PwC Israel Considerations of listing in London Q1 2007* Q1 2008* Q1 2009* Q1 2010* Q1 2011 Q1 2012...

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Transcript of PwC Israel Considerations of listing in London Q1 2007* Q1 2008* Q1 2009* Q1 2010* Q1 2011 Q1 2012...

  • Considerations of listing in London

    PwC Israel

    28 May 2014

    Ronen Berkovich,Partner, PwC Israel

  • PwC Israel

    Overview of equity markets and global trends

    Capital raising considerations •

  • PwC Israel 3

    Key markets IPO activity 2011 - Q1 2014

    USA Hong Kong London

    S&P 500: +28.0% since 2013 Shenzhen +18.5%, Hang Seng -5.0 % since 2013

    FTSE 100: +9.5% since 2013

    $18

    $8

    $16

    $13

    0

    15

    30

    45

    60

    75

    $0

    $4

    $8

    $12

    $16

    $20

    Q1 2011 Q1 2012 Q1 2013 Q1 2014

    Money raised ($m) Number of IPOs

    $2 $1 $1

    $6

    0

    15

    30

    45

    60

    75

    $0

    $4

    $8

    $12

    $16

    $20

    Q1 2011 Q1 2012 Q1 2013 Q1 2014

    Money raised ($m) Number of IPOs

    $2 $1

    $3

    $9

    0

    15

    30

    45

    60

    75

    $0

    $4

    $8

    $12

    $16

    $20

    Q1 2011 Q1 2012 Q1 2013 Q1 2014

    Money raised ($m) Number of IPOs

    80%

    90%

    100%

    110%

    120%

    130%

    80%

    90%

    100%

    110%

    120%

    130%

    Shenzhen Composite Index

    Hang Seng Index

    80%

    90%

    100%

    110%

    120%

    130%

  • PwC Israel

    4

    0

    5

    10

    15

    20

    25

    30

    35

    40

    -

    2

    4

    6

    8

    10

    12

    14

    16

    -פבר 12-ינו 12

    -מרץ 12

    -אפר 12

    -ספט 12-אוג 12-יול 12-יונ 12-מאי 12

    -דצמ 12-נוב 12-אוק 12

    -פבר 13-ינו 13

    -מרץ 13

    -אפר 13

    -ספט 13-אוג 13-יול 13-יונ 13-מאי 13

    -דצמ 13-נוב 13-אוק 13

    -פבר 14-ינו 14

    -מרץ 14

    V S

    T O

    X X

    i n

    d e

    x

    M o

    n e

    y ra

    is e

    d (

    € b

    n )

    Volatility compared to IPO proceeds

    Money raised (€bn) VSTOXX

    IPO of Talanx, Telefónica Deutschland and Direct line

    IPO of MegaFon, Alior Bank and Kcell

    IPO OF Ziggo and DKSH Holdings\

    Greek and Spanish bailouts and downturn in global economic growth

    IPO of bpost and Partnership Assurance

    IPO of Royal Mail, Riverstone Energy, and TCS Group

    IPO of ISS, Pets at Home, Poundland and Hispania Activos Inmobiliarios

    Volatility remained low and market indices continued to strengthen despite events such as the geopolitical turmoil in Ukraine

    -10%

    0%

    10%

    20%

    30%

    מרץ פבר ינו דצמ נוב אוק ספט אוג יול יונ מאי אפר מרץ פבר ינו

    % c

    h an

    ge s

    in ce

    1 Ja

    n 2

    0 1

    3

    Historical performance of major market indices since January 2013

    CAC 40 DAX 30 FTSE 100

    Source: Thomson Reuters

    Presenter Presentation Notes Chart 1 Column

  • PwC

    European IPO proceeds, excluding over-allotments, reached €11.4bn in Q1 2014, marking the strongest first quarter performance since 2007

    Long term European IPO activity by value and volume

    *Excludes IPOs on Borsa Istanbul and Bucharest

    Sustained momentum across European equity markets supported the most successful first quarter in seven years. The €11.4bn of cash raised, excluding over-allotments, from IPOs in first quarter of 2014 surpassed the aggregate Q1 proceeds raised in the previous four years. The first quarter was characterised by IPOs in the Retail and Real Estate sectors with 18 IPOs raising €5.2bn. The UK retail sector saw the IPOs of Lenta, Pets at Home, AO.com and Poundland. Hispania Activos Inmobiliarios SA and Lar Espana Real Estate Socimi SA demonstrated a reinvigorated Spanish real estate sector.

