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London Stock Exchange- Financing options for African companies
November 2010
Agenda
London – the world’s capital market
Listing shares in London
Listing DRs in London
Africa-focussed companies on London Stock
Exchange’s markets
London Stock Exchange Group operates the largest and most liquid equities market in Europe
-
500
1,000
1,500
2,000
2,500
3,000
3,500
LSEG NYSEEuronext(Europe)
DBAG BME SIX NASDAQ OMXNordic
AD
TV
in
US
D m
illi
on
0
20,000
40,000
60,000
80,000
100,000
120,000
Tra
des
('0
00)
ADTV Trades
0
500
1,000
1,500
2,000
2,500
3,000
LSEG NYSE Euronext DBAG BME SIX NASDAQ OMX Nordic
Mar
ket
cap
US
D m
illio
n
LSE
BIT
Domestic market capitalisationof European exchanges as at 31 June 2010
Average daily traded value (ADTV) and number of trades in shares, H1 2010
Source: World Federation of Exchanges
Source: World Federation of Exchanges
• Hosting many of the biggest companies in the world, the LSEG represent one third of Europe’ total market capitalisation.
• 1,900 UK-incorporated companies are currently listed/quoted on our London markets, sharing an aggregate market cap of about US $2.6 trillion, the largest among European exchanges.
• Close to 600 international companies are currently listed/quoted on our London markets, with their aggregate market cap reaching nearly US $3 trillion.
• With close to 3,000 companies listed/quoted on its markets and over 500 member firms, the London Stock Exchange Group operates one of the most liquid cash equity marketplaces globally.
• During the first half of 2010, an average of nearly US $3bn worth of shares were traded daily on the LSEG’s markets, more than any other major exchange in Europe.
We provide cost-efficient access to the some of the world’s largest pools of international equity assets
106.2362.84 61.64
30.72
London New York Paris Hong Kong
126.16
5.13 3.3 0.86
London Paris Hong Kong New York
Banks
Insurance
5.362.3
0 0
London New York Hong Kong Paris
Pension Funds
Source: Ipreo June 2010
International equity assets under management in key financial centers
International equity assets under management by type of investor (in USDbn)
London$888bn
New York$804bn
Paris$222bn
Frankfurt$150bn
Hong Kong$136bn
Comparison of % of international investors in recently admitted companies and number of the international companies
London offers access to a more international investor base
London Stock Exchange
592 international companies
NYSE Euronext (US)
501 international companies
NYSE Euronext (Europe)
162 international companies
Deutsche Borse 74 international companies
45%
55%
9.07%
91%
58%
41.5%
82%
55%
Source: Thomson ReutersInternational investors Domestic investors
London Stock Exchange offers a choice of routes to market, equally to UK and international
companies
Commercial Companies equity shares and funds
Commercial Companies all types of shares
Depositary receipts
Options, warrants, derivatives and fixed income
Admission totrading only
Companies admitted to trading on other exchanges
Growth Companies
Flexible route for DRs wishing to use domestic accounting standards
Private equity, hedge funds, complex and single strategy funds
Main Market
OTHER
Primary markets
Agenda
London – the world’s capital market
Listing shares in London
Listing DRs in London
Africa-focussed companies on London Stock
Exchange’s markets
Listing shares – choice of markets
Listing shares
Regulatory status Regulated and listed Exchange regulated and unlisted
Listing segment Premium/Standard N/A
Market positioningFor large, established
companiesFor smaller growing
companies
Trading services SSETS / SETSqx/ ITBB SSETS / SETSqx/ SEAQ
Profile Profile
The Exchange’s flagship international market for established companies across all sectors.
