IPO as a Strategic Financing Option

F R A N K F U R T A M M A I N , 1 0 T H N O V E M B E R 2 0 0 8

T H E I P O A S A S T R A T E G I C F I N A N C I N G O P T I O N

Oliver Diehl, Director

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Name and company address: Cazenove AG Neue Mainzer Straße 28 D-60311 Frankfurt am Main Germany Switchboard +49 (0) 69 505 0049-0 www.cazenove.comCommercial register: AG Frankfurt am Main HRB 53860 VAT ID: DE220772442 Tax ID: 04523012965

D E U T S C H E S E I G E N K A P I T A L F O R U M

Important information

This material has been prepared by Cazenove AG, or an affiliate thereof (“Cazenove”).

This material is for distribution only under such circumstance as may be permitted by applicable law. It has no regard to the specific investment objectives, financial situation or particular needs of any recipient. It is published solely for information purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the materials. It should not be regarded by recipients as a substitute for the exercise of their own judgement. Any opinions expressed in this material are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or groups of Cazenove as a result of using different assumptions and criteria. Cazenove is under no obligation to update or keep current the information contained herein. Cazenove, its directors, officers and employees or clients may have or have had interests or long or short positions in the securities or other financial instruments referred to herein and may at any time make purchases and/or sales in them as principal or agent. Cazenove may act or have acted as market-maker in the securities or other financial instruments discussed in this material. Furthermore, Cazenove may have or have had a relationship with or may provide or has provided investment banking, capital markets and/or other financial services to the relevant companies. Neither Cazenove nor any of its affiliates, nor any of Cazenove’s or any of its affiliates’, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this material.

© 2008 Cazenove. All rights reserved. Cazenove specifically prohibits the redistribution of this material and accepts no liability whatsoever for the actions of third parties in this respect.

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Agenda

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Overview of ECM markets and IPO environment

IPO structure and process

Financing alternatives in a different environment

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Current situation of German Prime Standard IPO market

Germany postpones Deutsche Bahn IPO. „Given the extreme uncertainty on the financial markets...“Reuters, 09/10/2008

Schott Solar postpones public offering... indefinitely.

dpa, 22/09/2008Evonik says owners drop Evonik IPO plans for now. .Reuters, 01/04/2008

The current market environment in Germany is moulded by uncertainty and economic downturn

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Investors / diversified financing options

Bond

Investment GradeHigh Yield

Leveraged DebtCommercial Paper

Equity

SharesConvertible Debt

Mezzanine

Debt

Bank loanLeasing

ABSFactoring

Private Placement

Promissory noteUSPP

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Proactive approach of finance department

Eigenkapital

Verbindlichkeiten

Short-term assets

Long-term assets

Liabilities

Equity

CAPEX financingCAPEX financing

Debt + equitymeasures

Debt + equitymeasures

Debt repayments and strengthening of liquidity

Debt repayments and strengthening of liquidity

Investments Acquisitions Divestiture

COMMUNICATION

Financing concepts should exist ahead of project

Possible financing triggers

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open

Leasing

Open 24/7

US Private Placements

Lunch break

Commercial Banks

Early Christmas vacation

Promissory Note (Schuldschein)

On vacation

Euro Investment Grade Bonds

closed

Mezzanine

Current availability of financing alternatives

closed

Euro High Yield Bonds

Accessing new pools of liquidity has become more difficult

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105.4

40.923.9

6.4

3.3

100.1

141.1

61.7

34.3

8.45.34.6

3.60

50

100

150

200

250

2006 1H2007 2H2007 1H2008 2H2008

0

50

100

150

200

250

Volume and number of German corporate loans by rating class1 Volume and number of German corporate loans by rating class1

How to bypass a liquidity shortage? Consider different options

Source: Dealogic, October 2008¹ Excl. Financial institutions, insurance companies and utilities

Investment Grade (€ bn)

Non-investment grade (€ bn)

Investment Grade (number)

Non investment grade (number)

Not rated (€ bn) Not rated (number)

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Volume and average coupon of bonds1 Volume and average coupon of bonds1

Corporate bonds and US Private Placements (USPP)

3.2

2.1

0.7

1.3

0.5

200.0

136.3

109.0

121.9137.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2004 2005 2006 2007 2008³

0

50

100

150

200

250

Volume and average price of USPPs1,2 Volume and average price of USPPs1,2

$ bn

10.0

5.4

0.7

7.5

5.55.3

0

2

4

6

8

10

12

2006 2007 2008

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

€ bn bps%

Volume and conditions depend heavily on each other

Source: Cazenove analysis, Bloomberg¹ Excl. Financial institutions, insurance companies and utilities² Average of 10 year bullet³ 2008 not representative, only one transaction so far

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Leasing

Source: BDL, ifo Institut. August 2008

Development of leasing volumeDevelopment of leasing volume

Source: Annual report BDL 07/08¹ Expectation of BDL, press release

5.7 7.5 7.1 7.1

44.344.9

50.356.3

0

10

20

30

40

50

60

70

2005 2006 2007 1H2008¹

Volume movables-leasing

Volume property-leasing

Business cycle test for movables-leasingBusiness cycle test for movables-leasing

Leasing volume increased despite subdued business cycle expactations

ifo business situation

ifo business expectations

ifo business climate

60

50

40

30

20

10

0

(10)

(20)

01 2

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05 2

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09 2

006

01 2

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05 2

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09 2

007

01 2

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05 2

008

09 2

008

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Why issue public equity?

