listing

Stockholders' equity1 or $5 million or $2.5 million or

Market value of listed securities2 or $50 million or $35 million or

Net income from continuing $750,000 $500,000

operations (in latest fiscal year or

2 of the last 3 fiscal years)

Publicly held shares3 1 million

Market Value of Publicly held shares4 $5 million $1 million

Operating history or 1 year or

Market value of listed securities2 $50 million

Minimum Bid Price2 $4 $1

Shareholders 300 300

(round lot holders)4


The PBN Company

NASDAQ

Market Makers5 3 2

Corporate Governance6 Yes Yes

1. For initial listing, a company must satisfy one of the following to be in compliance: the stockholders' equity requirement, the market value oflisted securities requirement or the net income requirement. 2. Seasoned companies qualifying only under market value of listed securities requirement must meet the market value of listed securities andthe bid price requirements for 90 consecutive trading days prior to applying for listing. 3. Publicly held shares is defined as total shares outstanding less any shares held by officers, directors or beneficial owners of 10% or more.In the case of ADRs/ADS, for initial inclusion only, at least 100,000 shall be issued.4. Round lot holders are shareholders of 100 shares or more. 5. An Electronic Communications Network (ECN) is not considered a market maker fo the purpose of these rules. 6. Marketplace Rules 4350 and 4351Source: NASDAQ. See www.NASDAQ.com for footnote explanations.

NASDAQ support and ServicesAll issuers are provided with an unparalleled level of value added products and services.

In Q3 2005 NASDAQ entered into a joint venturewith Reuters to create the Independent ResearchNetwork (IRN). Aimed at improving the quality ofresearch information that is disseminated into themarket, IRN acts as an intermediary for under-fol-lowed public companies seeking to have theirequity securities covered by analysts.

NASDAQ Contact: Paulina McGroartyManaging DirectorTel: +44 20 7825 5534Email: [email protected]


NYSE

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The New York Stock Exchange is the world'sleading equities market with a total global marketcapitalization of $21 trillion. There are about 447non-US listed companies on NYSE, spanning 47countries and with a combined global marketcapitalization of $7.5 trillion. If NYSE's non-USlisted companies were to be ranked as a stand-alone market, they would be the second largestequities market in the world, after the Exchangeitself.

The NYSE / Russian Federation partnership datesback to the VimpelCom (VIP) IPO on November15, 1996. The most recent Russian company tolist on NYSE was Mechel (MTL), which conductedan IPO on October 29, 2004. Tatneft (TNT), MTS(MBT), Rostelecom (ROS) and Wimm Bill Dann(WBD) are also listed on the Exchange. The totalworldwide market capitalization of these compa-nies exceeds $26 billion.

A recent study by Doidge, Karolyi and Stulz esti-mated the cross-listing premium for non-U.S.stocks listed on the major U.S. exchanges at31.2%. The cross-listing premium varies acrosscountries, with the most significant valuation pre-miums going to companies from Canada,France, Germany, Russia, Singapore,Switzerland and the UK.

An NYSE listing offers Russian companies along-term enhanced value proposition:• Access to the largest and deepest pool of cap-

ital.• Shareholder value is enhanced directly, through

increased demand for the Company's equity.Many US institutional investors, and most retailinvestors, prefer, or are restricted to owning,US-listed equity securities. The large emergingmarket funds that buy directly may haveincreased appetite for a stock that is registered

and reporting with the SEC, and complying withthe US corporate governance and transparen-cy regime.

• Recognition of meeting the highest world dis-closure, reporting and governance standards.

• US trading, ownership, and SEC filings, includ-ing financial statement reconciliations to USGAAP, all facilitate the market's benchmarkingthe stock against US peers, which in turn canassist in closing valuation gaps that often occurin favor of US peer groups.

• The NYSE acts as an unparalleled visibility plat-form for companies in the US community,amplifying the demand and valuation effects ofNYSE listing.

• The NYSE listing and SEC registration providesa flexible acquisition currency in the US.

NYSE Listings Fees• NYSE listings fees are calculated and based on

the shares/ADRs outstanding in the US. • The minimum and maximum Listing Fees appli-

cable the first time an issuer lists a class of com-mon shares are $150,000 and $250,000.

• Minimum and Maximum Continued Listing Fees.The minimum and maximum fees applicable onannual basis are $38,000 and $500,000.Issuers are billed at $930 per million shares out-standing in the US.