No. of share issuers: 1,180
Avg. mkt cap: $4.6bn
The Exchange’s international market for smaller growing companies across all sectors
No. of share issuers: 1,204
Avg. mkt cap: $86.7m
Main Market – listing segments
• Compliance with the Listing Principles (LR 7)• Appointment of a sponsor• 75% of the business to be supported by a revenue
earning track record• Control over the majority of the entity’s assets• Unqualified working capital statement• Combined Code (only UK companies, non-UK companies
have to state compliance with their domestic corporate governance and explain any substantial differences)
Premium Segment
Standard Segment (Commercial Companies and Depositary Receipts)
• Prospectus approved by the UKLA• Minimum 25% shares in public hands*• Minimum market capitalisation £700,000• 3 years of audited financial information (or such shorter
period since company has been in operation)• Free transferability of securities • Working capital statement covering 12 months (for
commercial companies issuing shares only) • Compliance with the London Stock Exchange's
Admission and Disclosure Standards
In addition to…
* FSA will consider lower free float if it satisfied that there is sufficient liquidity in market
Main Market – key admission requirements
1 or such shorter period since company has been in operation; 2 China , Canada, South Korea and India’s accounting standard will be reviewed by 2011; 3 FSA will consider lower free float if it is satisfied that there will be sufficient liquidity in the market.
Premium listing Standard listing
Principal Listing Rules Chapter 6 14
Min. Market Cap. £700k
Principal Annex (PD) I, II, III
Financial Accounts 3 years of audited accounts 3 years of audited accounts1
Accounting StandardsIFRS and equivalent GAAP (China, Canada, India, US, Japan and
South Korea)2
Free float 25%3
Sponsor
Working capital statement
Admission and Disclosure Standards
* overseas issuers need to explain any major differences
Premium listing Standard listing
Combined Code Mandatory, for UK issuers*
Model Code
Pre-emption rights
Half Yearly Report 2 months after the period end
Interim Management Statement
Major Shareholder Notification
Annual Report 4 months after FY ends
Notifications by PDMR
Annual Information Update
Inside information Price sensitive information to be disclosed immediately
Main Market – key continuing obligations
FTSE Indices inclusion
Key rules which govern company eligibility are consistent across all FTSE indices: • Market capitalisation size• Free Float• Liquidity• Nationality
• Most companies are classified according to country of incorporation and listing where these do not coincide priority is given to country of primary listing
• Overseas issuers wishing to gain access to FTSE UK Series must adhere to Pre-emption Rights, Combined Code, City Code (takeovers), No Controlling Shareholder
• FTSE Nationality Committee which decides on nationality allocation for specific companies meets quarterly
• Companies incorporated in an emerging country (as classified by FTSE) will not be eligible for allocation to a developed country
FTSE 100
FTSE 250
FTSESmallCap
FTSEFledgling
(100)
(250)
(310)
(200)
FTSE All-
Share
(660)
FTSE 350
£2000* m
£300* m
£50* m
* Approximate size
AIM: an overview
AIM is the London Stock Exchange’s market for smaller, growing companies.
A platform for companies to raise capital (at admission and through further fundraisings) to help them realise their growth potential, within a tailored and balanced regulatory framework
Provides an attractive exit route for earlier stage investors and enables them to “recycle” capital
Supports companies beyond financing, by providing an attractive platform for them to increase their profile and visibility with key stakeholders
Key statistics – 3O September
Number of AIM companiesInternational companies*
1,204224
Aggregate market value
USD 104.4 billion
Total number of admissions since launch - UK - International*
3,1632,633
530
Total capital raised since launch - At admission
- Through further issues
USD 110.2 billion
USD 53.6 billionUSD 56.6 billion
Number of admissions in 2010
65
Capital raised in 2010 - At admission
- Further issues
USD 6.03 billion
USD 1.11 billionUSD 4.92 billion* By country of incorporation
AIM’s regulatory framework
Entry criteria – tailored for smaller, growing companies
Nominated adviser (Nomad) required at all times Admission document approved by Nomad and is not pre-vetted by Exchange or UKLA No minimum size requirement No minimum financial history required No formal requirement for shares to be held in public hands Disclosure based rules support company growth with shareholder approval required for the most fundamental transactions Compliance with the AIM Rules for Companies
Ongoing requirements – to facilitate growth and investor confidence
AIM companies must retain a Nomad at all times AIM companies must disclose all price sensitive information in a timely manner Half yearly and annual report and accounts required All directors accept full responsibility, collectively and individually for complying with AIM Rules Restrictions on deals for directors and applicable employees on AIM securities during close periods UK Corporate Governance standards adopted by companies as best practice AIM companies must maintain a website displaying key investor information
AIM’s regulatory framework, controlled by LSEG & independent from an external competent authority, has been central to the success of the market as it has developed & adapted according to market conditions, issuer needs & investor demands.
