Company News

Finam ranked among Russia's top 5 investment companies in H1 2005 This information was disclosed in the rating of leading Russian investment companies released by RBC. Finam’s aggregate trading volume in January-June totaled $4,994 mln. Thus, the investment company got a one-notch upgrade compared to the same period in 2004.

Finam Investment Company and Norum, EBRD Venture Fund focused on Russia’s North-West and West, have announced investments in the development of Buka, one of the largest players on the Russian computer games market. Investment has been made in the form of an acquisition of a stake in the charter capital of the established holding, Buka’s shareholder. The joint stake of investors in the holding will be 52.9%. Ernst&Young acted as Buka’s financial consultant. The value of the transaction is estimated at several millions of dollars. The proceeds raised will be allocated to the company’s development, in particular, to publishing a larger number of PC game projects and increasing its share on the domestic market by expanding its distribution network.

Buka Board Chairman Igor Ustinov said, “On the one hand, our roll-out strategy focuses on improving the quality of in-house computer game projects and releasing only the best international games in Russia. On the other hand, the most important task facing us now is to expand the number of “in-house territories” that is areas where we engage in the entire publishing cycle (production, marketing and sales). Buka opened a representative office in China in 2004 and we have already made impressive inroads on the Chinese market. In the long term, we plan to launch operations on other emerging markets as well. Our Chinese business expects to capture at least 2.5% of that market in 2-3 years, while total turnover of the Chinese market is estimated at $150-200 mln”.

Investment Manager of Norum Alexander Vlasov said that either a sale of the holding’s shares to a financial or strategic investor or an IPO could be a way to sell a stake in the company. He went on to say that “in line with our estimates, Buka’s market cap could top $40 mln”.

Buka is one of the largest and oldest Russian manufacturers of computer games. The company’s product line features leading Russian software developers and foreign sales outlets. The company’s partners include the best Russian software developers and major foreign publishers. Buka’s games are marketed and sold in 70 countries around the world and have been translated into 15 languages, including Japanese and Chinese.

The company accounted for a hefty 12% of Russia’s publishing market in 2003-2004 and its dealer network numbers over 250 towns and cities across Russia. According to expert estimates, the turnover of Russia’s licensed computer game market will amount to $150-200 mln in retail prices. The country’s licensed market is growing at 30% a year.

Kommersant Money magazine (Issue 24, June 20-26, 2005) released a rating of Growth Leaders among Mutual Funds. Mixed mutual fund Finam First (Asset Management Regulations were registered as entry #0097-59837006 with the Federal Securities Service on April 1, 2003, with amendments and additions registered as entry #0097-59837006 with the Federal Securities Service on January 27, 2005 ) was named as the winner of this rating in the 3-month (up 18.07%) and 6-month (31.3%) categories. In addition, according to certain data from the business magazine, over the past two years Finam First stock portfolio has gained 52%, which is one of the best results achieved by Russian mutual funds.

On June 21, 2005 the Federal Securities Service adopted a decision to grant a 5-year license for the provision of custody services to investment, mutual and non-state pension funds to Finam. This will enable the investment company to enlarge the range of its services. In addition, Finam has taken another step towards establishing an integrated investment holding.

This license will enable the depositary department of Finam Investment Company to significantly broaden the scope of its opportunities, in particular, keep records and store assets, as well as rights to securities of joint stock investment funds, mutual funds and non-state pension funds. In addition, the license provides for the company’s control over the compliance of management companies of investment funds (both joint stock and mutual) with requirements of federal laws, other statutory acts, the charter and investment declaration of the joint stock investment fund, terms of agreements signed with the joint stock company and asset management rules for mutual investment funds.

Unless otherwise provided for by the contract, the specialized depositary is also entitled to maintain registers of stakeholders of mutual investment funds, keep accounting records of joint stock investment funds or the mutual investment funds, render advisory and information services to joint stock investment funds, management companies for mutual investment funds or the non-state pension funds and (or) its management company based on operations as a specialized depositary.

Initially, Finam’s specialized depositary will focus on rendering services to Finam Management. So far, four mutual investment funds have been formed. The depositary will obviously not only meet the needs of Finam, but also offer services to a number of outside clients. For this reason, obtaining the license of a specialized depositary is another step in Finam’s development as an investment holding which has great opportunities and is able to operate any projects in the investment business, head of the depositary department at Finam Investment Company Svetlana Zaitseva pointed out.

Russian investment holding FINAM (www.fin-rus.com) is pleased to announce the release of a brand new powerful English Internet resource devoted to the Russian stock market. All information will be posted in the form of a blog, which is the most popular form of Internet communication today (http://finam.blogspot.com). FINAM is committed to providing international investors with the broadest possible range of web content needed to achieve success in trading on the Russian equity market.

