1 Strategic Alliance With:Strategic Alliance in the U.K.With: 1 November 8, 2006 Amir Aviv Managing...

1 Strategic Alliance With: Strategic Alliance in the U.K.With:

1

November 8, 2006

Amir Aviv

Managing Director, International Corporate Finance

Poalim Capital Markets

Going Public Abroad –

Key Considerations

Going Public Abroad –

Key Considerations


2

Table of ContentTable of Content

A.A. Introduction to Poalim Capital Markets (PCM)Introduction to Poalim Capital Markets (PCM)

B.B. Where to List?Where to List?

C.C. Listing Profiles and Shareholders LiquidityListing Profiles and Shareholders Liquidity

D.D. Relative Valuations Across MarketsRelative Valuations Across Markets

E.E. Liquidity - Nasdaq Vs. AIMLiquidity - Nasdaq Vs. AIM

F.F. Market Efficiency – Case StudiesMarket Efficiency – Case Studies

G.G. Comparative CostsComparative Costs


3

Introduction to Poalim Capital Markets Introduction to Poalim Capital Markets


4

Poalim Capital Markets - OverviewPoalim Capital Markets - Overview

Private EquityLocal

UnderwritingResearch

InternationalCorporateFinance

Bank Hapoalim

Holdings andInvestments

Poalim Abus

Poalim Real Estate

PoalimMezzanine*

Strategic AllianceStrategic Alliance (UK)

BR DGEWELLBR DGEWELLBR DGEWELLBR DGEWELL

PoalimMedica

Poalim THTF *

*Funds in formation

PoalimVentures


5

Poalim Capital Markets Public Offerings 2005-2006 YTDPoalim Capital Markets Public Offerings 2005-2006 YTD

November 2006

Initial Public Offering

$47,500000

(U.K.)

(USA)

$160,000,000

May 2006


$132,000,000

March 2006

Follow- On Offering

$201,100,0

00

December 2005

Follow-On Offering

$133,831,000

September 2004

Follow-On Offering

$401,280,000

March 2005

Follow-On Offering

$64,400,000

March 2005


$62,400,000

September 2005


$118,000,000

November 2005


$191,000,000

February 2006


$90,000,000

May 2006


October 2006


$290,000000


6

Poalim Capital Markets Poalim Capital Markets Advisory ServicesAdvisory Services 2005-2006 YTD2005-2006 YTD

$7,000,000

April 2006

Invested in

Has sold a majority interest

to

Fortissimo Capitaland

Kanir Investments

$12,000,000

November 2005

Has acquired by Has agreed to be acquired

by to York Capital Management

and to Mivtach Shamir

$67,851,000

July 2005

Selling of shares & debt

in

Inspair

$2,300,000

May 2006

Invested in

$159,000,000

July 2006

Has been acquired by

$7,000,000

March 2006

Ziff Asset Management

Investedin

$7,000,000

July 2006

Sharatzky groupInvested

in

$57,000,000

January 2005

Issued 11% of its shares capital to

$54,000,000

January 2005

Sold 13% of

to

$90,000,000

March 2006

$230,000,000

November 2005

$60,500,000

April 2005


O R E XDistributed Computed Radiography

$50,500,000

March 2005



7

Where to List? Where to List?


8

ValuationMetric used – Profit, Revenue, EBITDA, DCF, Revenue MultiplesForward Looking vs. Current ResultsCurrent Market Sentiment

Sector Specific SentimentSector PerformanceFlavor of the MonthFlow of Capital into Relevant FundsResearch Following

Location of revenues- Product Market LocalEuropeUS

Competitive Landscape- Listing Location

Key Considerations – Company Specific ApproachKey Considerations – Company Specific Approach


9

Size and Critical Mass

Liquidity Percentage Float Sector Specific Form of Liquidity – open market, block sales

Costs Capital at Risk Success Costs Maintenance Costs

Regulation and Reporting Requirements Quarterly (Nasdaq, TASE) vs. Semi Annually (London) Dual-Listing Arrangements

Profile as a Public Company Target Product Markets –Branding and Positioning Disclosure Requirements (Transparency)

Location of Management and Operations

Key Considerations – Company Specific Approach (cont’d)Key Considerations – Company Specific Approach (cont’d)Key Considerations – Company Specific Approach (cont’d)Key Considerations – Company Specific Approach (cont’d)


10

Listing Profiles and Shareholders LiquidityListing Profiles and Shareholders Liquidity