NYSE Listing StandardThe Exchange offers two sets of standards —worldwide and domestic — under which non-U.S. companies may qualify for listing. Bothstandards include distribution and financial crite-ria. A company must qualify for both the distribu-tion and financial criteria within that particularstandard. This chart is to be used for an initialevaluation only. The Exchange will work witheach company to determine which standardsare best suited to that entity.


The PBN Company

NYSE

NYSE Contact:David GriffithsSenior Managing DirectorTel: +44 20 7025 7881Email: [email protected]

CRITERIA REQUIREMENTS WORLDWIDE DOMESTICMay satisfy either A, B, or C:

Distribution Round-Lots Holders 5,000 A. 2,000 U.S. round lot shareholdersB. 2,200 total shareholders and100,00 shares monthly trading volume (most recent 6 months)C. 500 total shareholders and 1,000,000 shares monthly trad-ing volume (most recent 12 months)

Public Shares 2.5MM 1.1MM Public Market Value $100MM IPO's, Carve-outs & Spin-offs N/A $60MM All other listings N/A $100MM

Financials Earnings Aggregate Pre-tax Income for $100MM $10MM last 3 years Minimum Pre-Tax Income in each $25MM $2MMof 2 preceding years of 2 preceding yearsValuation/Revenue TestMay satisfy either A or B A. Valuation with Cash Flow Test Global Market Capitalization $500MM $500MM Revenues (most recent 12-month $100MM $100MM period)Aggregate Cash Flow for last 3 years $100MM $25MM

(all 3 years must be positive) Minimum Cash Flow in each of 2 $25MM N/A preceding years B. Pure Valuation Test Global Market Capitalization $750MM $750MM Revenues (most recent fiscal year) $75MM $75MM Affiliated CompanyFor new entities with a parent oraffiliated company listed on the NYSE Global Market Capitalization $500MM $500MM • At least 12 months of

operating history Yes Yes• Affiliated listed company is in

good standing Yes Yes• Affiliated listed company retains

control of the entity Yes Yes


MICEX

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The Moscow Interbank Currency Exchange(MICEX) is Russia's leading exchange. It servesas a basis for the nationwide system of trading inthe currency, stocks and derivatives sectors ofthe financial market, covering Moscow andRussia's largest financial and industrial centers.Jointly with its partners the MICEX Group (theMICEX Stock Exchange, the MICEX SettlementHouse, the National Depositary Center, regionalexchanges and others), MICEX provides settle-ment and clearing as well as depositary servicesfor about 1500 organizations - participants in thestock market. In terms of the total trade turnover(in 2004 — $549 billion with the average daily vol-ume of transactions amounting to $2.2 billion)MICEX is the largest exchange in Russia, the CISand Eastern Europe. Russia's Central Bank has used the results fromMICEX in calculating the country's officialexchange rate since 1992. The government secu-rities market has about 300 authorized dealers,who serve seven thousand investors. In 2004, thetotal volume of transactions in government secu-rities reached over $46 billion, including REPOdeals.

2004 annual trading volumes at MICEX

Currency market total 350 billion USDStock market total 151 billion USDGovernment bond total 47 billion USDDerivatives market total 0.46 billion USDMICEX turnover total 549 billion USD

In 2003 the MICEX Stock Exchange (MICEX SE)was established as a specialized stock floorunder the program of reorganization of theMICEX Group's stock business. The programwas implemented following the enactment ofamendments to the Law "On the securities mar-

ket". As a result, trades in non-government secu-rities were transferred from the MICEX StockMarket Section, where they had been tradedsince 1997. The procedure and the technology ofsettlements and trades in securities on MICEX SEremained the same, while the functions pertain-ing to the organization of trading in corporatesecurities were distributed between MICEX andMICEX SE in the following way:

• MICEX SE organizes the process of trading,work with clients, listing and the developmentof exchange technologies;

• MICEX provides clearing services and techno-logical support.

The MICEX Stock Exchange bases its activities onthe stock exchange license granted to it in 2004by the Federal Service for Financial Markets.

