PwC IPO Centre Q3 214 Equity Capital Markets Briefing PwC provides independent guidance to companies in the process of going public and to already listed companies in assessing their position in the equity capital markets. Martin Coenen martin.coenen@nl.pwc.com Clifford Tompsett clifford.tompsett@uk.pwc.com Nadja Picard nadja.picard@de.pwc.com Jan-Willem de Groot jan-willem.de.groot@nl.pwc.com
4.8 7.1 5.9 6.1.3 1.3.3 12.2 24.7 17.4 5.6 13.6 Overview Global Trends European Trends Case Studies Summary & dashboard North America and Asia led global IPO activity in Q3 Activity in the last three months was clearly led by North America and Asia. European activity was relatively low during the past summer months. Global IPO money raised was $69.2bn via 24 deals in the third quarter of 214, compared to $28.4bn via 18 deals in the third quarter of 213. Largest IPO on record executed on NYSE Chinese e-commerce giant Alibaba Group raised $25.bn on NYSE in September and became the largest IPO on record after the over-allotment option was exercised, ahead of Agricultural Bank of China s $22.1bn IPO in July 21. On its first trading day, Alibaba shares opened 36.3% above the offer price, marking the most positive opening on record of an IPO larger than $1bn. European IPO activity suffered from summer lull, but is ahead of Q3 213 After buoyant conditions throughout H1 214, the European markets suffered the effects of summer lull. Nonetheless, in terms of number of transactions and money raised European IPO activity for Q3 214 ($7.8bn from 36 IPOs) significantly outperformed Q3 213 ($3.8bn from 24 IPOs). Boosted by European Financials. global FO activity outpaced Q3 213 Global FO activity was at a healthy level during Q3 214 and compared to last year the number of deals outpaced Q3 213 by 4% while the total amount of money raised was 24% higher. Eleven out of the top twenty largest FOs in 214 YTD globally were executed in Europe. Number of companies coming to the market expected to remain strong Continued strength in the equities markets, positive post-ipo performances and decreased market volatility are expected to support robust IPO momentum for the remainder of 214 and into 2. 3 2 1 4 3 2 1 Money raised in Europe indexed on 1 year average IPO (1 = $4.6bn) 4 491 147 136 127 81 366 19 86 Apr May Jun Jul Aug Sep 214 143 24 Apr May Jun Jul Aug Sep 214 1 FO (1 = $.3bn) 4 3 2 1 4 3 2 1 13 128 195 148 Monthly averages ($bn) 125 6 119 13 18 118 Apr May Jun Jul Aug Sep 214 6 Apr May Jun Jul Aug Sep 214 Money raised in Europe indexed on same month average (1 yr) IPO -76-14 FO +5 The above June IPO index level of -76 implies an amount of money raised in Europe, which is 76% below the 1-year average Monthly averages ($bn) +18 Note: The two indices on top are based on the 1Y rolling monthly average capital raised in European IPOs ($4.6bn) and FOs ($.3bn). The two bottom indices are based on the same month rolling 1Y average capital raised in European IPOs ($1.3bn on average for September) and FOs ($13.6bn on average for June) Source: Dealogic as of 3 September, 214 2
