IPOs in India,
US and Europe
A Report on IPOs (Investment Banking)
IBS-2011
IB-SEC B
 Sajith Kumar-10BSPHH010669
 Wilson...
1 | P a g e
Table of Contents
A. Regulatory and Disclosure Norms in India, US and Europe Related To IPOs...........2
1. In...
2 | P a g e
The most successful IPOs are launched by those businesses that operate as public
companies well in advance of ...
3 | P a g e
It is to be distinctly understood that submission of offer document to SEBI should not in
any way be deemed or...
4 | P a g e
instruments sold near the dates of option grants, there will be close scrutiny by the SEC,
and the closer the ...
5 | P a g e
B. The Due Diligence Process
1. Due Diligence in India
The practice of undertaking a formal due diligence inve...
6 | P a g e
 Acquisitions/Ventures
 Legal
 Human Resources
 At the Business Unit Level
 Business Unit Strategy
 Majo...
7 | P a g e
Fixed price issue
Price at which the securities are offered and would be allotted is made known in advance to
...
8 | P a g e
institutional investors have to
necessarily place limit orders
Bids placed by institutional
investors are bind...
9 | P a g e
E. Post IPO Performance
1. Tesla Motors
Tesla IPO was "multiple times oversubscribed" at the retail and instit...
10 | P a g e
The share price of LinkedIn has never touched 60$. This tells that market values for
LinkedIn were much highe...
11 | P a g e
Punjab & Sind Bank IPO finally subscribed 50.75 times on its closing day. Punjab & Sind
Bank IPO was open on ...
12 | P a g e
Oversubscription detail
Qualified Institutional Buyers (QIBs): 1.7710 Times
Non Institutional Investors: 1.15...
13 | P a g e
6. FLYBE
Flybe Group plc (the “Company”) announced that, in connection with its initial public
offering of or...
14 | P a g e
2. LINKEDIN
The IPO was underwritten by Morgan Stanley, Bank of America, Merrill Lynch, JP Morgan,
ALLEN & CO...
15 | P a g e
3. JAYPEE INFRATECH
The Book Running lead managers for the IPO Were Morgan Stanley India Company
Private Limi...
16 | P a g e
* Formulating marketing strategies, preparation of publicity budget
* Finalise Media and PR strategy
* Finali...
17 | P a g e
The following table summarizes the specific roles of IBs in Europe:
S.No Activities
1. Processes
 Execution ...
18 | P a g e
G. ANNEXURES
1. LINKEDIN VALUATION
Present
--------------------------------------- ---------- --------- -----...
19 | P a g e
2. TESLA MOTORS
RELATIVE VALUATION
------------------------------------ -------------- ------------ ---------...
20 | P a g e
3. JAYPEE INFRATECH
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
1 2 3 4 5 6 ...
21 | P a g e
4. PUNJAB AND SIND BANK
--------------------------------------- ---------- ---------- --------- -------------...
22 | P a g e
5. FRESNILLO Plc
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
1 2 3 4 5 6 7 8
Sales 417.072 555.39 ...
23 | P a g e
6. FLYBE
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16
Note:in₤'million 1 2 3 4 5 6
S...
24 | P a g e
H. References
 www.capitaline.com
 http://www.sebi.gov.in/
 www.sec.gov
 www.nse-india.com
 www.fresnill...
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IPOs in India, USA and Europe along with the valuation using FCFE and FCFF models

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Comparative Analysis of IPOs in India, USA and Europe. Valuation of 6 firms which went for the IPOs recently in these countries using FCFE and FCFF valuation techniques.

