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PwC Capital Markets Group Q4 2013 Equity Capital Markets Briefing The PwC Capital Markets Group gives independent guidance to companies in the process of going public and to already listed companies in assessing their position in the equity capital markets. Edition: 2013, the year in review

Martin Coenen [email protected]

Clifford Tompsett

[email protected]

Jan-Willem de Groot [email protected]

Monthly averages ($bn)

17.8

5.3

12

.4

17.1

16.4

17.1

2

Summary & Dashboard

The global market for IPOs experienced a strong Q4 2013. Most equity indices

have continued their upward trend and volatility levels were relatively low

In the US, 2013 ended up being the strongest year for US IPOs in more than a

decade with 254 IPOs raising $77.7bn

Overview | Global Trends | European Trends | Case Studies

Note: The two indices on top are based on the 10Y rolling monthly average capital raised in European IPOs ($4.2bn) and FOs ($14.1bn). The two bottom indices are based on the same month rolling 10Y average capital raised in European IPOs ($4.7bn on average for December) and FOs ($17.1bnon average for December)

Note: included deals > $5m

Source: Dealogic as of 31 December, 2013

Strong global IPO activity during Q4 2013 boosts FY13 performance

PE-backed IPOs and privatisations fuel revival of European IPO market

Continued strength in the equities markets, decreased market volatility and

improving macroeconomic circumstances are also expected to support strong IPO

momentum in 2014

Private equity-backed IPOs are anticipated to continue their robust contribution

to global IPO activity

Financials continue to dominate strengthened FO activity

The European IPO market revived as investors seem relieved that the Eurozone

crisis has dwindled and the Euro-area recession has ended

Both in terms of number of transactions (144) and money raised ($36.7bn),

European IPOs in 2013 strongly outperformed 2012

Pipeline continues to grow and momentum remains strong

The global FO level picked up during Q4 2013. The 2013 total outpaces 2012 by

15% in terms of money raised and 21% in number of deals

During the past quarter, the largest FO was the rights issue of Barclays ($9.9bn)

on LSE in October. Not surprisingly, and in line with this year’s trend, this money

was raised by a bank

38

7

115

141

102 116

0

100

Jul Aug Sep Oct Nov Dec

2013

34

72

166

134

106

70

0

100


2013

56

1

33

143 130

0

100


2013

215

43 27

145 162

123

84

0

100


2013

Money raised in the EU indexed on 10 year average

Money raised in the EU indexed on same month average (10 year)

+16 IPO

IPO (100 = $4.2bn) FO (100 = $14.1bn)

FO

-16 +30

“The above December IPO index level of 130 implies an amount of money raised in Europe, which is 30% above the 10-year average”

-30 Monthly averages ($bn)

6.2

0.3

1.2

6.4

5.9

4.7

3

Global Capital Market Trends and Developments

Strong global equity capital markets activity during Q4 2013, further boosts FY13 performance

Top 5 Largest IPOs in 2013

Summary Statistics 2011 2012 2013 Q4 2012 Q4 2013

Number of IPOs 1,034 716 840 184 314

Money Raised in IPOs $178.2bn $140.5bn $193.4bn $41.4bn $76.8bn

Average Deal Size of IPOs $172.3m $196.3m $230.3m $225.2m $244.5m

Number of PE-backed IPOs 114 104 182 25 71

Value PE-Backed IPOs $38.7bn $21.2bn $58.9bn $5.5bn $28.4bn

Number of FOs 2,887 2,498 3,023 734 897

Money Raised in FOs $469.3bn $508.8bn $585.7bn $131.6bn $157.1bn

Average Deal Size of FOs $162.5m $203.7m $192.7m $179.3m $175.1m


Global Summary Data Initial Public Offerings (IPOs) and Follow-ons (FOs) Highlights

Backed by rising equity indices, total equity capital markets activity increased to $779.1bn through 840 IPOs and 3,023 FOs

Strong PE-backed IPO activity in Q4 2013 drove full year PE-backed IPO activity to its highest levels since the start of the financial crisis

The total amount of money raised through IPOs stood at $76.8bn in Q4 2013, representing the largest amount of money raised in one quarter since 2011

1) IPOs are classified as ‘In Range’ if the IPO is priced in the middle 50% of the price range. The top and bottom 25% are classified as ‘Top of Range’ and ‘Bottom of Range’ 2) PIMCO Dynamic Income is a non-diversified, closed-end management investment company

