Transcript INVESTMENT BANKING

DISCUSSION ON EQUITY CAPITAL MARKETS
Tuesday, December 12th, 2006
Chris Christina
Principal
(612) 303-8521
[email protected]
Elissa Kluever
Associate
(612) 303-6378
[email protected]
PIPER JAFFRAY MANAGEMENT COMMITTEE
Andrew Duff
Chairman & Chief Executive Officer
Tom Schnettler
Todd Firebaugh
Vice Chairman & Chief Financial Officer
Chief Administrative Officer
Jim Chosy
Jon Salveson
General Counsel
Head of Investment Banking
Frank Fairman
Bob Peterson
Head of Public Finance Services
Head of Equities
Capital Markets
Ben May
Institutional Sales & Sales Trading
Head of High -Yield & Structured Products
Trading
Research
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CORPORATE & INSTITUTIONAL SERVICES
Investment Banking and Equities Groups
Investment Banking
Existing Industries
New Industries
 Consumer
 FIG
 Health Care
 Technology
 Alternative Energy
 Business Services
 Industrial Growth
Equities
Capital Markets
Equity Capital Markets
Convertible Originations
Corporate & Venture
Services
Distribution
Research
Institutional Sales &
Sales Trading
Investment Research
(Equity
&
Fixed Income)
Trading
3
EQUITY CAPITAL MARKETS TEAM
Organization Chart
Chad Abraham
Maura Stoltz Hasan
Head of Equity Capital Markets
Executive Assistant
Execution
Origination
John Baumgartner
Steve Schmidt
Chris Christina
Neil Riley
Principal
Consumer & FIG
Vice President
Technology
Principal
Consumer & FIG
Vice President
Health Care & Technology
John Crowther
Elissa Kluever
Greg Klancher
Associate
Associate
Associate
Jonathan Jewett
Analyst
PIPEs / RDs
David Stadinski
Chris Christina
Managing Director
Principal
Eric Helenek
Chad Huber
Vice President
Analyst
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EQUITY CAPITAL MARKETS
Type of Transactions Completed on the Equity Capital Markets (ECM) Desk
Types of transactions
completed through the
Piper Jaffray Equity
Capital Markets desk
Initial Public Offerings
• An initial public offering (IPO) is when a private
company sells its stock for the FIRST time in the
public markets
• 146 IPOs have been completed in 2006, raising
nearly $33 billion in capital
• Piper has completed 28 IPOs in 2006, raising over
$4 billion in capital
• The average number of IPOs completed since 2000
has been 163, with a high of 373 completed in 2000
and a low of 70 completed in 2002
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EQUITY CAPITAL MARKETS
Type of Transactions Completed on the Equity Capital Markets (ECM) Desk
Types of
transactions
completed
through the
Piper Jaffray
Equity Capital
Markets desk
Follow-on Offerings
• A follow-on offering is when an already public company sells its stock,
either primary shares or shares from selling shareholders, in the public
markets
• 457 follow-ons have been completed in 2006, raising nearly $92 billion
in capital
• Piper has completed 43 follow-ons in 2006, raising over $7 billion in
capital
• The average number of follow-ons completed since 2000 has been 416,
with a high of 520 completed in 2004 and a low of 346 completed in
2002
Additional Types of Offerings – (Follow-on Offerings)
• Underwritten Shelf Takedowns
• 144 Block Trades
• PIPEs (Private Investment in Public Equity)
• Registered Direct Offerings
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BROAD DEPTH OF EQUITY OFFERING ALTERNATIVES
There is a Growing Continuum of Offering Alternatives for Equity Issuers…
Traditional Follow-on
Initial Public Offering (IPO)
Registered Direct (RD)
Underwritten Shelf Takedown
Private Investment in Public Equity (PIPE)
Bought Deal
Block Trade (Rule 144 Institutional)
$64,687,500
$97,232,500
$44,845,338
$57,960,000
$12,000,000
Initial Public Offering
Traditional Follow-on
Bought Deal
Initial Public Offering
PIPE
May 6th, 2005
November 8th, 2005
June 14th, 2006
May 1st, 2000
August 9th, 2006
$54,740,000
$40,089,000
$17,710,000
$120,000,000
$16,615,932
$95,737,500
Initial Public Offering
Traditional Follow-on
Rule 144 Block Trade
Initial Public Offering
Rule 144 Block Trades
Bought Deal
25th,
25th,
August/Sept 2005
June 15th, 2006
June
1999
May
2004
August
26th,
2004
January
7
28th,
2005
EQUITY CAPITAL MARKETS
Piper’s Involvement in Equity Capital Markets Offerings
Piper functions as a
Bookrunner, Co-Lead
Manager and Co-Manager
depending upon the deal
Deal economics depend
upon the status and
maturity of the issuer
Piper Roles
• Sole-Bookrunner: ECM desk functions as the lead manager on the
deal and is responsible for coordinating the roadshow, building
indications of interest, pricing the deal, allocating stock, billing &
delivering the stock offered in the issue and stabilization in the
immediate aftermarket; receives senior economic fees on the deal
and furthest to the left on the cover
• Joint-Bookrunner: same responsibilities as sole-bookrunner, but
split with another manager
• Co-Lead Manager: no bookrunning responsibilities; however,
receives differentiated economics on the deal and a better position
on the cover
• Co-Manager: most junior participating management position with
no bookrun responsibilities; offers additional sponsorship to issuer;
receives junior economics and far right position on cover
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EQUITY CAPITAL MARKETS