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IPOs in India, USA and Europe along with the valuation using FCFE and FCFF models

  1. 1. IPOs in India, US and Europe A Report on IPOs (Investment Banking) IBS-2011 IB-SEC B  Sajith Kumar-10BSPHH010669  Wilson Peter-10BSPHH010890  Vivek Sharma-10BSPHH010886  Saurabh Trivedi- 10BSPHH011076
  2. 2. 1 | P a g e Table of Contents A. Regulatory and Disclosure Norms in India, US and Europe Related To IPOs...........2 1. Indian Norms ...........................................................................................................2 2. United States Norms................................................................................................3 3. European Norms......................................................................................................4 B. The Due Diligence Process .........................................................................................5 1. Due Diligence in India.............................................................................................5 2. Due Diligence in the US..........................................................................................5 3. Due Diligence in Europe .........................................................................................6 C. PRICING METHODS FOLLOWED..........................................................................6 D. Issue Price and Supporting Valuation.........................................................................8 E. Post IPO Performance .................................................................................................9 1. Tesla Motors............................................................................................................9 2. LINKEDIN ..............................................................................................................9 3. Punjab & Sind Bank ..............................................................................................10 4. JAYPEE INFRATECH .........................................................................................11 5. FRESNILLO..........................................................................................................12 6. FLYBE...................................................................................................................13 F. Investment Banks and Their Roles and Responsibilities ..........................................13 1. TESLA MOTORS.................................................................................................13 2. LINKEDIN ............................................................................................................14 3. JAYPEE INFRATECH .........................................................................................15 4. PUNJAB AND SIND BANK................................................................................15 5. FRESNILLO..........................................................................................................16 6. FLYBE...................................................................................................................16 G. ANNEXURES...........................................................................................................18 H. References .................................................................................................................24
  3. 3. 2 | P a g e The most successful IPOs are launched by those businesses that operate as public companies well in advance of the actual IPO. These businesses have a relatively smooth process of going public, and they quickly transition to life as public companies. -PWC A. Regulatory and Disclosure Norms in India, US and Europe Related To IPOs 1. Indian Norms  Regulations: The primary issuances are governed by SEBI in terms of SEBI (Disclosures and Investor protection) guidelines. SEBI framed its DIP guidelines in 1992. Many amendments have been carried out in the same in line with the market dynamics and requirements. In 2000, SEBI issued “Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000” which is compilation of all circulars organized in chapter forms. These guidelines and amendments thereon are issued by SEBI India under section 11 of the Securities and Exchange Board of India Act, 1992. SEBI (Disclosure and investor protection) guidelines 2000 are in short called „DIP‟ guidelines. It provides a comprehensive framework for issuances buy the companies. As per IPO regulations are concerned, pursuant to Rule 19(2) (b) of the SCRR read with Regulation 41(1) of the SEBI Regulations, at least 60% of the Net Issue shall be allotted to QIBs. If at least 60% of the Net Issue cannot be allotted to QIBs, then the entire application money will be refunded forthwith. In accordance with the SEBI Regulations, QIBs bidding in the Net QIB Portion are not allowed to withdraw their Bids after the Bid/Issue Closing Date. In addition, QIBs bidding in the Net QIB Portion are required to pay Margin Amount of at least 10% upon submission of their Bid and allocation to QIBs will be on a proportionate basis. Provided that QIBs that are Anchor Investors are required to pay 25% of their Bid Amount at the time of submission of the Bid and the balance amount within two days from Bid/Issue Closing Date and allocation to them shall be on a discretionary basis. In terms of the SEBI Regulations, QIBs bidding in the Net QIB Portion shall not be allowed to withdraw their Bids after the Bid/Issue Closing Date and ASBA Bidders shall not be allowed to revise their Bids.  Disclosures: Section 211 of the Companies Act, 1956 provides for disclosure of annual financial information through a board‟s report prepared in accordance with section 217 and in a manner prescribed in Schedule VI. Regarding continuing financial disclosures, Clauses 35, 41 and 49 provide for information to be provided quarterly. Clause 35 requires every listed company to provide quarterly, information regarding pattern of shareholding at the end of each quarter. Clause 41 stipulates disclosure of quarterly un- audited financial statements and clause 49 provides the corporate governance code.
