Transcript Document
Zimmerman Adams International
Pre - IPO Financing
For
Russian, Eastern European, and
Central Asian Companies
2006
Zimmerman Adams International Limited
Registered in England and Wales No. 5136014; Registered Office: One Threadneedle Street, London EC2R 8AW
AUTHORISED AND REGULATED BY THE FINANCIAL SERVICES AUTHORITY
MEMBER OF THE LONDON STOCK EXCHANGE
Table of Contents
About Pre-IPO Financing
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Rationale and Basics of Pre-IPO Financing
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Financial Phases of a Growth Company
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Typical Practices and Additional Benefits of PreIPO Financing
Introducing the ZAI – FMC Pre-IPO Financing JV
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FMC - briefly
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Pre-IPO Financing
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ZAI - briefly
Pre-IPO financing: the Rambler Case Study
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IPO
Zimmerman Adams International Ltd
Rationale for Pre-IPO Financing
In emerging markets, successful and dynamic firms look to
international financial markets as a source of investment.
In turn, companies from emerging markets become
attractive for international investors.
Private Equity Placements and Initial Public Offerings (IPO) are popular
instruments to raise capital for emerging market companies;
Raising capital, and especially conducting an IPO, is expensive, time
consuming, and not without risk;
In these circumstances, Pre-IPO financing is an interesting
option …
Zimmerman Adams International Ltd
Basics of Pre-IPO Financing
Pre-IPO financing is a hybrid instrument. It combines
features of both Private Equity and IPO financing. In
technical terms, it is a Private Equity Placement that can be
used to accelerate an IPO.
In a pre-IPO deal, an Investor acquires a stake in a Company that is considering
an IPO, but lacks expertise and/or resources for its preparation. The Company
and the Investor work together to prepare the IPO;
The critical advantages of Pre-IPO deals for the Company and the Investor are as
follows:
The Investor’s expertise translates into significant savings of time and cost
for the Company preparing the IPO;
Higher probability for the Company to raise the targeted amount of capital
in the IPO;
Ability to propose a smaller percentage of shares at IPO - lower dilution to
existing shareholders;
Provides a budget to offset the high up-front costs of an IPO.
Pre-IPO financing is a useful option for Russian companies
with growth potential.
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Typical Growth Company - Financing
Phases
Convertible
Bond
High Yield
Bond
Secondary issues
IPO
P.E.
2nd round
M&A
Private
Equity
Venture
Capital
Pre-IPO “sweet spot”
Zimmerman Adams International Ltd
t
Pre-IPO Financing – Typical Practices
Investment between 24 months and 12 months prior to IPO;
Usual stake does not represent more than 20% of the company,
and can be a little as 5%;
Investments are in cash, in return for equity, with an agreed
security package as a fall-back plan, should the IPO fail;
Investor will seek an agreed Use of Proceeds. A reliable
business plan is a must of Pre-IPO financing.
Control of the Company is not one of the Investor’s objectives;
but confidence in a Company going in the right direction is
absolutely needed.
Zimmerman Adams International Ltd
Pre-IPO financing – Additional
Benefits
In addition to the obvious benefits to the Company and the
Founders of suffering less dilution, the Company will also
benefit from the following advantages :
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Additional cash to meet the fairly large up-front costs of professional
advisers necessary to prepare an IPO
more time to complete international accounting standard audits.
expert assistance in developing acceptable corporate governance practices
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Experience in managing the complex IPO process
Additional media and exposure from the IPO press
Contacts in the IPO investors community, from the pre-IPO fund
Experience in putting the best Broking syndicate together
Zimmerman Adams International Ltd
ZAI-FMC JV for Pre-IPO Financing
of Russian Companies
Zimmerman Adams International Ltd (London) and First
Mercantile Capital (Moscow) have formed a joint venture to
provide Pre-IPO Financing for Russian and CIS companies:
Arranging Pre-IPO financing for Russian and CIS companies;
The JV has both extensive emerging markets, specifically Russian
experience, and extensive experience handling IPOs on the
Alternative Investment Market, of the London Stock Exchange –
the most dynamic stock marketplace in the world.