Global capital market trends and developments Overview Global Trends European Trends Case Studies Q3 214 saw the largest IPO on record: in a $25bn transaction, Alibaba listed on NYSE Global Summary Data Initial Public Offerings (IPOs) and Follow-ons (FOs) Pricing Date Issuer Name Top 5 Largest IPOs 214 YTD Issuer Country Exchange Pricing 1 Money Raised ($bn) 18-Sep-14 Alibaba Group NYSE Top of range $25.bn 23-Sep-14 Citizens Financial Group NYSE Below range $3.5bn 22-Jan-14 HK Electric Investments HKEx Bottom of range $3.1bn 1-Mar-14 Japan Display Tokyo Exchange Bottom of range $3.1bn 3-Jul-14 Synchrony Financial NYSE Bottom of range $3.bn Pricing Date Summary Statistics 212 213 213 YTD 214 YTD Q3 213 Q3 214 Number of IPOs 718 849 531 82 18 24 Money Raised in IPOs $14.6bn $194.3bn $117.1bn $197.bn $28.4bn $69.2bn Average Deal Size of IPOs $195.8m $228.9m $22.6m $245.6m $7.7m $288.3m Number of PE-backed IPOs 13 173 166 35 39 Value PE-Backed IPOs $21.4bn $58.2bn $29.9bn $71.5bn $8.bn $13.9bn Number of FOs 2,51 3,34 2,129 2,42 77 733 Money Raised in FOs $58.8bn $586.bn $428.6bn $48.4bn $119.7bn $148.1bn Average Deal Size of FOs $23.5m $193.1m $21.3m $2.m $169.3m $22.m Issuer Name Top 5 Largest FOs 214 YTD Issuer Country Exchange Deal Type Money Raised ($bn) 25-Jun-14 Deutsche Bank Deutsche Börse Acc. bookb./ Rights offer $9.2bn 4-Apr-14 BOE Technology Group Shenzhen Cash Placing $7.4bn 14-Jul-14 CITIC Pacific Ltd HKEx Cash Placing $6.9bn 26-Mar-14 Lloyds Banking Group LSE Accelerated Bookbuild $6.9bn 1-Jul-14 Monte dei Paschi Borsa Italiana Rights Offer $6.8bn Highlights Boosted by the IPO of Alibaba, the total amount of money raised via IPOs in 214 YTD stood at $197.bn, almost 68% higher than the total money raised in 213 YTD. In Alibaba s slipstream, the second largest IPO of 214 YTD was also executed on NYSE: Citizens Financial Group raised $3.5bn. Continued FO activity by European banks further drove up global money raised via FOs. Monte Dei Paschi, Banco Commercial Portugues, Bank of Cyprus, Banca Carige and Banca Popolare dell'emilia Romagna all executed FOs with a deal value over $1.bn. PE-backed activity, a key driver in 214 YTD, slowed down a little but remained strong relative to previous years with 39 PE-backed IPOs in Q3 214, raising $13.9bn (213 Q3: 35 IPOs raising $8.bn). Global equity indices (213 214 YTD rebased to 1) 175 125 1 75 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 FTSE1 Hang Seng Index S&P5 1) IPOs are classified as In Range if the IPO is priced in the middle 5% of the price range. The top and bottom 25% are classified as Top of Range and Bottom of Range Source: Dealogic, Bloomberg as of 3 September, 214 3
IPOs and FOs in leading capital market regions Overview Global Trends European Trends Case Studies Highlights General trends All eyes in North America were on the IPO of Alibaba. Upon exercising the overallotment option as a result of the overwhelming demand from global investors, Alibaba secured its place as the world s largest-ever stock market flotation. On its first trading day, the shares of the Chinese ecommerce company soared by 38%. This implied a market capitalisation of more than $23bn, which was larger than for example Facebook and Amazon. In North America, a total of $44.4bn was raised via 74 IPOs (Q3 213: $14.6bn via 75 IPOs) and $49.2bn was raised via 221 FOs in Q3 214 (Q3 213: $51.1bn via 276 FOs). The largest FO of Q3 was executed in Asia by Basic Materials company CITIC Pacific, raising $6.9bn on HKEx in a cash placing. Other notable transactions include the FOs of Dai-ichi Life Insurance ($2.7bn on Tokyo Stock Exchange) and Financials company OCBC ($2.6bn on Singapore