cap markets

7/28/2019 Cap Markets

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Tuesday, December 12th, 2006

DISCUSSION ON EQUITY CAPITAL MARKETS

Chris ChristinaPrincipal

(612) 303-8521

[email protected]

Elissa KlueverAssociate

(612) 303-6378

[email protected]


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PIPER JAFFRAY MANAGEMENT COMMITTEE

Andrew DuffChairman & Chief Executive Officer

Tom SchnettlerVice Chairman & Chief Financial Officer

Todd FirebaughChief Administrative Officer

Jim ChosyGeneral Counsel

Ben MayHead of High -Yield & Structured Products

Bob PetersonHead of Equities

Frank FairmanHead of Public Finance Services

Jon SalvesonHead of Investment Banking

Capital Markets

Institutional Sales & Sales Trading

Trading

Research


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CORPORATE & INSTITUTIONAL SERVICES

Investment Banking and Equities Groups

Equities

Equity Capital Markets

Convertible Originations

Corporate & Venture

Services

Capital Markets

Institutional Sales &Sales Trading

Trading

Distribution Research

Investment Research

(Equity

&

Fixed Income)

New Industries Alternative Energy

Business Services

Industrial Growth

Existing Industries Consumer

FIG

Health Care

Technology

Investment Banking


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EQUITY CAPITAL MARKETS TEAM

Organization ChartChad Abraham

Head of Equity Capital Markets

Origination

John Baumgartner

Principal

Consumer & FIG

Steve Schmidt

Vice President

Technology

John Crowther

Associate

Execution

Chris Christina

Principal

Consumer & FIG

Neil Riley

Vice President

Health Care & Technology

Greg Klancher

Associate

PIPEs / RDs

David Stadinski

Managing Director

Elissa Kluever

Associate

Jonathan Jewett

Analyst

Maura Stoltz Hasan

Executive Assistant

Eric Helenek

Vice President

Chad Huber

Analyst

Chris Christina

Principal


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Initial Public Offerings

EQUITY CAPITAL MARKETS

An initial public offering (IPO) is when a private

company sells its stock for the FIRST time in the

public markets

146 IPOs have been completed in 2006, raising

nearly $33 billion in capital

Piper has completed 28 IPOs in 2006, raising over

$4 billion in capital

The average number of IPOs completed since 2000

has been 163, with a high of 373 completed in 2000

and a low of 70 completed in 2002

Types of transactions

completed through the

Piper Jaffray Equity

Capital Markets desk

Type of Transactions Completed on the Equity Capital Markets (ECM) Desk


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Follow-on Offerings A follow-on offering is when an already public company sells its stock,

either primary shares or shares from selling shareholders, in the public

markets

457 follow-ons have been completed in 2006, raising nearly $92 billion

in capital

Piper has completed 43 follow-ons in 2006, raising over $7 billion in

capital

The average number of follow-ons completed since 2000 has been 416,

with a high of 520 completed in 2004 and a low of 346 completed in

2002

Types of

transactions

completed

through the

Piper JaffrayEquity Capital

Markets desk

Type of Transactions Completed on the Equity Capital Markets (ECM) Desk

Additional Types of Offerings (Follow-on Offerings) Underwritten Shelf Takedowns

144 Block Trades

PIPEs (Private Investment in Public Equity)

Registered Direct Offerings


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Traditional Follow-on

November 8th, 2005

BROAD DEPTH OF EQUITY OFFERING ALTERNATIVES

There is a Growing Continuum of Offering Alternatives for Equity Issuers

Traditional Follow-on Registered Direct (RD) Underwritten Shelf Takedown Bought Deal

Initial Public Offering (IPO) Private Investment in Public Equity (PIPE) Block Trade (Rule 144 Institutional)

$64,687,500

Initial Public Offering

May 6th, 2005

$97,232,500 $44,845,338

Bought Deal

June 14th, 2006

$40,089,000 $17,710,000

Traditional Follow-on

May 25th, 2004

Rule 144 Block Trade

August 26th, 2004

$54,740,000


June 25th, 1999


May 1st, 2000

$57,960,000 $12,000,000

PIPE

August 9th, 2006

$16,615,932 $95,737,500

Rule 144 Block Trades

August/Sept 2005

Bought Deal

June 15th, 2006

$120,000,000


January 28th, 2005


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Piper Roles


Sole-Bookrunner: ECM desk functions as the lead manager on the

deal and is responsible for coordinating the roadshow, building

indications of interest, pricing the deal, allocating stock, billing &

delivering the stock offered in the issue and stabilization in the

immediate aftermarket; receives senior economic fees on the dealand furthest to the left on the cover