11

NASADQ IPOs Priced 2006 YTDNASADQ IPOs Priced 2006 YTD

* Columns represent stand-alone threshold data and are not interdependent

PercentileTotal

OfferingSize

Market Value

at pricing

OwnershipDilution

SecondaryShares as a %

of Offering

LTMRevenue

LTMEBIT

LTMEBIT

Margin

At PricingP/E on Next

Year’s Earnings

100% 2,579.3

6,016.1 114.3% 100.0% 7,792.0 497.0 146.2% 79.6x

90% 481.6 1,705.6 42.8% 47.3% 942.3 67.6 27.1% 25.9x

80% 264.6 994.5 35.3% 26.0% 385.7 39.6 14.2% 18.9x

70% 184.9 536.8 30.2% 16.2% 285.2 23.0 10.2% 16.0x

60% 140.7 383.8 27.4% 0.0% 176.2 12.0 7.0% 14.0x

50% 105.6 306.4 23.8% 0.0% 85.5 4.8 6.2% 12.5x

40% 87.0 269.9 20.3% 0.0% 43.3 1.1 4.2% 10.8x

30% 61.1 218.1 18.3% 0.0% 30.9 (0.7) 1.3% 8.8x

20% 38.5 140.0 14.4% 0.0% 14.9 (10.7) (1.7%) -4.0x

10% 25.4 84.5 0.0% 0.0% 3.5 (17.7) (47.5%) -13.5x

($ in millions)

Source: Equidesk as of November 1, 2006; includes SEC registered IPOs; excludes REITs and closed-end funds.


12

NASADQ - YTD Over 40% of IPO’s had a Secondary Share ComponentNASADQ - YTD Over 40% of IPO’s had a Secondary Share Component

Source: Equidesk as of August 1, 2006; includes SEC registered IPOs; excludes REITs and closed-end funds.


13

NASADQ - On Average < 30% of Shares Sold are Secondary SharesNASADQ - On Average < 30% of Shares Sold are Secondary Shares

33.6%

38.1%

26.6%

32.2%

23.2%23.0%

38.1%

29.2%

21.0%

Source: Equidesk as of November 1, 2006; includes SEC registered IPOs; excludes REITs and closed-end funds.


14

AIM - Distribution of companies by equity market valueAIM - Distribution of companies by equity market value

114

183

229

370

242

197

145

2311 5

0

50

100

150

200

250

300

350

400

0-2 2-5 5-10/ 10-25/ 25-50 50-100 100-250 250-500 500-1,000 Over1,000

Nu

mb

er o

f co

mp

anie

s

Market value range £mSource: LSE, as of November 2006


15

Relative Valuations Across MarketsRelative Valuations Across Markets


16

Valuation MethodologyValuation Methodology

Comment Relevance

Preferred benchmark for IPOs reflecting investors’ preference for

profitabilityForward P/E

Method

Historically the standard valuation tool where lack of profits

Used to review valuation levels across the cycle

Forward EV / EBITDA

Forward EV / sales

Significant sensitivity to a number of assumptions

Overly dependent on terminal valueOften used as a “sanity check”

DCF analysis

Mu

ltip

les

DC

F

Not distorted by differences in capital structure

Many technology companies still pre operating profit

Key driver will be forward P/E


17

Industry Benchmarking – Where are Your Competitors TradingIndustry Benchmarking – Where are Your Competitors Trading??

gross margin and growth rate support high value?


18

LSE vs. NASDAQLSE vs. NASDAQ

Nasdaq Valuations are 20% Higher than AIM Across the Board*Sources – NASDAQ, LSE, CapitalIQ*Companies with market cap <1Bn USD as of September 2006

1.9x 1.5x

10.5x

14.8x

20.0x

17.7x

9.2x

14.5x14.5x

10.9x

0

5

10

15

20

TEV/Revenues TEV/EBITDA TEV/EBIT LTM P/E NTM P/E

London

Nasdaq


19

LSE vs. NASDAQ - HealthcareLSE vs. NASDAQ - Healthcare

Healthcare Companies Valuations on Nasdaq are 24% Higher than on AIM*Sources – NASDAQ, LSE, CapitalIQ*Companies with market cap <1Bn USD as of September 2006

2.3x

16.2x

3.4x

12.8x

17.3x

27.9x

23.4x

21.0x

15.0x

10.0x

0

5

10

15

20

25

30

TEV/REV TEV/EBITDA TEV/EBIT LTM P/E NTM P/E

London

Nasdaq


20

LSE vs. NASDAQ - ITLSE vs. NASDAQ - IT

IT Companies Valuations on Nasdaq are 28% Higher than on AIM*Sources – NASDAQ, LSE, CapitalIQ*Companies with market cap <1Bn USD as of September 2006

1.3x

9.3x

1.6x

12.3x

17.5x

27.8x

20.9x

13.6x

18.8x

14.4x

0

5

10

15

20

25

30

TEV/REV TEV/EBITDA TEV/EBIT LTM P/E NTM P/E

London

Nasdaq


21

LSE vs. NASDAQ – Industrial LSE vs. NASDAQ – Industrial (%)(%)

Industrial Companies Valuations on Aim are 9% Higher than on Nasdaq

*Sources – NASDAQ, LSE, CapitalIQ*Companies with market cap <1Bn USD as of September 2006