Raise capital

Establish market value (IPO)

Provide liquidity or exit strategy for investors

Increase financial and strategic flexibility through access to capital markets

Enhance public visibility and credibility

Management/employee incentive

BenefitsBenefits

Ongoing investor scrutiny and quarterly reporting

High level of focus on earnings visibility, growth and margin expansion potential

Disclosure of potentially competitive information

Increased corporate governance

Dilution; expensive form of capital

ConsiderationsConsiderations

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Objectives of an IPO

IPO

Optimise proceeds

Optimise value of retained ownership

Create positive market momentum facilitating future offerings

Broaden share ownership/create liquidity for subsequent sales

Optimise proceeds

Optimise value of retained ownership

Create positive market momentum facilitating future offerings

Broaden share ownership/create liquidity for subsequent sales

Execute a successful offering

Raise capital for expansion of the business (if primary)

Establish attractive, sustainable market valuation

Obtain a broad-based, sophisticated shareholder base

Raise company profile

Strong aftermarket performance will facilitate future fund raising and corporate action

Achieve broad research sponsorship

Create capital strength in the Company, benefiting commercial negotiations with customers and suppliers

Create vehicle for management incentivisation

Execute a successful offering

Raise capital for expansion of the business (if primary)

Establish attractive, sustainable market valuation

Obtain a broad-based, sophisticated shareholder base

Raise company profile

Strong aftermarket performance will facilitate future fund raising and corporate action

Achieve broad research sponsorship

Create capital strength in the Company, benefiting commercial negotiations with customers and suppliers

Create vehicle for management incentivisation

Secure good value

Establish sizeable holding in company

Optimise share price performance post IPO

Broaden investment portfolio

Selling shareholders Company

Investors

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Agenda

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What is a successful IPO?

Right equity story

Intrinsic attractions

Positioning vs. peers

Right timing

Launch window / market conditions

Not too early / not too late: past accomplishment vs. remaining upside

Right valuation (for company/selling shareholders and for new investors)

Generate price tension, broad demand

Perception of scarcity value: “must-own” stock vs. “show-me” stock

DeterminantsDeterminants

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What is an IPO process?

A 1-2 months of pre-IPO preparation, followed by…

… 4-6 month exercise

Pricing date known from the first day — moral commitment by all parties to stick to it

Large working group: discipline, accountability and information flows are key

Private/confidential phase followed by public phase

3-4 “go/no go” points

ProcessProcess

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Internal organisation needs to be prepared for the IPO

An IPO is a demanding process

Senior management needs to find the right balance between the necessary running of operations and the involvement in a critical event in the life of the company

Two steps can be taken to make the process smoother

Designate a “project leader” for the IPO is recommended

— “Buffer” between bankers/lawyers/accountants and senior management

— Consistency in action and messages all along the process

Hire/designate, early on, before the IPO process starts, an Investor Relations Officer

— IPO preparation good training for life as a listed company

— Typical profile: internal recruit with good vision of company and proficiency in English, or external hire (e.g. experienced research analyst)

ProcessProcess

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Project management and working groups for IPO

Company and bookrunners project team

Legal, business and financial due diligence AccountsPreparation of prospectusDrafting of other transaction documents Shareholder agreementsOpinionsCorporate approvalsComfort lettersPublicity and research guidelinesCorporate/legal structure

Capital structureCorporate governanceValuationBusiness plan/ forecastsDevelopment of investment casePreparation of analyst and roadshow presentations

Offer structureTax considerationsSyndicate co-ordinationLiaison with the relevant regulatory authoritiesLock-up

Development of IR and PR strategyInvestor educationRoadshow and bookbuildingAnnouncement of offeringPricing and allocationAftermarket—greenshoe/ stabilisation

Key

wor

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Key

wor

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ps /

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Documentation/ legal/ accounting

Investment case Offer structure/ listing Marketing/ distribution

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Pre-IPO steps

Review/update business plan

Prepare 3 year consolidated audited IFRS financial statements

Discuss IPO with auditors to identify any issues early on

Consider need to present financial track-record of business

Financial/AccountingFinancial/Accounting

If any acquisitions are envisaged, ideally they should be completed prior to IPO or, as a minimum, parameters should be defined and shareholder approvals obtained pre-IPO

Be aware of need to disclose and explain process in IPO prospectus

Consolidation Consolidation

Appoint working group / deal captain

Consider corporate governance, board structure and composition, and committees

Review internal controls, treasury and financial reporting functions,

Review any litigation, customer/supplier disputes and other contingencies and consider whether/how to resolve pre-IPO

Establishing public company infrastructure/pre-IPO housekeeping Establishing public company infrastructure/pre-IPO housekeeping

Commence search for suitable non-executive directors

Identify Investor Relations Specialist to allow familiarisation with company business before IPO process commences

Identify general counsel

Engage appropriate individuals/advisorsEngage appropriate individuals/advisors

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Key questions to be answered in preparing for an IPO