Exchange). A total of 27 FOs were executed, raising $48.4bn (Q3 213: $29.6bn via 25 FOs). The IPO of meat processor WH Group ($2.4bn on HKEx) was the largest of 14 IPOs in Q3 in Asia, raising a combined total of $11.3bn (Q3 213: $6.9bn via 66 IPOs). European capital markets activity in Q3 was dominated by Financials. Via a rights offer, Monte dei Paschi raised over $6.8bn to strengthen its balance sheet, while Banco Comercial Portugues executed a $3.bn FO transaction on Euronext Lisbon. The second-largest European transaction was the Rights Offer of Telefonica Deutschland on Deutsche Börse ($4.6bn). The most significant IPO was the flotation of Insurer NN by ING Group in the Netherlands with a total deal value of $2.4bn. On a combined basis, $47.4bn was raised via 36 IPOs and 133 FOs in Q3 in Europe (Q3 213: $34.2bn was raised via 24 IPOs and 124 FOs). Capital markets activity in Africa and Australasiawas substantially ahead of Q3 last year. In Africa, in Q3 214, $4.4bn was raised via 3 IPOs and 13 FOs, while Q3 213 saw 1 IPO and 9 FOs, raising $.5bn. Furthermore, Australasia saw 21 IPOs, raising $3.7bn (Q3 213: $1.7bn via 7 IPOs) and 86 FOs raising $5.7bn (Q3 213: $4.7bn via 9 FOs). Capital raising at IPOs and FOs North America Europe Asia 296 / 1,111 24 / 986 231 / 1,193 248 / 897 $23.6bn $222.8bn $184.4bn $172.5bn $54.bn $63.9bn $83.bn $85.3bn 211 212 213 214 YTD 146 / 579 188 / 471 136 / 572 82 / 482 $173.2bn $1.8bn $124.4bn $1.1bn $33.3bn $.9bn $37.1bn $58.1bn 211 212 213 214 YTD 569 / 686 371 / 634 36 / 91 296 / 79 $113.6bn $135.1bn $139.5bn $12.bn $91.bn $51.3bn $48.1bn $39.5bn 211 212 213 214 YTD Legend: the bars show the money raised ($bn) in IPOs and FOs ( FO IPO). The number of IPOs and FOs are shown as follows: number of IPOs / number of FOs 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 Source: Dealogic as of 3 September, 214 4
Overview Global Trends European Trends Case Study The listing of Alibaba makes Consumer Services and NYSE the leading sector and Exchange in terms of money raised IPO activity in continental Europe puts the recently listed Euronext among the leading exchanges The activity on NASDAQ and the number of Health Care IPOs reflect the buoyant market for Biotechs Exchange Split: 213 Exchange Split: 214 YTD $1bn $8bn $21.3 bn 1 87 1 35 28 $1bn $8bn $2.9 bn 1 822 1 35 28 $6bn 21 $6bn 21 $4bn 14 $4bn 14 $2bn 7 $2bn 7 $bn NYSE LSE NASDAQ OMX HKEx Tokyo SE ASX Other $bn NYSE LSE NASDAQ OMX HKEx Euronext ASX Other No. of IPOs No. of IPOs Sector Split: 213 Sector Split: 214 YTD $1bn $8bn $194.3 bn 849 35 28 $1bn $8bn $197.bn 82 35 28 $6bn 21 $6bn 21 $4bn 14 $4bn 14 $2bn 7 $2bn 7 $bn $bn No. of IPOs No. of IPOs 1) If IPOs or FOs take place on two or more exchanges, the full amount of money raised is attributed to all exchanges Note: Sector classification is based on the Industry Classification Benchmark (ICB) Note: LSE Group includes Borsa Italiana Source: Dealogic, Bloomberg as of 3 September, 214 5