Zimmerman Adams International Ltd
The ZAI – FMC JV: FMC
First Mercantile Capital, or “FMC” are a Moscow based,
Western-oriented Investor Group:
FMC is the Lead Investing Partner in the JV
5 Funds – AUM of +/- $ 300m
Extensive working experience in the CIS environment, mainly in
Russia (over 10 years)
One of the highest deal closing rates amongst the CIS-oriented
investment banks
Practical experience in resolving the problems facing Russian
companies wishing to do a western IPO
The Team that successfully developed Rambler pre-IPO and managed
the entire IPO process. Rambler’s major shareholder today.
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Zimmerman Adams International Ltd
The ZAI – FMC JV:
ZAI
Zimmerman Adams International, or “ZAI” are a Londonbased, independent, internationally focussed investment
banking firm, offering a full range of corporate finance,
broking and advisory services:
ZAI are the project management and corporate finance advisory
partners in the JV
Members of the London Stock Exchange
A licensed Nominated Adviser, or “NOMAD” for the dynamic AIM
market
Experienced international management team
International clientele, with companies from the USA, Russia, China,
Israel, Argentina, etc.
Acted as the co-ordinating Financial Adviser for the Rambler IPO
_____________________________________________________
See the attached ZAI brochure for further details
Zimmerman Adams International Ltd
Pre-IPO Financing: Rambler Case
FMC made their initial investment in Rambler in 2002. When the
initial investment strategy faltered, the FMC management team
took charge of strategic and operational management;
Over 3 years, FMC Funds invested a several million US dollars in
the companies that now collectively comprise Rambler Media
Group;
The FMC management team began grooming Rambler for a
Public Market (“IPO”) at an early stage:
Ramblers accounts were audited to western standards
Rambler adopted Western standard corporate governance practices
In July of 2004, Rambler hired the ZAI team to prepare an IPO;
In June of 2005, Rambler did an IPO of their shares on the AIM
market of the London Stock Exchange.
Zimmerman Adams International Ltd
IPO: Rambler Case
In June of 2005, Rambler did an IPO of their shares on the AIM
market of the London Stock Exchange:
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Rambler offered its shares at a price of $10.25 in the IPO, which was
oversubscribed;
Rambler raised nearly $40 mln. to invest into a several media projects of critical
importance for the Company;
The Value of Rambler at IPO was set at approximately $170 million;
After the IPO, the FMC group of investors retained 52% of the Company;
Rambler’s shares currently trade at over $20 per share, having more than
doubled since IPO;
The Market Value of Rambler (as of 15 Feb 2006) is above $340 million;
Zimmerman Adams International Ltd
Contact Details
LONDON:
Zimmerman Adams International Ltd
New Broad Street House
35 New Broad Street
London EC2M 1NH
United Kingdom
Ray Zimmerman
– Ph:
+44 (0)20 7060 1760
– Fax:
+44 (0)20 7060 1761
– E-mail:
[email protected]
Dominique Doussot
– Ph:
+44 (0)20 7060 1760
– Fax:
+44 (0)20 7060 1761
– E-mail:
[email protected]
– Website:
Zimmerman Adams International Ltd
www.zimmint.com
Contact Details
MOSCOW:
"ЭФ-ЭМ-СИ ЭДВАЙЗОРЗ ЛИМИТЕД"
Восточная улица, дом 10
115280 Москва
Jim Mullins / Джим Маллинс
– Ph:
+7 (495) 721 92 00
– Fax:
+7 (495) 721 92 01
– E-mail:
[email protected]
Sergei Shilovtsev / Сергей Шиловцев
– Ph:
+7 (495) 721 92 00
– Fax:
+7 (495) 721 92 01
– E-mail:
[email protected]
– Website:
Zimmerman Adams International Ltd
www.first-mercantile.org
www.ramblermedia.com