Note: included deals > $5m Source: Dealogic, Bloomberg as of 31 December, 2013

Pricing Date

Issuer Name Issuer

Country Exchange Pricing1 Money Raised

($bn)

25-Apr-13 BB Seguridade Participacoes BOVESPA In range $5.7bn

24-Jun-13 Suntory Beverage & Food Tokyo SE Bottom of range $4.0bn

28-Jan-13 PIMCO Dynamic Credit Inc. Fund2 NYSE In range $3.4bn

10-Oct-13 Royal Mail LSE Top of range $3.2bn

15-Oct-13 Plains GP Holdings NYSE Bottom of range $2.9bn

Top 5 Largest FOs in 2013

Global equity indices (2012 –2013 | rebased to 100)

90

100

110

120

130

140

150

Jan-12 Jun-12 Nov-12 Apr-13 Sep-13

FTSE100 Hang Seng Index S&P500

Pricing Date

Issuer Name Issuer

Country Exchange Deal Type

Money Raised ($bn)

4-Oct-13 Barclays LSE Rights offer $9.9bn

28-Jun-13 Piraeus Bank Athens Stock Exchange Rights offer $9.0bn

11-Mar-13 Japan Tobacco Tokyo SE Fully marketed $7.8bn

26-Sep-13 China Merchants Bank HKEx; Shanghai SE Rights offer $5.5bn

17-Sep-13 Lloyds Banking Group LSE Accel. bookbuild $5.1bn

IPOs and FOs in Leading Capital Market Regions

General

trends

Highlights

North American IPO activity in 2013 was at its highest level since the financial crisis in terms of money raised. Among the most notable IPOs were a number of large transactions, executed in Q4 2013 on NYSE: Plains GP Holding ($2.9bn), Hilton Worldwide Holdings ($2.7bn) and Twitter ($2.1bn). In terms of FO activity, more transactions were executed in 2013, and a larger amount of money was raised than in 2012. The largest North American FO of 2013 was the accelerated bookbuild of Facebook, raising $3.9bn on NASDAQ.

Europe also seems to be on track to recovery as ECM activity for 2013 is over 60% higher than in 2012 in terms of money raised. Money raised through IPOs more than doubled compared to last year. About 43% of the money raised in Europe via IPOs was PE-backed. The two largest European IPOs were both executed in Q4 on LSE: Royal Mail raised $3.2bn and Merlin Entertainment raised $1.7bn in its PE-backed transaction. The largest FOs globally in 2013 were executed by European banks: Barclays raised $9.9bn on LSE and Piraeus Bank raised $9.0bn on the Athens Stock Exchange.

Asian ECM activity was heavily affected by the regulatory ban on IPOs in China. Early December, China Securities Regulatory Commission announced the expected end of the IPO halt and a move to a registration-based system for new companies. Over 2013, no IPOs were executed on either Shenzhen or Shanghai Stock Exchange. Total IPO activity for 2013 stood at $47.9bn via 300 transactions. The largest transactions in Asia were the fully marketed FO of Japan Tobacco, raising $7.8bn on Tokyo Stock Exchange, the rights offer of China Merchants Bank ($5.5bn) on HKEx and Shanghai and the IPO of Suntory Beverage and Food on Tokyo Stock Exchange ($4.0bn).

The largest IPO of 2013 was executed in Brazil, where BB Seguridade Participacoes raised $5.7bn. Latin America saw the highest amount of money raised through IPOs and FOs in three years. Via 56 FOs, $24.0bn was raised. The second-largest transaction was the fully marketed FO of Grupo Financiero Banorte, raising $2.5bn on Mexican Stock Exchange.

In line with the global trend, Australasia also showed a pickup in ECM activity. In 2013, $20.7bn was raised via FOs (2012: $17.6bn) and $10.2bn via IPOs (2012: $1.5bn). The largest transaction was the IPO of Meridian Energy raising $1.6bn on both ASX and NZX. In Africa, a total of $0.7bn was raised via 15 IPOs, representing almost double the total amount raised during 2012. In terms of FO activity, Africa is slightly behind the previous year: via 36 transactions, a total of $3.6bn was raised.