  4. 4. 3 | P a g e It is to be distinctly understood that submission of offer document to SEBI should not in any way be deemed or construed that the same has been cleared or approved by SEBI. The Lead manager certifies that the disclosures made in the offer document are generally adequate and are in conformity with SEBI guidelines for disclosures and investor protection in force for the time being. This requirement is to facilitate investors to take an informed decision for making investment in the proposed issue. 2. United States Norms The IPO process in the United States is driven by two primary federal securities laws that govern the offer and sale of securities: the Securities Act of 1933 (1933 Act), which governs the offer and sale of securities and the Securities Exchange Act of 1934 (Exchange Act), which imposes certain public reporting obligations on public companies as well as their officers, directors and large shareholders. Companies contemplating an IPO in the US should also consider the following norms laid down by the „Sarbanes- Oxley Act’ Internal Controls: Sarbanes-Oxley requires a registrant‟s management (CEO and CFO) to provide certain certifications in periodic filings with the SEC regarding the company‟s evaluation of the effectiveness of its internal control over financial reporting (section 404). Furthermore, sections 302 and 906 of Sarbanes-Oxley are required in the first periodic filing (Form 10-K and 10-Q) subsequent to the IPO. Section 302 and 906 require that the CEO and the CFO of a public company certify that the company‟s financial statements are accurate, comply with the requirements of the exchange acts, and information reported is fairly presented. Audit Committee: Sarbanes-Oxley requires public companies to have an independent audit committee with at least one member qualified as a financial expert. Board of Directors: Sarbanes-Oxley requires that a majority of the members of a board of directors be from outside the company. At least one board member must have a financial background either as a CPA or CFO. Loans to Company Executives: Sarbanes-Oxley prohibits public companies from extending or maintaining credit in the form of a personal loan to or for any director or executive officer. Accordingly, appropriate actions should be taken to ensure these types of arrangements can be extinguished prior to the initial public offering. Apart from these regulations, SEC also focuses on the cheap stock based compensation. Cheap stock continues to be a focus area for the SEC. Generally, the SEC challenges the fair value of stock options granted in the period preceding the IPO, while a company is private, with the presumption that the exercise prices were below the market value of the stock at the time of the grant. The difference between the exercise price and the market value Roadmap for an IPO.A guide to going public 29 must be considered when computing stock-based compensation and the related expense should be amortized to income over the vesting periods of the options. Companies preparing for an IPO need to carefully review their „Option Pricing‟ history. Where option exercise prices are significantly less than the price of any other equity
  5. 5. 4 | P a g e instruments sold near the dates of option grants, there will be close scrutiny by the SEC, and the closer the grant dates are to the IPO, the more intense the review. 3. European Norms Financial Services Authority („FSA‟) acts as competent authority for listing, as competent authority for the purposes of the European Prospectus and Transparency Directives, and as competent authority for certain aspects of the Market Abuse Directive. These roles have a statutory basis in Part VI of the Financial Services and Markets Act 2000 („FSMA‟). Three sourcebooks in the FSA Handbook implement the relevant rules. These are:  Listing Rules – these rules include the eligibility requirements for admission to the Official List (or listing) and the continuing obligations that apply thereafter.  Prospectus Rules - these rules stem primarily from the enactment of the European Prospectus Directive and detail the circumstances when a prospectus is required and the disclosures a prospectus should include.  Disclosure and Transparency Rules („DTRs‟) - these rules govern the periodic and ad hoc disclosure of information by listed companies. Periodic information includes interim and annual accounts, and ad hoc disclosures, including major shareholding notifications and details of significant developments that might affect the price of the securities. Some subtle differences In India, the Initial Public Offerings (IPOs) coming to the market are compulsorily graded on a scale of 1 to 5 by regulation with 1 signifying poor fundamentals and 5 signifying very strong fundamentals. The rating agencies in India claim that the grade is not a recommendation on the “price” of the IPO or a buy, hold, sell recommendation. It is typically to find out whether this unique concept of grading has added any value to the issuers, investors and the regulators for book built IPOs. Norms in Europe in general have certain requirements regarding the „draft prospectus‟:  If the securities are offered to the public, a prospectus should be prepared with the listing sponsor (if Alternext) or banks (if Eurolist). In May 2005, Euronext launched Alternext, a new exchange-regulated market, tailor-made for mid- and small-cap companies, which offers them easier listing requirements while providing investors with an appropriate level of transparency.  In case of a direct listing on Alternext after a private placement, an „offering circular‟ (i.e., prospectus not approved by the regulator) should be produced, which is prepared under the responsibility of the company and its listing sponsor. UK IPO markets in particular have an „Alternative Investment Market‟ which is regulated by the London Stock Exchange. In the US, a company deals directly with the regulatory authority (the SEC), supported by its legal counsel, auditors and other advisors during the IPO process.