Overview Global Trends European Trends Case Study Despite the carve-out of Euronext, NYSE continues to dominate global FO activity in terms of money raised The FOs by Deutsche Bank and Telefonica Deutschland spurred activity on Deutsche Börse Jumbo deals by Financials continue to dominate global FO activity Exchange Split: 213 Exchange Split: 214 YTD $25bn $2bn $62. bn 1 Total no. of FOs: 3,178 1 2, 1,6 $25bn $2bn $59.5 bn 1 2,52 1 2, 1,6 $bn 1,2 $bn 1,2 $1bn 8 $1bn 8 $5bn 4 $5bn 4 $bn NYSE NASDAQ OMX LSE Euronext Tokyo SE HKEx Other $bn NYSE LSE NASDAQ OMX TMX Group Deutsche Börse HKEx Other No. of FOs No. of FOs Sector Split: 213 Sector Split: 214 YTD $25bn $2bn $586.bn Total no. of FOs: 3,34 2, 1,6 $25bn $2bn $48.4bn Total no. of FOs: 2,42 2, 1,6 $bn 1,2 $bn 1,2 $1bn 8 $1bn 8 $5bn 4 $5bn 4 $bn $bn No. of FOs No. of FOs 1) If IPOs or FOs take place on two or more exchanges, the full amount of money raised is attributed to all exchanges Note: Sector classification is based on the Industry Classification Benchmark (ICB) Note: LSE Group includes Borsa Italiana Source: Dealogic, Bloomberg as of 3 September, 214 6
Money raised in PE-backed IPOs ($bn) Overview Global Trends European Trends Case Study Robust PE-backed activity continues despite summer slowdown Global PE-backed IPOs (212 214 YTD) 25 2 1 5 Apr 212: BTG Pactual ($1.7bn on BOVESPA / Euronext Amsterdam) Jul 212: IHH Healthcare ($2.1bn on Bursa Malaysia / Singapore Exchange) Oct 213: Plain GP ($2.9bn on NYSE) Dec 213: Hilton Worldwide (2.7bn on NYSE) Apr 214: Ally Financial ($2.6bn on NYSE) Jun 214: AA ($2.4bn on LSE) Jul 214: WH Group ($2.4bn on HKEx) Jul 214: Healthscope ($2.1bn on ASX) 5% 4% 3% 2% 1% PE-backed / total IPOs 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 212 213 214 Other regions Asia Europe North America Number of PE-backed IPOs of total (%) % Highlights PE-backed IPO activity has been strong and money raised in 214 YTD more than doubled relative to 213 YTD. In Q3 214, a total of $13.9bn was raised via 39 PE-backed IPOs (Q3 213: $8.bn via 35 PE-backed IPOs). Asia was the leading region in terms of PE-backed activity in Q3 214: via 8 transactions, a total of $4.6bn was raised (Q3 213: $.7bn via 6 deals). In Q2 214, Asia saw 12 PE-backed IPOs with $2.6bn raised. North American activity suffered from summer lull: where Q2 saw 3 PE-backed IPOs raising $16.4bn, in Q3 only 19 transactions were executed, raising $4.1bn (Q3 213: $5.1bn via 23 deals). Europe saw 6 PE-backed IPOs, raising $2.bn (Q2: $18.5bn via 35 PEbacked IPOs; Q3 213: $1.5bn via 4 deals). Pricing Date Top PE-backed IPOs 214 YTD Issuer Name Exchange Pricing 1 Raised Money ($m) 9-Apr-14 Ally Financial NYSE Bottom of range 2,556 29-Jul-14 WH Group HKEx In range 2,362 23-Jun-14 AA LSE In range 2,356 24-Jul-14 Healthscope ASX In range 2,117 21-May-14 JD.com NASDAQ Above range 2,47 Note: PE-backed IPOs include all IPOs backed by a financial sponsor Source: Dealogic as of 3 September, 214 7
Overview Global Trends European Trends Case Study Under regulatory pressure, ING floated NN Group in Europe's biggest 214 IPO ($2.4bn) European FO activity continues to be dominated by Banks; early July, Monte dei Paschi completed its second FO of 214 to boost its capital base and increase the chances of passing the ECB Asset Review Pricing Date Issuer Name Issuer Country Exchange Price Range (local currency) Offer Price (Local currency) Pricing 1 Money Raised ($m) 1-Jul-14 NN Group Euronext Amsterdam 18.5-22. 2. In range 2,419 23-Jun-14 AA LSE 2.5-2.5 2.5 In range 2,356 31-Jan-14 Altice 2 Euronext Amsterdam 24.75-31.25 28.25 In range 2,43 11-Jun-14 B&M European Value Retail LSE 2.3-2.9 2.7 In range 1,976 26-Jun-14 Merlin Properties SOCIMI BME 1. - 1. 1. In range 1,759 13-Mar-14 ISS NASDAQ OMX Copenhagen 14. - 175. 