Daily trades are held on the MICEX StockExchange in 645 securities of 400 issuers, includ-ing such blue chips as RAO UES, LUKoil,Rostelecom, Mosenergo, Sberbank andSurgutneftegaz, whose total capitalizationamounts to about $250 billion. Approximately30% of these securities are already on the MICEXSE quotation lists. More than 500 professionalparticipants in the securities market, who repre-sent over one hundred thousand investors, partic-ipate in trading on MICEX SE.

The daily average volume of transactions in secu-rities amounts to 700 million USD (19 billion rubles)which makes up over 80% of the total turnover ofRussia's leading exchange floors. Trades are heldelectronically, using an up-to-date trading anddepositary system, which is connected to regionaltrading floors and about 1500 remote terminals inmore than 50 Russian cities. Cash settlements areeffected through the MICEX Settlement House,

MICEX


The PBN Company

while settlements for securities are effectedthrough the National Depositary Center.

The total capitalization of the MICEX SE sharesmarket is 253 billion USD. The capitalization of cor-porate and regional bonds reached 20 billion USD.

MICEX SE developed an effective structure forthe placement of bonds of corporate, municipaland subfederal issuers, as well as IPOs. Since1999, over 440 issues totaling 630 billion rubleshave been placed at MICEX.

Since 2002, MICEX SE has already had sevensuccessful IPOs, exceeding 14 billion rubles.Lebedyansky, Severstal-Avto, Irkut, Kalina,Pharmacy Chain 36.6, RosBusinessConsultingand Khleb Altaya have conducted IPOs onMICEX.

Securities can be admitted to trading on MICEXeither through an initial public offering or second-ary circulation. Secondary circulation of securi-ties can be listed or unlisted. Among the require-ments taken into account for listing are: financialperformance and the stockholders' structure ofthe issuer, securities' liquidity, total volume ofissue, quality of information disclosure, etc.

MICEX SE provides a list of services for clients plan-ning a public offering. MICEX SE has schemes for

IPOs and secondary offerings, develops a depositaryclearing mechanism of securities and monetaryfunds and provides consultations at every stage ofIPO preparation, including assistance in issue docu-ments. On the technical side, the stock exchangecollects purchase bids, automatically closes the dealat the price fixed by the client, and provides settle-ments on investors' deals, transfer of documents andmonetary funds that the client raises through its IPO.

MICEX also offers some PR and marketing sup-port, which includes placing information onwww.micex.ru, distributing it through Interfax,RosBusinessConsulting, AK&M, Prime-TASS andother information agencies as well as organizingpresentations on MICEX premises.

FeesListing fees on MICEX SE range from 15,000 to60,000 rubles, depending on which list the com-pany is on. Likewise, annual fees range from6,000 to 15,000 rubles.

Prices for the admission of bonds (corporate, inaddition to state, regional and municipal) on MICEXSE can range from 0.1% of the volume up to300,000 rubles, depending on the size of the bond.

For more information please contact:IPO Project HeadGennady Margolit, Deputy Director GeneralPhone: +7 495 705-9616, Fax: +7 495 745-8127Email: [email protected]

For operational questions:Leonid Savvinov, Director of Listing DepartmentPhone: +7 495 234-4816, Fax: +7 495 745-8127Email: [email protected]

125009 Moscow, Russia, Bolshoy Kislovskiy per., 13, Website: http://www.micex.com

Trade volume, Billion USD


RTS (Russian Trading System)

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The RTS Stock Exchange (RTS) is Russia's lead-ing stock exchange in terms of product offerings.By the end of 2004, more than 300 securities andbonds traded on RTS. RTS's indicative quotationsystems comprise about 700 stocks and 500 billsissued by Russian companies. RTS in partnershipwith St. Petersburg Stock Exchange executes“Gazprom” stock trades. In 2004, total turnover ofthe RTS Group increased by 1.8 times comparedto 2003 and reached $37.86 billion.

• 240+ Members;• 300+ securities of 200+ companies listed on

RTS Classic (stock, corporate bonds, municipaland federal bonds, eurobonds, mutual funds);

• Almost 800 OTC-securities of 600+ companiesquoted on RTS Board.

The RTS Stock Exchange was established in1995, consolidating several regional securities

trading floors into a single regulated Russiansecurities market. RTS lists leading Russian secu-rities for purchase by both domestic and foreignportfolio investors. RTS ensures efficient marketprices for a wide range of stocks and bonds, withits trading information distributed worldwidethrough the largest financial information servicescompanies, such as Reuters and Bloomberg.