ValuationFunding requirementsDemandFree float/liquidityGreenshoeIndex impact

ValuationFunding requirementsDemandFree float/liquidityGreenshoeIndex impact

Offer sizeOffer size

Use of proceedsShareholder intentionsNature of sale/sellerOverhang / Lock-ups

Use of proceedsShareholder intentionsNature of sale/sellerOverhang / Lock-ups

Primary vs secondaryPrimary vs secondary

StrategyLeadership positionsOperational track recordSolid financialsBoard & ManagementGrowth / Value / DividendInvestment risks

StrategyLeadership positionsOperational track recordSolid financialsBoard & ManagementGrowth / Value / DividendInvestment risks

Investment caseInvestment case

Optimal valuationBusiness cycle Company objectives Market conditionsInvestor sentiment

Optimal valuationBusiness cycle Company objectives Market conditionsInvestor sentiment

TimingTiming

DomesticInternationalRetailIndexTargetingEmployees

DomesticInternationalRetailIndexTargetingEmployees

Syndicate sizeQuality of researchDistribution capabilitiesAftermarket supportFees

Syndicate sizeQuality of researchDistribution capabilitiesAftermarket supportFees

Single or dual listingPeer groupResearch coverageInvestor accessCorporate GovernanceDisclosure standardsCosts Liquidity

Single or dual listingPeer groupResearch coverageInvestor accessCorporate GovernanceDisclosure standardsCosts Liquidity

ComparablesRelevant multiplesCross check fundamental valuation

ComparablesRelevant multiplesCross check fundamental valuation

Demand poolsDemand pools Syndicate structureSyndicate structure Listing locationListing locationValuationValuation

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Understanding investor criteria is critical for a potential IPO candidate

Management team that has delivered results in the pastManagement has thorough understanding of macro and micro economic trends affecting companyAbility to anticipate changeManagement will be judged by recent performance

Cohesive strategy and superior management

Better product portfolioStrong relationships with customersSuperior marketing clout

Superior revenue growth / scalability

Pricing leverage in marketplaceSuperior business mix of value-added products or servicesCash generating powerAbility to pursue acquisitions and other strategic alternatives

Attractive profitability profile / Well-capitalized balance sheet

Large attractive market / Strong existing market position

Provides attractive base case growth outlook for companyOpportunity to drive growth in market through innovationSuperior product/service portfolio (as evidenced by leading market share)Effective relationships with industry playersStrong brand recognition

What investors look forWhat investors look for ImportanceImportance

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IPO candidates are usually valued using Discounted Cash Flow analysis and/or Market multiples

Methodology Comment

Discounted cash flow

Net present value of forecasted cashflows

Allows to capture 100% of management forecasts

— Highly sensitive to discount rate and terminal value

— Absolute valuation independent from stock market prices

A

Market multiples

Multiple derived from ratio of each peer's valuation over selected accounting figures; multiple then applied to IPO candidate’s accounting figure to derive valuation

Simple and easy to calculate

Utilised by all equity investors

— Lack of exact comparables may be an issue

— Focus on near future (08, 09)

B

Source: Cazenove

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Listing market considerations should not only take company-specific factors into account

Listing market

Key factors are headquarters, production locations, clients, equity story, relevant investors, accounting standards and corporate governance

Existence of relevant quoted peers

Sector familiarity to reduce ‘mispricing’ risk (for IPO and aftermarket)

Investors with thorough understanding of the business

Access to the relevant investors is crucial, in particular to those who will drive offer and demand

Position the company for maximum market valuation

Broad and high-quality research coverage and comparable valuations

Sufficient free-float and liquid market with capacity to effect large capital raisings

Costs of listing on markets vary; tax treatment for selling shareholders

The selection of the right listing market is of the up most importance for future capital raising as well as effective investor access

Parameters for the selection of the listing market

Company specific factors

Peer group

Target investors

Valuation

Liquidity

Cost

Index ImpactKey to capturing demand and investor attention

Increasing focus of passive fund managers on liquid stocks

Growing attention to the world’s major benchmarks

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The right market segment is as important as listing location – transparency levels are key for institutional investors

Prime Standard General Standard Entry Standard

Characteristics

Accounting Requirements

Prospectus Requirements

Publication Requirements

Perceived as the market for "blue chip" stocks in Germany with highest transparency standards

Less transparent than Prime Standard but still regulated market

Young and small companiesFirst step to capital marketLow cost and flexible accessFocus on institutional investors

IFRS (or adequate for Non-EU issuers (1))

National GAAP (for EU issuers)IFRS (or adequate for Non-EU issuers (1))

Non-public offering, i.e. private placement: exposé sufficientPublic offering: BaFin approval needed, WpPG applies – EU passport

Audited annual reportQuarterly reporting to the formal requirements of the Exchange RulesFinancial calendarAt least one analyst conference per yearAd-hoc disclosure also in EnglishDirectors’ dealings

Audited annual reportSemi-annual and interim report Ad-hoc disclosureDirectors’ dealings

Audited annual reportSemi-annual and interim reportNo ad-hoc disclosure but publication of any material development on the websiteCompany profile needs to be updated once a year on the website

Official Market / Regulated Market Open Market

EU-Regulated Market Regulated Unofficial Market

IFRS (or adequate for Non-EU issuers (1))