Piper’s Involvement in Equity Capital Markets Offerings
Piper functions as
a Bookrunner, CoLead Manager
and Co-Manager
depending upon
the deal
Deal economics
depend upon the
status and
Deal Economics
• Fixed Economics: set gross spread to the banks on the offering,
which is comprised of management fees, underwriting fees, and
the selling concession
• Jump-Ball: subset of the selling concession based on who the
designated account gives credit for the sale, bookrunner(s)
frequently capped; underwriting and management fees fixed
• Bought Deal Spread: bank’s principal capital put at risk to buy
shares from the issuer/selling shareholder at a discount to last
trade and in turn sold to institutions at a discount from last trade
and a premium to the price paid to the issuer/selling shareholder
maturity of the
issuer
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PIPER JAFFRAY COVER POSITIONS
Piper as Sole-Bookrunner
Piper as Joint-Bookrunner
Piper as Co-Lead Manager
Piper as Co-Manager
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PIPER JAFFRAY BOOKRUN OFFERINGS
$95,737,500
$247,817,032
$16,779,966
Follow-on
Follow-on
Registered Direct
August 2006
August 2006
August 2006
$62,560,000
$44,845,338
$20,925,000
IPO
Follow-on
Follow-on
June 2006
June 2006
June 2006
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EQUITY CAPITAL MARKETS
Overview of Equity Capital Markets
Primary roles of
Equity Capital
Markets –
Origination and
Origination
the groups within
Origination of Transaction with Investment Banking
Discussion of Economics and Number of Managers on Deal
Size and Time of Transaction
Constant Communication with Management during the Roadshow
Execution
Execution
Marketing the Deal with Sales – Roadshow Layout
Distribution Strategy
Allocation Decisions
Deal Pricing
Opening and Trading Process
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CORPORATE CLIENT COMMUNICATION
The Role of the Equity Capital Markets Team
Situation
Role
Client Targeting, Pitches,
and Industry Conferences
Update of Equity Capital Markets Conditions/Trends
Deal Strategy, Structure & Timing
Company Positioning & Piper Jaffray Marketing
Valuation Discussion
Prior to Roadshow
Introduction Process
Presentation Coaching
Sales Force Education
During Roadshow
Institutional Sales Feedback
Research Analyst Feedback
Order Book Updates
Market Updates
Institutional Account Profiles
Pricing
Recap of Roadshow and Order Book
Offering Distribution Overview
Aftermarket Trading Intelligence
Aftermarket
Trading Updates
Green Shoe Management
Trading Monitoring/Account Intelligence
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EQUITY CAPITAL MARKETS
Equity Capital Markets Role in deal offering
The role of Equity
Equity Capital Markets Desk
Capital Markets in
the pricing of an
offering is to
balance the
desires of the
corporate client
and institutional
client
Corporate Client &
Investment Banker
Institutional Client &
Sales Force
 Wants to sell for the highest
price
 Wants to buy for the
lowest price
 Maximize offering value for
the corporate client
 Generate increased value
for the Institutional client
 Maximize profit for the firm
 Increase likelihood of
long-term stock appreciation
The goal is to find
the so-called
“market-clearing”
price that pleases
both parties
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GOLF GALAXY CASE STUDY
Golf Galaxy priced an upsized,
Golf Galaxy Inc. (NASDAQ: GGXY)
•
Initial Public Offering
7/29/2005 at $14.00
at $14.00, one point above its $11 -
•
Filing Range
$11.00 - $13.00
$13 filed range
•
•
•
Shares Filed
Shares Offered
Shares Offered with Green Shoe
– Primary
– Secondary
3,333,000
3,950,000
4,542,500
3,000,000
1,542,500
$63.6 million initial public offering
The Company is headquartered in
Eden Prairie, Minnesota and is a
leading specialty retailer of golf
equipment, apparel and accessories
$63,595,000
Piper Jaffray
Sole Bookrun
Initial Public Offering
July 29th, 2005
•
Post-Deal Market Capitalization
$148.9 million
•
•
•
Sole Bookrunner
Co-Lead Manager
Co-Managers
Piper Jaffray
William Blair
A.G. Edwards, Wedbush Morgan
•
Use of Proceeds
Fund new store openings, general corporate purposes, pay all accrued
and unpaid dividends due to preferred shareholders
Transaction Highlights
•
Roadshow
9 Days, 14 Cities (Domestic Only); approximately 175 accounts on
the roadshow via 62 institutional 1-on-1 meetings and 6 group
functions
•
Order Book
16x oversubscribed; 210 accounts indicating on the deal; 85% of
1-on-1 meetings converted into orders; 90 orders of 10% or greater
•
1 Day Aftermarket Performance
Offer = $14.00; Open = $17.05; Close = $18.61; +33% from offer price
•
Post-IPO/ Aftermarket
Piper Jaffray served as the sole sell-side advisor to Golf Galaxy in their
sale to Dick’s Sporting Goods (11/13/06) at a price of $18.82 (+32%
from IPO)
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Introduction
GOLF GALAXY CASE STUDY
IPO Execution Timeline
Week of May 16th
Week of July 13th
Week of July 20th
Week of July 27th
Pricing on July 29th
File IPO
Deal kick-off. Piper Jaffray research analyst gives a “teach-in” to the sales force
giving them a better understanding of the business and its growth outlook.