Legend: the bars show the money raised ($bn) in IPOs and FOs ( ). The number of IPOs and FOs are shown as follows: number of IPOs / number of FOs FO IPO

Capital raising at IPOs and FOs

4

Note: The location of the listing venue(s) denotes the region(s) of the IPO or FO Note: Several regions, such as Australasia, Middle East, Africa and Latin America are excluded from the analysis in the graphs

Note: included deals > $5m Source: Dealogic as of 31 December, 2013

North America

$61.1bn $54.0bn $63.9bn $82.8bn

$256.9bn

$184.4bn $222.8bn

$230.4bn

2010 2011 2012 2013

254 / 1,424

231 / 1,193

204 / 986

Europe

$40.4bn $33.3bn $15.9bn $36.7bn

$134.6bn $124.4bn $115.1bn

$173.1bn

2010 2011 2012 2013

170 / 692 136 / 572

82 / 480

Asia

$175.2bn

$91.0bn $51.3bn $47.9bn

$206.9bn

$112.6bn $135.1bn $139.1bn

2010 2011 2012 2013

700 / 950

567 / 684 371 / 633

295 / 1,108

144 / 576 300 / 896

Regulatory IPO ban in China ends dominance of Shenzhen in terms of numbers of IPOs

Overview | Global Trends | European Trends | Case Study

Exchange Split (number of deals) Exchange Split (money raised)

5

Note: Sector classification is based on the ICB Industry Classification Benchmark Note: LSE Group includes Borsa Italiana

Note: If IPOs or FOs take place on two or more exchanges, the full amount of money raised is attributed to all exchanges Note: included deals > $5m

Source: Dealogic, Bloomberg as of 31 December, 2013

0% 0% 0% 0% 0% 0% 0% 0% 0%

ASX Bursa Malaysia HKEx LSE Group NASDAQ OMX NYSE Euronext Shenzhen Tokyo Exchange Other

154

122

92

85 52

352

26%

16%

8% 7% 5%

5%

32% 32%

11%

10% 9%

5%

5%

28%

120

115

73

55 42

332

2012 2012 2013 2013

NYSE Euronext, LSE Group, NASDAQ OMX and HKEx were the leading exchanges globally

Financials strengthen leading position in terms of IPO activity; activity in Health Care doubled

$152.2 bn

$200.3bn

737 857

Sector Split (number of deals) Sector Split (money raised)

Financials Technology Consumer Services Industrials Oil & Gas Consumer Goods Telecommunications Basic Materials Health Care Utilities

2012 2012 2013 2013

34%

16% 12%

10%

8%

6%

6%

4% 3% 1%

41%

7% 13%

11%

8%

8%

1% 2% 6%

3%

172

70

82 139

47

80

12

65

41 8

269

92

98

114

45

73

3 35

94 17

840 716 $193.4

bn $140.5

bn

Facebook $16.0bn/11.4%

Financials Oil & Gas Industrials Consumer Services Basic Materials Consumer Goods Utilities Health Care Telecommunications Technology

0% 0% 0% 0% 0% 0% 0% 0% 0%

ASX HKEx LSE Group Nasdaq OMX Group NYSE Euronext Shanghai Stock Exchange TMX Group Tokyo Stock Exchange Other

FO activity on ASX, TMX group and, to some extent LSE, is characterised by a large number of smaller transactions


6

Note: sector classification is based on the ICB Industry Classification Benchmark Note: LSE Group includes Borsa Italiana

Note: if IPOs or FOs take place on two or more exchanges, the full amount of money raised is attributed to all exchanges Note: included deals > $5m


Exchange split (number of deals) Exchange split (money raised)

2012 2012 2013 2013

32%

11%

8% 5% 5%

4%

34%

407

367

331

321 220

170

805 33%

9%

8% 8%

5%

4%

32%

537

465

332

263 247

226

Albeit to a lesser extent, Financials continue to dominate global FO activity

Number of deals in Consumer Services and Technology sector up by over 70%

$538.9bn

$619.3bn

2,621 3,164

1,094

Sector split (number of deals) Sector split (money raised)