16. In range 1,752 8-May-14 Applus Services BME 13.25-16.25 14.5 In range 1,685 25-Feb-14 Kennedy Wilson Europe Real Estate LSE 1. - 1. 1. In range 1,549 26-Jun-14 Coface Euronext Paris 9.6-11.2 1.4 In range 1,33 1-Jun-14 Elior Euronext Paris 14.35-17.5 14.75 Bottom of range 1,3 Pricing Date Issuer Name Issuer Country Largest 1 European IPOs 214 YTD Largest 1 European FOs 214 YTD Exchange Price Range (local currency) Offer Price (Local currency) Deal Type Money Raised ($m) 25-Jun-14 Deutsche Bank Deutsche Börse 22.5-22.5 22.5 Accelerated Bookbuild / Rights Offer 9,187 26-Mar-14 Lloyds Banking LSE.79 -.79.76 Accelerated Bookbuild 6,923 1-Jul-14 Monte dei Paschi Borsa Italiana 1. - 1. 1. Rights Offer 6,824 24-Sep-14 Telefonica Deutschland Deutsche Börse 3.24-3.24 3.24 Rights Offer 4,649 29-Apr-14 Eurobank Ergasias Athens Stock Exchange.3 -.33.31 Accelerated Bookbuild 3,965 22-Jan-14 Raiffeisen Bank Vienna Stock Exchange 27.54-27.54 28.5 Accelerated Bookbuild / Rights Offer 3,762 9-May-14 National Bank of Greece Athens Stock Exchange 3.4-3.4 2.2 Accelerated Bookbuild 3,476 22-Jul-14 Banco Comercial Portugues Euronext Lisbon.7 -.7.7 Accelerated Bookbuild / Rights Offer 3,32 4-Jun-14 Repsol BME 2.87-2.87 2.1 Accelerated Bookbuild 2,848 4-Jun-14 Volkswagen Deutsche Börse 195.65-195.65 191. Accelerated Bookbuild 2,723 1) IPOs are classified as In Range if the IPO is priced in the middle 5% of the price range. The top and bottom 25% are classified as Top of Range and Bottom of Range 2) Altice is incorporated in Luxembourg, but the issuer nationality is France Source: Dealogic, Bloomberg as of 3 September, 214 8
136 $33.3bn 82 $.9bn 146 $37.1bn 188 $58.1bn 21 16 11 6 1-4 $19.2bn $6.6bn $21.1bn $25.8bn 95 75 55 35-5 -25 $.bn $2.9bn $.bn $6.3bn 2 1 5-5 -1 $.3bn $.7bn $2.8bn 3 25 2 1 5-5 -1 - -2 $.2bn $.8bn $5.3bn $.3bn $.2bn $.bn $2.4bn $1.7bn $.bn $6.1bn $3.4bn $6.5bn 3 25 2 1 5-5 -1 - -2 3 25 2 1 5-5 -1 - -2 3 25 2 1 5-5 -1 - -2 Overview Global Trends European Trends Case Study With 88 IPOs raising a total of $25.8bn, the UK already outperformed previous six full years in terms of IPO activity After two years of drought, Spain saw already 7 IPOs, raising a combined total of $6.5bn European IPOs IPO activity in top 6 European countries based on money raised (211 214 YTD) Rank (#) 1. 2. 3. 4. Number of IPOs 42 37 77 88 23-Jun: AA ($2.4bn) 11-Jun: B&M European Value Retail ($1.8bn) 2 4 1 Jul: NN Group ($2.4bn) 31-Jan: Altice ($2.bn) 4 2 11 17-Jun: Com Hem ($938m) 21-Mar: Hemfosa Fastigheter ($563m) 11 9 26 26-Jun: Coface ($1.3bn) 1-Jun: Elior ($1.3bn) Money raised ($bn) 1 17 27-Jun: Fineco Banca ($1.1bn) 4 1 11-Apr: Anima Hold. ($1.1bn) Rank ($) 1. 2. 3. 4. FY 211 FY 212 FY 213 214 YTD 4 7 26-Jun: Merlin Properties ($1.8 bn) 8-May: Applus Services ($1.7bn) Note: The vertical axes of the UK graph have different scales compared to the other European countries Source: Dealogic as of 3 September, 214 9
