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London Stock Exchange - raising capital in the heart of world’s financial markets
Tracey PierceDirector of Primary Markets
June 2011
2
London is the key global listing venue
London Stock
ExchangeHKSE
NYSE Euronext
(US)
NYSE Euronext (Europe)
DBAG
Total Market cap(1)
(of which international)
USD 6,826bn(USD 3,509bn)
USD 2,724bn(USD 154bn)
USD 14,024bn(USD
1,689bn)US 3,091bn
USD 1,519(USD 106bn)
Number of listed companies(of which international)(1)
2,949(601)
1,420(16)
2,316(523)
1,133(152)
755(74)
Flagship Index FTSE 100Hang Seng
IndexDow Jones Industrial
Euronext 100 DAX
International companies in the index
Yes No No No No
Annual share turnover(1)
USD 246tr USD 111tr USD 1,336tr USD 182tr USD 132tr
% of share trading in int’l companies listed*
14% 0.52% 11% 0.38% 4.32%
Price / earnings ratio(2) 13.46x 12.76x 13.99x 12.84x 12.39x
All information is as at 1 March 2011(1) Source: World Federation of Exchanges,
Individual websites, FactSet, Bloomberg and LSE(2) six month average; source: Bloomberg
3
We operate the largest and most liquid equities market in Europe
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
LSEG NYSE Euronext(Europe)
Deutsche Borse NASDAQ OMXNordic
0.00
100.00
200.00
300.00
400.00
500.00
600.00
700.00
800.00
900.00
1,000.00
Transaction ValueTransactions
Domestic market capitalisation of European exchanges as at 1 March 2011
Average daily traded value (ADTV) and number of trades in shares in 2010
(1)By number and mkt capitalisation of listed companies (2)by value of transacted shares Source: World Federation of Exchanges
• Close to 3,000 companies sharing an aggregate market cap of close to USD 7 trillion
• 600 international companies with aggregate market cap exceeding USD 3.5 trillion.
• Over 600 member firms operate on our platforms
• During 2010, an average of over USD 12bn worth of shares were traded daily on the LSEG’s markets, more than any other exchange in Europe.
LSE is the largest IPO market in Europe(1)
LSEG is the most liquid secondary market in Europe(2)
4
Our global footprint
Source: London Stock Exchange statistics. Based on country of operation
We have companies from more than 110 different countries
60 +
40-59
20-39
1-19
Number of companies as
at 1 March 2011
5
*by number of international companies listed (1)as at Feb 2011. Based on country of incorporation of the issuer, except HKSE and LSEG where country of primary business is applied. Euronext
Brussels is not included. Source: FactSet, Bloomerg and LSE calculation
Comparison of market capitalisation of international companies (1)
London Stock Exchange is the most international exchange*
LSE is a global leader in listing international companies.
•This enables listed issuer to compare themselves against their peers.
•It also creates dedicated investor community
6
Source: relevant exchange websites and Bloomberg. DB figures do not include Open Market
London Stock Exchange leads the way in international listings
NORTH AMERICA
EMEARUSSIA AND
CIS
SOUTH AMERICA
ASIA
Total number of international companies admitted to trading as at 1 March 2011
INDIA
7
London Stock Exchange is a global leader in IPOs
0
100
200
300
400
500
600
700
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
LSE NYSE Euronext (US) Hong Kong Deutsche Borse NYSE Euronext (Europe) Shanghai
Source: World Federation of Exchanges
Financial crisis
Number of IPOs Post crisis LSE continues to lead in
IPOs
8
LSEG is the leader in attracting companies from a wide range of sectors
Comparison of market capitalisation of international companies issuers, by sector*
* as at Feb 2011. Based on country of incorporation of the issuer, except HKSE and LSEG where country of primary business is applied. Euronext Brussels is not included. Source: Factset, Bloomerg and LSE calculation
LSE maintains the global benchmark peer group in
•Oil and Gas
•Mining
•Retail
•Health care
•Telecommunications
It is also leading the way in almost all other sectors.