Golf Galaxy travels to the Piper Jaffray office and presents its story to the sales force.
This is the same presentation that will be used on the IPO roadshow with institutional
investors.
Golf Galaxy begins its roadshow. The company management travels with the Piper
Jaffray investment banker and a member of the institutional sales force. The
roadshow will take them to institutional investors throughout the United States. The
roadshow begins in Chicago and continues through Kansas City, Denver, San Diego,
Los Angeles, San Francisco, Minneapolis and Milwaukee.
Company continues its roadshow through Boston, New York, Baltimore and Philadelphia.
Roadshow ends on Thursday afternoon. All-in-all, Golf Galaxy presented in front of 175
institutional investors via 62 1-on-1 appointments and 6 group functions
IPO is priced at $14.00 per share – above the $11-$13 filing range. Piper Jaffray
receives orders for 16x the number of shares that are being offered in the deal. 85% of
1-on-1 meeting attendees submit and order to Piper Jaffray. Piper Jaffray’s Equity
Capital Markets team works to allocate all of the shares to the institutional investors.
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EQUITY CAPITAL MARKETS OVERVIEW
Piper Jaffray has consistently been a Top Equity Underwriter…
IPOs, Follow-ons & Convertibles in 2006 YTD
Rank
1
1
3
4
5
6
6
8
9
10
11
12
13
14
15
16
17
18
19
19
21
22
23
23
25
Manager
J.P. Morgan Securities Inc.
Citigroup Global Markets Inc.
Banc of America Securities
Merrill Lynch & Co.
UBS Securities Inc.
Wachovia Capital Markets LLC
Goldman Sachs & Co.
Credit Suisse
Lehman Brothers
Morgan Stanley
Deutsche Bank Securities Inc.
Bear Stearns & Co Inc.
Piper Jaffray & Co
Cowen & Co., LLC
Jefferies & Co Inc.
Raymond James
Thomas Weisel Partners L.L.C.
RBC Capital Markets
CIBC World Markets
A.G. Edwards & Sons Inc.
KeyBanc Capital Markets
Keefe Bruyette & Woods Inc.
Stifel Nicolaus & Co
JMP Securities LLC
Robert W. Baird & Co. Inc
N o.
160
160
150
149
137
124
124
121
119
118
110
80
78
71
66
62
59
54
47
47
37
36
35
35
32
IPOs in 2006 YTD
Rank
1
2
3
4
5
5
5
8
9
10
10
12
13
14
14
16
17
18
19
19
19
22
22
24
25
Manager
J.P. Morgan Securities Inc.
Credit Suisse
Banc of America Securities
Merrill Lynch & Co.
Goldman Sachs & Co.
UBS Securities Inc.
Citigroup Global Markets Inc.
Deutsche Bank Securities Inc.
Cowen & Co., LLC
Piper Jaffray & Co
Morgan Stanley
Bear Stearns & Co Inc.
Lehman Brothers
Wachovia Capital Markets LLC
Thomas Weisel Partners L.L.C.
CIBC World Markets
Jefferies & Co Inc.
Raymond James
RBC Capital Markets
William Blair & Co
Keefe Bruyette & Woods Inc.
A.G. Edwards & Sons Inc.
JMP Securities LLC
Pacific Growth Equities
Lazard Capital Markets
N o.