Money raised on AIM
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Jan-Oct
New Further
Mon
ey ra
ised
(£m
)
Money raised on AIM, new & further 1995 - 2010
Source: London Stock Exchagne Statistics, November 2010
• Total money raised on AIM has fallen back to the 2004 level due to the financial crisis, but further money raised maintains good momentum, with recovery in IPO market underway
AIM provides access to leading institutional investors
– The investor base for AIM companies is both institutional and retail.– The top 10 most influential institutions by value and number are:
Source: GCI Institutional Investors in AIM survey 2010
Rank Most Active Institutions by Value of investment
Value of Investment
(USDm) No. of
Investments
1 BlackRock 1970.18 130
2 Invesco 1309.56 74
3 Citivic (Nominees) 1217.92 5
4 Fidelity 1193.07 103
5 Prudential Group 791.97 38
6 Lloyds Banking Group 720.19 68
7 BNY Mellon (Nominees) 716.78 190
8 Brickington Trading 705.36 1
9 RAB Capital 662.82 43
10 Capital Group Companies 638.37 35
Rank Most Active Institutions by Number of investments
Value of Investment
(USDm) No. of
Investments
1 BNY Mellon (Nominees) 716.78 190
2 BlackRock 1970.18 130
3 Gartmore 511.58 106
4 Fidelity 1193.07 103
5 AXA 452.13 103
6 Artemis Investment Management 560.81 92
7 F&C Asset Management 404.79 81
8 Henderson Global Investors 382.24 81
9 Barclays 370.63 80
10 HSBC (Nominees) 461.17 75
Agenda
London – the world’s capital market
Listing shares in London
Listing DRs in London
Africa-focussed companies on London Stock
Exchange’s markets
Listing DRs – choice of markets
Listing DRs
Regulatory status Regulated and listed Exchange regulated and listed
Listing segment Standard Standard
Market positioning
For DR issuers requiring access to both wholesale and retail
investors
For wholesale DR issuers wishing to use local GAAPs
Trading services International Order Book (IOB)
Profile Profile
The Exchange’s flagship international market for established companies across all sectors.
No. of DR issuers: 148
Avg. mkt cap: $4.51bn
The Exchange’s market for wholesale issuers of debt and depositary receipts
No. of DR issuers: 37
Avg. mkt cap: $144.0m
Listing DRs – key admission requirements
1 or such shorter period since company has been in operation; 2 China , Canada, South Korea and India’s accounting standard will be reviewed by 2011; 3 FSA will consider lower free float if it is satisfied that there will be sufficient liquidity in the market.