2012 2012 2013 2013

47%

13%

9%

7%

6%

6%

4% 4%

2%

2%

36%

9%

12%

12%

6%

8%

4%

5%

3% 5%

626

309

337 190

389

178

64

236

32 137

774

298

465 325

280

220

72

327

29 233

3,023 2,498 $585.7

bn $508.8

bn

AIG $45.8bn / 9.2%

Pricing Date

Issuer Name Exchange Pricing1 Money Raised

15-Oct-13 Plains GP Holdings NYSE Bottom of range $2.9bn

11-Dec-13 Hilton Worldwide Holdings NYSE In range $2.7bn

9-Oct-13 Antero Resources Corp NYSE Above range $1.8bn

8-Nov-13 Merlin Entertainments LSE In range $1.7bn

2-Feb-13 Asiacell Telecommunication Iraq Stock Exchange n/a $1.3bn

Global PE-backed IPO activity at highest level since start of crisis

0%

10%

20%

30%

40%

50%

0

2

4

6

8

10

12

14

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2011 2012 2013

PE

-ba

ck

ed

/ tota

l IPO

s

Mo

ne

y r

ais

ed

in

PE

-ba

ck

ed

IP

Os

($

bn

)

Other regions Asia Europe North America Number of PE-backed IPOs of total (%)

7

Global PE-backed IPOs (2011 – 2013)

Highlights


In 2013, a total of $58.9bn was raised via 182 PE-backed IPOs. This represents the largest amount of money raised and the largest number of PE-backed IPOs since the start of the financial crisis. Over 48% of the money raised via PE-backed IPOs was raised in the fourth quarter of 2013.

The largest PE-backed IPOs were executed in the US. Furthermore, North American PE-backed activity in 2013 was over 2.5 times the activity in 2012 in terms of money raised. For Europe, the amount of money raised via PE-backed IPOs was even 5 times larger than in the previous year.

Asian PE-backed IPO activity decreased relative the previous year, which can partly be explained by the regulatory IPO ban in China.

Top PE-backed IPOs 2013

Note: PE-backed IPOs include all IPOs backed by a financial sponsor Note: included deals > $5m


Jan: Nielsen Holdings ($1.9bn on NYSE) Feb: Kinder Morgan ($3.3bn on NYSE) March: HCA Holdings ($4.4bn on NYSE) April: Arcos Dorados ($1.4bn on NYSE) May: Yandex ($1.4bn on NASDAQ)

March: Ziggo ($1.2bn on NYSE Euronext A’dam) April: BTG Pactual ($1.7bn on BOVESPA / NYSE Euronext A’dam) July: IHH Healthcare ($2.1bn on Bursa Malaysia

October: Plain GP Holdings ($2.9bn on NYSE) October: Antero Resources Corp ($1.8bn on NYSE) December: Hilton Worldwide ($2.7bn on NYSE)

The largest IPO and FO of 2013 were both executed on LSE: Royal Mail and Barclays raised $3.2bn and $9.9bn, respectively


The 2013 league table for European IPOs is dominated by (post-summer) activity on LSE

In addition, private-equity backed transactions appear to be a key driver (6 of the top 10 IPOs)

The 2013 league table for European FO activity is dominated by a mix of European banks

8

1) IPOs are classified as ‘In Range’ if the IPO is priced in the middle 50% of the price range. The top and bottom 25% are classified as ‘Top of Range’ and ‘Bottom of Range’ Note: included deals > $5m


Pricing Date

Issuer Name Issuer

Country Exchange

Price Range (local currency)

Offer Price (Local currency)

Pricing1 Money Raised

($m)

10-Oct-13 Royal Mail LSE 2.60 - 3.30 3.30 Top of range 3,170

8-Nov-13 Merlin Entertainments LSE 2.80 - 3.30 3.15 In range 1,692

31-Jan-13 LEG Immobilien Deutsche Börse 41.00 - 47.00 44.00 In range 1,576

23-Oct-13 Riverstone Energy LSE 10.00 - 10.00 10.00 In range 1,229

30-Oct-13 Cembra Money Bank SIX Swiss Exchange 43.00 - 51.00 51.00 Top of range 1,166

20-Jun-13 bpost NYSE Euronext Brussels 12.50 - 15.00 14.50 Top of range 1,159

22-Oct-13 TCS Group Holding LSE 14.00 - 17.50 17.50 Top of range 1,087

11-Dec-13 Moncler Borsa Italiana 8.75 - 10.20 10.20 Top of range 1,078

22-Mar-13 esure Group LSE 2.40 - 3.10 2.90 In range 1,052

7-Nov-13 Numericable Group NYSE Euronext Paris 20.30 - 24.80 24.80 Top of range 1,012