At present, the Russian equity market is one of the most undervalued marketplaces in the world with a 6.3. P/E ratio. This factor has drawn in a large number of investors to the Russian market, especially private investors. However, many of them do not have access to a broad enough range of equity research information to operate successfully on the Russian stock market. FINAM’s new blog initiative is specifically designed to help turn this situation around.

Finam’s Internet resource offers investors the chance to stay abreast of key events such as the daily market roundup, major news items and obtain rapid-fire feedback through an online forum, receive cutting-edge advisory from leading industry analysts, portfolio managers and economists on all investment-related issues of interest to the domestic securities market and propose hot topics of their own for discussion. We proceed from the assumption that successful operations on the equity market hinge on the expertise and information awareness about ongoing processes in global and domestic economies and politics, industries and companies, combined with a thorough examination and synthesis of reams of qualitative/quantitative information. The blog is a logical extension of FINAM’s mainstream English corporate website which also showcases a wealth of analytical views on the Russian equity market which are available to our online readers in Dailies, Weeklies and Desk Notes. We are confident that our combined resources will give investors fast-track insight into the status of the Russian stock market and ideally position them to make the right investments in the Russian economy.

Finance business magazine published its rating of the leading Russian brokerage firms. To be more precise, at issue is a broad array of ratings in which investment companies are ranked according to various criteria. Based on the results, Finam Investment Company emerged among the Top 5 professional participants by turnover in stocks and bonds in Q1 2005. The financial magazine therefore essentially reiterated the earlier Kommersant rating.

In addition, Finam found its way into the group of 15 leading public brokerages based on 2004 performance. The following factors were taken into account when this rating was assigned: aggregate turnover, equity capital, profit, headcount, turnover structure, customer base, etc. In addition, Finam was named among the Top 10 public brokerages according to Finance business magazine as one of the most transparent domestic investment companies.

It’s especially noteworthy that Finam entered the Top 8 rating, which tracks the most professional brokerages in Russia based on the results of a public poll conducted among professional stock market participants.

According to composite list of professional stock market participants which executed securities transactions (shares and bonds, including governmental, municipal and corporate bonds) in the first quarter of 2005, published by Kommersant business daily, Finam was rated among the top five brokerages in Russia.

In Q1 2005 the company executed securities transactions totaling Rub 90.4 bln ($3.2 bln).

On May 17, 2005 the fifth meeting was held to name the winners of the Stock Market Elite contest. Finam Investment Company received awards in two categories: Best Internet Broker and Best Stock Market Development Project, with our company’s training center taking the award).

The Stock Market Elite prize is awarded by the National Association of Stock Market Participants (NAUFOR) and reflects recognition of the company’s achievements by the investment community.

Elena Alekseeva, head of Finam’s training center: We are very pleased that our training center won due recognition from stock market professionals. As a matter of fact, our project plays an important role in advancing the domestic equity market, since more than 2,500 people have completed our training courses and most of them have gone on to become active investors on the stock market. I believe that at the present time the graduates of Finam’s training center account for several percentage point of the total turnover on Russian trading platforms and we expect to see this figure rise as time goes on.

In addition, we continue to develop our training center by rolling out similar centers in the regions where the company has representative offices. At present, the company offers 3-level courses, both for beginners and experienced stock traders.

Andrey Shulga, head of pre-sales at Finam: Our company is truly a leading e-trading company in Russia and we are committed to offering our clients a world of opportunities in this sphere. In particular, they have access not only to our trading platforms as QUIK-Broker, Transaq, but also our own software product - Finam Web-Trade, which we are getting ready to offer investors in the new future. Our company is on a stable growth track and provides a broad array of investment services. However, I believe that e-trading will remain the area where Finam has the strongest position in the years to come.

On January 26, 2005 the Federal Securities Service registered the following mutual funds set up by Finam Investment Company:

1.Finam Bond, an open mutual fund which focuses on fixed-income instruments;2.Open benchmark mutual fund Finam Index MICEX, which makes investments in MICEX-traded stocks, i.e. directly on the stock market;3.Finam Low Liquidity Shares, mixed mutual fund of low liquidity stocks, which focuses on investments in second-tier stocks.

Now Finam customers can select any mutual fund which is in line with their risk strategies. Heightened risks and, consequently, high returns are offered by Finam Low Liquidity Shares mutual fund. Finam offers practically risk-free investments with Finam Bond mutual fund.

Transactions executed by Finam in 2004 on the stock market totaled $10.7 bln. This figure puts Finam in sixth place in RBC’s 2004 rating of Russia’s Top 50 largest investment companies.

As regards MICEX trading, Finam ranks fifth on the ruble-denominated trading floor. It is important to note that the arrival of new customers has played an important role in this achievement.

The aggregate turnover of Russia’s top 50 investment companies which operate on the two largest trading floors in the country – MICEX and RTS – was around $158.2 bln in 2004, or an upsurge of 33% year-on-year.

Record high trading volumes were registered in March, April and October.