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Introduction to the London AIM Market

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Introduction to the London AIM Market Introduction to the London AIM Market Presented by: Mehboob (Mebs) Dossa London Direct line: +44 20 7632 1627 Email: [email protected] CONFIDENTIAL London Stock Exchange (LSE) • Main Market • AIM Market Others: PLUS 2 CONFIDENTIAL London Stock Exchange – key statistics Total companies Domestic: 2,228 International: 589 Market capitalisation Main Market: UK listed: US$1,681bn International listed: US$2,810bn AIM: US$93bn Turnover value (Jan-Dec 2008) Main Market: US$4,587bn AIM: US$73bn Source: London Stock Exchange 3 CONFIDENTIAL London Stock Exchange – key statistics • 1,134 Domestic companies – Aggregate market cap $2.7 trillion • 330 International companies – Aggregate market cap $2.8 trillion • Money raised Jan-Sept 2009 $95 billion • 1,094 Domestic companies – Aggregate market cap $58 billion • 259 International companies – Aggregate market cap $35 billion • Money raised Jan-Sept 2009 $5 billion Source: London Stock Exchange 4 CONFIDENTIAL The platform of choice for international companies 450 London Stock Exchange Nasdaq 400 NYSE 350 300 250 200 150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 to Sept. In 2006: • London Stock Exchange - 367 new companies joined. • NYSE, Nasdaq and Hong Kong Stock Exchange had 332 IPOs in 2006. • $104bn raised on the London Stock Exchange, $40bn on NYSE, and $29bn on Nasdaq. In 2007: • London Stock Exchange - 252 new companies joined. • 142 new companies on Nasdaq, 67 on NYSE • $56 billion raised on the London Stock Exchange. Source: London Stock Exchange 5 CONFIDENTIAL Approach to regulation Companies Investors Minimise Balance bureaucracy Competing Maximise protection and cost Needs Ranked first in corporate Principles based - governance standards by GMI, UK “comply or explain” Deminor and Davis Global Advisors Increased cost of compliance and US Rules based - risk premium (Financial Executive prescriptive and expensive & Korn Ferry Surveys) Source: London Stock Exchange 6 CONFIDENTIAL The world’s most successful growth market 7 CONFIDENTIAL AIM companies: 1,353 Overseas AIM companies: 259 (non UK incorporated) IPOs on AIM in 2008: 38 Total capital raised in 2008: US$6.4bn Key US$1.6 New Statistics US$4.8bn Further Capital raised (new & further) since 1995: US$104bn Source: London Stock Exchange 8 CONFIDENTIAL The widest choice of proven global markets A choice of globally respected markets supported by a wide range of institutional & retail investors Main Market Supports earlier stage Supports more established companies in their initial companies seeking further growth period. growth. 1,353 issuers 1,464 issuers Nominated Adviser (Nomad) UK Listing Authority Sponsor Source: London Stock Exchange 9 CONFIDENTIAL AIM admissions UK and International admissions 600 120 500 UK International 124 400 61 87 300 12 200 15 399 13 16 14 338 3 294 265 27 7 6 100 197 7 1 162 147 146 120 131 100 96 87 68 17 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 to Sept Source: London Stock Exchange 10 CONFIDENTIAL Raising new and further capital on AIM Funds raised in ($bn) New Further 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 to Sept Source: London Stock Exchange 11 CONFIDENTIAL Distribution of AIM companies by market value Sept 09 350 300 Sep-09 250 200 150 No ofCompanies 100 50 0 Less than $5m - $10m - $20m - $50m - $100m - $200m - $500m - $1000m - over $5m $10m $20m $50m $100m $200m $500m $1000m $2000m $2000m Market Value ($) Source: London Stock Exchange 12 CONFIDENTIAL Top AIM sectors by market value & no. of companies Sept 09 16,000 Latest Market Value $ 180 14,000 Number of Companies 160 12,000 140 120 10,000 100 8,000 80 6,000 60 Mkt Value ($m) Value Mkt 4,000 40 Number of companies 2,000 20 - 0 Media Mining Food Leisure General Travel & Support Financial Services Equity Oil & Gas Oil & Services Producers Computer Producers Services Software & Investment Real Estate Real Instruments Investment & Source: London Stock Exchange 13 CONFIDENTIAL Institutional and Retail Investors 100 90 80 44 50 54 70 60 65 62 60 Retail 50 Institutional 40 30 56 50 46 20 38 40 35 10 0 2003 2004 2005 2006 2007 2008 Source: London Stock Exchange 14 CONFIDENTIAL Institutional Investors on AIM – Most active Rank Most Active Institutions by Value of Value of Investments No. of Investments investment (US$m) 1 BlackRock Merrill Lynch Investment 2391.0 162 2 Invesco 1590.5 80 3 Artemis Investment Management 1154.6 138 4 Citivic (Nominees) 1134.4 4 5 Fidelity International 968.3 131 6 CDS & CO (Nominees) 786.5 7 7 Lansdowne Partners 751.8 32 8 Prudential Group 728.7 46 9 QVT Financial 718.2 32 10 AVIVA 699.1 70 Source: London Stock Exchange 15 CONFIDENTIAL