Director of Equity Financing, FINAM Investment Company, Moscow
Logo for the FINAM IT Venture Fund
This week we learned that multiple venture capital firms in Russia are issuing IPOs. The latest examples are: Tau Capital PLC, an investment company based in Kazahkstan. Tau Capital recently had a successful listing on the London Stock Exchange’s Alternative Investment Market (LSE AIM). This venture was formed by a group of U.S. investment bankers who teamed up with financial experts from Kazakhstan to develop public and private businesses in Russia and Central Asia. Another example of this trend is the Russian buyout fund - Russian Strategic Growth Holdings PLC (a subsidiary of Russia's National Bank Trust and Trust Investment Bank), which plans to list on the LSE AIM this summer with the goal of raising at least $150 million.
Here at FINAM, we are raising capital domestically in Russia and hope that foreign investors will participate in our own efforts. Of course, our upcoming IPO on the Moscow Interbank Exchange (MICEX) junior market will be rather modest, but it presents a unique and challenging opportunity to investors.
An outdoor stock ticker at FINAM's offices in Moscow
In my previous Russia Blog post (“Investing in Russia’s IT Sector – Is it Worth Your While?”), I described some of the secular technological and economic trends supporting the phenomenal growth of Russia’s IT sector. Anticipating this growth, in December 2005 the FINAM Investment Company set up the FINAM Information Technologies Venture Unit Fund. The FINAM Investment Company correlates its investment strategy with the current situation in the Russian IT market.
The investment philosophy of FINAM’s IT Venture Fund is centered on the following:
- Development of software applications and services- Growth in outsourcing IT services to Russia and the CIS countries
- Services and software targeted towards SMEs, SOHO and individuals
More specifically, we have targeted companies that:
- Exploit the opportunities within Russia’s online advertising market, specifically contextual advertising.- Provide comprehensive services to web users, such as supporting e-commerce, interactive services (specifically, on-line dating), creating and maintaining business Web-sites, developing and improving search engines; and finally, utilizing the creative potential of Russian Internet users.
As of April 30, 2007 the FINAM Venture Fund held equity and shares in six Russian IT companies with total net asset values of approximately of $ 42.5 million, including:
Mamba is the most popular on-line dating service in Russia, and it cooperates with major Ru-net portals Mail.Ru, Rambler.ru and Km.Ru. The company’s database holds 9 million online profiles, 4 million of which are active; this means that Mamba has 85% of the online dating market in Russia. On average, the website hosts 30,000 unique member visits per day.
Buka Entertainment Ltd.
Buka Limited is a producer, publisher and distributor of first-rate PC games for worldwide distribution. Headquartered in Moscow, Russia, it also has publishing activities in North America. Since 1993, the company has sold more then 35 million copies of computer games. Computer games developed by Buka Ltd. are licensed in 70 countries, while the company also localizes the products of its peers in Russia.
Other companies from the Venture FINAM Fund’s portfolio represent “top brains” in the Russian IT sector and have an extremely bright future in Web 2.0 development.
At the beginning of June 2007 the Venture FINAM Fund will launch its IPO on the MICEX, and it will be:
- The first of its kind for venture mutual funds in Russia;
- The first of its kind for the MICEX junior market (for Innovation and Growth Companies – IGCs)
The proceeds from this IPO will be used to expand the Fund’s portfolio.
If you are interested in learning more about this IPO and participating, please contact me at vladfk@finam.ru.
You can read the original post at Vladimir Kuznetsov's blog, Equity Financing in Russia. The views expressed in this post and on Mr. Kuznetsov's blog are reproduced here solely for educational purposes. To read more Russia Blog posts about Russian capital markets, click on the finance section or type www.russiablog.org/finance in your web browser.
