London Stock Exchange Group plc · LSE:LSEG
London Stock Exchange — Investor Presentation (September 2014)
39 slides from London Stock Exchange's investor presentation, September 2014
Slide 1: A Discussion on Equity Primary Markets
London Stock Exchange A Discussion on Equity Primary Markets September 2014
Slide 2: Introduction to the London Stock Exchange Markets
1) Introduction to the London Stock Exchange Markets 2
Slide 3: London Stock Exchange Group: A leading diversified international Exchange Group
London Stock Exchange Group: A leading diversified international Exchange Group CAPITAL MARKETS Primary Markets Trading POST TRADE SERVICES Main Market MTA AIM AIM Italia Professional Securities Market MIV LCH Clearnet CC&G Specialist Fund Market Monte Titoli INFORMATION SERVICES RNS Proquote Histor
Slide 4: Routes to market available for all sizes, strategies and development stages
Routes to market available for all sizes, strategies and development stages Market Not public Exchange regulated EU Regulated Official List & EU Regulated designation Funding requirement £1bn £150m £1m £500k £100k £50k Concept & Start - Up Early Stage Expansion Consolidation & Diversification of inv
Slide 5: Choice for companies and investors
Choice for companies and investors The route to market a Securities admitted Securities not admitted company choses will depend to official list to official list on a number of factors (maintained by UKLA) (maintained by UKLA) including: • Stage in a company’s Main Market development EU Regulated •
Slide 6: Main Market – Regulated by the UKLA
Main Market – Regulated by the UKLA Regulation The UK Listing Authority (UKLA) is responsible for admitting securities to the Official List Admission The London Stock Exchange is responsible for admitting securities to trading Listing Securities become officially listed on the Main Market of the Lon
Slide 7: AIM - Unique Regulatory Framework
AIM - Unique Regulatory Framework AIM Regulation team Regulate the Nomads and keep a close oversight of their operations Nominated Advisers (NOMADs) – key roles: Assess suitability of a company Pre-vet the admission documents Advise companies on the AIM Rules AIM Companies 7
Slide 8: Why list on LSE?
Why list on LSE? Access to deepest pool of international capital in the world Proven level of sustained liquidity Access to incremental sell-side research coverage An exit route for earlier stage investors Ability to incentivise key employees’ commitment Significantly enhance profile & visibility, p
Slide 9: LSE Listing: access to global community
LSE Listing: access to global community Number of companies 2014 60 + 40-59 20-39 Our issuers operate in more than 115 different 1-19 countries across the world Source: London Stock Exchange statistics. Based on country of primary business. 9
Slide 10: London is the home of international companies
London is the home of international companies International companies on major exchanges More international companies choose London for the listing home than any other exchange. Close to 40% of all international companies are listed in London. Euronext NYSE Thanks to tried and tested market expe
Slide 11: Our APAC credentials – facts and figures
Our APAC credentials – facts and figures APAC listings on London Stock Exchange Main market AIM No. of companies 89 115 Total market cap (£bn) 856.9 7.6 No. of companies by country Top 10 sectors by no. of companies Sector No. of cos Other Mining 30 Vietnam China Equity Investment Instruments 19 Ind
Slide 12: Superior analyst coverage
Superior analyst coverage 5,000 40% 35% 11.4 # of Analysts Covering International % = # of Analysts Covering Int'l Companies/ Total # of Analyst 4,500 35% 4,000 30% 3,500 Average of analyst recommendations per 25% 3,000 Companies London listed int’l 2,500 company 20% 2,000 15% 10% 1,500 9% 5% 10% 1,
Slide 13: Sustained growth in London's IPO activity
Sustained growth in London's IPO activity Money Follow on Number of Q2 Q2 % Q2 Q2 % Q2 Q2 % raised (IPO) issues IPOs 2013 2014 change 2013 2014 change 2013 2014 change (USDm) (USDm) Main Market 8 29 263% Main Market 2,939 12,656 331% Main Market 7,465 10,138 36% AIM 15 24 60% AIM 306 951 210% AIM 1,
Slide 14: The leading cross-border listings venue