  6. 6. 5 | P a g e B. The Due Diligence Process 1. Due Diligence in India The practice of undertaking a formal due diligence investigation is of comparatively recent origin in India relative to the US and Europe and was mainly imported as a process by foreign investors/their legal and financial advisors after the economic liberalization reforms of 1991. The SEBI mandates certain parties to undertake a due diligence, in the context of issuance of securities by a company. For instance:  The BRLMs are required to exercise due diligence and satisfy themselves about all the aspects of the issue. The BRLM is also required to call upon the issuer, its promoters or in case of an offer for sale, the selling shareholders, to fulfil their obligations as disclosed by them in the offer document.  The BRLM need to submit post-issue reports to the SEBI. The BRLM is also required to submit a due diligence certificate as per the format specified in Form G of Schedule VI, along with the final post-issue report.  The BRLM, while seeking in principle approval for listing of the eligible securities issued under the qualified institutions placement, is required to furnish to each stock exchange on which the same class of equity shares of the issuer are listed, a due diligence certificate stating that the eligible securities are being issued under qualified issuers placement. Before the opening of the issue, the BRLM is required to submit a Due diligence certificate along with the draft offer document to the SEBI.  SEBI has recently issued guidelines that IBs involved in IPOs are supposed to include the track records of their previous IPO performances in the IPO prospectus issued to the investors. Also they are supposed to maintain documents pertaining to the due diligence they have carried out to date. In US, SEC already had rules that required the IBs to produce the documents when demanded. 2. Due Diligence in the US During the due diligence phase, the company, its underwriters and their attorneys will focus on the registration statement. The registration statement is an important priority for the IBs. This phase require the company to thoroughly review its business and to substantiate all claims in the registration statement. Besides inspecting the registration statement, the underwriters and counsel for both parties will also question company officers and key employees. The due diligence team will also speak with third parties, such as customers, retailers and suppliers. In US, the due diligence is typically carried out in three broad legs:  Business Overview  Industry Overview/Market Opportunity  Products/Services  Customers  Suppliers  Growth Strategy and Projections
  7. 7. 6 | P a g e  Acquisitions/Ventures  Legal  Human Resources  At the Business Unit Level  Business Unit Strategy  Major Business Unit Review  Detailed Financial Review  Budgeting/Forecasting Process  Personnel  Customer Review 3. Due Diligence in Europe The Due Diligence in Europe specifically include  Review of material documents relating to the issuer and its group (usually the issuer will create a physical electronic data room for this purpose)  Actual text of the draft prospectus preparation of specialist reports, such as mineral experts or property valuation reports, or a report of financial reporting procedures.  Representations and warranties from the company and selling shareholders.  Delivery of comfort letters from the accountants.  Delivery of legal opinions from counsel Financial due diligence is geared toward confirming a company‟s historical financial results and understanding its operational and financial prospects. Legal due diligence is conducted by the solicitors and is the process of verifying a company‟s legal records, material contracts and litigation. C. PRICING METHODS FOLLOWED INDIA UNITED STATES EUROPE Jaypee Infratech Punjab & Sind Bank Tesla Motors LinkedIn Flybe Fresnillo Book- Building Fixed Price Book building Book building is the process of price discovery. That means there is no fixed price for the shares. Instead, the company issuing the shares comes up with a price band. The lowest price is referred to as the floor and the highest, the cap. Bids are then invited for the shares. Each investor states how many shares he wants and what he is willing to pay for those shares (depending on the price band). The actual price is then discovered based on these bids.
