Ru-Net Holdings

completed

Ru-Net owns controlling stakes in a number of Russian information technology (IT) and Internet businesses. The company has a two-pronged strategy which consists of: (i) developing a portfolio of majority owned Internet companies with extremely high growth potential; and (ii) creating a leading systems integration company to serve the Russian domestic market. Consolidated revenues for 2000 were approximately US$1 million. On a pro-forma basis (following three recently closed acquisitions) the Ru-Net group is projecting revenues of approximately US$25 million for 2001. The combination of a strong management team, controlling stakes in a number of Russia''s leading IT companies, and the support provided by the company''s existing international institutional investors, positions Ru-Net as one of the most promising firms in the Russian information economy. Ru-Net''s website is located at www.ru-net.ru. This IFC project would support a group of local entrepreneurs that is building an internationally competitive IT services company offering value added to domestic firms. It would also represent an excellent opportunity to finance a company providing value added software services to companies in the developed world from a production base centered in Moscow. The company currently employs approximately 250 employees, all of whom are located in Russia. IFC''s participation would be critical to bringing in other investors in the proposed round that have concerns regarding country risk. In addition, by learning from its other IT service company investments across the world, IFC will be able to bring its global knowledge to help Ru-Net in its growth strategy. Russia is in the midst of developing the skills base necessary to be able to compete in high-technology exports. This investment will support efforts to catalyze growth and development through high-end services exports, creating quality jobs but also acting as an important symbol of the benefits of continued reform, opening up, and support for education. The project will have significant developmental impact by: (i) potentially creating hundreds of IT related jobs in Russia; and (ii) helping to train skilled technology workers in Russia by exposing them to best practices from U.S. based technology firms. There is, at present, a shortage of qualified managers in the IT sector in Russia. This is a significant bottleneck to further development of the Internet and Internet applications across the Russian region, since most companies (particularly SME''s) do not have access to U.S. and European technology expertise at the present time.