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Going Public in Russian Securities Market. Alexei Rybnikov CEO MICEX Stock Exchange. IPO for Russian Issuers: Pros and Cons. Benefits of going public Ability to raise capital rapidly when needed acquisition currency liquid market for the company ’ s stock expanding shareholder base

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Going Public in Russian Securities Market

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Going Public in Russian Securities Market

Alexei Rybnikov

CEO

MICEX Stock Exchange


IPO for Russian Issuers: Pros and Cons

Benefits of going public

  • Ability to raise capital rapidly when needed

    • acquisition currency

    • liquid market for the company’s stock

    • expanding shareholder base

  • Strengthening balance sheet to support future growth

  • Increases valuation (reduces illiquidity premium)

    The dark side of IPO

  • Losing full control of the process – market dictates final outcome

  • Underpricing - market price may not reflect true value of the firm

  • Focus shift – from long-term to short-term goals


Choice of Venue: Issuer Perspective

Factors to consider:

  • Deal size

  • Target investor base

  • Critical mass of liquidity

  • Legislation

  • Cost

  • Story


Choice of Venue: Issuer Perspective

Factors to consider:

  • Deal size – up to US$ 500 million

  • Target investor base - mix of buy-and-hold and active traders

  • Critical mass of liquidity – at all times

  • Cost – at issuance and maintenance

  • Story – compelling


A CRITICAL NEED

Domestic Market


MICEX Group: the national financial infrastructure

St.-Petersburg

Novosibirsk

N. Novgorod

Moscow

Samara

Rostov-on-Don

Yekaterinburg

Vladivostok


Domestic Market in Figures

  • MICEX Stock Exchange’s share in Russian stock market turnover exceeds 85%

  • Turnover in 2005 reached US$ 225,6 bln, 49,2% increase over 2004

  • Volume of transactions in Jan-Feb 2006 - US$ 69,6 bln, 3,4 times over Jan-Feb 2005


MICEX Stock Exchange: Stock Market Up-and-Coming


MICEX Stock Exchange:Liquidity Growth


MICEX Stock Exchange:Start in Gazprom

  • MICEX SE trading volume is over 41% of the total market


Issuers on MICEX Stock Exchange


MICEX Stock Exchange:Investor Base


MICEX Stock Exchange: Cash Equities

  • 294 securities of 185 issuers traded

  • 50equities of 34 issuers listed, including all blue chips

  • 2005 equities trading volume reached US$ 141,8 bln, 30,6% increase over 2004

  • Volume of transactions with equities in Jan-Feb 2006 - US$ 49,6 bln, 4 times over Jan-Feb 2005


MICEX Stock Exchange: Corporate and Regional Bonds

  • 375 bonds of 262 issuers traded

  • US$ 24,2 bln (par value) total outstanding

  • 114 bonds of 67 issuers listed

  • 2005 turnover in bonds reached US$ 83,8 bln, 2 times over 2004

  • Volume of transactions with corporate and regional bonds in Jan-Feb 2006 - US$ 20 bln, 2,4 times over Jan-Feb 2005


Corporate Bond Market: Proxy for IPOs

  • Market value of corporate bonds has grown 6,2 times during 2003-2005

  • Market value of corporate bonds in Jan-Feb 2006 has increased by 28,1% to 12,3 bln USD

  • The biggest issuers of bonds (in terms of nominal value):

    • RZhD – 1.17 bln USD

    • Gazprom – 0.89 bln USD

    • Vneshtorgbank – 0.71 bln USD


MICEX Stock Exchange Among Peers


Russian Legislation & Regulation:Recent Developments (2005-2006)

  • More issuer & investor friendly

  • Shorter IPO cycle

  • 30% rule

  • RDR

  • Transparency

  • Corporate Governance

  • Investor Protection

  • National Infrastructure


Future Prospects

  • Market is Ready

  • Infrastructure in Place

  • Regulation Inviting

  • Next Steps:

    • Dual Listings

    • Strategic Cooperation & Partnerships

    • Real Working Mechanisms


Contacts

  • Address: 13, B.Kislovskiy per., Moscow, 125009, Russia

  • Telephone: (+7 095) 234-4811

  • Fax: (+7 095)705-9622

  • E-mail: info@micex.com

  • Web-server: www.micex.com


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