The leading cross-border listings venue 14,000 LSEG has consistently attracted 12,000 327 475 international issuers to list on our 1,121 1,165 markets Money Riaused at IPO (USDm) 10,000 546 1,958 75 ‘non-domestic’ issuers listing since 809 2,917 2011, representing an average of 35% of 8,000 all cros
Slide 15: Connecting investors around the world
Connecting investors around the world Selected major Institutional investors in London listed equities Americas Europe • Capital Research • Blackrock • Vanguard • Legal & General • SSgA Funds • Scottish Widows • Fidelity • Invesco • Blackrock • M&G • Thornburg Investment • Standard Life • Artisan Pa
Slide 16: The heart of the global investment community
The heart of the global investment community Domicile of investors in listed securities (as at Q2 2014) 3.2 trillion 1.9 trillion Total Equity Assets Under International equity Managements (USD) AUM (USD) Lat America 2% Asia Pacific 11% 4.9 trillion 1 trillion 232 billion 186 billion Total equity AU
Slide 17: Leading the way in international equity
Leading the way in international equity EAUM in Equity AUM held in international portfolios, by exchange * Largest institutions investing in LSE London listed stock 1,400 (USDbn) USDbn (% change to Q2 2014) 4% BlackRock Investment Management 145 1,200 (UK) 13% Legal & General Investment 106 1,000 Ma
Slide 18: London peer – diversity across sectors
London peer – diversity across sectors Telecom Utilities 3% Basic Basic Materials Telecom 4% 10% Technology Utilities Materials 5% 2% 6% Consumer 3% Technology Goods 1% Oil & Gas 5% 6% Oil & Gas Consumer Goods 16% 17% Industrials Consumer Services 20% 19% FTSE 100 FTSE 250 Industrials 7% Consumer Se
Slide 19: Access to the FTSE indices
Access to the FTSE indices • FTSE UK series is one of the world’s most widely tracked family of indices • FTSE UK Series is the only flagship index series of any major exchange to admit international companies • Premium Listing on the London Stock Exchange enables issuers to get access to tracker fu
Slide 20: Strong Market Performance And Liquidity Has Allowed Significant Further Sponsor Monetisation
Strong Market Performance And Liquidity Has Allowed Significant Further Sponsor Monetisation • Strong performance of PE-backed IPOs in the secondary market has allowed PE firms to sell down further tranches through accelerated transactions • Investor demand has allowed placings of a significant numb
Slide 21: Lessons Learned from Recent IPOs
Lessons Learned from Recent IPOs Observation Comment In an increasingly crowded primary market calendar, early preparation is critical Very hard to accelerate an IPO process, so early preparation enhances ultimate timing flexibility Prepare Ahead As activity has increased, pressures / bottlene
Slide 22: Overview of IPO Process and Preparation
2) Overview of IPO Process and Preparation 22
Slide 23: IPO Process Overview
IPO Process Overview Pre-IPO Preparation Preparation of the offering IPO Execution Phase 4-6 months + 2-3 months 1 month PUBLIC PROCESS Management Company Preparation Preliminary Analyst Investor IPO Process Roadshow, Aftermarket preparation of the listing Valuation Presentation Education Bookbuildi
Slide 24: Pre-IPO: Key Preparation Ingredients
Pre-IPO: Key Preparation Ingredients Start Due Business Pre-IPO Valuation / Kick-off Diligence / Plan / Analyst Investor Management Pricing and Company Price Bookbuilding Aftermarket Meeting Prospectus Financial Presentation Education Roadshow Allocation Preparation Range Drafting Structure T - 4-6
Slide 25: Pre-IPO: Key Preparation Ingredients (cont’d)
Pre-IPO: Key Preparation Ingredients (cont’d) Start Due Business Pre-IPO Valuation / Kick-off Diligence / Plan / Analyst Investor Management Pricing and Company Price Bookbuilding Aftermarket Meeting Prospectus Financial Presentation Education Roadshow Allocation Preparation Range Drafting Structure
Slide 26: Prospectus Drafting and Contents
Prospectus Drafting and Contents The prospectus is the key marketing and disclosure document – the International Prospectus Table of Contents – Illustrative legal and selling document available to all potential international investors Part 1 SUMMARY Part 2 RISK FACTORS The prospectus is prod
Slide 27: Analyst Presentation and Syndicate Research
