Transcript Document

Equity financing alternatives for Russian
companies on the London Stock Exchange
October 20, 2006
Company growth
Liquidity
Increasing and
maintaining
liquidity
Capital
Raising it efficiently
& effectively when
required
Profile
Growth
Maximising
marketing/PR
opportunities
Independent Market Expertise
Recommendations on how to maximise the value of joining a
London market
The LSE supports customers in maximising shareholder value through supporting capital
raising and generating liquidity whilst maximising opportunities from their increased profile
October 2006
2
Volume of Assets Managed
in Financial Centres, 2005
16000
Equity ($, billion)
10000
$3,081
12000
$7,584
14000
8000
6000
4000
2000
0
London
New York
Boston
San
Francisco
Los
Angeles
Chicago
Paris
Frankfurt
Munich
Fund management activities in the UK are concentrated in a single location (London) rather
than geographically spread of different centres
Source: Big Dough, Hemscott (September 2005)
October 2006
3
Cost of Capital in London:
Oxera Research
Oxera’s new analysis confirms that
the findings of the 2003 Torstila
study continue to apply now. The
Oxera analysis is based on a sample
of all IPOs on the LSE, NYSE,
Nasdaq, Euronext and Deutsche
Boerse during the period from
January 1st 2003 to June 30th 2005,
for which underwriting fee data was
available in Bloomberg.
The gross spreads of IPOs on the US exchanges are found to be the highest, averaging 6.5% for
the NYSE sample and 7% for Nasdaq IPOs. In comparison, median spreads of IPOs on the LSE’s
Main Market are 3.25% and those on AIM somewhat higher at 4%.
Source: The Cost of Capital - An International Comparison, June 2006
October 2006
4
London continues to attract
int’l companies
Total New Issues for the International Main Market 2003,
2004, 2005 and 2006 compared
Number of Companies
4
2003
2004
2005
2006
3
2
1
Source: London Stock Exchange, August 2006
October 2006
5
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br
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0
International IPOs
in London, 2005
Int'l IPOs in 2005 (£,m)
907
718
Feb-05
Mar- Apr- May05 05
05
Jul05
Oct-05
Nov-05
NLMK.L
17
REA.LI
AMV.LI
INVEST
NVTK.LI
PRTY.L
EVR.LI
AGC.L
Jun-05
333 353
130
91
BKM.LI
148
61
19
FIVE.LI
UTI
SSA.LI
125
SRI.LI
141
KUMHO
31
232
435
888.L
312
TEEG.L
531
FRUT.LI
1000
900
800
700
600
500
400
300
200
100
0
Dec-05
In 2005, 17 Int’l Companies raised approximately $8 billion in London
Source: London Stock Exchange, August 2006
October 2006
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International IPOs
in London, 2006 YTD
Int'l IPOs in 2006 (£,m)
3,581
Feb-06
Mar-06
Apr-06
May-06
304
NAPOPHARMA
10
ROSNEFT
129
COLT
TELECOM
52
CHERKIZOVO
35
ROLTA
66
CARADOR
250
GOLDENPORT
COMSTAR
564
KINGDOM
1,586
LOTTE
4,000
3,000
2,000
1,000
0
Jul-06
In the first eight months of 2006, 10 Int’l companies have raised over $12 billion in London
Source: London Stock Exchange, August 2006
October 2006
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Top 10 companies traded on IOB
– Jan-Jul’06
45,000
41,463
37,124
40,000
120,000
Total trading Values ($ million)
Total no of trades
100,000
35,000
30,000
80,000
25,000
60,000
20,000
10,000
40,000
8,332
6,435
6,075
Source: London Stock Exchange trade statistics
October 2006
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SAMSUNG
ELECTRONICS CO
ORASCOM
TELECOM HLDGS
S.A.E.
MMC NORILSK
NICKEL
UNIFIED ENERGY
SYSTEMS OF
RUSSIA
GAZPROM OAO
LUKOIL OAO
0
SURGUTNEFTEGAZ
5,000
4,206
3,083
2,909
LOTTE SHOPPING
CO
9,368
NOVATEK OAO
9,511
ROSNEFT OJSC
15,000
20,000
0
Case Study: London – a leader in
international trading
Trading of DRs on International Order Book
(2001 - 7 MNTHS 2006)
Main Market
(London listed, DR issuer)
Turnover $
200
Trades
600
180
500
160
140
(exchange
regulated)
120
100
300
80
Trades '000
(regulated)
400
Trade value
$ billion
London listing
Professional
Securities
Market
200
60
40
100
20
-
IOB
IOB (U)
0
2001
2002
2003
2004
2005
7
MNTHS
2006
In 2005, IOB total trading turnover was $131bln and in the 7 MNTHS 2006 of $172bln.
Source: London Stock Exchange - July 2006
October 2006
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Rosneft: 30/70 in Action
Rosneft ownership structure
Russian government via
Rosneftegaz 100%
Demand split
Other free float 13%
•Retail 4%
•Strategic 21%
Consolidation
minorities 12%
•Russia instl
•39%
Rosneftegaz 75%
Pre-IPO
Post-IPO
•Intl institutional
•36%
•Shares Sold: Ordinary Shares (~41%) & GDRs (~59%)
•Offer Size: $10.4 Billion (pre-Green Shoe) and $10.6
billion
•Post IPO Market Cap: $80.2 Billion
Source: JP Morgan
October 2006
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Key differences between our markets