Pricing Date

Issuer Name Issuer

Country Exchange

Price Range (local currency)

Offer Price (Local currency)

Deal Type Money Raised

($m)

4-Oct-13 Barclays LSE 1.85 - 1.85 1.85 Rights Offer 9,882

28-Jun-13 Piraeus Bank Athens Stock Exchange 1.70 - 1.70 1.70 Rights Offer 9,035

17-Sep-13 Lloyds Banking LSE 0.75 - 0.76 0.75 Accelerated Bookbuild 5,118

15-May-13 Royal KPN NYSE Euronext A’dam 1.06 - 1.06 1.06 Rights Offer 3,973

30-Apr-13 Deutsche Bank Deutsche Börse 32.90 - 32.90 32.90 Accelerated Bookbuild 3,871

25-Sep-13 Nordea Bank NASDAQ OMX Stockholm 75.50 - 76.00 76.00 Accelerated Bookbuild 3,378

22-May-13 VTB Group Moscow Exchange 0.04 - 0.04 0.04 Cash Placing / Guaranteed Pref. Allocation 3,281

29-May-13 Commerzbank Deutsche Börse 4.50 - 4.50 4.50 Rights Offer 3,226

19-Jun-13 Nordea Bank NASDAQ OMX Stockholm 78.75 - 78.75 75.00 Accelerated Bookbuild 3,015

9-Apr-13 EADS NYSE Euronext Paris 37.35 - 37.95 37.35 Accelerated Bookbuild 2,968

Largest 10 European FOs 2013

Largest 10 European IPOs 2013

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Q4 2013 IPO activity in the UK stimulates the revival of the European IPO market; UK sees 35 IPOs raising a total of $12.5bn


9

1) IPOs are classified as ‘In Range’ if the IPO is priced in the middle 50% of the price range. The top and bottom 25% are classified as ‘Top of Range’ and ‘Bottom of Range’ Note: The vertical axes of the U.K. graph have different scales compared to the other European countries



Almost 60% of the total money raised via IPOs in 2013 was raised in Q4

European IPOs

Number of IPOs

Money raised ($bn)

IPO activity in selected European countries (2010 – 2013)

$4

0.4

bn

$3

3.3

bn

$15

.9b

n

$3

6.7

bn

17

0

13

6

82

14

4

-40

10

60

110

160

FY2010

FY2011

FY2012

FY2013

1.

2.

3.

4.

Rank (#)

Rank ($)

1.

2.

3.

4.

$13

.8b

n

$19

.2b

n

$6

.7b

n

$2

0.8

bn

63

42 37

75

-25

-5

15

35

55

75

10 Oct:

Royal Mail ($3.2bn)

8 Nov: Merlin

Entertainment($1.7bn)

Top 2

$3

.5b

n

$1.

2b

n

$0

.4b

n

$1.

5b

n

9

4 2

9

-20

-15

-10

-5

0

5

10

15

20

25

30

21 Nov: BW LPG

($578.1m)

27 Sep: Odfjell Drilling

($392.2m)

$3

.5b

n

$0

.8b

n

$0

.2b

n

$1.

7b

n

5 7

9

4

-20

-15

-10

-5

0

5

10

15

20

25

30

11 Dec: Moncler ($1.1bn)

28 Mar:

Moleskine ($313.5m)

$5

.0b

n

$2

.8b

n

$1.

0b

n

$1.

6b

n

25 26

8

15

-20

-15

-10

-5

0

5

10

15

20

25

30

3 Dec: Energa

($699.4m)

22 Oct: PKP Cargo ($464.5)

Top 2

Top 2

$3

.6b

n

$2

.1b

n

$2

.7b

n

$3

.3b

n

17

12

8 5

-20

-15

-10

-5

0

5

10

15

20

25

30

31 Jan:

LEG Immobilien

($1.6bn)

9 Jul: Deutsche

Annington ($738.5m)

Top 2 Top 2

$2

.8b

n

$0

.2b

n

$0

.3b

n

$2

.4b

n

11 11 9

15

-20

-15

-10

-5

0

5

10

15

20

25

30

7 Nov: Numericable

($1.0bn)

