listing in london santiago 12 th june 2008 the worlds capital market
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Listing in London
Santiago
12th June 2008
The world’s capital market
2
Global platform for global institutional investors
Global institutional
investor base
Local market
US Institution
al Investors
144A
Regional funds
and retail investors
USA Middle East
Asia Eastern Europe
Europe UK
3Source: London Stock Exchange statistics – December 2007
London Stock Exchange - key statistics
Total companiesDomestic: 2,550International: 675
Market capitalisation Main Market: UK listed: US$3,570bnInternational listed: US$4,398bnAIM: US$181bn
Turnover value (Jan-Dec 2007) Main Market: US$8,054bn
AIM: US$150bn
London Stock Exchange
4Source: IPREO 2007
More international equity assets under management
London has a far bigger international presence and weight. 45% of equity assets under management are invested in international markets.
New York is a larger but mainly domestic market.
0
1000
2000
3000
4000
5000
6000
7000
International
Domestic
Equity assets under management by centre.
In US$ billions
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The platform of choice for international companies
In 2006: London Stock Exchange - 367 new companies joined in 2006. NYSE, Nasdaq & Hong Kong Stock Exchange had 332 IPOs
in 2006.
$104bn raised on the London Stock Exchange, $40bn on NYSE, and $29bn on Nasdaq
In 2007:London Stock Exchange - 252 new companies joined the London Stock Exchange, 142 new companies on Nasdaq, 67 on NYSE
$88bn raised on the London Stock Exchange.
Source: London Stock Exchange and WFE – December 2007
0
50
100
150
200
250
300
350
400
450
2000 2001 2002 2003 2004 2005 2006 2007 2008
London Stock ExchangeNasdaqNYSE
Q1, 2008
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Leader in cumulative capital raised at IPO
General Market Summary
Investment Flows - Cumulative Total Funds Raised ($US million) since Jan 2005 by Shares at Initial Public Offering (IPO), Comparing Various Exchanges.
Source: World Federation of Exchanges
London Stock Exchange
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
$110,000
$120,000
$130,000
$140,000
Jan-
05
Mar
-05
May
-05
Jul-0
5
Sep-0
5
Nov-05
Jan-
06
Mar
-06
May
-06
Jul-0
6
Sep-0
6
Nov-06
Jan-
07
Mar
-07
May
-07
Jul-0
7
Sep-0
7
Nov-07
$US
mil
lio
n -
cu
mu
lati
ve t
ota
l
NASDAQ
NYSE
London Stock Exchange
Hong Kong Stock Exchanges
Source: London Stock Exchange and WFE – December 2007
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Comparing UK and US as listing locations
London and New York exchanges offer optimal profile London has world’s highest reputation for regulation and
governance Principles-based (UK) versus rule-based (US) approach
London has the most liquid equity market in Europe London has the world’s most successful growth market (AIM) London Stock Exchange offers world’s only location for liquid and
transparent trading of GDRs
London combines simple, flexible disclosure with high reputation of regulators
US disclosure regime more prescriptive, exacerbated by need to protect against opportunistic securities litigation
London offers rapid turnaround by regulators, and limits the time regulators can take to approve offer documents
US: SEC review periods longer, with no certainty on turnaround time
AIM offers potentially shorter transaction timetable
Timing
Disclosure
Trading
Cost-benefit analysis favours London
Profile
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Optimal Least suitable
Comparison of international listing locations
High profile
Rapid timing Simplified disclosure
Trading / liquidity
London Stock Exchange
NYSE / Nasdaq
Bovespa
Strategic financings from global companies will converge on London or New York
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An intelligent approach to regulation
Balance Competing Needs
Companies Investors
Minimise bureaucracy
and cost
Maximise protection
US
UK
Ranked first in corporate governance standards by GMI, Deminor and Davis Global Advisors
Increased cost of compliance and risk premium (Financial Executive & Korn Ferry Surveys)
Principles based - “comply or explain”
Rules based - prescriptive and expensive
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Corporate Governance and regulatory framework
Sarbanes–Oxley has increased the costs of listing in US:• Has it improved governance standards in USA?• No evidence that Sarbanes–Oxley delivers benefits beyond
those that apply under the UK regime• The Cost of Capital: An International Comparison - report
available here:
http://www.londonstockexchange.com/NR/rdonlyres/B032122B-B1DA-4E4A-B1C8-42D2FAE8EB01/0/Costofcapital_full.pdf
London Stock Exchange – intelligent regulation