(1) US GAAP, Canadian GAAP or Japanese GAAP

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Cazenove will add value at every stage of IPO execution process

Structuring

Business plan

Capital structure

Management and board

Audited accounts

Due diligence

Analyst presentation

Structuring

Business plan

Capital structure

Management and board

Audited accounts

Due diligence

Analyst presentation

Management presentation

Research notes

Flagship investors

Management presentation

Research notes

Flagship investors

Preliminary prospectus

Regulator sign-off

Sales force briefing

Announce-ment

Analysts visit

Demand profile

Indicative price range

Preliminary prospectus

Regulator sign-off

Sales force briefing

Announce-ment

Analysts visit

Demand profile

Indicative price range

Price range

Roadshow

Book-building

Pricing scenarios

Price range

Roadshow

Book-building

Pricing scenarios

Demand review

Pricing decision

Allocation

Demand review

Pricing decision

Allocation

Stabilization

Greenshoe

On-going research

Trading support

Market making

Corporate relations

Stabilization

Greenshoe

On-going research

Trading support

Market making

Corporate relations

PreparationPreparation Analyst education Analyst

educationInvestor

education Investor

educationRoadshow/

bookbuilding Roadshow/

bookbuildingPricing/

allocation Pricing/

allocation AftermarketAftermarket

T- x weeksT- x weeks T-7 weeksT-7 weeks T-4 weeksT-4 weeks T-2 weeksT-2 weeks TT T+4 weeksT+4 weeks

Key stepsKey steps

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Objectives of investor education

Execution

Investor education is led by equity research analysts

The investor education process, the first contact of company with the market, will be undertaken by our research analysts and specialist sales and enable both the management and underwriters to gather preliminary market feedback on the offering

AftermarketPricing/allocationRoadshow/bookbuildingInvestor education

Bank in charge of investor education

Bank will publish research report

Research report is only marketing instrument during investor education

1. Research report

Bank´s specialists will present company to institutional investors

Bank´s specialists act as interface between company and institutional investors

2. First contact with the market

3. Investor education itinerary

Bank´s specialists provide investor feedback to company's management after meetings

Complete feedback report presented to company and shareholders before offering

4. Price range

After investor education and before bookbuilding, company decide on price range

Preliminary prospectuses are distributed to investors and book of demand is open

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Objectives of the

roadshow

Execution

Effective roadshow organization is key to investor targeting and ability to maximize demand

Roadshow is the official marketing phase – management meets institutional investors and performance of management team will be a critical factor for success of IPO

Bank´s specialists continue to host investor education meetings during roadshow period

Organise a number of 1-on-1 meetings and group presentations (assuming two weeks)

Bank’s roadshow and IR departments will be responsible for organisation of roadshow

Bank’s salesforce ensures that interest by inst. investors is translated into orders for the shares

Company and its shareholders will have full visibility and access to the book of demand

One roadshow team:

CEO + CFO + the company senior or operational manager(s)

Investor education AftermarketPricing/allocationRoadshow/bookbuilding

Bank’s role during the roadshow The company’s roadshow

- Boston

- New York- Middle East: 2-3 days

- London: 2-3 days

- Edinburgh

- Paris

- Frankfurt

- Stockholm

- Netherlands

- Switzerland

2 days

5-6 days

- o

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Example—evolution of an order book during an IPO

98 121 140 143

336459

1.135

1.769

3 3

1 2 3 4 5 6 7 8 9 10

Institutional tranche = 235.2m shares incl. greenshoe

Day:

Coverage: 0.0x 0.0x 0.4x 0.5x 0.6x 0.6x 1.4x 2.0x 4.8x 7.5x

Bank communicates to the market that books

are covered

Demand (m shares)Demand (m shares)

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(25)%

(20)%

(15)%

(10)%

(5)%

0%

5%

10%

15%

Preliminary valuationrange by Bookrunners

Valuation range bySyndicate research

Bookbuilding pricerange

Pricing

“Price discovery” is key to achieving a sustainable valuation

Roadshow/bookbuilding AftermarketPricing/allocationInvestor education

Valuation/ price range

Time T T + 3 weeks T + 5 weeks T + 7 weeks

Investor education

Roadshow &

bookbuilding

10-20%

Marketing momentumAnalyst presentation

Syndicate Valuation Analyst Valuation Price Range Pricing

Pricing

Bank would manage a “price discovery” process in order to achieve the most favourable results Bank would manage a “price discovery” process in order to achieve the most favourable results

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In order to enhance shareholder visibility on valuation, company could use “pilot fishing”

Description

Preliminary meetings organised by the Bookrunners with selected lead investors to gather feedback on company equity story and valuation

Meetings organised early in the IPO process (before or around analyst presentation subject to company’s preparedness)

Meetings organised in a discrete manner, no market publicity

Target key accounts with superior understanding of the sector and company comparables

Process used in recent IPOs

Objectives

Test company positioning with investors and their potential interest/appetite for the story

Test valuation methodologies/trading multiples that will be used by investors to value company

Provide additional insight to company and its shareholders on feasibility of IPO

Risks

Partial investor feedback only, likely to evolve throughout the process

“Pilot fishing”“Pilot fishing”


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Objectives of pricing

and allocations

Execution

IPO performance in the aftermarket also depends on effective allocation process by the Bookrunners