9
London is a global hub for international investors
USD million
Assets managed in the UK and globally from London – ten largest investment firms
Source: Investment Management Association: Asset Management in the UK
2009-2010
All major global investors sit in London and are able to access the London Stock Exchange listed stocks
0 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 +1 +2 +3 +4 +5 +6 +7 +8 +9 +10 +11
…sitting in a time zone which can trade with the
world
London trading hours
10
USD(bn)
We provide access to the world’s largest pool of international equity assets*
*Based on international equity AUM in key financial centres. (1)Data for NYSE Euronext |(US) and DBAG currently unavailable Source: Ipreo, March 2011
International equity assets under management in key financial centres
Equity assets under management held by foreign investors(1)
London has the largest pool of investors dedicated to international companies and also serves as a hub attracting more foreign investors compared to any other financial centre
11
Listing on London Stock Exchange provides for a truly international shareholder register
Severstal United KingdomUnited StatesSwitzerlandGermanySwedenFranceAustriaFinlandDenmarkIrelandEstoniaBelgiumNetherlandsCzech RepublicOther
Investor registers by country (May 2011) Pie charts show market value of each holding
Source: FactSet
12
Money raised by CIS companies
• In 2005, LSE established itself as a venue of choice for Russian IPOs
• In 2009, London became a hub for Russian SPO deals providing much needed growth capital for listed companies
• Overall market conditions are improving – average and median money raised by CIS companies in 2011(YTD) are comparable to 2006 &2007 when the market was booming
2004 2005 2006 2007 2008 2009 20102011(YT
D)
No. of CIS IPOs (MM)
1 9 13 19 6 1 4 4
No. of CIS SPOs (MM)
- - - - - 2 3 1
Average raised (mn$)
178.0 657.9 1503.7 1,286.4 285.1 188.5 440.4 1,038.3
Median raised (mn$)
178.0 638.8 748.0 800.0 334.5 101.0 400.0 575.0
Source: www.RussianIpo.com, Bloomberg
13
0.13%
0.15%
0.16%
0.18%
0.18%
0.19%
0.20%
0.21%
0.24%
0.29%
0.32%
0.37%
0.57%
BHP BILLITON
BRIT AMER
TOBACC
BG GROUP
HSBC HLDGS
GLAXOSMITHKLINE
VODAFONE
GROUP
BP
ASTRAZENECA
TESCO
RIO TINTO
STANDARD
CHARTER
ANGLO AMER
BARCLAYS
0.30%
0.31%
0.34%
0.49%
0.53%
0.56%
0.57%
0.67%
0.82%
1.05%
1.18%
1.33%
1.33%
SURGUTNEFTEG
MAGNIT
NOVATEK
NOVOLIP
SISTEMA
MAGNITOGORSK
GAZPROM
MMC NORILSK
LUKOIL
ROSNEFT
SEVERSTAL
EVRAZ GROUP
VTB BANK
London Stock Exchange is a leader in trading emerging market securities
Source: Bloomberg, March 2011
Average Daily Value traded (6m) as a percentage of free float market cap - for emerging
market securities trading on IOB
On the London Stock Exchange, issuers from emerging markets enjoy comparable liquidity with the world’s
most liquid securities.