572 $124.4bn 482 $1.1bn 579 $173.2bn 471 $1.8bn 65 55 45 35 25 5-5 $22.2bn 234 $26.3bn 21 $41.6bn 226 $36.3bn 218 275 225 175 125 75 25-25 $5.6bn $1.1bn $22.8bn $11.4bn 8 7 6 5 4 3 2 1-1 -2 $39.5bn $14.4bn $23.7bn $29.2bn 8 7 6 5 4 3 2 1-1 -2 $4.7bn $18.9bn $4.8bn $9.9bn $.1bn $.2bn $7.9bn $6.4bn $12.6bn $12.6bn $16.9bn $13.1bn 8 7 6 5 4 3 2 1-1 -2 8 7 6 5 4 3 2 1-1 -2 8 7 6 5 4 3 2 1-1 -2 Overview Global Trends European Trends Case Study Monte dei Paschi s right s offer represents the largest FO in Q3 The top 5 European FO s of Q3 is again dominated by Financials (three of the five) Two Telecommunications companies complete the top 5 European FOs FO activity in top 6 European countries based on money raised (211 214 YTD) Rank (#) 1. 2. 3. 4. Number of FOs 26-Mar: Lloyds Banking Group ($6.9bn) 25-Jul: BSkyB ($2.3bn) 36 26 45 34 21-May: PSA Peugeot Citroen ($2.7bn) 25-Jun: GDF Suez ($2.1bn) 79 55 7 47 25-Jun: Deutsche Bank ($9.2bn) 24-Sep: Telefonica Deutschland ($4.6bn) 16 13 19 22 4-Jun: Repsol ($2.8bn) 1-Apr: Iberdrola ($2.1bn) Money raised ($bn) 22 12 23 22 1-Jul: Monte dei Paschi ($6.8bn) 24-Apr: Banco Popolare ($2.1bn) Rank ($) 1. 2. 3. 4. FY 211 FY 212 FY 213 214 YTD 8 2 6 8 29-Apr: Eurobank Ergasias ($4.) 9-May: National Bank of Greece ($3.5bn) Note: The vertical axes of the UK and Norway graph have different scales compared to the other European countries Source: Dealogic as of 3 September, 214 1
Overview Global Trends European Trends Case Study LSE maintains its position as the leading European exchange while momentum in Europe continues to build Similar to the global trend, European IPO activity is dominated by Financials and Consumer Services (e.g. AA, B&M European Value Retail, Elior) Exchange Split: 213 Exchange Split: 214 YTD $3bn $24bn $39.bn 1 1 1 1 8 $3bn $24bn $6.1bn 1 193 1 1 8 $18bn $12bn $6bn $bn LSE Euronext Deutsche Börse Borsa Italiana Warsaw SE Oslo Børs Other 6 4 2 $18bn $12bn $6bn $bn LSE Euronext BME NASDAQ OMX (EU) Borsa Italiana Deutsche Börse Other 6 4 2 No. of IPOs No. of IPOs Sector Split: 213 Sector Split: 214 YTD $3bn $24bn $37.1bn 146 1 8 $3bn $24bn $58.1bn 188 1 8 $18bn 6 $18bn 6 $12bn 4 $12bn 4 $6bn 2 $6bn 2 $bn $bn No. of IPOs No. of IPOs 1) if IPOs or FOs take place on two or more exchanges, the full amount of money raised is attributed to all exchanges Note: sector classification is based on the Industry Classification Benchmark (ICB) Source: Dealogic, Bloomberg as of 3 September, 214 11
Overview Global Trends European Trends Case Study Balance sheet strengthening by Greek banks continues to place the Athens SE among the leading European exchanges About 53% of all European money raised via FOs was raised in the Financials sector The FO by Monte dei Paschi boosts money raised on Borsa Italiana Exchange Split: 213 Exchange Split: 214 YTD $1bn $8bn $178.5bn 1 Total no. of FOs: 588 1 25 2 $1bn $8bn $4.7bn 1 Total no. of FOs: 478 1 25 2 $6bn $4bn $2bn $bn LSE Euronext Deutsche Börse NASDAQ Athens SE BME Other OMX (EU) 1 5 $6bn $4bn $2bn $bn LSE Deutsche Börse Euronext Borsa Italiana Athens SE BME Other 1 5 No. of FOs No. of FOs Sector Split: 213 Sector Split: 214 YTD $1bn $8bn $173.2bn Total no. of FOs: 579 25 2 $1bn $8bn $1.8bn Total no. of FOs: 471 25 2 $6bn $6bn $4bn 1 $4bn 1 $2bn 5 $2bn 5 $bn $bn No. of FOs No. of FOs 1) if IPOs or FOs take place on two or more exchanges, the full amount of money raised is attributed to all exchanges Note: sector classification is based on the Industry Classification Benchmark (ICB) Source: Dealogic, Bloomberg as of 3 September, 214 12