Communicate a positive message to market to price in the upper half of range

Encourage orders and attempt to limit selling pressure on the company’s shares

Foster stock liquidity

Quality/sophisticated investors

Outstanding knowledge of the company, the country and the sector

Buyers in the secondary market

Likely to become l-t shareholder

Favour high quality institutional investors

Limit the allocation of shares to Tier 2 and Tier 3 accounts

Avoid allocating shares to Tier 4 accounts, apart from key investors

Tier I

Tier II

Tier III

Tier IV

Allocation strategySuggested allocation criteria

Quality investors

Limited holdings in the sector

“Followers” rather than “leaders”

Uncertain holding period

Smaller inst. funds or local brokers

70% of demand

20% of demand

8% of demand

2% of demand


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IPO performance in the aftermarket also depends on effective allocation process by the Bookrunners

Example of order book and price sensitivity

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

4.75

4.80

4.85

4.90

4.95

5.00

5.05

5.10

5.15

5.20

5.25

5.30

5.35

5.40

5.45

5.50

5.55

5.60

5.65

5.70

5.75

5.80

5.85

5.90

5.95

6.00

Shares (bn)

Inst. Tranche:

253.2m shrs

Tier 1 investor price sensitivity

Offer price: 5.40

Retail

54%

Long only

39%

7%

Hedge funds

Demand

Retail

46%

Long only

27%

27%

Hedge funds

Allocation


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IPO pricing considerations (1/3) : discount to fair value

Fair trading multiple is obtained and reflected in valuations

At execution, institutional investors seek to purchase shares at discount to projected trading value

Size of additional “IPO discount” required to attract investors into a transaction is subject to several factors and can vary significantly from deal to deal. Key variables are:

Gauging range of IPO discount is possible by calculating difference between offer price and valuation (through DCF or other)

Historically, the “IPO discount” has been in the 5-15% range to the benchmark fair, trading value

Impossible to accurately determine the IPO discount until pre-marketing and bookbuilding phases commence, i.e. when the valuation is tested with investors for the first time

7%

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IPO pricing considerations (2/3) – determining the range

Investors will require an “IPO discount” to the fully distributed valuation range:

Width of IPO pricing range is usually around 15%

Guidelines on setting IPO pricing range:

Set the bottom of the range in order to

— Engage the bulk of investors in the process

— Act as a catalyst for deal momentum to move investors up the price range

— Accommodate the possibility of market volatility during the roadshow period

Set the top of the range in order to

— Reflect estimated maximum pricing level

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IPO pricing considerations (3/3) – determining pricing

7%

Low Just rightHigh

Could signal ‘weak’ deal

If offering ‘pops’ money left of the table

If pop is 40-100%, investors may flip

Investor enthusiasm/ support is strained

No tolerance for execution mistakes

Narrows investor pool

Investors believe they have helped price the deal

Investors understand milestones and metrics and support multiple expansion

70% of top 10 allocated accounts hold stock for 30+ days and increase positions

Allows for multiple expansion

Communicates ‘hot’deal

Investors have ‘bought-in’ to value

Risk

sPo

siti

ves

Final Pricing

Create solid, experienced investor base with l-t commitment to companyEnsure steady and reasonable aftermarket share price progression to maintain investor confidence and satisfaction

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Objectives of aftermarket

phase

Execution

The Bookrunners’ equity trading and distribution platform would support company stock price performance in the aftermarket

Stabilisation and exercise of the greenshoe option

Provide excellent visibility to investors through continuous news flow

Establish a liquid and buoyant secondary market for the shares

Pricing/allocationRoadshow/bookbuilding AftermarketInvestor education

Management of aftermarket phase

Continuous and coherent communication will be necessary to ensure company visibility and strong performance in the aftermarket

Bookrunners to initiate research coverage following end of blackout period

Maintain active dialogue with investors when investor interest weakens or focuses on certain aspects of the story

Continue to channel investor feedback and questions to the company’s management

Market maker

End of the black-outperiod

Initiation of researchcoverage

Stabilisation period

Listing Bookrunners become traders

IR/PR communication

Publication of research notes

End of research black-out period

40 calendar days after pricing

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Market demand/timingTake advantage of broad market and sector trends

Capital needsReturn to equity markets to support expansions in business plan

Provide currency for significant M&A or CAPEX activityOwnership structure

Broaden investor base

Allow key investors to increase ownership stake

LiquidityExit strategy for insiders and/or VC investors

Increase market float, reduce volatility

MarketingBroaden research coverage

Opportunity to further educate investors on company’s story

After an IPO, publicly traded companies often sell additional equity

Why complete a follow-on offering?Why complete a follow-on offering?