The UK’s intelligent approach to regulation & the success The UK’s intelligent approach to regulation & the success of the Combined Code is the foundation for Europe’s deepest of the Combined Code is the foundation for Europe’s deepest pool of capital in Europe pool of capital in Europe andand why our Main Market is one of why our Main Market is one of
the world’s most cost-efficient to accessthe world’s most cost-efficient to access
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Corporate governance: overall rating by country
3.34
4.20
4.73
5.08
5.61
5.85
6.15
6.40
7.25
7.31
7.39
7.40
0 1 2 3 4 5 6 7 8
China
Mexico
Spain
India
Switzerland
Norway
Germany
Finland
USA
Canada
Ireland
UK
Principles-based regulation: high standard, pragmatic application
No equivalent to Sarbanes-Oxley section 404
An intelligent approach.
Most advanced regulation and governance
Source: Governance Metrics International, 2007
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Main features
Setting the standard for excellence Where ideas take off
Highest standards of regulation
Largest institutional investor base
Deepest capital pool
Most liquid trading platforms
Enhanced profile and status
Investable indices
Easier entry requirements
Flexible regulatory regime
Specialist small-cap institutional & retail investor base
Variety of tax benefits may be available
Bespoke indices
London Stock Exchange
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The widest choice of proven global markets
A choice of globally respected markets supported by a wide range of institutional & retail investors
Supports more established companies seeking further
growth.1,550 issuers
Supports earlier stage companies in their initial
growth period.1,675 issuers
Main Market
Sponsor
UK Listing AuthorityNominated Adviser (Nomad)
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The world’s most successful growth market
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• AIM companies: 1,675
• Overseas AIM companies: 343 (non UK incorporated)
• IPOs on AIM in 2007: 182
• Total capital raised in 2007: US$32.4bn• US$13.2bn New • US$19.2bn Further
• Capital raised (new & further) since 1995: US$115bn
Key Statisti
cs
Source: London Stock Exchange trade statistics – April 2008
The widest choice of proven global markets
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AIM – critical mass to support growth
Source: London Stock Exchange trade statistics –April 2008
123145
10775
102
277
177160 162
355
519
462
284
41
0
100
200
300
400
500
600
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Nu
mb
er o
f ad
mis
sio
ns
Number of IPOs
Q1, 2008
17
118
235286 291
325
493
587
654694
905
1,179
1330 1,347 1,332
3 17 22 21 22 31 42 50 60116
220
304347 343
0
200
400
600
800
1000
1200
1400
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 toApr
UK International
As at April 2008, there were 1675 companies on AIM of which 343 were international with a combined market capitalisation of £91billion.
590 companies have their primary business outside the UK
Source: London Stock Exchange trade statistics – April 2008
AIM today
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Raising new and further capital on AIM
Source: London Stock Exchange trade statistics – April 2008
2006- More money was raised on AIM in 2006 ($31bn) than on NASDAQ ($29bn)2007- More money was raised on AIM in 2007 ($32bn) than on NASDAQ ($20bn)
2000 2001 2002 2003 2004 2005 2006 2007 2008
New Further
6.1
2.32.0
4.2
9.3
17.9
31.432.4
2.93
Funds raised in ($bn)
Q1, 2008
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AIM - company size
Source: London Stock Exchange trade statistics – April 2008
0
50
100
150
200
250
300
350
400
Less than$5m
$5m - $10m
$10m - $20m
$20m - $50m
$50m - $100m
$100m - $200m
$200m - $500m
$500m -$1000m
$1000m - $2000m
over$2000m
Market Value ($)
No
of
Co
mp
an
ies
Apr-08 Apr-07
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A diverse market
Source: London Stock Exchange trade statistics – April 2008
-
5,000
10,000
15,000
20,000
25,000
30,000
Min
ing
Oil &
Gas
Pro
du
cers
Real E
sta
te
Gen
era
l
Fin
an
cia
l
Su
pp
ort
Serv
ices
Eq
uit
y
Investm
en
t
Intr
um
en
ts
So
ftw
are
Co
mp
ute
r &
Serv
ices
Tra
vel &
Leis
ure
Med
ia
Fo
od
Pro
du
cers
Mkt
Val
ue
($m
)
0
20
40
60
80
100
120
140
160
180
200
Nu
mb
er o
f co
mp
anie
s
Latest Market Value $
Number of Companies
Top AIM sectors by market value & no. of companies April 08
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AIM – The market of choice for growing Mining companies
2002 2003 2004 2005 2006 2007
New Further
309598
1,656
2,194
3,552
5,262
Mining companies on AIM: Money raised ($m)
Source: London Stock Exchange April 08.