Analyst Presentation and Syndicate Research Overview of the Analyst Presentation: Syndicate Research Production: Management presentation to research analysts in the syndicate The research report is produced by research analysts independently, • Typically lasts half a day (minimum) to a full day
Slide 28: The UK Corporate Governance Code
The UK Corporate Governance Code UK Corporate Governance Code “Best Equity Market Perspectives / Recommendations Practice” • Independence is determined by the board subject to stringent criteria • At least half the board (excluding Chairman) Supervisory should be independent non-executive directors
Slide 29: Comparison of different routes to market for commercial companies
Comparison of different routes to market for commercial companies MAIN MARKET AIM Description Premium Standard HGS AIM Domicile Any Any EEA incorporated Any EU Regulated Market & EU Regulated Market & Regulation EU Regulated Market MTF Listed Listed 10% with a min value of Minimum free float 25% 25%
Slide 30: Case Study: JQW plc
Case Study: JQW plc Company Details Transaction Details 140 130 Company JQW Admission Date 9 Dec 2013 120 Price rebased to 100 Money raised at 110 Market AIM £6.8m admission 100 Sector General Retailers Market cap at 90 £138.2m admission 80 Trading System SETSqx 70 Current Market cap £155m 60 Countr
Slide 31: Case Study: Hutchison China Meditech
Case Study: Hutchison China Meditech Company Details Transaction Details 400 Hutchison China Meditech vs FTSE AIM All 350 Share Hutchison China Admission Date 10 May 2006 Company Meditech 300 Market AIM 250 Money raised $74.3m 200 Sector Health Care 150 Trading System SEAQ Current market cap $815.7m
Slide 32: IPO Execution and Marketing Considerations
3) IPO Execution and Marketing Considerations 32
Slide 33: Refining Valuation through the IPO Process
Refining Valuation through the IPO Process Investment Banking Valuation Research Valuation Market Valuation P – 12 weeks P - 10 weeks P - 4 weeks P - 2 weeks P Company Drivers • Preliminary valuation assessment, driven by • Due diligence investment banking / • Development of the advisers equity stor
Slide 34: Management Roadshow
Management Roadshow • The culmination of the marketing process is the two-week Management roadshow. The roadshow is a key marketing tool for the IPO, allowing management to meet with investors in key investor hubs (e.g. in the UK, in continental Europe and in the US) – cements confidence and comfort
Slide 35: Demand and Pricing Dynamics
Demand and Pricing Dynamics Illustrative Build Up of Demand Illustrative Demand at Price 600 552 3 500 450 Demand (x Covered) Demand (m shares) 400 2 300 272 Offer size 193 200 147 165 1 121 104 100 42 22 10 0 0 Bottom of Optimum Top of the Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9 Day D
Slide 36: Allocation Criteria and Finalising IPO Distribution
Allocation Criteria and Finalising IPO Distribution Allocation Criteria • Retail / Employees vs. Institutional Type Split • Geographical split (e.g. balance between UK / US / RoE / Asia) • For institutional investors, quality and type of investors (e.g. long-only vs. hedge funds) Timeliness of Order
Slide 37: Aftermarket: Stabilisation of the Stock
Aftermarket: Stabilisation of the Stock • Process by which the stabilising manager (a bookrunner) enters the market for a limited Description period of time following the pricing of IPO, to stabilise or maintain the market price of the shares, by making purchases Is Stabilisation • IPOs and secondar
Slide 38: Aftermarket: Mechanics of the Greenshoe
Aftermarket: Mechanics of the Greenshoe Aftermarket Scenarios Description • Call option which entitles the stabilisation manager to acquire up to an agreed number of additional Price Rises securities (beyond the number of “base” shares in 108 Bookrunner can exercise the Greenshoe the offering) to co
Slide 39: Legal disclaimer
Legal disclaimer This document has been compiled by the London Stock Exchange plc (the “Exchange”). The Exchange has attempted to ensure that the information in this document is accurate, however the information is provided “AS IS” and on an “AS AVAILABLE” basis and may not be accurate or up to date
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