Joint-Bookrunner: same responsibilities as sole-bookrunner, but

split with another manager

Co-Lead Manager: no bookrunning responsibilities; however,

receives differentiated economics on the deal and a better positionon the cover

Co-Manager: most junior participating management position with

no bookrun responsibilities; offers additional sponsorship to issuer;

receives junior economics and far right position on cover

Piper functions as a

Bookrunner, Co-Lead

Manager and Co-Manager

depending upon the deal

Deal economics depend

upon the status and

maturity of the issuer

Pipers Involvement in Equity Capital Markets Offerings


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Deal Economics

Fixed Economics: set gross spread to the banks on the offering,

which is comprised of management fees, underwriting fees, and

the selling concession

Jump-Ball: subset of the selling concession based on who the

designated account gives credit for the sale, bookrunner(s)frequently capped; underwriting and management fees fixed

Bought Deal Spread: banks principal capital put at risk to buy

shares from the issuer/selling shareholder at a discount to last

trade and in turn sold to institutions at a discount from last trade

and a premium to the price paid to the issuer/selling shareholder

Piper functions as

a Bookrunner, Co-

Lead Manager

and Co-Manager

depending upon

the deal

Deal economics

depend upon the

status and

maturity of the

issuer

Pipers Involvement in Equity Capital Markets Offerings


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PIPER JAFFRAY COVER POSITIONS

Piper as Sole-Bookrunner

Piper as Co-Lead Manager

Piper as Joint-Bookrunner

Piper as Co-Manager


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PIPER JAFFRAY BOOKRUN OFFERINGS

$95,737,500 $247,817,032 $16,779,966

Follow-on Follow-on Registered Direct

August 2006 August 2006 August 2006

$62,560,000 $44,845,338 $20,925,000

IPO Follow-on Follow-on

June 2006 June 2006 June 2006


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Overview of Equity Capital Markets

Marketing the Deal with Sales Roadshow Layout

Distribution Strategy

Deal Pricing

Opening and Trading Process


Origination of Transaction with Investment Banking

Discussion of Economics and Number of Managers on Deal

Allocation Decisions

Size and Time of Transaction

Constant Communication with Management during the Roadshow

Primary roles of

the groups within

Equity Capital

Markets

Origination and

Execution

Origination

Execution


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CORPORATE CLIENT COMMUNICATION

The Role of the Equity Capital Markets Team

Situation RoleClient Targeting, Pitches, Update of Equity Capital Markets Conditions/Trends

and Industry Conferences Deal Strategy, Structure & Timing

Company Positioning & Piper Jaffray Marketing

Valuation Discussion

Prior to Roadshow Introduction Process

Presentation Coaching

Sales Force Education

During Roadshow Institutional Sales Feedback

Research Analyst Feedback

Order Book Updates

Market Updates

Institutional Account Profiles

Pricing Recap of Roadshow and Order BookOffering Distribution Overview

Aftermarket Trading Intelligence

Aftermarket Trading Updates

Green Shoe Management

Trading Monitoring/Account Intelligence


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The role of Equity

Capital Markets in

the pricing of an

offering is to

balance the

desires of the

corporate client

and institutional

client

The goal is to find

the so-called

market-clearing

price that pleases

both parties

Equity Capital Markets Role in deal offering

Corporate Client &

Investment Banker

Institutional Client &

Sales Force

Wants to sell for the highest

price

Maximize offering value for

the corporate client

Maximize profit for the firm

Wants to buy for the

lowest price

Generate increased value

for the Institutional client

Increase likelihood of

long-term stock appreciation

Equity Capital Markets Desk


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Golf Galaxy Inc. (NASDAQ: GGXY)