1.2x

9.5x

12.9x

19.8x

17.1x

1.2x

8.7x

15.4x15.6x

12.2x

0

5

10

15

20

25

TEV/REV TEV/EBITDA TEV/EBIT P/E Forward P/E

London

Nasdaq


22

Liquidity - NASDAQ Vs. AIM Liquidity - NASDAQ Vs. AIM


23

Liquidity - NASDAQ vs. AIMLiquidity - NASDAQ vs. AIM

Market Cap (mn USD)

Number of Companies in Group - AIM

Number of Companies in

Group - Nasdaq

AIM Avg. Daily Volume

(USD – mn)

Nasdaq Avg. Daily Volume (USD – mn)

0-50 702 184 0.053 0.216

50-150 243 560 0.300 0.564

150-300 96 496 0.691 1.850

300-500 37 433 1.140 3.500

500+ 26 945 7.620 45.900

Liquidity on Nasdaq is better than on AIM across the board, however...

Source: CapitalIQ


24

Source: London Stock Exchange

Liquidity on AIM is improving rapidly

Liquidity - NASDAQ vs. AIMLiquidity - NASDAQ vs. AIM

Average Daily Volume £mn


25

Market Efficiency – Case Studies Market Efficiency – Case Studies


26

Summary

IturanIturan

NASDAQ IPO completion date: September 27th, 2005

Total funds raised at IPO and green-shoe: $71,760,000

At IPO: Net proceeds to selling shareholders: $11.7mn

Green-shoe: Net proceeds to selling shareholders: $1.8mn

Total funds to selling shareholders: $13.5mn

5 foreign I-banks cover Ituran with research

Stock Price Performance on TASE 12 months before IPO to 3 months after

Relative Price Appreciation 12 months prior to IPO to 3 months after

Premium Analysis

ITRN

TA100Nasdaq

3 months prior to IPO: 40.0%




3 months after the IPO to IPO price: 20.8%


27

Summary

Lipman Lipman

NASDAQ IPO completion date: February 3rd, 2004

Total capital raised at IPO and green-shoe: $142,395,000


Green-shoe: Net proceeds to selling shareholders: $0mn


4 foreign I-banks cover Lipman with research



Premium Analysis 3 months prior to IPO: 24.0%




3 months after the IPO to IPO price: 11%

LPMATA10

0

Nasdaq


28

Summary

Frutarom Frutarom

LSE IPO completion date: February 3rd, 2005

Total funds raised at IPO and green-shoe: $100,716,000


Green-shoe: Net proceeds to selling shareholders: $4.6mn


2 foreign I-banks provide Frutarom with research



Premium Analysis

LPMATA10

0

Nasdaq





3 months after the IPO to IPO price: -3.4%

FRUT

TA100

Nasdaq


29

Comparative CostsComparative Costs


30

Cost of Going PublicCost of Going Public

($US) Nasdaq AIM

Registration Fee ~$5,500 ~$20,000

Listing Fee ~$100,000 ~$6,000

Printing Expenses ~$200,000 ~$60,000

Legal Fees ~$500,000 ~$400,000

Accounting Fees ~$500,000 ~$350,000

Transfer Agent & Registrar Fees

~$10,000 ~$15,000

Nomad/I-Bank Fee N/A ~$300,000

Underwriting Discount* ~$3,500,000 (~7%) ~$2,500,000 (~5%)

Miscellaneous ~$100,000 ~$70,000

Total Approximate Cost ~$4,915,500 ~$3,721,000

* Assumes a $50m dollar raise

** Capital at risk is approximately $400k, $220k on NASDAQ and AIM respectively


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Public Company Ongoing CostsPublic Company Ongoing Costs

($US) Nasdaq AIM

Directors & Officers Insurance

~$200,000 ~$100,000

Directors Fees & Expenses

~$150,000 ~$100,000

Annual Audit Accounting Fees

~$100,000 ~$80,000

404 Compliance* ~$400,000 N/A

Legal Fees ~$150,000 ~$150,000

SEC & Exchange Compliance

~$100,000 N/A

Listing Fees ~$25,000 ~$20,000

Nomad Expenses N/A ~$90,000

Other (Investor Relations, Mailing, Printing, Trvl, etc.)

~$100,000 ~$100,000

Total Approximate Cost $1,225,000 $640,000* 404 not applicable to foreign issuers until 2007. Varies depending on company size.

** Nasdaq incremental cost for TASE listed companies approx. $400-$600k based on survey of dual listed companies


32

Thank YouThank YouContact Details:

Amir Aviv

Managing Director,

International Corporate Finance

Poalim Capital Markets

Tel: (03) 567-5590

[email protected]

1 Strategic Alliance With:Strategic Alliance in the U.K.With: 1 November 8, 2006 Amir Aviv Managing...

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