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Flexible regulationAdmission Rules
• No minimum size to be admitted
• No minimum financial history required
• No minimum amount of shares to be in public hands
• In most cases, no prior shareholder approval required for transactions
• Admission documents not pre-vetted by Exchange or UKLA but by nominated adviser
Nominated adviser (Nomad) required at all times
Appropriate regulation and oversight
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Continuing obligations
• AIM companies are subject to the AIM Rules which outline the continuing obligations of being on a public market. Key continuing obligations are:
• AIM companies must have a Nomad at all times, otherwise they will be suspended from the market
• AIM companies must disclose all price sensitive information in a timely manner including substantial transactions, related party transaction, reverse takeovers and other miscellaneous transactions
• Half yearly and annual report and accounts required in adherence with deadlines• All directors accept full responsibility, collectively and individually for the AIM
Rules• Restrictions on deals for directors and applicable employees on AIM securities
during close periods• UK Corporate Governance standards as best practice
Appropriate regulation and oversight
24Source: GCI Institutional Investors in AIM survey 2007
Institutional Investors on AIM – Sector breakdown
AIM has a deep pool of institutional investors
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Institutional Investors on AIM – Most active
Source: GCI Institutional Investors in AIM survey 2007
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Fidelity Investments
Value of largest holdings, 2006
$ million*
- Sportingbet Leisure $268
- Imperial Energy Oil & gas 117
- First Calgary Oil & gas 91
- Centurion ElectronicsElectronics 60
- PIPEX Comms Telecoms 57
- Highland Gold Mining 53
- Clipper Windpower Electricity 47
- Star Energy Oil & gas 41
- Asia Energy Coal 39
- Serica Energy Oil & gas 39
Artemis Investment Management
Value of largest holdings, 2006
$ million*
- Star Energy Oil & gas $60
- Develica Deutschld Equity fund49
- Cape Support ser47
- Genesis Oil & gas 44
- Coda Software 41
- Speymill Real estate30
- European GoldfieldsMining 30
- Prosperity Minerals Bldg Mats 30
- Equest Balkan Real estate29
- Imperial Energy Oil & gas 28Source: Teather & Greenwood, Growth Company Investor* Translated into $ at £1.00 = $1.90Data for year 2006
Leading investors
Institutional investors understand AIM
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To summarise… why choose AIM
• The world’s most successful growth market
• An internationally focused, professional investor base
• Comprehensive research coverage for international companies
• A more flexible approach to regulation
• Better value than NYSE or NASDAQ
• A global platform
The Exchange of choice for companies wishing to access the international capital markets
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New York Listing
• Higher cost
• Slower to market
• Higher risk
• Sarbanes Oxley
• Section 404
• Class actions
London Listing
• Access to global capital
• Lower cost
• Lower risk
• Faster to market
• Intelligent regulation
The world’s capital market
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Contact us
Graham DallasHead of Business Development – The [email protected] +44 (0) 20 7797 4055
Anne MoulierBusiness Development Manager– Latin [email protected] +44 (0) 20 7797 4584
Website: www.londonstockexchange.com