Equity Offerings

Initial public offering

Accelerated bookbuildings

and block trades

Fully marketed offering,

Capital increase

Equity-linked or convertible offerings

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Fully marketed

Bank places shares with targeted investors through extended marketing and bookbuilding process

Offering period: 2 weeksPreparation time: 6—8 weeks

Narrower discountOpportunity to market equity story through management roadshowAllows for maximum size vis-à-vis AGT and block trade

Not fully underwritten as in case of block tradeIncreased market risk vis-à-vis block trade and AGTRequires management supportLonger preparation time

Comparison of alternativesD

escr

ipti

onEx

ecut

ion

tim

ing

Adv

anta

ges

Cons

ider

atio

nsAccelerated bookbuild

Bank places shares with targeted investors via accelerated bookbuilding process

Fast track execution:1—3 days (sometimes within hours)

Potentially narrower discount vis-à-vis block tradeNo need to file prospectusAllows for larger size vis-à-vis block trade

Not fully underwritten as in case of block tradeSize is an issueIncreased market risk vis-à-vis block tradeWider discount relative to fully marketed offering

Block trade

Bank purchases shares from the Company at pre-determined price and then places shares with investors in secondary market

Rapid execution: typically short time frame of 24 hours

Certainty of disposalNo need to file prospectusNo involvement of the Company’smanagement requiredLittle or no market risk during execution

Wider discount relative to accelerated offeringSize and feasibility of transaction greatly influenced by liquidity of the stock and market conditions

Agency sale

Bank sells shares on behalf of the Company on open market at specific price limit or at the market

Depends on the liquidity of stock; Target 20% of ADTV

No regulatory or disclosure issuesIncreased likelihood of disposal of entire stake at average market priceFlexibilityCould be combined with block trade to achieve complete sale (o. vice-versa)

The Company faces market risk during the sale periodTiming of complete sale uncertainPotentially negative signal to market resulting in downward pressure on share price

Rights issue

Bank places shares with existing investors

Offering period: 2 weeksPreparation time: 6-8 weeks

Guarantee of proceeds — underwritten offerPotential to raise bigger % of companyPreferential treatment to existing shareholdersOpportunity to market equity story

Typically, is the most deeply discounted offeringLong preparation timeLimited ability to tap new investor base

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Typical usage of IPO funds

Expansion of business activity

Strengthening of equity basis

Expansion of R&D department

MeVis (Technology)MeVis (Technology)

€ 37.4m 16 Nov 2007€ 37.4m 16 Nov 2007

GK Software (Software)GK Software (Software)

€ 8.7m 19 Jun 2008€ 8.7m 19 Jun 2008

Expansion of core market Germany

International expansion

Expansion of product portfolio and safeguarding of technology leadership

Primary € 8.7mSecondary -Primary € 8.7mSecondary -

SMA Solar (Renewables)SMA Solar (Renewables)

€ 361.9m 27 Jun 2008€ 361.9m 27 Jun 2008


Internationalisation

Expansion of development capacities

Primary € 126.9mSecondary € 235.0mPrimary € 126.9mSecondary € 235.0m


Source: Company offering prospect, Deutsche Börse

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Typical usage of IPO funds (cont´d)

Strategic investments in other companies


Expansion of R&D department

Maintenance

Modernisation

Expansion of infrastructure of port

Hamburger Hafen (Logistics)Hamburger Hafen (Logistics)

€ 1,166m 02 Nov 2007€ 1,166m 02 Nov 2007

Centrotherm (Renewables)Centrotherm (Renewables)

€ 185.1m 12 Oct 2007€ 185.1m 12 Oct 2007

Franconowest (Real Estate)Franconowest (Real Estate)

€ 9.0m 13 Nov 2007€ 9.0m 13 Nov 2007

Expansion of business operations


Increased financial flexibility

Primary € 9.0mSecondary -Primary € 9.0mSecondary -

Primary € 123.2mSecondary € 1,042.8mPrimary € 123.2mSecondary € 1,042.8m


Source: Company offering prospect, Deutsche Börse

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http://www.hamburg-port-authority.de/

http://www.centrotherm.de/14.index.html

Agenda

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Date Event 2007 March HSBC unwinds its subprime lending business

July 2 Bear Stearns hedge funds lose $1.6bn on subprime CDOs

Oct/Nov Merrill Lynch and Citi CEOs fired

2008 January Countrywide acquired by Bank of America

March Bear Stearns acquired by JPMorgan Chase

April Sachsen LB merges with LBBW

August KfW sells IKB to LoneStar September Treasury takes control of Fannie Mae & Freddie Mac

Lehman Brothers files for Chapter 11

Merrill Lynch & Bank of America agree to merge

$85Bn bailout of AIG by the Federal government

SEC issues emergency order temporarily banning short selling in the shares of c. 800 financial institutions

Morgan Stanley and Goldman Sachs convert to bank holding companies

Warren Buffett investments in Goldman Sachs and GE

JPMorgan Chase acquires WaMu after FDIC seizure

October Wells Fargo acquires Wachovia

House passes $700bn TARP plan on second try

Kaupthing Bank files for bankruptcy and is taken over by the government

November West LB, Commerzbank and HSH Nordbank claim German bail-out fund

Chronology of the financial crisis

Timeline of eventsTimeline of events

Source: Factset, press

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Equity markets are likely to remain volatile, but medium term risk reward is supportive as a deep recession is likely priced in

Source: Bloomberg

CommentsComments

Rapid deterioration in economic data and continued stress in funding markets threaten to transform a mild global recession to a deep one

Equity funds continued to see large outflows across all regions except in Western Europe

Earnings estimates are likely to be revised downwards

On the positive side, the medium term inflation trends are improving

The long term risk-reward outlook for stocks is supportive

Significant steps have been taken to support and restore confidence in banks

Key market indicators (2007 — 2008 YTD)Key market indicators (2007 — 2008 YTD)