Allocation of a security on IOB or SETS does not affect its liquidity
0.35%
0.37%
0.50%
0.65%
0.73%
0.86%
0.91%
1.30%
ESSAR ENERGY
ANGLO AMER PLC
FRESNILLO PLC
EURASIAN NATURAL
ANTOFAGASTA PLC
KAZAKHMYS PLC
AFRICAN BARRICK GOLD
VEDANTA RESOURCES
Average Daily Value traded (6m) as a percentage of free
float market cap - for emerging market securities trading on
SETS
Average Daily Value traded (6m) as a percentage of free float
market cap - for top FTSE 100 constitutes
14
Companies from CIS enjoy high levels of liquidity
Source: www.RussianIPO.com
15
Q1 2011 Value Traded Rankings:
1 IOB Gazprom DR2 FTSE Rio Tinto3 FTSE HSBC4 FTSE BHP Billiton5 FTSE Vodafone 6 FTSE BP
7 IOB Lukoil DR8 FTSE Xstrata9 FTSE Anglo American10 FTSE GlaxoSmithKline11 FTSE BG12 FTSE Barclays13 FTSE Standard Chartered14 FTSE RDS B15 FTSE BATS
16 IOB MMCNorilsk DR17 IOB Rosneft DR18 FTSE AstraZeneca19 FTSE Tesco20 FTSE Lloyds… … …
IOB securities are leading LSE’s secondary markets
Source: UBS Investment Bank
• IOB is LSE’s fully dedicated depositary receipt electronic trading platform
• Powered with LSE’s MIT trading technology infrastructure
• Clearing, netting and settlement services which enhances liquidity
• New product development such as FTSE Russia IOB index and individual GDR option contracts, help to drive liquidity
• In 2011(YTD), total value traded on IOB was more than US$180 bn and accounted for around 16% of total order book value traded on LSE
16
Average analysts per company, by sector
Source: Bloomberg. Data includes only companies on the main boards of each exchange
Average analysts per company
• Analysts raise profile for the listed companies which they cover
• Analytical reports deepen issuers’ liquidity potential
• London listing provides for the largest analyst exposure compared to any other centre
London Stock Exchange listing gives companies global visibility
17
0
50
100
150
200
250
300
350
400
450
500
FTSE 100
MSCI Emerging
LSE Emerging MarketCap
London Stock Exchange traded companies from emerging markets outperform peers listed elsewhere
LSE Emerging index represents the performance of emerging stocks on the London Stock Exchange weighted by market cap. Source: LSE calculation and Bloomberg. All indices rebased as at 1/01/2005.
Return on investment in LSE listed emerging markets companies is higher than compared to on other markets.
It highlights:
• The growth story and quality of LSE issuers
• That issuers listed in London gain additional investors which they would not normally attract in their home market.
Index performance
18
London Stock Exchange offers choice of markets
Main MarketEU Regulated markets
Exchange Regulated markets
AIM
Professional
Securities Market
Specialist Fund Market
Securities admitted to official list
(maintained by UKLA)
Securities not admitted to official
list(maintained by UKLA)
The choice of market will depend on a number of factors including:
• Stage in company’s development
• Complexity of the offer and securities issued
• Targeted investors
• Size of the company • Company's strategy and objectives
From small to large
19
Glencore chose London for its premium listing and HK for its secondary listing
Glencore relied on London for core of its international offering, resulting in liquidity concentrating in London
Source: Fidessa
Comparison of average weekly tradingturnover for GLENCOREInternational Offer /
listed in London
UK investorsCornerstone investorsEU investorsHong Kong investors Qualifying investors (in accordance with 144A and other exemptions from the US laws)
HK offer / listed in Hong Kong
Public and professional investors in Hong Kong
Source: Glencore IPO prospectus May 2011
US
Dm
Glencore cornerstone investors
20
Case Study: Glencore International PLC
Company ProfileGlencore PLC is a leading integrated producer and marketer of commodities, with worldwide activities in the marketing of metals and minerals, energy products and agricultural products and the production, refinement, processing, storage and transport of these products. Headquartered in Switzerland, Glencore operates globally, leveraging on its expertise and relationships with a broad supplier and customer base from diverse industries and geographic regions.
Listing storyGlencore joined the Main Market of the London Stock Exchange in May 2011 and was also admitted to the FTSE 100 – the first company in 25 years to be launched straight into the FTSE 100 at IPO. Following a successful book-building that was 6 times oversubscribed, Glencore raised USD 7bn.
After listingAccording to its prospectus, Glencore intends to apply the proceeds from the global offer towards: acquisitions of additional stakes in strategic partners; capital expenditure in some of its existing projects; reducing the cost of borrowing and improving financial flexibility. The listing is particularly prudent as the current structure enables the company to draw-down on more funds from investors through either new or existing facilities.