  8. 8. 7 | P a g e Fixed price issue Price at which the securities are offered and would be allotted is made known in advance to the investors. For the record, LinkedIn's IPO managers, Morgan Stanley and Bank of America (Merrill Lynch division), fixed its offer price at $45 per share to sell 7.84 million shares, raising $352.8 m for LinkedIn, and valuing the firm at $4.3 bn. UK fixed price offerings advertise the number of offer price and number of shares by prospectus 14 days prior to accepting applications from interested investors. Far from being the exception, such historic practices have more nearly been the rule in international primary equity markets. India United States Europe Book is built Directly Underwriter takes the shares onto his book first then allots shares to investors UK fixed price offerings advertise the number of offer price and number of shares by prospectus 14 days prior to accepting applications from interested investors. The fees charged by underwriters for the U.S IPOs are higher than Europe. The fees charged by European IPOs are lower than those in US. Book building is transparent Book building process is confidential Same as US Book has to be kept open for minimum of 5 days and this period can be increased if price band is revised Book can be opened and closed anytime Rigid price band Soft Price band- investors can bid at a price outside the band Only floor can be determined by BRLM cap is automatically set at 120% of floor Price band can be freely determined by the BRLM By contrast, in Germane IPOs the price range is typically set after book building has started, with the pricing typically occurring seven trading days later. The price range is frequently more than 2 Euros, but once set, IPOs never price above the maximum Institutional as well as Retail investors are invited to participate in the bidding process Only institutional investors are invited to participate in the bidding process. Same as US Retail investors have a choice of the nature of the bids – they can place either market bids or limit bids while Institutional investors can place either market, limit or step bids
  9. 9. 8 | P a g e institutional investors have to necessarily place limit orders Bids placed by institutional investors are binding Institutional investors place nonbinding bids that can be revoked without attracting any penalties. Indian IPO markets did not use the bookbuilding method until 1999. Book- building methods are now used in most large international equity offerings. It has been suggested that the decline of fixed price offerings is related to the fact both Asia and Europe have employed efforts to privatize the state owned firms and the fact that many of these firms were simply too large to sell in a single market. As a result privatization authorities and non-US investment banks were introduced to book-building methods when they engaged US investment banks to gain access to foreign capital. Unlike international markets, India has a large number of retail investors who actively participate in IPO‟s. Internationally, the most active investors are the Mutual Funds and Other Institutional Investors. So the entire issue is book built. But in India, 25 per cent of the issue has to be offered to the general public. Here there are two options to the company. According to the first option, 25 per cent of the issue has to be sold at a fixed price and 75 per cent is through Book Building. The other option is to split the 25 per cent on offer to the public (small investors) into a fixed price portion of 10 per cent and a reservation in the book built portion amounting to 15 per cent of the issue size. The rest of the book built portion is open to any investor. D. Issue Price and Supporting Valuation1 Company Offer Price/Share FCFE Valuation Price* Tesla Motors USD 14-16 USD 15.14 LinkedIn USD 45 USD 30.92 Jaypee Infratech Ltd. INR 102-117 INR 107.20 Punjab & Sind bank INR 113-120 INR 128.92 Fresnillo Plc. USD 10.87 USD 10.93 Flybe GBp 295 GBp 296.40 *FCFE Valuation for all the companies has been done in Excel Spreadsheet 1 See Annexures for details