DJ Stoxx 600 P/E

EUR/USD

Crude oil ($/bbl)

7

11

15

Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08

1.2

1.3

1.4

1.5

1.6


50

100

150


Key benchmark indicesKey benchmark indices

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0

100

200

300

400

500

600

700

800

Oct-98 Dec-99 Jan-01 Feb-02 Apr-03 May-04 Jun-05 Aug-06 Sep-07 Oct-08

0%

10%

20%

30%

40%

50%

60%

70%

80%

Markets are seeing a sustained period of equity volatility…

Source: Bloomberg

10-year performance of selected indices and volatility 10-year performance of selected indices and volatility

Equity index 1 month 3 months 2008 YTD LTM 5 years 10 years

FTSE 100 (20.4%) (25.0%) (36.3%) (37.2%) (3.6%) (21.6%) S&P 500 (23.6%) (29.2%) (37.2%) (40.2%) (12.2%) (15.2%) DAX (25.5%) (30.9%) (44.0%) (42.4%) 29.2% 1.5%

Equity indices rebased to 100 VDAX volatility index

Russian and Asian crises

9/11 attack

US accounting scandals

Spring 2006 correction

(growth fears)

Current crisis

Dot-com bubble burst

Source: Bloomberg

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Real GDP forecastsReal GDP forecasts Weaker growthWeaker growth CommentsComments

The global economy is sliding into recession, the first simultaneous recession since the 1970s. Developed economies are likely to contract for three consecutive quarters, and by more than in 2001

Emerging markets growth is set to slow sharply, but modestly better than in 2001

Expect central banks to aggressively lower interest rates

…anticipating the global economy heading for its most challenging period in decades

% q/q 3Q08 4Q08 1Q09 2Q09 3Q09

Germany (0.8) (1.8) (1.0) 0.5 1.0

Euro area (1.0) (2.0) (1.0) 0.5 1.0

U.S. (0.5) (4.0) (2.0) 0.0 2.5

UK (2.0) (3.0) (2.5) (1.5) 0.0

Japan (0.7) (1.0) (0.5) 0.0 0.8

Source: J.P. Morgan Economic Research

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(18.4)%

(27.4)%

(34.1)%

(35.3)%

(39.0)%

(50.9)%

(51.3)%

(54.3)%

(54.6)%

(57.3)%

MSCI World: (47.5%)

European equity markets update

Global equity markets update and outlook for 4Q 2008 Global equity markets update and outlook for 4Q 2008

Source: Bloomberg

MSCI world sector performance LTMMSCI world sector performance LTM

Consumer staple

Healthcare

Consumer discretionary

Utilities

Energy

IT

Materials

Industrial

Telecom

Financials

The credit spreads are at 2-3x recession peak levels, and equities have fallen by half the average recession penalty

A significant and prolonged equity market rebound is not likely in the short term

In the secondary market, investors are currently favouring stock with the following characteristics

Current consensus seems to be for economic rebound around summer 2009 (in the US)

A rebound in equity markets could take place a couple of months before (end Q2 2009) but this is subject to a prior resolution of the financial crisis and macroeconomic developments

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0

10

20

30

40

50 IPOs Follow on Convertibles

175

200

225

250

275

300

325

The profile of equity issuance has changed dramatically, reflecting the current crisis

CommentsComments

The equity issuance market has experienced considerable disruptions (e.g. only two Equity-linked transactions were placed in EMEA since beginning of August)

2008YTD ECM volume has been driven by large rights issues, particularly by financial institutions in order to strengthen the capital base

Considerable investor liquidity shifted to defensive asset classes and heavy redemptions is underway

IPO market not likely to re-open before the end of H1 and for solid equity stories only

EMEA ECM issuance split by deal typeEMEA ECM issuance split by deal type

Issuance, €bn

’07 ‘08Jun

Stoxx 600

’07 ‘08Jul

’07 ‘08Aug

’07 ‘08Oct

’07 ‘08Sep

Source: Dealogic

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The profile of equity issuance has changed dramatically, reflecting the current crisis

2003-2007 2008YTD

ABB: 33%

IPO: 27%

Rights: 21%

Convert: 13%

Fully marketed: 6%

IPO: 13%

Rights: 56%

Fully marketed: 3%

Telecom: 7%Consumer Goods: 4%

Other: 22%FIG: 31%

Telecom: 10%

Utility: 7%Real Estate: 7%Oil & Gas: 5%

Other 40%

FIG: 59%

EMEA ECM issuance H2 20081 EMEA ECM issuance H2 20081

Date Issuer Country Industry Type Size (€mm) Purpose 07-Oct-08 Sampo Oyj Finland Finance ABB 1,314 Secondary shares2 25-Sep-08 Natixis France Finance Rights 3,727 Strengthen cap. 22-Sep-08 Mobile Telecom Kuwait Telecom Rights 3,133 General 22-Sep-08 Deutsche Bank Germany Finance ABB 2,200 Growth 19-Sep-08 Lloyds TSB UK Finance ABB 972 Growth 18-Sep-08 Barclays UK Finance ABB 884 Growth 08-Sep-08 Commerzbank Germany Finance ABB 1,112 Growth 22-Aug-08 IKB Germany Finance Rights 679 Strengthen cap. 24-Jul-08 Abu D. N. Energy UAE Utility Conv 717 General 21-Jul-08 HBOS UK Finance Rights 5,202 Strengthen cap. 18-Jul-08 Barclays UK Finance FM 5,011 Strengthen cap. 14-Jul-08 Ma'aden Saudi A. Mining IPO 1,547 Secondary shares2 07-Jul-08 AngloGold S. Africa Mining Rights 1,108 General 01-Jul-08 Credit Agricole France Finance Rights 5,900 Strengthen cap.

