Updated May 21, 2008

   Russian Internet holding Mail.ru prepares to hold IPO, as it was announced that the parent company JSC Mail.ru holds talks with Citibank, Goldman Sachs and Credit Suisse about stocks offering on the London Stock Echange (LSE) this summer. Sources aware of the talks assert Mail.ru expects the $2 billion capitalization although half year ago the holding has cost almost twice cheaper.

   Mail.ru prepares to enter the stock exchange in the mid-summer as told investment bankers from Deutsche Bank and Renaissance Capital.

Source in Merrill Lynch marked that IPO could be put off till 4Q 2008. According to investment bankers the offering managers are Citibank, Goldman Sachs and Credit Suisse. Goldman Sachs and Credit Suisse representatives aware of the talks, but refused to comment.

Citigroup mass media manager neither confirmed nor denied the bank participation.

   Mail.ru sells its stocks in London at the company $2 billion value, as it has been stated.

Rambler Media business director Anna Znamenskaya confirmed this information.

"I know Mail.ru is going to the LSE

this summer and Yandex – to the American NASDAQ in autumn".

Mail.ru marketing vice-president Anna Artamonova refused to announce definite plans, but marked that holding "considers IPO as one

of the development options".

   As of September-end, 2007 the monthly Mail.ru audience was 35,3 million users that browse 4,3 billion web pages through monthly. According to September data, the number of Mail.ru email users was 30,7 million people.

Structure of Mail.ru ownership is not exposed, but the South African Naspers Ltd. holding owns around 33% of JSC Mail.ru. The holding shareholders lists such funds as Digital Sky Technologies owned by the businessman Yuriy Milner and the American Tiger Global Management

   In 2007 Mail.ru earnings totaled around $40 million, as calculated Mrs. Znamenskaya. "According to my data, the company earned $10 millions out of the context advertising and around $30 million more out of the media one. Their EBITDA profitability is at the 40% level, therefore previous year EBITDA could total around $16 million". Mail.ru does not publish the reporting and the latest data dates back to 2005, and then the earnings by US GAAP totaled $17,3 million, EBITDA was $5,3 million (profitability – 30,6%), net income was $3,1 million (profitability – 17,9%).

   If profitability remained at the 30-40% level, Mail.ru could expect around $1 billion capitalization, as considers the leading Troika Dialog analyst Andrey Bogdanov.

According to him, $2 billion is "a very optimistic forecast", as large Yandex holding is estimated at $3 billion. Moorgate Capital managing director Andrey Zubkov named the $2 billion estimation "a fantasy". "Such company capitalization is fair on the assumption of EBITDA 20-25 coefficient.

50 EBITDA is a very good estimation, and 100 EBITDA is impossible". According to him, Mail.ru would cost within $320-800 million range.

   But Mail.ru cost more in November, 2007, if orient to the last deal with its equity. Then the South African Naspers Ltd.

bought 2,6% of the holding for $26 million, i.e. Mail.ru was estimated at $1 billion. Thus in January that year Naspers bought 30% of Mail.ru for just $165 million, i.e. for seven months the holding price rose 1,8 times.

   If Mail.ru IPO takes place this summer, the holding will become the third Russian Internet project having gotten to the stock exchange. In spring 2002 RBC has hold IPO on RTS and MICEX, and capitalization totaled $83 million. In summer 2005 Rambler Media (Rambler.ru) was estimated at $153 million on the LSE. This autumn the largest Russia's Internet holding Yandex should

hold IPO. But "it competes with Google directly", as marks Mrs. Znamenskaya. "This may seem a huge minus for the western investors.

Mail.ru situation differs: the company parlayed into development of its e-mail service and popular online communities". Moreover, according to TNS Gallup Media data, in March Mail.ru became the leader by the daily audience volume of all Ru.net (5,85 million people) first, and outstripped Yandex by 290 000 people.