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MOGSC IPO Talk_Final.ppt


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MOGSC IPO Talk_Final.ppt

  1. 1. Underwriting, Placements and the Art of Investor Relations Sherilyn Foong Director / Head of Equity Capital Markets Alliance Investment Bank Berhad 11 June 2008
  2. 2. <ul><ul><li>Underwriting & Placements </li></ul></ul>
  3. 3. Stages Of An IPO <ul><li>Coordinate efforts of all advisers, i.e. due diligence, submissions, documentations. </li></ul>Coordination Approval Process Status Review Completion Process Post Completion <ul><li>Liaise with the relevant authorities such as the Securities Commission, Foreign Investment Committee, Ministry of International Trade & Industry, Bursa Securities. </li></ul><ul><li>Monitor progress periodically. </li></ul><ul><li>Underwriting, placement & distribution. </li></ul><ul><li>Pricing. </li></ul><ul><li>Roadshows. </li></ul><ul><li>Research & marketing. </li></ul><ul><li>Investor Relations strategy. </li></ul><ul><li>Despatch of Prospectus. </li></ul><ul><li>Listing. </li></ul><ul><li>Follow-up on any conditions that may be imposed by the relevant authorities. </li></ul>
  4. 4. <ul><ul><li>Facilitator of equity & equity-linked transactions </li></ul></ul><ul><ul><ul><li>Interface between non-retail buyers and sellers of equity & equity- linked instruments. </li></ul></ul></ul><ul><ul><ul><li>Sourcing of new IPOs & Private Placements for the Bank. </li></ul></ul></ul><ul><ul><ul><li>Advising corporate clients on equity market conditions and the suitability to undertake equity or equity-linked transactions. </li></ul></ul></ul><ul><ul><li>Underwriter of IPOs </li></ul></ul><ul><ul><ul><li>Ensuring that the required equity funding for the Company is available in the event of an IPO undersubscription. </li></ul></ul></ul><ul><ul><ul><li>Risk undertaken involve subscribing for the underwritten shares in the event of undersubscription. </li></ul></ul></ul><ul><ul><li>Placement Agent </li></ul></ul><ul><ul><ul><li>Sourcing for new investors that would be interested to acquire new / existing Private Placement shares being offered by the company / existing shareholder(s) and facilitating the resultant primary / secondary market transaction. </li></ul></ul></ul>Role Of An ECM Unit Within An Investment Bank
  5. 5. Underwriting <ul><ul><li>Underwriting - where an Investment Bank / Universal Broker agrees to subscribe for any unsubscribed shares that has been issued / offered by an Issuer. </li></ul></ul><ul><ul><li>Objective - ensuring that the required equity funding that a Company needs is available in the event of an undersubscription. </li></ul></ul><ul><ul><li>In return for the risks undertaken, there is an underwriting commission. </li></ul></ul><ul><ul><li>For large issues, a Managing Underwriter may be appointed to manage the Co-Underwriters. </li></ul></ul><ul><ul><li>Underwriting Agreement is the primary legal document. </li></ul></ul><ul><ul><li>Only the shares offered to the public and employees (pink forms) are typically underwritten in an IPO. </li></ul></ul>
  6. 6. Placements <ul><ul><li>Placement - Placement Agent, usually the same as the Adviser, will place out shares reserved under Private Placement portion to qualified investors. </li></ul></ul><ul><ul><li>Objective - to look for quality shareholders and to those who can bring value to the company. </li></ul></ul><ul><ul><li>Book-building - price discovery mechanism to determine “market price” of an IPO which normally conducted for well known larger issues. </li></ul></ul>
  7. 7. <ul><li>Book-Building </li></ul><ul><li>Book-building is an exercise where investors submit bids throughout the offer period, indicating demand and price sensitivity. </li></ul><ul><li>Investors pay at a single price determined after book-building to solicit indications of demand by the company and underwriters, usually lower than the highest bid to create an over-subscription and stable aftermarket. </li></ul><ul><li>Advantages </li></ul><ul><li>Roadshows will generate publicity and awareness for the IPO. </li></ul><ul><li>Establishes a larger institutional shareholder base and greater stability in aftermarket. </li></ul><ul><li>Provides an indication of the market valuation of the IPO shares to retail investors. </li></ul><ul><li>Leads to a more favourable pricing of the retail tranche. </li></ul>Placements Via Book-Building
  8. 8. Placements - Targeted Investors Reaching Out To The Investment Community Statutory Bodies Insurance Funds Asset Management Funds Unit Trust Funds Corporates High Net Worth Individuals Others Hedge Funds EPF, PNB, Lembaga Tabung Haji, … AIG, Great Eastern, Prudential, … Alliance Investment, HwangDBS, … Public Mutual, Pacific Mutual, …
