Speaker Claudia Biolchini from BNY Mellon at "Globalize Your Outreach"

1. BNY Mellon
Depositary Receipts – December 2012 Seminar

2. Who is BNY Mellon?
BNY Mellon is a leader in Investment Management and Investment Services
Global Expertise
US$ 27.1 trillion in assets under custody and administration
US$ 1.3 trillion in assets under management
US$ 1.4 trillion average payments processed daily
48.000+ professionals
Present in 36 countries over 100 markets Elected the Safest Bank in the US
BNY Mellon
Asset Under Administration #8 EUA, #11 Global
Wealth Mgmt Top 10 EUA
Europe, Investment Services #1 Global
Middle East Asia Corporate Trust #1 Global
ans Africa Pacífico
Depositary Receipts #1 Global
Broker Dealer Services #1 EUA: + 60%share
Americas Clearing Services #1 EUA, UK e Irlanda
Stock Transfer #1 EUA
Global Payments Top 5 Global
Cash Mgmt Top 5 EUA
Data-base: June 2012
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3. Section I.
Depositary Receipt Market
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4. A Depositary Receipt is a negotiable security issued by BNY Mellon that
represents a security of a non-US company public traded in its local
market.
3,500 DR issuers from 80 countries in all sectors of the economy.
175 billion DRs valued at USD 3.8 trillion were traded in 2011
Source: BNY Mellon; www.adrbnymellon.com, December 2011
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5. DR Program Levels & Trading Platforms
Program Visibility/ Liquidity
Level III ADR
High
Level II ADR
Medium Level II GDR and
Level III GDR
Level I ADR
Low Level I GDR
Low Medium High
Disclosure Requirements
Generally, Increased Disclosure Results in Increased Visibility
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6. ADRs Provide Access to Deep Capital Markets
Level II & III DR
Level I DR (OTC) (SEC Registered & Listed)
- US and European
- US and European
144A/RegS Institutions that
Institutional Investors that
prefer SEC-registered
- Qualified U.S. don’t have clearing
securities and familiar
Institutional Buyers and settlement
BOVESPA trading and settlement
(QIBs – with over structures in Brazil
structures
- Brazilian Institutions $100 MM in assets) but seek Brazilian
and European equity opportunities - Mutual/Pension Funds that
- Brazilian Retail are required to hold U.S.-
investors with
- US and European Institutions clearing and - Mutual/Pension registered securities
with presence in Brazil settlement Funds that are
structures in Brazil required to hold U.S. - Managed Accounts
- Some ETFs DTC securities
- Individual Investors
- Managed Accounts
- ETFs / Index Funds
DRs will increase access to institutional and individual investors
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7. BNY Mellon Brazilian DR Partners:
Private Placements Level I Level II & III
144A / Reg. S / Reg. D
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8. Section II.
Why establish a Level I ADR Program?
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9. Why establish a Level I DR Program?
BNY Mellon is the leading depositary in the Level I ADR Universe
• We manage more than 600 Level I programs in 50 countries
• In Brazil, we manage 39 Level I Programs, representing 68% of
market share in the country
Level I Sponsored
Programs - Global
Market Share
Others
29%
DR Brazil Team:
8 experienced Portuguese BNY Mellon
speakers professionals, 3 71%
located in Brazil
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10. DR Benefits to Issuers
• Access deep international capital markets
• Potential for increase share valuation and liquidity, provide higher visibility
• Diversify and broaden shareholder base
• Express international commitment
• Simple to establish, little or no cost to the company
• No additional financial disclosure, existing local market disclosure requirements accepted
DR Benefits to Investors
• Invest in more than 3,300 DRs from 78 countries
• Get quotes and dividends in U.S. dollars
• Overcome foreign investment restrictions
• Access improved information flow in English
• Transaction and holding costs may be less than that assessed in local market
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11. Section III.
Debunking some Myths
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12. Myth #1:
“The DR is no longer necessary, because all
investors already buy and negotiate in the local
market”
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13. The importance of ADRs continues to grow
DR traded figures for Brazilian Companies (US$)
In 2011, DRs represented 60% of overall trading for these companies, totaling
more than U$ 670 bn in transactions
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14. Myth #2:
“DR Level I is only for small and unknown
companies”
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15. Some of the largest companies in the world have a
Level I DR program
Some of them are:
Nestle Largest food company in the world
Volkswagen Largest automaker in Europe
BASF Greater chemical company in the world
Gazprom Greater natural gas company in the world
Usiminas Largest steel producer in Latin America
JBS World's largest meat company
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16. Myth #3:
“A DR Level I will increase the visibility of my
company in the foreign market ”
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17. There is a difference between "access" and "visibility"
Features of DR Investor Relations
Clearance via DTC Conferences with brokers
Trading in U$ Roadshows
Quotes in U$ Media Relations
Real time quotes Institutional advertising
Use of online brokers Events for investors
ADR RI
Brings Brings
ACCESS VISIBILITY
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18. Myth #4:
“DRs will divide the liquidity between the two
markets"
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19. Empiric evidence shows that a DR Level I program
also increase liquidity in the local market
OGX Petróleo Hypermarcas
100 May 26 ‘10 – DR Level I
May 08 ‘09 - DR Level I
$ Million
$ Million
250 90
80
200 70
60
150 50
AVG.: 122,5mm
40
100 AVG.: 30,16mm
30
50 20
AVG.: 27,9mm
10 AVG.: 8,2mm
0 0
jul-09
nov-09
jul-10
nov-10
jan-09
mar-09
mai-09
set-09
jan-10
mar-10
mai-10
set-10
jan-11
jun-08
ago-08
out-08
dez-08
abr-09
jun-09
ago-09
out-09
dez-09
abr-10
jun-10
ago-10
out-10
dez-10
fev-09
fev-10
fev-11
OGXP3 BZ OGXPY US HYPE3 BZ HYPMY US
$ Average Day Traded Value in BMFBovespa (U$ mm)
Before DR Level I After DR Level I Var.
OGX Petróleo 27,9 122,5 339%
Hypermarcas 8,2 30,16 268%
MRV Engenharia 7,9 21,6 173%
MPX Energia 2,3 6,2 170%
Marfrig 8,6 13,6 58%
Banco Do Brasil 44,7 67,7 51%
Equatorial 1,3 1,9 46%
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