21 Nov: Tarkett

($652.5m)

Top 2



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Jumbo deals by banks push European FO activity to 4-year high


10

1) IPOs are classified as ‘In Range’ if the IPO is priced in the middle 50% of the price range. The top and bottom 25% are classified as ‘Top of Range’ and ‘Bottom of Range’ Note: The vertical axes of the U.K. graph have different scales compared to the other European countries



Barclays and Piraeus Bank raise a combined total of $18.9bn via rights offers in the UK and Greece

In 2013, 52% of the European FOs took place in the U.K. raising 57% of total money raised

European FOs

Number of FOs

Money raised ($bn)

FO activity in selected European countries (2010 – 2013)

$13

4.6

bn

$12

4.4

bn

$115

.1b

n

$17

3.1

bn

69

2

57

2

48

0

57

6

-50

50

150

250

350

450

550

650

FY2010

FY2011

FY2012

FY2013

Rank ($)

1.

2.

3.

4.

$3

5.7

bn

$2

2.2

bn

$2

6.3

bn

$4

1.6

bn

26

5

23

4

20

8

22

5

-25

25

75

125

175

225

275

325

4 Oct:

Barclays ($9.9bn)

17 Sep: Lloyds

Banking ($5.1bn)

Top 2

$5

.7b

n

$1.

7b

n

$3

.9b

n

$4

.3b

n

62

34

51

42

-20

-10

0

10

20

30

40

50

60

70

80

12 Nov: Norsk Hydro

($1.8bn)

8 Feb: Archer

($251.0m)

$4

.4b

n

$4

.8b

n

$0

.2b

n

$12

.6b

n

6 8 2

6

-20

-10

0

10

20

30

40

50

60

70

80

28 Jun: Piraeus Bank

($9.0bn)

14 Jun: National Bank

of Greece ($1.4bn)

Top 2

$3

3.6

bn

$3

9.5

bn

$14

.4b

n

$2

3.7

bn

77 79

55

70

-20

0

20

40

60

80

30 Apr:

Deutsche Bank

($3.9bn)

29 May: Commerzbank

($3.3bn)

Top 2 Top 2

$2

.2b

n

$2

.1b

n

$3

.1b

n

$11

.8b

n

17

6 7

20

-20

-10

0

10

20

30

40

50

60

70

80

15 May: Royal KPN ($4.0bn)

9 Jan:

ArcelorMittal ($1.8bn)

Top 2

1.

2.

3.

4.

Rank (#)

$7

.4b

n

$5

.6b

n

$10

.1b

n

$2

2.8

bn

44

36

26

45

-20

-10

0

10

20

30

40

50

60

70

80

9 Apr: EADS

($3.0bn)

17 Apr: EADS

($3.0bn)

Top 2












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0% 0% 0% 0% 0% 0% 0% 0% 0%

Borsa Italiana Deutsche Börse Istanbul Stock Exchange LSE Moscow Exchange NYSE Euronext (EU) SIX Swiss Exchange Warsaw SE Other

LSE strengthens its position as the leading European exchange as momentum in Europe continues to increase


11

Note: sector classification is based on the ICB Industry Classification Benchmark Note: if IPOs or FOs take place on two or more exchanges, the full amount of money raised is attributed to all exchanges




Financials continue to dominate European IPO activity

Industrials display increased activity as number of IPOs doubles and money raised rises by over 600%

38%

18%

15%

10%

6%

12%

54%

11%

9%

4%

4%

18%

37

11

8

8

8

11 2012 2012 2013 2013

75

19

15

10

5

25

$17.7 bn

$38.7 bn

83 149

Financials Telecommunications Industrials Health Care Oil & Gas Basic Materials Consumer Goods Utilities Consumer Services Technology


2012 2012 2013 2013

39%

35%

8%

5%

4%

47%

25%

3%

2%

6%

10% 18

5

13

10 3

8

9

4

7 5

51

27 15

4

9

10

11

13

144 82 $36.7

bn $15.9

bn


0% 0% 0% 0% 0% 0% 0% 0% 0%

Athens Stock Exchange BME Borsa Italiana Deutsche Börse LSE Nasdaq OMX Group (EU) NYSE Euronext (EU) Oslo Børs Other