Initial Public Offering 7/29/2005 at $14.00

Filing Range $11.00 - $13.00

Shares Filed 3,333,000 Shares Offered 3,950,000 Shares Offered with Green Shoe 4,542,500

Primary 3,000,000 Secondary 1,542,500

Post-Deal Market Capitalization $148.9 million Sole Bookrunner Piper Jaffray Co-Lead Manager William Blair Co-Managers A.G. Edwards, Wedbush Morgan

Use of Proceeds Fund new store openings, general corporate purposes, pay all accruedand unpaid dividends due to preferred shareholders

Transaction Highlights

Roadshow 9 Days, 14 Cities (Domestic Only); approximately 175 accounts on

the roadshow via 62 institutional 1-on-1 meetings and 6 groupfunctions

Order Book 16x oversubscribed; 210 accounts indicating on the deal; 85% of1-on-1 meetings converted into orders; 90 orders of 10% or greater

1 Day Aftermarket Performance Offer = $14.00; Open = $17.05; Close = $18.61; +33% from offer price

Post-IPO/ Aftermarket Piper Jaffray served as the sole sell-side advisor to Golf Galaxy in theirsale to Dicks Sporting Goods (11/13/06) at a price of $18.82 (+32%from IPO)

Golf Galaxy priced an upsized,

$63.6 million initial public offering

at $14.00, one point above its $11 -

$13 filed range

The Company is headquartered in

Eden Prairie, Minnesota and is a

leading specialty retailer of golf

equipment, apparel and accessories

GOLF GALAXY CASE STUDY

$63,595,000

Piper Jaffray

Sole Bookrun


July 29th, 2005


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Introduction

File IPO

GOLF GALAXY CASE STUDY

IPO Execution Timeline

Week of July 27th

Week of July 20th

Week of July 13th

Week of May 16th

Deal kick-off. Piper Jaffray research analyst gives a teach-in to the sales force

giving them a better understanding of the business and its growth outlook.

Golf Galaxy travels to the Piper Jaffray office and presents its story to the sales force.

This is the same presentation that will be used on the IPO roadshow with institutional

investors.

Golf Galaxy begins its roadshow. The company management travels with the Piper

Jaffray investment banker and a member of the institutional sales force. The

roadshow will take them to institutional investors throughout the United States. The

roadshow begins in Chicago and continues through Kansas City, Denver, San Diego,

Los Angeles, San Francisco, Minneapolis and Milwaukee.

Company continues its roadshow through Boston, New York, Baltimore and Philadelphia.

Roadshow ends on Thursday afternoon. All-in-all, Golf Galaxy presented in front of 175institutional investors via 62 1-on-1 appointments and 6 group functions

Pricing on July 29thIPO is priced at $14.00 per shareabove the $11-$13 filing range. Piper Jaffray

receives orders for 16x the number of shares that are being offered in the deal. 85% of

1-on-1 meeting attendees submit and order to Piper Jaffray. Piper Jaffrays Equity

Capital Markets team works to allocate all of the shares to the institutional investors.


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EQUITY CAPITAL MARKETS OVERVIEW

Piper Jaffray has consistently been a Top Equity UnderwriterIPOs, Follow-ons & Convertibles in 2006 YTD IPOs in 2006 YTD

Rank M anager N o. Rank Manager N o.