Institutional Investors on AIM – Sector breakdown Rank Most Active Sector by Value of Institutional Value of Investments (US$m) Investment 1 Oil & Gas Producers 9504.9 2 Mining 9482.3 3 Real Estate 7534.0 4 General Financial 6313.7 5 Equity Investments Instrument 5308.4 Rank Most Active Sector by Number of Institutional Number of Investments Investment 1 Mining 869 2 General Financial 811 3 Real Estate 571 4 Support Services 528 5 Oil & Gas Producers 515 Source: London Stock Exchange 16 CONFIDENTIAL AIM Rules AIM Rules for Companies are intended to be straightforward and principles-based. The LSE monitors the regulatory framework that applies to AIM companies and, in response to on-going changes in global market places, it continues to make targeted amendments to protect AIM’s position as the world’s leading growth market. - Major rule changes in 2007 - The AIM Rules for Nominated Advisers 17 CONFIDENTIAL AIM/Plus/Official List CONDITION FOR ADMISSION AIM Official List PLUS (Main Market) Minimum shares in public hands None 25% None Minimum required years’ of audited historical financial None 3 years None information 75% of the entity’s business must be supported by a revenue No Yes No earning track record for the 3 year period Control over the majority of the entity’s assets for the 3 year No Yes No period required Clean working capital statement (sufficient working capital for Yes Yes Yes at least 12 months from the date of the prospectus) Minimum market capitalisation No £700,000 No Appointment of Sponsor / Nomad / Broker / Corporate adviser Nomad / Broker Sponsor Corporate adviser required Re-vetting or Admission documents by Nomad by UKLA by Corporate Advisor 18 CONFIDENTIAL Appropriate regulation and oversight AIM companies are subject to the AIM Rules which outline the continuing obligations of being on a public market. Key continuing obligations include: • AIM companies must have a Nomad at all times • AIM companies must disclose all price sensitive information in a timely manner: substantial transactions, related party transaction, reverse takeovers and other miscellaneous transactions • Deadlines for half yearly and annual report and accounts • Restrictions on deals for directors and applicable employees on AIM securities during close periods • All directors accept full responsibility, collectively and individually for compliance with AIM Rules • UK Corporate Governance standards 19 CONFIDENTIAL Role of the Nomad What is a Nomad? Why is the system different?: − AIM has no formal ‘Regulator’ but Nomads are firms regulated by the FSA and London Stock Exchange − AIM is much more Nomad-led than other markets, which rely on lawyers and a regulator − Principles based approach around narrow rule book − Regular compliance visits by LSE AIM Regulation to Nomads to maintain standards 20 CONFIDENTIAL Role of the Nomad (cont’d) The Nomad must confirm SUITABILITY of the Company to be admitted. Comfort obtained through: − Initial Assessment • Good business plan • Quality of management • Readiness to be public • Valuation • Likelihood of complying with rules • Free Float − Legal and accounting (plus technical, if applicable) due diligence − Verification of Admission Document/Prospectus − Background checks on Directors and shareholders − Research into the Company’s markets and prospects − Test marketing with institutions − Confirming directors have received advice and guidance as to the nature of their responsibilities and obligations − The Nomad is a friend and a policeman — a unique and pivotal role! 21 CONFIDENTIAL Fast Track Admission Fast-track admission process for companies who have traded on AIM designated Market for at least 18 months. 22 CONFIDENTIAL Why choose AIM? • The world’s most successful growth market • A balanced approach to regulation • An internationally focussed, professional investor base • International profile 23 CONFIDENTIAL THE END Business Department Capital Markets | Energy & Utilities | Health Care | International | Land Use & Environmental Mergers & Acquisitions, Securities & Corporate Services | Real Estate Transactions | Tax & Employee Benefits | Technology & Business Litigation Department Antitrust & Trade Regulation | Business & Securities Litigation | Complex Commercial Litigation | Financial Services Litigation | Government Investigations IP Litigation/Patents | Labor & Employment | Product & Consumer Litigation | Restructuring & Insolvency | Toxic Torts & Environmental Litigation ATLANTA •BALTIMORE •CHARLOTTE •CHARLOTTESVILLE • CHICAGO • JACKSONVILLE • LOS ANGELES NEW YORK • NORFOLK • PITTSBURGH • RALEIGH • RICHMOND • TYSONS CORNER • WASHINGTON, D.C. • WILMINGTON ALMATY, KAZAKHSTAN | BRUSSELS, BELGIUM | LONDON, UNITED KINGDON www.mcguirewoods.com © 2009 McGuireWoods LLP 24 CONFIDENTIAL.
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