  9. 9. Investor Roadshow <ul><ul><li>Whilst promoting the underlying equity “story”, we also give clients the widest “footprint” in terms of investors to place-out the shares to. </li></ul></ul><ul><ul><li>By doing so, we generate the strongest possible demand & interest in the shares prior to listing. </li></ul></ul><ul><ul><li>Our placement to quality placees will in turn increase the likelihood of a strong after-market share price performance. </li></ul></ul><ul><ul><li>ECM will work with specialists in investor relations and the investment community comprising of fund managers and investment analysts to maximise market acceptance of the equity story. </li></ul></ul>
  10. 10. IPO Institutional Placement - Live Case Study Typical Placement Allocation Of A Main Board Company Local Statutory Bodies 6% Corporates 3% High Net Worth Individuals 45% Institutional Funds 46% Local & Foreign
  11. 11. IPO Institutional Placement - Live Case Study Book Building Demand Allocation Local Statutory Bodies 6% Local & Foreign Insurance Funds 17% Institutional Funds 77% Local Statutory Bodies 17% Local & Foreign Insurance Funds 20% Institutional Funds 63% Local & Foreign Local & Foreign
  12. 12. IPO Statistics * Completed IPOs between the months of Jan-Apr 2008. Number Of Listings Excluding REITs   Main Second MESDAQ Total 2007 12 8 3 23 2008* 2 4 5 11 Average Forward PE Main Second MESDAQ 2007 9.16 8.16 10.11 2008* 10.99 7.83 9.29
  13. 13. <ul><ul><li>The Art of Investor Relations (IR) </li></ul></ul>
  14. 14. IR - What It Is <ul><ul><li>IPOs is like a 1 st marriage - once in lifetime event. </li></ul></ul><ul><ul><ul><li>To ensure many “happy returns”, its IR strategy needs to be carefully thought out & planned, and convincingly executed. </li></ul></ul></ul><ul><ul><li>IR is the continuous dialogue between your Company and investors and / or the channel medium that feeds the info to be conveyed to investors. </li></ul></ul><ul><ul><ul><li>Process of crafting & delivering your Company’s story to the investment community, demonstrating its strengths and investment worthiness. </li></ul></ul></ul><ul><ul><ul><li>IR a fight for space in the media for the hearts & minds of investors. </li></ul></ul></ul><ul><ul><li>Amplifies your Company’s success in executing its business strategy by providing greater recognition and acceptance. </li></ul></ul><ul><ul><li>Not just about promotion. Not a substitute for a Company’s fundamentals. </li></ul></ul><ul><ul><li>Consider hiring an IR professional - when doing the job, let’s do it right. </li></ul></ul>
  15. 15. Elements of an IR Programme Converting Investors to Buy Investible Position Investor Awareness & Preference <ul><li>Fund manager’s briefing </li></ul><ul><li>Analyst briefing </li></ul><ul><li>News releases </li></ul><ul><li>Profiling </li></ul><ul><li>Media briefing </li></ul><ul><li>Focus on:- </li></ul><ul><li>Industry niche & business </li></ul><ul><li>Highlight management’s track record & experience </li></ul><ul><li>Emphasize financial track record & performance </li></ul>
  16. 16. How To Start <ul><ul><li>Basic scope of work for an IR programme. Therefore, you need to: </li></ul></ul><ul><ul><ul><li>identify your Company’s key business drivers; </li></ul></ul></ul><ul><ul><ul><li>recognise your Company’s strengths & weaknesses; </li></ul></ul></ul><ul><ul><ul><li>create & prepare key themes & concise corporate messages; </li></ul></ul></ul><ul><ul><ul><li>develop a pro-active IR communication plan; and </li></ul></ul></ul><ul><ul><ul><li>once all the above is ready, implement and continuously implement the IR programme over the next 18 months. </li></ul></ul></ul>
  17. 17. Nuts & Bolts of IR <ul><ul><li>Objective - simplifying your Company’s complex story to basic, positive messages to be conveyed ultimately translating the shares of your Company to be an attractive investment destination. </li></ul></ul><ul><ul><li>Each IR material should contain no more than 3 or 4 key messages. </li></ul></ul><ul><ul><li>When formulating key messages, the KISS (i.e. Keep It Simple, Stupid) principle works best (max. of 20 words). </li></ul></ul><ul><ul><li>Consistency of messages & its communication is key. </li></ul></ul><ul><ul><li>Create & establish an “IR Tool Kit”. </li></ul></ul>