LSE and NYSE Euronext (EU) represent over 45% of European FO activity for 2013


12

Note: sector classification is based on the ICB Industry Classification Benchmark Note: if IPOs or FOs take place on two or more exchanges, the full amount of money raised is attributed to all exchanges




The FO of Piraeus bank puts Athens Stock Exchange among the leading European indices

Jumbo rights offers of Barclays and Piraeus Bank dominate European FO activity


23%

23%

13%

9%

7%

4%

20%

2012 2012 2013 2013 22%

15%

12% 12%

8%

7%

23%

224

84 69

57

41

23

89

208

55 51

47

44

81

$121.4 bn

$178.4bn

486 587


Financials Industrials Consumer Goods Basic Materials Oil & Gas Utilities Telecommunications Consumer Services Health Care Technology

2012 2012 2013 2013

47%

13%

9%

8%

6%

5% 4%

4% 2%

48%

14%

4%

6%

4%

3%

6%

10%

4%

118

65

40 59

64

14 9

42

33

36

155

103

30 43

51

11 12

73

42

56

576 480 $173.1

bn $115.1

bn


Window closed

0

10

20

30

40

50

0

5

10

15

20

25

30

35

Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13

Vo

latility

Ind

ice

s

Mo

nth

ly n

um

be

r o

f E

ur

op

ea

n I

PO

s

Monthly Number of European IPOs

VStoxx Index (monthly average)

VIX Index (monthly average)

0

10

20

30

40

50

0

2,000

4,000

6,000

8,000

10,000

12,000

Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13

Vo

latility

Ind

ice

s

Mo

nth

ly M

on

ey

Ra

ise

d i

n

Eu

ro

pe

an

IP

Os

($

m)

Money Raised in European IPOs ($m)VStoxx Index (monthly average)VIX Index (monthly average)

Low and stable levels of volatility relative to the past years spurred European IPO activity in the last quarter of 2013

A correlation is observed between increased volatility indices and weak European IPO activity ($m)…

Overall, higher volatility indices could be the ‘new normal’


13

Note: the VStoxx Index and the VIX Index are both volatility indices. The VStoxx is based on the Euro Stoxx 50 Index and the VIX Index is the Chicago Board Options Exchange Volatility Index



… which is also shown if we focus on the actual number of European IPOs


Case Studies

14


Transaction highlights

Case Study: Twitter IPO on NYSE

On Thursday 7 November 2013, the Internet information network Twitter had its long-awaited debut on NYSE under the ticker: TWTR. Prior to the start of the trading, the company revealed its price in a tweet via its microblog. In the IPO, the company raised $2.1bn, including the overallotment option.

In September, Twitter confidentially filed as an “emerging growth company”. In line with the Jumpstart Our Business Startups Act of 2012, this status reduces the Sarbanes-Oxley Act requirements applicable to public companies. For instance, there is no requirement to audit the effectiveness of internal control over financial reporting and reduced disclosure obligations apply regarding executive compensation.

The pre-deal marketing of Twitter can be described as conservative. The initial filing range of Twitter was set at $17.00-$20.00, was then upscaled to $23.00-$25.00, and eventually settled at $26.00. The size of the offering remained unchanged. The good market conditions contributed to the robust demand with a string of flotations that had doubled or nearly doubled on debut in the months preceding. The oversubscribed order book was closed a day earlier than originally planned. This enabled the underwriters to select fewer and larger investors who generally have more intention to hold shares for a longer duration.

Twitter started trading at a slight premium compared to LinkedIn, Yelp and Zillow but lived up to the pre-deal hype by soaring 73% on its first day of trading.

The company is fast growing but still loss-making. The FY2012 revenue is over 11 times more the FY2010 revenue while the $422m in the first 9M of 2013 is about twice the prior year period. However, the strong growth comes at a price; in the first 9M of 2013 the company reported a loss of $134m.

The deal was structured without a dual class voting structure. Furthermore, no insiders sold their shares at the IPO.

The net proceeds of about $2.0bn are used for general corporate purposes (e.g. working capital, operating expenses and capital expenditures). About a third of the total underwriter discounts, commissions and offering expenses ($73m) was paid to the lead underwriter Goldman Sachs.

