Going Public in Russian Securities Market

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 companys 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 Exchanges 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 ExchangeLiquidity Growth
10
MICEX Stock ExchangeStart in Gazprom

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

11
Issuers on MICEX Stock Exchange
12
MICEX Stock ExchangeInvestor Base
13
MICEX Stock Exchange Cash Equities

• 294 securities of 185 issuers traded
• 50 equities 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 [phone]
• Fax [phone]
• E-mail info_at_micex.com
• Web-server www.micex.com