9 IN 10 RUSSIAN & CIS LISTED COMPANIES WORTH LESS TODAY THAN AT IPO

PBN IPO Pioneers Report: “2009 – Year of IPØ?”

London, Moscow – Following a disastrous year for the capital markets, only 8 of 92 companies from Russia and the CIS finished the year with a higher market capitalization than at their time of listing. This is according to IPO Pioneers 4, an annual report released today by The PBN Company, a strategic and financial communications consultancy.

“Not only did 2008 fall well short of expectations in terms of CIS IPO activity, it also saw most of the value created over the past 12 years disappear,” said Peter Necarsulmer, Chairman & CEO of The PBN Company. “Unfortunately, given current market conditions, we are unlikely to see this value begin to re-generate before 2010.”

Vimpelcom, the first ever IPO from the region, has created and retained the most value since its NYSE listing in 1996 – up 1,066%. The other 7 companies with an increase in market capitalization were Open Investments at 456%, Mobile TeleSystems at 407%, Lebedyansky at 93%, Wimm-Bill-Dann at 40%, Pyaterochka (X5 Retail) at 17%, Novorossiysk Commercial Sea Port at 14%, and Novatek at 6%.

“With the lowest level of IPO activity since 2004, 2008 certainly stands in stark contrast to 2007, which saw 4 different companies – PIK Group, ENRC, VTB and Sberbank – each raise more capital individually than 2008’s combined total,” said Necarsulmer.

“The question today is whether 2009 will be known as ‘the Year of the IPØ ’,” said Necarsulmer. “We think that is a real possibility, but hope to be proven wrong.”

The report profiles all the IPOs from Russia and the CIS in 2008, and analyzes the performance of the 92 IPOs since Vimpelcom’s pioneering flotation in 1996. Key highlights from the report reveal:

• Deals hit record lows in 2008 – only 7 companies from the CIS conducted IPOs in 2008, raising only $1.7bn, compared to 33 IPOs raising $34.3bn in 2007.
  
  
• 37 postponed & 11 cancelled flotations – a total of 48 companies withdrew their projected IPO plans due to market conditions.
  
  
• Flotations from consumer industries sustained their performance – the combined market capitalization of consumer companies increased by 0.6% from listing to the end of 2008, compared to decreases of 53% for energy companies, 58% for mining and heavy industry, 74% for agriculture, 78% for banking & finance, and 91% for real estate.
  
  
• Kazakh flotations most resilient in relative terms – since listing, the combined market capitalization of Kazakh companies fell by 50%, compared to 60% for Russian companies and 70% for Ukrainian companies.
  
  
• Renewed focus on London as the venue of choice – for those companies that braved the market in 2008, 73% of funds were raised by listing either on the London Stock Exchange Main Market or Alternative Investment Market.

The report lists over 125 Russian and CIS companies that The PBN Company has identified as considering initial flotations, subject to market conditions.

“When the equity markets eventually open back up, investors will be much more fastidious and demanding in their assessment of Russian and CIS companies,” Necarsulmer said. “Companies will need to use this time to put their houses in good order, so they are able to present a compelling, competitive investment case to win over increasingly wary investors.”

IPO Pioneers 4: An Analysis & Review of 2008 Russian & CIS IPOs profiles the 7 IPOs in 2008 from Russia, Kazakhstan and Ukraine, complete with listing data, offering trends and analysis of past CIS IPO performance. It is the fourth volume of The PBN Company’s IPO Pioneers series of research products, which is available free online at http://www.pbnco.com.

PBN has also recently launched CrisisCrunch (http://crisiscrunch.pbndc.com), a blog covering economy and finance in the CIS that provides additional key information and analysis on developments in the region as they evolve.

About The PBN Company (www.pbnco.com)

The PBN Company is the leading strategic and financial communications and government relations consultancy with a focus on Russia & the CIS. Its IPO Pioneers series of research products, available on its website (www.pbnco.com), provides an annual in-depth survey of all flotations by CIS companies. IPO Pioneers 4 is a comprehensive review of the 7 Russian, Ukrainian and Kazakh IPOs in 2008, as well as an analysis of the performance of all 92 CIS IPOs since Vimpelcom’s first flotation in 1996. PBN’s IPO research is also available on Bloomberg Professional under the ticker PBNC.

PBN has advised on numerous CIS IPOs including, recently, Bank Saint-Petersburg, M.video, MMK, Ferrexpo and Raspadskaya. PBN was named joint winner of the IPO Communications Advisor of the Year award at the 2007 Russian IPO Awards, organized by the Stock Market and Management Institute (IFRU).

PBN’s recent clients in the region include Alliance Bank of Kazakhstan, Baltic Beverages Holding, Bank Saint-Petersburg, Basic Element, BP, Chagala Group, Citigroup, Deutsche Bank, Dragon Capital, Enel, Ferrexpo, Gazprom Neft, Horizon Capital, Knight Frank, Merrill Lynch, MMK, Motorola, M.video, Nordstream, Pepsi, Pharmacy Chain 36.6, PricewaterhouseCoopers, Renaissance Group, Rolf Group of Companies, Rosneft, Sberbank, Sony Pictures and UkrEximBank.

The PBN Company is 49% owned by WPP, the world’s leading integrated marketing and communications group.