  18. 18. IR Tool Kit - Essentials <ul><ul><li>At the minimum , an IR Tool Kit should at least contain: </li></ul></ul><ul><ul><ul><li>Fact sheet(s) containing company history, profile, biodata of directors and key management personnel and website address; </li></ul></ul></ul><ul><ul><ul><li>Recent quarterly financial statements (relevant post-IPO) and the most recent annual report; </li></ul></ul></ul><ul><ul><ul><li>Recent press and media clippings / announcements; and </li></ul></ul></ul><ul><ul><ul><li>Contact details on the key IR person(s) in your Company. </li></ul></ul></ul><ul><ul><li>Don’t forget to: </li></ul></ul><ul><ul><ul><li>tailor the IR Tool Kit to convey the key messages to be brought across; </li></ul></ul></ul><ul><ul><ul><li>use clear & unambiguous language; </li></ul></ul></ul><ul><ul><ul><li>ensure layout & format of IR Tool Kit is user friendly; and </li></ul></ul></ul><ul><ul><ul><li>constantly review, edit and update the IR Tool Kit to ensure information timeliness & relevancy. </li></ul></ul></ul>
  19. 19. Newsworthy Key Messages <ul><ul><li>Examples of positive key messages might include: </li></ul></ul><ul><ul><ul><li>growing PAT. </li></ul></ul></ul><ul><ul><ul><li>expansion of margins. </li></ul></ul></ul><ul><ul><ul><li>diversification related to existing core competencies. </li></ul></ul></ul><ul><ul><ul><li>new contracts clinched, entry into a new market. </li></ul></ul></ul><ul><ul><ul><li>dividend payout increase. </li></ul></ul></ul><ul><ul><ul><li>appointment of high profile individual into the senior management team whom is able to further value-add. </li></ul></ul></ul><ul><ul><ul><li>sector / industry growth and your Company’s positioning within it. </li></ul></ul></ul><ul><ul><li>Emphasis that your Company’s business strategies and expansion plans are sound, realistic & achievable. </li></ul></ul><ul><ul><li>The experienced, capability and trustworthiness of senior management to meet expectations. </li></ul></ul><ul><ul><li>Being transparent, responsible and accountable for decisions / actions. </li></ul></ul>
  20. 20. Building Positive Media Relations <ul><ul><li>Always be: </li></ul></ul><ul><ul><ul><li>accessible and available to the media, even after office hours. </li></ul></ul></ul><ul><ul><ul><li>responding fast to queries. </li></ul></ul></ul><ul><ul><ul><li>having more than 1 spokesperson. </li></ul></ul></ul><ul><ul><ul><li>fast tracking media calls. </li></ul></ul></ul><ul><ul><li>Steps to deal with wrong reporting or misquotes: </li></ul></ul><ul><ul><ul><li>First, double-check report to ascertain the mistake / misquote. </li></ul></ul></ul><ul><ul><ul><li>Second, determine seriousness of error on Company / self. </li></ul></ul></ul><ul><ul><ul><li>If serious: </li></ul></ul></ul><ul><ul><ul><ul><li>call the journalist. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>then send letter to the editor. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Last, request for a retraction / clarification of error soonest. </li></ul></ul></ul></ul>
  21. 21. “ No-Nos” When Dealing With The Media <ul><ul><li>When engaging with the media, DO NOT : </li></ul></ul><ul><ul><ul><li>say “no comments”. </li></ul></ul></ul><ul><ul><ul><li>say “off the record”. </li></ul></ul></ul><ul><ul><ul><li>say anything which casts your Company in a bad light, or bad-mouthing your competitors. </li></ul></ul></ul><ul><ul><ul><li>disclose too much about yourself / your Company. </li></ul></ul></ul><ul><ul><ul><li>lie or make-up stories. </li></ul></ul></ul><ul><ul><ul><ul><li>“ Sometimes you say it best, when you say nothing at all…” </li></ul></ul></ul></ul><ul><ul><ul><li>overanswer. </li></ul></ul></ul><ul><ul><ul><li>request to check and comment on the media piece before release / publication. </li></ul></ul></ul>
  22. 22. Continuity Is Key <ul><ul><li>IR is an on-going process, in good times and bad. Therefore, your Company needs to: </li></ul></ul><ul><ul><ul><li>continuously get on & continue be on investors’ radar screens. </li></ul></ul></ul><ul><ul><ul><ul><li>Management pro-activeness is paramount. Coming clean is essential in order to build & gain trust with investors. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Maintaining close contact with the analyst, fund management & financial media communities to rectify unrealistic earnings forecasts & manage expectations. </li></ul></ul></ul></ul><ul><ul><ul><li>establish and widen analyst / financial media coverage. </li></ul></ul></ul><ul><ul><ul><ul><li>Provides support to the IR programme via creation and maintaining awareness of your Company to existing / potential investors. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Plays a large influence & shaping investor perception. </li></ul></ul></ul></ul><ul><ul><ul><li>increase the number of new shareholders - both retail & institutional. </li></ul></ul></ul><ul><ul><ul><ul><li>1 on 1 meetings with buy-side / institutional investors works best. </li></ul></ul></ul></ul><ul><ul><ul><li>build a broker network to maximise liquidity and trading opportunities. </li></ul></ul></ul>