Monthly number of European IPOs Monthly Money Raised in European IPOs ($m) Overview Global Trends European Trends Case Study A prolonged period with low volatility bolstered investor demand and resulted in a robust European IPO pipeline A correlation is observed between increased volatility indices and weak European IPO activity ($m) 25, 2,, 1, 5, Money Raised in European IPOs ($m) VStoxx Index (monthly average) VIX Index (monthly average) Window closed Jan-1 May-1 Sep-1 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 5 4 3 2 1 Volatility Indices which is also shown if we focus on the actual number of European IPOs 5 4 3 2 1 Monthly Number of European IPOs VStoxx Index (monthly average) VIX Index (monthly average) 5 4 3 2 1 Volatility Indices Jan-1 May-1 Sep-1 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Note: the VStoxx Index and the VIX Index are both volatility indices. The VStoxx is based on the Euro Stoxx 5 Index and the VIX Index is the Chicago Board Options Exchange Volatility Index Source: Dealogic, Bloomberg as of 3 September, 214 13
Case Studies 14
Share price ($) Case Study: The IPO of Alibaba on NYSE Overview Global Trends European Trends Case Study Transaction highlights On 19 September 214, the Chinese e-commerce giant Alibaba Group Holding launched its record-breaking IPO on the New York Stock Exchange. The company priced at the top end of its adjusted filing range of $66.-$68.. Its shares opened at $92.7, 36.3% higher than the offering price. The successful Alibaba offering is considered a positive development for other companies looking for opportunities in equity market and a good sign of investor confidence. Alibaba Group provides internet infrastructure, e-commerce (both B2B and C2C) and online financial service worldwide. Its B2B web portal, Taobao.com, is among the world s top 2 most visited websites. Post IPO, the company envisages to acquire stakes in American start-ups specialized in mobile and ecommerce. Alibaba officially filed with the SEC in May 214, setting an initial filing range of $6. to $66.. Its IPO was then delayed once due to the massive demand, as investors projected the company would hit the market in early August. To cover strong investor demands, bankers exercised the over-allotment option and issued an additional 48 million shares, which boosted the proceeds from $21.8bn to $25.bn, and made the Alibaba debut the largest IPO in history. After the first trading day, the company s market value reached about $231bn, higher than companies such as Facebook or Amazon. Alibaba would be the 11th biggest company in the S&P 5, if it would have been included in the index. Alibaba s business soared ahead of IPO, as revenue in the first 2 quarters of 214 increased 38.7% and 46.% respectively. Yahoo sold part of its 22% stake in Alibaba the night before the offering, which results in a falling of 5.6% in price, although Alibaba s price jumped 38.1%. Trading on NYSE Summary statistics 1 9 8 7 6 5 4 3 2 1-day performance: 38.1% Current performance: 3.7% 18-Sep 19-Sep 22-Sep 23-Sep 24-Sep 25-Sep 26-Sep 29-Sep 3-Sep 3 25 2 1 5 Trading volume (millions of shares) Listing venue: NYSE Country of incorporation: Cayman Islands Adjusted filing range: $66. - $68. Pricing: $68. Pricing date: 18 September, 214 Trading date: 19 September, 214 Money raised: $25.bn Shares offered: 368,122, shares (14.9%) Over-allotment option: 48,,9 shares (2.%) Shares outstanding: 2,465,5,966 shares (1%) Trading volume on NYSE Share price Market cap at listing: Current market cap: $167.6bn S219.bn Sources: Prospectus, Dealogic, WSJ, Bloomberg as of 3 September, 214