46
40
35
34
32
32
32
31
29
28
28
27
26
24
24
19
17
13
12
12
12
11
11
8
7
EQUITY CAPITAL MARKETS OVERVIEW
Sector Rank – IPOs & Follow-On Offerings Completed in 2006
Consumer
Piper Jaffray continues to
be one of the most active
managers across key
growth sectors
Rank
1
2
2
4
5
5
7
8
8
8
11
12
Financial
Manager
Wachovia Capital Markets LLC
Piper Jaffray & Co
J.P. Morgan Securities Inc.
Goldman Sachs & Co.
Citigroup Global Markets Inc.
Banc of America Securities
Merrill Lynch & Co.
Cowen & Co., LLC
Lehman Brothers
Credit Suisse
Thomas Weisel Partners L.L.C.
Deutsche Bank Securities Inc.
N o.
17
16
16
15
13
13
12
10
10
10
9
8
Health Care
Rank
1
2
3
3
5
6
6
8
9
9
11
11
Rank
1
2
3
4
5
5
7
7
7
10
10
15
Manager
Keefe Bruyette & Woods Inc.
Citigroup Global Markets Inc.
Wachovia Capital Markets LLC
Banc of America Securities
J.P. Morgan Securities Inc.
Merrill Lynch & Co.
Credit Suisse
UBS Securities Inc.
Sandler, O'Neill & Partners, L.P.
Bear Stearns & Co Inc.
Deutsche Bank Securities Inc.
Piper Jaffray & Co
N o.
36
31
25
22
21
21
20
20
20
15
15
12
Manager
Credit Suisse
Goldman Sachs & Co.
Morgan Stanley
Lehman Brothers
Piper Jaffray & Co
J.P. Morgan Securities Inc.
Deutsche Bank Securities Inc.
Thomas Weisel Partners L.L.C.
Citigroup Global Markets Inc.
Cowen & Co., LLC
UBS Securities Inc.
Banc of America Securities
N o.
28
26
23
22
21
21
21
20
19
17
16
15
Technology
Manager
Cowen & Co., LLC
Piper Jaffray & Co
UBS Securities Inc.
J.P. Morgan Securities Inc.
CIBC World Markets
Banc of America Securities
Morgan Stanley
Merrill Lynch & Co.
Thomas Weisel Partners L.L.C.
Lehman Brothers
Goldman Sachs & Co.
Rodman & Renshaw, Inc.
18
N o.
27
25
21
21
20
19
19
17
16
16
15
15
Rank
1
2
3
4
5
5
5
8
9
10
11
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EQUITY CAPITAL MARKETS OVERVIEW
Historical IPO Volume
Number of IPOs Completed
Number of IPOs by Year
600
531
500
450
409
400
373
300
252
210
200
100
80
70
76
2001
2002
2003
170
146
0
1996
1997
1998
1999
2000
$69.2
$71.2
2004
2005
2006
YTD
IPO Capital Raised by Year
Capital Raised ($B)
$80
$60
$46.9
$42.6
$37.8
$40
$44.1
$39.0
$35.0
$33.4
$24.8
$20
$14.5
$0
1996
1997
1998
1999
2000
19
2001
2002
2003
2004
2005
2006 YTD
EQUITY CAPITAL MARKETS OVERVIEW
Historical Follow-on Volume
Number of Follow-ons by Year
Number of FOs Completed
700
617
628
600
520
464
500
415
398
400
374
424
431
457
346
300
200
100
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
YTD
$90.3
$85.0
$92.2
2004
2005
2006
YTD
Follow-on Capital Raised by Year
Capital Raised ($B)
$150
$125
$111.9
$100
$74.6
$81.2
$124.8
$84.2
$75.4
$75
$69.3
$68.8
2002
2003
$50
$25
$0
1996
1997
1998
1999
20
2000
2001
EQUITY CAPITAL MARKETS
What is Equity Capital Markets to You?
Equity Capital Markets is
– Equity Capital Markets is a dedicated resource for equity offering information
and analysis, related trading intelligence, and broader market information/color
a dedicated resource for
– Equity Capital Markets provides a weekly update of the following:
equity offering
information and analysis
Week in Review Deal Commentary
YTD Performance Tables
Week Pricings
Week Filings
Withdrawn/Postponed
Industry Calendar
YTD Deal Performance
Current Backlog
League Tables
Piper Transactions
– Equity Capital Markets works with Investment Banking to tailor the best
advice/approach for IPOs, follow-on offerings, and other equity-linked
transactions
– Equity Capital Markets works with our corporate clients, Investment Banking,
company/underwriter’s counsel, and Institutional Sales and Sales Trading to
manage all aspects of the deal execution process
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EQUITY CAPITAL MARKETS
Questions?
Comments?
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