Summary statistics

15

Trading on NYSE

Sources: Prospectus, Dealogic, IFR, Bloomberg as of 31 December, 2013

Listing venue: NYSE

Country of incorporation: United States

Adjusted filing range: $23.00 - $25.00

Pricing: $26.00

Pricing date: 6 November, 2013

Trading date: 7 November, 2013

Money raised: $2.1bn

Shares offered: 80,500,000 shares (14.8%)

Over-allotment option: 10,500,000 shares (1.9%)

Shares outstanding: 544,696,816 shares (100%)

Revenue (first 9M 2013): $422.2m (FY12: $316.9m)

Market cap at listing: $14.2bn

Current free float: 14.5%

0

10

20

30

40

20

30

40

50

60

70

80

6November

13November

20November

27November

5December

12December

19December

27December

Tr

ad

ing

vo

lum

e

(millio

ns o

f sh

ar

es)

Sh

ar

e p

ric

e (

$)

Trading volume on NYSE Share price

1-day performance:

72.7%

Current performance:

144.8%


Transaction highlights

Case Study: Merlin Entertainment Group IPO on LSE

On Friday 8 November 2013, the amusement venue operator Merlin Entertainments had its IPO on the London Stock Exchange and raised $1.7bn (including the over-allotment option). The IPO took place amid a strong second half of the year for U.K. IPOs, the shares of Merlin closed 10.2% higher on its first day.

The company operates amusement parks, including the popular attractions Legoland, Madame Tussauds, Sea Life, the Dungeons and the London Eye. It is the biggest visitor attraction operator in Europe and the second largest in the world after Disney. Last year it pulled in more than 54 million visitors.

The pricing of the IPO was geared towards the top range of the original guidance (£2.70- £3.30), at £3.15. This gave Merlin a slight valuation premium compared to US peers (Six Flags and Cedar Fair) and a slight discount compared to the well established U.K. peer Whitbread.

The pilot marketing, which already started early this year, involved about 30 key investors. In July, the company announced that it had selected London Stock Exchange over New York. The marketing efforts contributed to a smooth bookbuilding process with the conversion rate of one-on-one roadshow meetings at more than 80% and the top 25 of the orders capturing two-thirds of the book. Approximately 12.5% of the allocated shares went to retail investors.

The deal fits into the trend of increased momentum for private equity-backed IPOs. Merlin’s major shareholders prior to the IPO were private equity firms Blackstone Group (32.0%), CVC Capital Partners (26.3%), and the Danish firm Kirkbi (34.3%), which also controls Lego Group. Kirkbi remains the largest shareholder with a 30.0% stake after the IPO. In the exercised over-allotment option, both Blackstone and CVC sold additional shares. As a result of this, they retain a 19.8% and 11.6% stake, respectively.

The £200m in proceeds from new issued shares is used to reduce debt (£130m) and restructure interest rate swaps (£35m). The deal related costs were £35m.

Summary statistics

16

Trading on LSE

Sources: Prospectus, Dealogic, IFR, Bloomberg as of 31 December, 2013

Listing venue: LSE

Country of incorporation: United Kingdom

Filing range: £2.80 -£3.30

Pricing: £3.15

Pricing date: 8 November, 2013

Trading date: 8 November, 2013

Money raised: £1.1bn ($1.7bn)

Shares offered: 334,189,078 shares (33.0%)

Over-allotment option: 30,380,825 shares (3.0%)

Shares outstanding: 1,013,746,032 shares (100%)

Revenue (13H1): £483m (FY2012: £1,074m)

Market cap at listing: £3.2bn

Current free float: 36.0%

0

50

100

150

200

250

2.8

2.9

3

3.1

3.2

3.3

3.4

3.5

3.6

3.7

7 November 18 November 27 November 6 December 17 December 30 December

Tr

ad

ing

vo

lum

e

(millio

ns o

f sh

ar

es)

Sh

ar

e p

ric

e (

£)

Trading volume on LSE Share price

1-day performance:

10.2%

Current performance:

13.5%

http://www.google.nl/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=axPKkWYhz3UJ1M&tbnid=un_XWuH2bsXjFM:&ved=0CAUQjRw&url=http://en.wikipedia.org/wiki/Merlin_Entertainments&ei=QWC4Ur_PH9Tu0gXFy4DoAQ&bvm=bv.58187178,d.d2k&psig=AFQjCNHWfIIoHL1EXd4FnICDJwrJypEQXg&ust=1387901335849920

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