Share price ( ) Overview Global Trends European Trends Case Study Case study The IPO of NN Group on Euronext Amsterdam Transaction highlights After ING received financial state aid from the Dutch during the financial crisis in 28, ING Group was forced by the European Commission to separate its global banking and insurance operations. Before the end of 2, ING has to reduce its shareholding of NN Group to less than 5%. On 2 July 214, ING Group took the first step by divesting 89 million ordinary shares of NN Group via a listing on Euronext Amsterdam. Shares of the independent NN Group were priced at 2., raising a total of 1.8bn ($2.4bn), including over-allotment shares. Pre-IPO, ING secured a 1.3bn investment through an agreement with two Asian investment firms: RRJ Capital and Temasek (through subsidiary SeaTown). RRJ agreed to buy 662m of subordinated convertible notes from ING, while Temasek (throughwholly owned SeaTown) agreed on subscribing for 463m of the notes. The exchangeable subordinated notes will be mandatorily settled in three tranches through 216. The first tranche ( 45m ) together with the accrued coupon will be converted into NN Group shares at a 1.5% discount to the IPO offer price. In addition to acquiring the notes, RRJ agreed on investing 88m while Temasek and SeaTown agreed on an amount of 62m of equity stakes in NN. At IPO, NN Group s market capitalisation amounted to 7.bn. Underwriters exercised the over-allotment option to purchase additional 12 million existing shares at the offer price. ING generated 231m gross proceeds from the overallotment option and further reduced its ownership from 71.4%(excluding exercise of over-allotment option) to 68.1%. NN Group s share price closed on the first day of trading at 21.26 ( 6.3% as compared to the offer price), implying a total market capitalisation of 7.4bn ($1.2bn). Trading on Euronext Amsterdam Summary statistics 24 23 22 21 2 19 1-day performance: 6.3% 18 1-Jul 9-Jul 17-Jul 25-Jul 4-Aug 12-Aug 2-Aug28-Aug 5-Sep -Sep 23-Sep Trading volume on Euronext Amsterdam Share price Current performance: 14.9% 24. 21. 18.. 12. 9. 6. 3.. Trading volume (millions of shares) Listing venue: Euronext Amsterdam Country of incorporation: Netherlands Filing range: 18.5-22. Pricing: 2. Pricing date: 1 July, 214 Trading date: 2 July, 214 Money raised: 1.8bn ($2.4bn) Shares offered at IPO: 88,55, (25.3%) Over-allotment exercised: 11,55, (3.3%) Shares outstanding: 35,, (1%) Market cap at listing: 7.bn ($9.6bn) Current market cap: 8.bn ($1.2bn) Source: Dealogic, Thomson One, Bloomberg as of 3 September, 214 16
Disclaimer 214 PricewaterhouseCoopers Accountants N.V. (3418285) (hereinafter referred to as 'PwC'). All rights reserved. Not for further distribution without the permission of PwC. PwC refers to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firm s professional judgment or bind another member firm or PwCIL in any way. PricewaterhouseCoopers Accountants N.V. is the author of this publication and has got the copyrights. Without written permission of PwC this publication may not be duplicated, copied, distributed or published. This publication has been prepared for information purposes and general guidance on matters of interest only, and does not constitute, or may not be interpreted as, professional advice or as a sale, buying or trading advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.