Listing DRs
Principal Listing Rules Chapter 18 4
Min. Market Cap. £700k
Financial Accounts 3 years of audited accounts1
Accounting StandardsIFRS and equivalent GAAP (China,
Canada, India, US, Japan and South Korea)2
Local GAAP
Free float 25%3
Sponsor
Working capital statement
Admission and Disclosure Standards
Listing DRs – key continuing obligations
Listing DRs
Combined Code
Model Code
Pre-emption rights
Half Yearly Report
Interim Management Statement
Major Shareholder Notification No (unless underlying on regulated market)
Annual Report 4 months after FY ends 6 months after FY ends
Notifications by PDMR
Annual Information Update
Dissemination of regulated info. via
RIS
Inside information Price sensitive information to be disclosed immediately
Auditors EU Directive on Statutory Audit Outside EU Directives
Agenda
London – the world’s capital market
Listing shares in London
Listing DRs in London
Africa-focussed companies on the London Stock Exchange’s markets
African companies on the London Stock Exchange – facts and figures
• 18 African companies with equity listings on the Main Market
• 16 African companies with DRs listed on the Main Market or PSM
• 49 Africa focussed companies quoted on AIM
African Listings / Admissions in 2010:
Money Raised
African Barrick
GoldMarch 2010
Main Market £581.2m
Bellzone Mining April 2010 AIM £33.6m
Ncondezi Coal June 2010 AIM £35.6m
MasawaraAugust
2010AIM £15.4m
Zanaga Iron Ore Nov 2010 AIM £62mTotal raised by African IPOs in 2010: £727.8m
Key regulatory comparisonsLondon Stock
Exchange London Stock Exchange - DR
HKSE NYSE Euronext DBAG
Corporate governance
UK Corporate Governance Code (mandatory for
Premium listing only)
Domestic governance code
appliesn.a Depending on
the jurisdiction
German Corporate
Governance for German inc.
issuers
Free Float 25%* 25%*
Different criteria depending on the size of the
company
25% 25%
Accounting
standard IFRS or equivalent** IFRS or [local
GAAP on PSM]US GAAP or IFRS IFRS or
equivalent**IFRS or
equivalent**
Accounts 3 years audited
accounts 3 years audited
accounts 3 years audited
accounts 3 years audited
accounts 3 years audited
accounts
Working Capital statement
Yes Not required Cash Flow Statement
No No
Sponsor Only for Premium
listing Not requiredCompliance
Adviser Not required Listing Agent
Remuneration
UK Corporate Governance Code (mandatory for
Premium listing only)
Domestic governance code
applies
Domestic governance code
applies
Depending on jurisdiction
Domestic governance
code applies
Reports
Interim Half yearly
AnnualAnnual
QuarterlyInterim
Half yearly Annual
Interim (unaudited)Half yearly
Annual
Half yearly Annual
Investor Conference
Competent Authority
UKLA UKLASecurities and
Futures Commission
UKLA, AFM, AMF, CBFA,
CMVMBaFIN
Inside information
Inside information must be disclosed to the market without delay
The exchanges represented here are only a sample of our competitors *FSA will accept lower free float if its is satisfied that there will be sufficient liquidity in the market **Japan and US’ China, India, South Korea and Canada
Pricing - listed markets
UK and International Issuers Min: £6,085
Max: £352,085
Admission
Annual
Depositary Receipt Issuers Min: £20,000
Max: £352,085
Vetting Fee - FSA
London Stock Exchange
Share Prospectus: £13,420 or £2,750DR Prospectus: £2,750
In cases of complex transactionSuper transaction - £50,000
Significant transaction - £25,000
FSA
Domestic Trading Service Min: £4,005
Max: £39,480
International Trading ServicesShare issuers: £6,145 - £19,630DR issuers: £8,000 or £15,000*
London Stock Exchange
Share issuers: £3,425 – no maximum (eg. £1bn market cap issuer – £9,634)Overseas Standard listed issuers - 20% discount
DR issuers: £2,750
FSA
*New securities may be introduced to the non-CCP segment but moved to our CCP service at a later date if trading volumes are deemed to be at a sufficient level. Suitability for the CCP service is determined by trading volumes and in conjunction with LCH Clearnet.
Contact us
Ibukun AdebayoHead of Primary MarketsAfrica, India and Middle EastTel: +44 20 7797 1085Mobile: +44 7770 567 562Email ： [email protected]
Richard Webster-SmithManager, Primary MarketsAfrica, India and Middle EastTel: +44 20 7797 1058Mobile: +44 7766 421 989Email: [email protected]
Visit our website: www.londonstockexchange.com