  10. 10. 9 | P a g e E. Post IPO Performance 1. Tesla Motors Tesla IPO was "multiple times oversubscribed" at the retail and institutional levels, which suggests the deal could be priced at the high end of the planned $14-to-$16-a-share range. The company sold 13.3 million shares at US$17 each, enabling them to raise US$226 million. When the market closed Tesla's stock price was worth $23.89, up 40.53% from the $17.00 it opened at this morning. Tesla's strong performance stood out in a day where the American markets sunk across the board. The lists of investors in Tesla include Germany's Daimler, the Abu Dhabi government, Toyota and venture capitalists Elon Musk Steve Jurvetson. This has resulted in the good performance of TESLA Motors. The share price has been almost always above the issue price of 17 $. Analysts at Morgan Stanley released a 50-page report on the automaker's prospects and they have predicted that its share price will touch 70$. The folks at Morgan Stanley are already calling Tesla "America's Fourth Automaker" and predicting great things for the company, thanks to a soon-to-be-burgeoning market for electric vehicles and help from giant Toyota. 2. LINKEDIN LinkedIn was the first pure-play social networking site to go public and investors jumped on it. LinkedIn's IPO price was initially planned to be between $32 and $35, but the investment banks underwriting the deal (Morgan Stanley, Bank of America, JP Morgan) discovered such strong institutional demand during the road shows that the price was raised to $45. It turned out that the banks should have raised the IPO price much, much higher. When the stock began trading yesterday, it opened at $83, rose as high as $122.70 and closed at $94.25, up more than 109% on the day. Since 2001, LinkedIn‟s first-day IPO performance is the fifth-best ever: 0 5 10 15 20 25 30 35 40 SharePrice(US$) TESLA Motors Share Price Post-IPO Close
  11. 11. 10 | P a g e The share price of LinkedIn has never touched 60$. This tells that market values for LinkedIn were much higher than the 45$ which was quoted for IPO. Most people would probably call LinkedIn‟s IPO a huge success but when you think about it, LinkedIn‟s shareholders left a lot of money on the table. The corporation only received $45 per share. The real winners of the IPO were the institutional buyers who bought the stock at the IPO price of $45 and flipped it for $100. 3. Punjab & Sind Bank The IPO price band of Punjab & Sind Bank was fixed at Rs 113 to Rs 120. The initial public offering (IPO) of Punjab & Sind Bank has been subscribed 50.41 times. The issue got total bids of 2.01bn shares as against 40mn shares on offer, as per the data available with the National Stock Exchange. Thus the price was set at the upper end of the band at 120 for the IPO. 0 20 40 60 80 100 120 5/19/2011 6/19/2011 7/19/2011 8/19/2011 SharePrice(US$) LinkedIn Share Price Post-IPO Close 0 20 40 60 80 100 120 140 30/12/2010 11/01/11 20/01/2011 01/02/11 10/02/11 21/02/2011 04/03/11 15/03/2011 24/03/2011 04/04/11 15/04/2011 27/04/2011 06/05/11 17/05/2011 26/05/2011 06/06/11 15/06/2011 24/06/2011 05/07/11 14/07/2011 25/07/2011 03/08/11 12/08/11 24/08/2011 SharePrice(Rs) P&S Bank Share Price Post-IPO Close
  12. 12. 11 | P a g e Punjab & Sind Bank IPO finally subscribed 50.75 times on its closing day. Punjab & Sind Bank IPO was open on Dec 13, 2010 and closed on Dec 16, 2010 for subscription. Punjab & Sind Bank received bids for 2,02,98,86,650 shares as against issue size of 40,000,000 shares. The shares, which were allotted at Rs 120 through an Initial Public Offer, opened nearly 22 per cent up at Rs 146.10 on the Bombay Stock Exchange. As the trading session progressed, the scrip stabilized at around eight per cent gains over the allotment price, closing at 127.15. The performance of the IPO was good initially for a month and the price it was trading at was above the issue price of 120 till 24 Jan 2011. Since that day the prices have come down and even though they have regained each time it has gone low but the average price is around 102 and the stock is yet to touch the initial price of 120 since 24 Jan 2011. Oversubscription detail Qualified Institutional Buyers (QIBs): 49.80 Times Non Institutional Investors: 85.84 Times Retail Individual Investors (RIIs): 44.45 Times Employee: 1.61 Times Total: 50.75 Times 4. JAYPEE INFRATECH Jaypee Infratech Ltd IPO finally subscribed 1.24 times on its closing day. Jaypee Infratech Ltd IPO was open on Apr 29, 2010 and closed on May 04, 2010 for subscription. Jaypee Infratech Ltd received bids for 27,395,050 shares as against issue size of 221,764,705 shares. The stock went down more than 10 per cent to Rs 91, below its issue price of Rs 102. 50 60 70 80 90 100 110 120 5/21/2010 5/23/2010 5/25/2010 5/27/2010 5/29/2010 5/31/2010 6/2/2010 6/4/2010 6/6/2010 6/8/2010 6/10/2010 6/12/2010 6/14/2010 6/16/2010 6/18/2010 6/20/2010 6/22/2010 6/24/2010 6/26/2010 6/28/2010 SharePrice(Rs) Jaypee Infratech Share Price Post -IPO Close
