Updated March 28, 2008

   The volume of mergers and acquisitions has fallen by 31% in the world, as well as the European IPO volume – by 95% because of the world financial crisis in

the first quarter. Such data gives in the report the research company Thomson Financial. Russia entered the top five of the European countries with the most dynamic M&A market in the first quarter 2008 due to assets consolidation of the Russian HydroOGC.

   In the world mergers and acquisitions (M&A) market took place the substantial activity decline of the financial crisis.

Due to the loan funds constraint the companies and private investment funds simply do not have money for these transactions. As the result in 1Q 2008 the whole world volume of M&A transactions totaled only $661 billion, and that is 31% less than $962 billion in 1Q previous year.

According to Thomson Financial experts' data, it is the weakest index for the first quarter since 2005.

   However, the financial crisis, as well as instability at the stock markets, affects most the initial offering market. In Europe in 1Q the companies held the initial offerings amounted at $800 million. Thus, in 1Q previous year the volume of European IPO attained $13,8 billion. Concerning the USA, the situation would be also so dire, if it was not the brilliant IPO of the largest world payment operator Visa Inc.

at $19,6 billion (96% from the total IPO volume in the USA). The Russian companies hesitated to hold IPO at the beginning of the year. Nitol Solar was the only company which planned IPO, but declared officially about its postponement. The company planned to attract up

to $250 million, but refused the offering for "the market conditions worsening". The unnamed source was quoted as saying that Nitol Solar was able to fill only 50-60% of the bid stock book.

"In terms of liquidity crisis the companies withdraw from IPO in favor of private offerings", marks the director of investment banking services department

of Metropol Company Yekaterina Akhanova. According to her opinion, the companies as a rule could attract the bigger volume of funds as compared to IPO due to such solutions.

   At the Russian M&A market no considerable changes took place in the 1Q.

Thomson Financial estimates the volume of these transactions in Russia for the stated period at $14,2 billion, and that is just 4% less than the $14,5 billion of the 1Q previous year. Due to the Russian HydroOGC that completed its assets consolidation to the sum $12,4 billion on February 11, 2008, it occupied the fifth place in the top ten list of the largest M&A transactions in the world for the 1Q this year; and Russia entered the five of the European countries with the most dynamic M&A market for the same period. In the experts' opinion, in the nearest year the volumes of the Russian M&A market will not fall. "RAO UES of Russia reorganization is not completed yet. Moreover, transactions with the Russian Railways subsidiaries start soon", Yekaterina Akhanova sums up.

   According to the activity results of London Stock Exchange (LSE) for 11 months of fiscal year (ends on March, 31), the number of issuers, who offered their securities at the trading floor, has gone 22,34% down. 365 new companies appeared on LSE, while in 2007 there was 470 "novices". LSE representatives mark that although LSE remains the world leader by the amount of the foreign issuers' IPO, previous year their number has reduced by 5,6%, up to 84.

The most quickly growing segment of the stock exchange

within the last months became the derivative instruments market.

The volume of trades at the Italian derivatives market (Milan Stock Exchange amalgamated with LSE previous year) has gone 13% up, up to 34 million contracts.

The volume of trades at the London EDX market has gone 63% up, up to 44 million contracts. "This growth took place mainly due to the platform start for the trade of the Russian securities derivatives", mark on the stock exchange. The platform was started in December, 2006. For the reporting period the volume of trades at the stock exchange totaled 7,05 million contracts (16% from the aggregate turnover at the EDX derivatives market). The volume of derivatives trade for the Russian securities at the EDX totaled $5,17 billion in January and February, the daily trades' turnover in January – $109 million, in February – $132 million.