  23. 23. Final Word Of Warning <ul><ul><li>When talking to the media about your Company, be mindful of what is being disclosed / revealed, as certain information could be price sensitive and/or be subject to verification by an independent 3 rd party before public release, under the SC and Bursa Malaysia’s guidelines / listing rules. </li></ul></ul>
  24. 24. THANK YOU Sherilyn Foong Director / Head of Equity Capital Markets Tel: 03-2717 6680 (Direct) E-mail: M. Irtiza Azmel M. Ismail Associate Director Equity Capital Markets Tel: 03-2717 6682 (Direct) E-mail: Jason Lee Senior Manager Equity Capital Markets Tel: 03-2717 6681 (Direct) E-mail:
  25. 25. <ul><li>This presentation was prepared by Alliance Investment Bank Berhad (“Alliance”) exclusively for the benefit and internal use of our client to indicate, on a preliminary basis, the feasibility of a possible transaction(s). The terms and structure of the possible transaction(s) in this presentation are preliminary only and implementation is subject to, inter alia, the satisfactory outcome of due diligence (including legal and financial) of the client. Accordingly, the terms and structure of the possible transaction(s) and their implementation may be subject to material changes. </li></ul><ul><li>This presentation is proprietary to Alliance and may not be disclosed to any third party or used for any other purpose without the prior written consent of Alliance . </li></ul><ul><li>The information in this presentation is based upon management representations and reflects prevailing conditions and our preliminary views as of this date, which are accordingly subject to changes. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information provided by management. Accordingly, Alliance and its officers, agents or employees do not give any representation or warranty, express or implied, with respect to the information pertaining to the financial position, condition, operation, business and prospects of the client nor shall we or any such person be liable for any information or omission in the information pertaining to the financial position, condition, operation, business and prospects of the client. </li></ul><ul><li>Alliance is not acting as an adviser or agent to any person to whom this presentation is directed. Such persons must make their own independent assessment of the contents of this paper, should not treat such contents as advice or recommendation by Alliance and its officers, agents or employees on investment matters, legal, accounting or taxation matters and should consult their own advisers. Accordingly, such persons are deemed to rely on their own information and assessment as they deem necessary in order to make any investment decision with respect to the securities in this presentation and their own assessment of the merits and risks of any investment in the securities in this presentation. In this respect, Alliance and its officers, agents or employees shall not accept any responsibility and shall not be liable for the economic risk or any consequences sustained by such persons arising from any investment in the client and/or the securities in this presentation. </li></ul><ul><li>All pricing of securities and the possible transaction(s) shown in this presentation are for illustrative purposes and are subject to changes as the actual pricing shall only be determined at a later date, after receipt of relevant regulatory approvals and shareholders’ approval and closer to the launch of the possible transaction(s) after taking into consideration the prevailing capital market conditions, economic conditions and industry specific conditions at that time. </li></ul><ul><li>Alliance and/or its affiliates may act as principal or agent in any transaction(s) contemplated by this paper, or any other transactions connected with such transaction(s), and may as a result earn brokerage, commission or other income. </li></ul><ul><li>Nothing in this paper is intended to be, or should be construed as an offer by Alliance and its officers, agents or employees to buy or sell, or invitation to subscribe for, any securities. </li></ul><ul><li>Neither Alliance nor any of its directors, employees or representatives are to have any liability (including liability to any person by reason of negligence or negligent misstatement) from any statement, opinion, information or matter (express or implied) arising out of, contained in or derived from or any omission from the presentation, except liability under statute that cannot be excluded. </li></ul>Disclaimer