1 J.P. Morgan Securities Inc. 160 1 J.P. Morgan Securities Inc. 46

1 Citigroup Global Markets Inc. 160 2 Credit Suisse 40

3 Banc of America Securities 150 3 Banc of America Securities 35

4 Merrill Lynch & Co. 149 4 Merrill Lynch & Co. 34

5 UBS Securities Inc. 137 5 Goldman Sachs & Co. 32

6 Wachovia Capital Markets LLC 124 5 UBS Securities Inc. 326 Goldman Sachs & Co. 124 5 Citigroup Global Markets Inc. 32

8 Credit Suisse 121 8 Deutsche Bank Securities Inc. 31

9 Lehman Brothers 119 9 Cowen & Co., LLC 29

10 Morgan Stanley 118 10 Piper Jaffray & Co 28

11 Deutsche Bank Securities Inc. 110 10 Morgan Stanley 28

12 Bear Stearns & Co Inc. 80 12 Bear Stearns & Co Inc. 27

13 Piper Jaffray & Co 78 13 Lehman Brothers 26

14 Cowen & Co., LLC 71 14 Wachovia Capital Markets LLC 24

15 Jefferies & Co Inc. 66 14 Thomas Weisel Partners L.L.C. 24

16 Raymond James 62 16 CIBC World Markets 1917 Thomas Weisel Partners L.L.C. 59 17 Jefferies & Co Inc. 17

18 RBC Capital Markets 54 18 Raymond James 13

19 CIBC World Markets 47 19 RBC Capital Markets 12

19 A.G. Edwards & Sons Inc. 47 19 William Blair & Co 12

21 KeyBanc Capital Markets 37 19 Keefe Bruyette & Woods Inc. 12

22 Keefe Bruyette & Woods Inc. 36 22 A.G. Edwards & Sons Inc. 11

23 Stifel Nicolaus & Co 35 22 JMP Securities LLC 11

23 JMP Securities LLC 35 24 Pacific Growth Equities 8

25 Robert W. Baird & Co. Inc 32 25 Lazard Capital Markets 7


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Consumer Financial

Health Care Technology

Rank Manager N o.

1 Wachovia Capital Markets LLC 17

2 Piper Jaffray & Co 16

2 J.P. Morgan Securities Inc. 16

4 Goldman Sachs & Co. 15

5 Citigroup Global Markets Inc. 13

5 Banc of America Securities 13

7 Merrill Lynch & Co. 12

8 Cowen & Co., LLC 10

8 Lehman Brothers 108 Credit Suisse 10

11 Thomas Weisel Partners L.L.C. 9

12 Deutsche Bank Securities Inc. 8

Rank Manager N o.

1 Keefe Bruyette & Woods Inc. 36


3 Wachovia Capital Markets LLC 25




7 Credit Suisse 20

7 UBS Securities Inc. 20

7 Sandler, O'Neill & Partners, L.P. 2010 Bear Stearns & Co Inc. 15



Rank Manager N o.



3 UBS Securities Inc. 213 J.P. Morgan Securities Inc. 21

5 CIBC World Markets 20


6 Morgan Stanley 19



9 Lehman Brothers 16


11 Rodman & Renshaw, Inc. 15

Rank Manager N o.

1 Credit Suisse 28


3 Morgan Stanley 234 Lehman Brothers 22







11 UBS Securities Inc. 16



Piper Jaffray continues to

be one of the most active

managers across key

growth sectors

Sector Rank IPOs & Follow-On Offerings Completed in 2006


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$33.4

$46.9

$42.6$37.8

$69.2 $71.2

$39.0

$24.8

$14.5

$44.1

$35.0

$0

$20

$40

$60

$80

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 YTD

CapitalRaised($B

)

210170

531

409

252

450

373

80 70 76

146

0

100

200

300

400

500

600

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

YTD

Numb

erofIPOsCompleted

Number of IPOs by Year

IPO Capital Raised by Year

Historical IPO Volume



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$74.6$81.2 $75.4

$111.9

$68.8$92.2

$69.3$85.0

$90.3

$124.8

$84.2

$0

$25

$50

$75

$100

$125

$150

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

YTD

CapitalRaised

($B)

617

398374

346

424457

628

520

415431

464

0100

200

300

400

500

600

700

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

YTD

Nu

mberofFOsCompleted

Historical Follow-on Volume

Follow-on Capital Raised by Year

Number of Follow-ons by Year



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Equity Capital Markets is

a dedicated resource for

equity offering

information and analysis


Equity Capital Markets is a dedicated resource for equity offering informationand analysis, related trading intelligence, and broader market information/color

Equity Capital Markets provides a weekly update of the following:

Week in Review Deal Commentary Industry Calendar

YTD Performance Tables YTD Deal Performance

Week Pricings Current Backlog

Week Filings League TablesWithdrawn/Postponed Piper Transactions

Equity Capital Markets works with Investment Banking to tailor the best

advice/approach for IPOs, follow-on offerings, and other equity-linked

transactions

Equity Capital Markets works with our corporate clients, Investment Banking,company/underwriters counsel, and Institutional Sales and Sales Trading to

manage all aspects of the deal execution process

What is Equity Capital Markets to You?


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