ListingThe RTS Stock Exchange provides investors,professional market participants and their clients,both domestic and foreign, with a wide range ofopportunities to trade Russian stocks, bonds andderivatives. According to current legislation, onlyan appropriately licensed Russian company canwork on the local market. Non-residents are wel-come to trade Russian securities either as a reg-istered client of local brokerages/investmenthouses, or by setting up a local subsidiary, get-ting licensed and joining the appropriate RTSmarket.

The RTS product line includes a wide variety ofproducts and services offered to investors andmarket participants, such as:

• RTS Classic Market;• Ruble- and dollar-settlement;• Can be anonymous or non-anonymous;• Quote-driven trading.

RTS Classic Market trades the widest securitieslist of all Russian exchanges. It provides flexibledelivery terms: delivery versus payment (DVP)and free of payment (FOP). Trading on the clas-sic OTC segment of the RTS Stock Exchangebegan on July 5, 1995.

• RTS T+0 Market; • Double-auction anonymous market with full preliminary deposition of assets;• Includes trading in “Gazprom” stock;• FORTS - (Futures and Options Trading with Ruble Settlement);• Launched in September 2001;• Fastest growing segment of the RTS;• 87 companies headquartered in Moscow, St. Petersburg, Novosibirsk, Samara, Rostov-on-Don,Kazan and Abakan are registered FORTS members;• 10 futures contracts and 5 futures options are traded;• RTS Board — System used for indicative quotation of securities not listed on the RTS.

Fees, rubles1. Admission of securities to placement (in the non-listed stock section) including 6000

• cost of document examination 0• payment for admission to placement 6000

2. Securities fee (clearing fee), including VAT• shares 0.0075%• bonds 0.0075%

3. Securities storage (global certificate) in depositary clearing company, per month 0

Listing procedure costs in rubles (before VAT)To include its securities in the quotation lists, a company has to make a one-time payment of51,000 for A1 stocks, 40,800 for A2 and 18,000 for B. The cost of maintaining the securities in thelists is 12,000 per year for A1, 9,000 per year for A2 and 6,000 for B list.

Fees for examination of share issue, rublesShare type Nominal cost of all securities in the same category,

separate issues of which are listedUp to 100 Up to 500 More than 500 million million million

Ordinary shares 24,000 30,000 42,000Preferred shares 24,000 30,000 42,000


The PBN Company

RTS (Russian Trading System)

For more information please contact

127006, Russia, Moscow Dolgorukovskaya Str, 38, Bldg. 1Tel. (495)705-90-31/32

Oksana Derisheva, Head of RTS [email protected]

Alexey Fedorov, RTS IPO Department:[email protected]


Research Conducted by The PBN Company

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October 2005 — The PBN Company's Guide to the UK and Its FinancialMarkets: Essential Information for FSU and Other Emerging MarketCompanies Wanting to Raise Finance in the UK.

March 2005 — Russia: Investment Destination. Aconfidential survey of 158 foreign investors conductedby The PBN Company for the Foreign InvestmentAdvisory Council and the Russian Ministry ofEconomic Development and Trade.

October 2004 — The Russian CEO Survey. 175 Russian CEOs speak out onreputation, corporate governance, transparency and raising finance. The PBNCompany will conduct a follow-up survey of Russian CEOs in early 2006.

April 2003 — Top 100 Emerging Companies of theRussian Consumer Market. This breakthrough studyrevealed and analysed the most promising targets for invest-ment throughout all of Russia's consumer-oriented industries.

To obtain copies of any of the above studies, please write to DominiqueWinther at [email protected], or visit The PBN Company’swebsite at http://www.pbnco.com.

ABOUT THE PBN COMPANY

The PBN Company (www.pbnco.com) is the leading strategic communications and financial rela-tions company with a focus on Russia and emerging European markets. The company has officesin Moscow, London, Kiev, Riga, Almaty and Washington DC.

PBN’s clients from the region include: Baltika, Basic Element, Pharmacy Chain 36.6,Renaissance Capital, Rosinter, Rusal, Sberbank, Sibir Energy plc, TNK-BP, Ukreximbank, UkrainianMobile Communications, Cardinal Resources plc and the Western NIS Enterprise Fund.

russia’s ipo pioneers - fertikola · 2007. 10. 9. · rambler media novatek urals energy...

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