The biggest IPO in 2011 YTD raising over USD 10bn
Source: publicly available information. Please refer to the end of the presentation for legal disclaimer
Main Market – Premium Equity Commercial Company
Admission Date:Country of
incorporation:Main country of
operation: Money Raised at
Admission: TIDM:IPO advisers:
19 May 2011JerseyGlobal
USD 10 bnGLEN
CITI, Credit Suisse, Morgan Stanley
Index: Website:
FTSE 100http://
www.glencore.com
Sh
are
pri
ce
Market Cap at IPO: USD 56.3bnMarket Cap as at 1/06: USD 57.4bn
21
Case Study: Exillon Energy PLC
Main Market – Premium listing
Admission Date:Country of
incorporation:Main country of
operation: Money Raised at
Admission: TIDM:IPO advisers:
17 Dec 2009UK
RussiaUS$101mln
EXIING Bank, BAML,
Mirabaud Securities
Index: Website:
FTSE 250www.exillonenergy.com
Company Profile
Exillon Energy is a Russia-focused oil producer with upstream operations located in two oil rich regions of northern Russia, Timan-Pechora and West Siberia. The company has a high quality reserve base and has a proven track record in discovering and producing high quality crude oil.
Listing story
Exillon Energy was the first Russian company to IPOsince the crisis struck in 2008. The vast majority of the IPO was bought by London based investors specialising in Oil & Gas.The company raised just over US$100mln in a purely primary offering. The IPO represented just under a third of Exillon's share capital and valued the group at US$313 million.
After listing
The company used the proceeds to finance new projects and repay debt. After its successful IPO in 2009, the company came back to the market on two occasions raising a further US$34mln in 2010 and US$150mln in 2011.
Sh
are
pri
ce
Market Cap at IPO: USD 313 mlnMarket Cap Today: USD 1,164 mln
The first London IPO from Russia after the financial crisis struck in 2008
22
Case Study: VTB Bank
Company ProfileVTB is a leading Russian bank with strong international presence. VTB Group operates international network of affiliates and subsidiaries with over 20 banks and financial companies in 19 countries worldwide. VTB offers its services in several regions including the CIS, Europe, Asia, and Africa. In the Russian market, VTB Group is highly ranked based on all major banking indicators.
Listing storyIn 2007, VTB Bank raised a total of USD 7.9bn via GDR offering in London and share offering on MICEX and RTS. The deal was eight times oversubscribed and resulted in a 22.5% free float.It was the largest global IPO by a banking institution in 2007. VTB Bank became the first Russian bank to offer Global Depositary Receipts (GDR) on the London Stock Exchange (LSE).
In February 2011, VTB Bank completed a secondary share offering rising further USD 3.3bn on LSE.
After listingVTB Bank has used the proceeds to develop and expand its retail, corporate and investment banking operations in Russia and CIS. It delivered a strong top-line performance in the consecutive years and established high quality portfolio of retail and corporate loans.
VTB is one of the most liquid securities on the International Order Book and is a part of the FTSE Russia IOB index.
The largest global IPO by a banking institution in 2007
Source: www.RussianIpo.com and publicly available information. Please refer to the end of the presentation for legal disclaimer
Market Cap: USD 35bn
Main Market – Standard Listing, Depositary Receipts
Admission Date:Country of
incorporation:Main country of
operation: Money Raised at
Admission: TIDM:IPO advisers:
17 May 2007RussiaRussia$7,9bn
VTBRCitigroup, Deutsche
Bank, Goldman Sachs, RenCap,
Index: Website:
FTSE Russia IOBwww.vtb.com
Sh
are
pri
ce
23
Case Study: Petro Matad
Company Profile
Petro Matad is the parent company of a group focused on oil exploration, as well as future development and production in Mongolia. The Group’s principal asset is the Production Sharing Contract (PSC) over Matad Block XX, a petroleum block with an area of 14,250km2 in the far eastern part of Mongolia, near the Chinese border. Recently the company signed two more Production Sharing Contracts on Bogd Block IV and Ongi Block V, a total of approximately 71,000km² in central Mongolia.
