The Euroset holding has received $50 million from UralSib Financial Corporation in exchange for 7.5% of its preferred shares. A preliminary agreement was reached in October 2005, and the deal was completed after all necessary legal documents were coordinated and approved. According to CNews, citing CNews Analytics, Euroset leads the Russian digital network market by a wide margin over its competitors: sales through the network in 2005 totaled $2.5 billion, 2.66 times more than in 2004. The turnover of the Euroset group of companies is expected to be around $4 billion by the end of 2006.
Analyst Assessments
Vladislav Kochetkov of Finam believes that attracting investment of this magnitude will have a positive effect on Euroset's further development, which is likely to accelerate even more. His colleague Alexei Yazykov of Aton agrees: Euroset will most likely invest this money in actively expanding its business.
According to Kochetkov, the investments could be directed toward acquiring competitors, such as the Svyaznoy retail chain, or toward continuing regional expansion, where small businesses will not withstand the pressure of an aggressive Euroset. He also noted that, despite the charisma of Mr. Chichvarkin, UralSib is inspired by effective management and the company's high growth rates. The appearance of an investor like UralSib Financial Corporation among Euroset's assets, according to Kochetkov, will also positively affect the attention of Western strategic investors, such as the Germanos franchise network, which has long shown interest in Euroset.
Forecasts for UralSib
For UralSib, acquiring a stake in Euroset is also beneficial. Kochetkov suggests that due to the company's rapid development, share value could be expected to grow by 100–200%. Yazykov is more cautious: "Judging by the information, it is difficult to estimate the value of Euroset as a whole, so it is quite difficult to predict further developments regarding the growth of its share price."
Analysts agree that the appearance of UralSib Financial Corporation among Euroset's assets will increase Euroset's share valuation at an IPO on European exchanges.
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