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
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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.
Zimmerman Adams International Ltd
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
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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:
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FMC is the Lead Investing Partner in the JV
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5 Funds – AUM of +/- $ 300m
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Extensive working experience in the CIS environment, mainly in
Russia (over 10 years)
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One of the highest deal closing rates amongst the CIS-oriented
investment banks
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Practical experience in resolving the problems facing Russian
companies wishing to do a western IPO
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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:
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ZAI are the project management and corporate finance advisory
partners in the JV
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Members of the London Stock Exchange
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A licensed Nominated Adviser, or “NOMAD” for the dynamic AIM
market
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Experienced international management team
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International clientele, with companies from the USA, Russia, China,
Israel, Argentina, etc.
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Acted as the co-ordinating Financial Adviser for the Rambler IPO
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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