    12.3 2.0 0.0 1.8 3.2 2.4 3.3 11.4

    141

    63

    16

    77

    102

    61 45 68

    0

    20

    40

    60

    80

    100

    120

    140

    160

    0

    2

    4

    6

    8

    10

    12

    14

    Q1 2007*

    Q1 2008*

    Q1 2009*

    Q1 2010*

    Q1 2011

    Q1 2012

    Q1 2013

    Q1 2014

    V o

    lu m

    e o

    f IP

    O s

    V a

    lu e

    o f

    IP O

    s (€

    b n

    )

    Value Greenshoe Number of IPOs

    PwC Q1 2014 IPO Watch Europe Survey

    3.2 13.6 9.4 0.9 2.4 0.8 0.4 7.7 3.3 5.4 3.0 14.8 11.4

    102

    149

    126

    82

    61

    93

    60 74

    45

    76

    52

    106

    68

    -

    20

    40

    60

    80

    100

    120

    140

    160

    - 2

    4

    6

    8

    10

    12

    14

    16

    18

    Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

    2011 2012 2013 2014

    V o

    lu m

    e o

    f IP

    O s

    V a

    lu e

    b y

    q u

    a rt

    e r

    (€ b

    n )

    Value Greenshoe Number of IPOs

    Presenter Presentation Notes Chart 1 Column

  • PwC Israel

    London listing requirements

    Capital raising considerations •

  • PwC Israel 7

    Listing requirements – overview

    Eligibility conditions in London Premium Standard AIM

    Appointment of a sponsor/nominated advisor  x 

    Clean three year IFRS track record (>75% of business)  x

    If exists, must present 3 years

    x

    If exists, must present 3 years

    Control of the majority of assets (>50%)  x x

    Audited numbers must not be more than 6 months old  x x

    Reviewed interims if document dated > 9 months after end of last audited year

    n/a  

    Adequate controls to meet continuing obligations   

    Adequate financial reporting procedures declaration  x (a) 

    Sufficient working capital for at least 12 months from date of prospectus   - shares x – GDRs (a)

    Reporting Accountant’s due diligence reports  x (a) 

    At least 25% shares in public hands   x

    Shareholder approval of significant and related party transactions  x x

    (a) Market practice in London currently evolving, FRP and working capital reports sometimes requested for GDRs. For standard share listing, level of diligence similar to premium listing expected.

    F in

    an cial

    D iligen

    ce

  • PwC Israel

    Key factors for a successful capital raising

    Capital raising considerations •

  • PwC Israel 9

    What are investors looking for?

    Corporate governance

    Robust capital structure

    Strong management

    Strong market position

    Cash generation

    Sustainable and visible growth

    • Reasonable leverage levels at IPO

    • Capacity to fund organic growth in the business

    • Selective M&A headroom (on the basis of proven track record)

    • Sustainable growth drivers: attractive end market dynamic with secular growth trends

    • Earnings visibility: quality and breadth of customer relationships

    • Established track record of growth across economic cycles

    • Margin growth • Strong and/or growing return on invested capital • Management focus on optimising cash generation

    • Right balance of independent directors on the board • Effective risk management and internal

    controls

    • Dynamic, ambitious, focused team

    • Experience in the sector • Management interests aligned

    with shareholders

    • Leadership positions in core markets

    • Established brand within the industry – clear ‘go to’ position

    • Quality and breadth of customer relationships

  • PwC Israel 10 Capital raising considerations •

    Section 4 – Key factors for a successful capital raising

    Principal valuation drivers

    Company specific factors

    Financial factors

    External factors

    Compelling equity story

    Liquidity

    Shareholders and management

    Corporate governance

    Risks

    Transparency

    Equity market conditions

    Sentiment towards country of origin

    Familiarity and sentiment towards the sector

    Competing offerings

    Historic financial results

    Industry trends/fundamentals

    Investment programme

    Balance sheet Peer performance

    Time in cycle

    Financial projections

    Capital structure/leverage

  • PwC Israel 11

    Related party transactions – key area of focus

  • PwC Israel

    Getting ready

    Capital raising considerations •

  • PwC Israel 13

    Two key early decisions for a London l