Regulation by the LSE
No trading record required
No minimum amount of shares to be in public hands
In most cases, no prior shareholder approval required for
transactions
Normally, admission documents not pre-vetted by Exchange
or UKLA but by nominated adviser
Nominated adviser required at all times






Pre-vetting of admission documents by the UKLA
Compliance required with the rules of the UKLA
Normally a three-year trading record required
Minimum of 25% shares in public hands
Prior shareholders approval for certain transactions
Sponsors needed for certain transactions





Main Market
October 2006
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AIM for Russia
2006 – A Record Year for Capital Raised*
Total Money Raised ($m)
25,000.00
20,000.00
15,000.00
5,000.00
$19,406
$16,997
10,000.00
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 30Sep06
Source: London Stock Exchange, September 2006, *Includes further capital raises
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AIM for Russia
2006 – 199 IPOs have raised close to $11 Billion
50
80
Number of
Companies
45
$73
$73
$69
70
$62
Avg Raise ($,m)
40
60
35
30
$44
$43
25
40
44
$33
20
30
31
$24
$20
26
15
50
12
17
21
19
20
22
10
10
7
5
0
0
Jan-06
Feb-06
Mar-06
Apr-06
May-06
Jun-06
Source: London Stock Exchange, September 2006
13
Jul-06
Aug-06
Sep-06
AIM for Russia
2006 – Top 10 Sectors By IPO Capital Raised
3,000
40
36
Money raised $m
Number of IPOs
2,500
35
30
2,000
1,500
22
25
17
20
13
1,000
14
12
15
11
10
10
500
4
3
5
0
al
Re
0
te
ta
s
E
an
in
lF
ra
e
en
G
ty
ui
q
E
l
cia
s
ve
In
t
en
tm
s
In
m
tru
ts
en
&
el
v
a
Tr
re
su
i
Le
s
du
In
M
al
tri
ftw
So
e
ar
s
al
et
&
C
om
r
te
pu
rv
Se
s
ice
n
io
ct
u
tr
ns
o
C
Source: London Stock Exchange, September 2006
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&
M
ls
ia
er
t
a
M
g
in
in
M
ia
ed
S
tS
or
p
up
er
es
vic
AIM for Russia
Russian Assets on AIM – A Sizeable Peer Group
Company
Amur
Aricom
Aurora Russia
Baltic Oil Terminal
Bema
Celtic Resources
Highland Gold
Imperial
IMSG
Admission Date Market Cap Market Cap IPO $
Further $
Today ($,m) at IPO
Raised
Raised
15.03.2006
37
54
7.8
0
31.12.2003
344
27
7.6
192
24.03.2006
128
143
142.6
0
27.04.2006
153
116
43.7
0
30.12.2003
1,932
N/A
N/A
241
14.10.2002
192
68
9.6
57
17.12.2002
452
399
38.0
190
05.05.2004
663
4
1.6
342
06.12.2005
60
110
15.2
0
Peter Hambro
Rambler Media
Raven Russia
Sibir
Trans-Siberian
Urals Energy
Zirax
29.04.2002
15.06.2005
29.07.2005
12.06.2000
25.11.2003
09.08.2005
16.12.2005
Totals:
1,703
363
841
2,384
54
833
44
$10,181
Source: London Stock Exchange, August 2006
15
68
160
291
N/A
82
395
49
20.6
41.7
290.8
N/A
30.4
139.9
14.7
124
0
589
312
15
232
0
$804.2
$2,294
AIM for Russia
Access to Capital - both at IPO and after
CIS Companies - Money Raised on AIM ($,m)
2,784
3,000
2,500
2,000
1,500
1,200
1,000
500
0
IPO $ Raised
Further $ Raised
Source: London Stock Exchange, August 2006
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AIM for Russia
AIM Supports Growth Companies
900
800
Market Cap at Admission ($,m)
841
833
Market Cap Today ($,m)
700
600
519
200
100
162
269
14 Months
300
371
13 Months
400
11 Months
500
0
Max Petroleum
Urals Energy
Source: London Stock Exchange Statistics, September 25, 2006
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Raven Russia
AIM for Russia
IPO Process
Cost Structure (AIM)
Legal reports and negotiations
Total costs to raise £50m,
Excluding value of options:
Law Firm
(NOMAD’s)
Law Firm
(Corporate)
£2,500K - £5,000K
Overall costs range: 5%-10%
Prospectus
Preparation
£150K- £300K,
Of which NOMAD’s
Lawyers get 25%- 40%
£150K- £200K
plus
1% of the firm
NOMAD
Reporting
Accountants
Company
Underwriting and
analytical coverage
Broker
£100K- £150K
3 - 5% of
the deal, plus
1% of the firm
Short-form
report
Technology
Experts
£25K- £50K
£10K
Public Relations and
Investor Relations
Listing and trading Services
Stock Exchange: AIM
LHC
CREST Co
PR firms
Registrar
Independent
Researchers
Source: Oxford Said Business School MBA Project, August 2006 as amended by London Stock Exchange
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Contact Details
WWW.LONDONSTOCKEXCHANGE.COM/RU/AIM
Jon Edwards
Senior Manager, CIS Desk
+44(20) 7797-1599
[email protected]
October 2006
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