Listing story
Petro Matad is the first substantially Mongolian owned company to have its shares admitted to trading on a major international stock exchange. Since its Introduction to AIM, Perto Matad has successfully came back to the market multiple times and raised a total of US$67.4mln in further issues. Its Market capitalisation increased more than 15 times since its admission to AIM in 2008.
The first Mongolian company to join a major international stock exchange1
Source: publicly available information. Please refer to the end of the presentation for legal disclaimer
AIM market – Introduction
Admission Date:Country of incorporation:Main country of operation: Avg. Daily Trading Value
(6m)Further Money RaisedFree-floatTIDM:IPO advisers:
1 May 2008UK
Mongolia$1.6mln
US$67.4mln61%
MATDHanson Westhouse,
PKF, Norton Rose
Index: Website:
FTSE AIM 100www.petromatad.com
Sh
are
pri
ce
Market Cap at IPO: $36.0mlnMarket Cap as at 05/2011: $540.1mln
1 - first substantially Mongolian owned company
24Please refer to the end of the presentation for legal disclaimer
Sh
are
pri
ce
The London Stock Exchange is the most international exchange in the world, with close to 600 international companies from over 110 countries, listed and traded on its markets.
The London Stock Exchange offers a wide choice of routes to market. The choice of markets is open equally to UK and international companies, and differentiated trading platforms offer tailored solutions to maximise liquidity and investor participation.
We provide cost-efficient access to the world’s largest pool of international equity assets. Over USD 1.85 trillion of equities are managed out of London, with USD 1.26 trillion invested in international equity assets, more than any other major financial centre.
With close to 3,000 companies quoted on its markets and over 500 member firms, the London Stock Exchange Group operates one of the most liquid equity marketplaces globally.
Conclusions
25
DisclaimerThis document has been compiled by the London Stock Exchange plc (the “Exchange”). The Exchange has attempted to ensure that the information in this document is accurate, however the information is provided “AS IS” and on an “AS AVAILABLE” basis and may not be accurate or up to date. The Exchange does not guarantee the accuracy, timeliness, completeness, performance or fitness for a particular purpose of the document or any of the information in it. The Exchange is not responsible for any third party content which is set out in this document. No responsibility is accepted by or on behalf of the Exchange for any errors, omissions, or inaccurate information in the document.No action should be taken or omitted to be taken in reliance upon information in this document. The Exchange accepts no liability for the results of any action taken on the basis of the information in this document. All implied warranties, including but not limited to the implied warranties of satisfactory quality, fitness for a particular purpose, non-infringement, compatibility, security and accuracy are excluded by the Exchange to the extent that they may be excluded as a matter of law. Further, the Exchange does not warrant that the document is error free or that any defects will be corrected.To the extent permitted by applicable law, the Exchange expressly disclaims all liability howsoever arising whether in contract, tort (or deceit) or otherwise (including, but not limited to, liability for any negligent act or omissions) to any person in respect of any claims or losses of any nature, arising directly or indirectly from: (i) anything done or the consequences of anything done or omitted to be done wholly or partly in reliance upon the whole or any part of the contents of this document; and (ii) the use of any data or materials in this document.Information in this document is not offered as advice on any particular matter and must not be treated as a substitute for specific advice. In particular information in the document does not constitute professional, financial or investment advice and must not be used as a basis for making investment decisions and is in no way intended, directly or indirectly, as an attempt to market or sell any type of financial instrument. Advice from a suitably qualified professional should always be sought in relation to any particular matter or circumstances.The contents of this document do not constitute an invitation to invest in shares of the Exchange, or constitute or form a part of any offer for the sale or subscription of, or any invitation to offer to buy or subscribe for, any securities or other financial instruments, nor should it or any part of it form the basis of, or be relied upon in any connection with any contract or commitment whatsoever.London Stock Exchange and the London Stock Exchange coat of arms device are registered trade marks of London Stock Exchange plc. Other logos, organisations and company names referred to may be the trade marks of their respective owners.
© May 2011London Stock Exchange plc
10 Paternoster SquareLondon EC4M 7LS
Telephone +44 (0)20 7797 1000www.londonstockexchange.com