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Going Public in Russian Securities Market

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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  1. Going Public in Russian Securities Market Alexei Rybnikov CEO MICEX Stock Exchange

  2. 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

  3. Choice of Venue: Issuer Perspective Factors to consider: • Deal size • Target investor base • Critical mass of liquidity • Legislation • Cost • Story

  4. 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

  5. A CRITICAL NEED Domestic Market

  6. MICEX Group: the national financial infrastructure St.-Petersburg Novosibirsk N. Novgorod Moscow Samara Rostov-on-Don Yekaterinburg Vladivostok

  7. 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

  8. MICEX Stock Exchange: Stock Market Up-and-Coming

  9. MICEX Stock Exchange:Liquidity Growth

  10. MICEX Stock Exchange:Start in Gazprom • MICEX SE trading volume is over 41% of the total market

  11. Issuers on MICEX Stock Exchange

  12. MICEX Stock Exchange:Investor Base

  13. 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

  14. 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

  15. 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

  16. MICEX Stock Exchange Among Peers

  17. Russian Legislation & Regulation:Recent Developments (2005-2006) • More issuer & investor friendly • Shorter IPO cycle • 30% rule • RDR • Transparency • Corporate Governance • Investor Protection • National Infrastructure

  18. Future Prospects • Market is Ready • Infrastructure in Place • Regulation Inviting • Next Steps: • Dual Listings • Strategic Cooperation & Partnerships • Real Working Mechanisms

  19. 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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