Utility: 4%

Food & Bev.: 4%

By deal typeBy deal type By sectorBy sector

2003-2007 2008YTD

Convert: 10%

ABB/other: 18%

1 Deals > €650mm 2 No proceeds for the issuerSource: Dealogic as of October 29, 2008

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2003 2004 2005 2006 2007 2008

German equity issuance since 2003 in € bnGerman equity issuance since 2003 in € bn

Overview of German equity capital markets

90%

10% 14%

86%

20.9

29.8 IPO Other1

1 Inclucdes everything except IPOsSource: Dealogic

Development of German indices since July 2007Development of German indices since July 2007

30

50

70

90

110

Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 Jun-08 Aug-08 Oct-08

% DAX 30 (34.7%) TecDAX (38.2%)

Source: Bloomberg

26.5

69%

31%

100%

29.7

MDAX (45.2%) SDAX (54.7%)

21.7

66%

34%

16.7

93%

7%

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0.0 0.00.8

0.3 0.60.0

1.61.52.0

4.9

3.3

1.0

2.8

1.20.4

1.5

0.1

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

Quarterly German IPO Volumina, 2004 - 2008Quarterly German IPO Volumina, 2004 - 2008

€4.2m €8.3m

German IPOs by sector & size since 2007German IPOs by sector & size since 2007German equity issuanceGerman equity issuance

Source: Dealogic 1 Other includes: Computer, Construction, Healthcare, Services, Finance, Food, Metal, Energy

2008: €16.7m

Convertibles€7.4m Capital

increase€8.3m

IPO €1.1m

Recent development of German equity capital markets

€7.4m

2007

€0.1m

Machinery8.5%

RealEstate 7.5%

TMT9.2%

Auto- motive28.6%

> €1,000m3.9%

< €250m84.3%

€500–1,000m3.9%

€250-500m7.8%

Consumer- products11.3%

2004 2005 2006

€2.0m

2008

Trans- portation

18.6%

Other1

16.3%

SectorSector SizeSize2008 (Q1-Q3)2008 (Q1-Q3)

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Date Company Volume Original price span Development since IPO

08-Mar-07 Kromi Logistic 26.1 23.00 27.00

21-Mar-07 POLIS Immobilien 78.6 13.75 16.75

27-Mar-07 VITA 34 International 9.0 14.50 17.50

02-Apr-07 ESTAVIS 80.0 28.00 35.00

03-Apr-07 alstria office REIT 406.4 16.00 17.50

11-Apr-07 SMT Scharf 15.2 9.50 11.50

27-Apr-07 Versatel 720.7 29.00 36.00

15-May-07 Wacker Construction 352.0 18.00 22.00

24-May-07 DF Deutsche Forfait 13.5 7.00 7.50

11-Jun-07 Gerresheimer 880.0 37.00 45.00

18-Jun-07 InVision Software 30.0 32.00 38.00

28-Jun-07 VTG Aktiengesellschaft 174.0 16.00 20.00

02-Jul-07 Tognum 1,800.0 22.00 26.00

06-Jul-07 ZhongDe Waste 94.6 23.00 26.00

12-Jul-07 EnviTec Biogas 210.9 42.00 52.00

13-Jul-07 Homag Group 185.9 29.00 35.00

12-Oct-07 centrotherm photovoltaics 161.2 26.50 34.50

02-Nov-07 HHLA 1,017.6 43.00 53.00

13-Nov-07 FranconoWest 9.0 1.80 2.20

16-Nov-07 Asian Bamboo 82.6 13.50 17.00

16-Nov-07 MeVis Medical Solutions 37.4 55.00 65.00

19-Jun-08 GK Software AG 8.7 21.00 23.00

27-Jun-08 SMA Solar Technology AG 361.9 40.00 52.00

Overview of German IPOs in Prime Standard since March 2007

Source: Deutsche Börse, Bloomberg Price span decreases or price at end of bookbuilding span

(69.9)%(90.9)%

(67.9)%(29.0)%

(65.4)%(76.6)%

(22.7)%(34.0)%

(71.9)%(40.9)%

(54.3)%(62.4)%

(69.3)%(68.0)%

(17.1)%(41.0)%(35.0)%

(38.0)%(4.3)%

(57.3)%(53.6)%

(34.8)%(71.6)%

28.00

9.5029.00

22.007.50

40.00

32.00

18.00

24.00

15.00

20.00

47.0031.00

34.50

53.00

1.80

17.00

55.00

14.50

16.00

26.00

21.00

47.00

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There is always light at the end of the tunnel...

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Documents

IPO as a Strategic Financing Option