  13. 13. 12 | P a g e Oversubscription detail Qualified Institutional Buyers (QIBs): 1.7710 Times Non Institutional Investors: 1.1544 Times Retail Individual Investors (RIIs): 0.6113 Times Shareholder Reservation: 0.1006 Times Total: 1.24 Times 5. FRESNILLO Shares in Fresnillo Ltd fell as much as 10 percent after the world's biggest silver producer raised 905 million pounds ($1.77 billion) in a London flotation that was priced at the bottom of the expected range. Analysts said the share fall reflected a recent retreat in precious metals prices and a lack of appetite for new issues after Czech coal miner New World Resources raised 1.1 billion pounds in its flotation on Tuesday. At 0915 GMT, shares in Mexico-focused Fresnillo were trading at 524 pence, down 3.8 percent from their offer price of 555 pence, but off an early low of 502 pence and giving a market value of about 3.8 billion pounds. Fresnillo plc (the 'Company') announces that, in connection with the initial public offering of ordinary shares in the Company (the 'Global Offer'), JPMorgan Cazenove Limited, as stabilising manager, has today exercised the over-allotment arrangements in respect of 1,554,464 ordinary shares in the Company (the 'Over-allotment Shares'). None of the £8.6 million proceeds arising from the exercise of the over-allotment arrangements will be received by the Company. Including the Over-allotment Shares, the total size of the Global Offer is £913.3 million (164,564,968 ordinary shares). Following the exercise of the over-allotment arrangements, Industrias Penoles S.A.B. de C.V. will own approximately 77.1 per cent of the Company's ordinary shares. 450 460 470 480 490 500 510 520 530 540 550 560 5/14/2008 5/16/2008 5/18/2008 5/20/2008 5/22/2008 5/24/2008 5/26/2008 5/28/2008 5/30/2008 6/1/2008 6/3/2008 6/5/2008 6/7/2008 6/9/2008 6/11/2008 6/13/2008 SharePrice(GBp) Fresnillo Share Price(GBp)Post -IPO Close
  14. 14. 13 | P a g e 6. FLYBE Flybe Group plc (the “Company”) announced that, in connection with its initial public offering of ordinary shares (the “Global Offer”), Merrill Lynch International, as stabilising manager, on 14 December 2010 exercised the over-allotment option in respect of 2,033,898 ordinary shares in the Company (the “Over-allotment Shares”). The Over-allotment Shares were issued at the offer price of 295 pence per Over-allotment Share (the “Offer Price”), raising additional gross proceeds for the Company of £6 million. Including the exercise of the over-allotment option, the total size of the Global Offer was £66 million (22,372,881 ordinary shares, in total representing approximately 30 per cent. of the 74,872,881 issued ordinary shares of the Company at Admission). F. Investment Banks and Their Roles and Responsibilities 1. TESLA MOTORS The Lead Managers for the IPO were Goldman Sachs, Morgan Stanley, JP Morgan and Deutsche Bank. Underwriters Number of Shares Goldman, Sachs & Co. 4,655,000 Morgan Stanley & Co. Incorporated 4,655,000 J.P. Morgan Securities Inc. 2,660,000 Deutsche Bank Securities Inc. 1,330,000 Total 13,300,000 295 300 305 310 315 320 325 330 335 340 345 12/14/2010 12/16/2010 12/18/2010 12/20/2010 12/22/2010 12/24/2010 12/26/2010 12/28/2010 12/30/2010 1/1/2011 1/3/2011 1/5/2011 1/7/2011 1/9/2011 1/11/2011 1/13/2011 1/15/2011 1/17/2011 1/19/2011 SharePrice(GBp) Flybe Group Share Price(GBp) Post-IPO Close
  15. 15. 14 | P a g e 2. LINKEDIN The IPO was underwritten by Morgan Stanley, Bank of America, Merrill Lynch, JP Morgan, ALLEN & COMPANY LLC and UBS INVESTMENT BANK. All the directors and executive officers and the holders of substantially all of the securities sign lock-up agreements under which they agree not to sell, transfer or dispose of, directly or indirectly, any shares of the common stock or any securities convertible into or exercisable or exchangeable for shares of the firm‟s common stock without the prior written consent of the lead manager, incorporated for a period of 180 days, subject to possible extension under certain circumstances, after the date of the S1 prospectus. These agreements are described below under “Underwriting.” The following table summarizes the specific roles of IBs in US: WEEK STAGES IN THE IPO CALENDAR 1 Conduct Organizational Meeting 2-5 Conduct Due Diligence Draft Registration Statement and Prospectus Continue to prepare issuer to become a public company 6-8 Finish drafting registration statement Select Financial printer File registration statement with the SEC 9-12 Assemble a syndicate Receive initial approval from the SEC on confidential review approximately two to three weeks after filing, and confidentially submit stock exchange listing application 13-18 Receive SEC approval of the registration statement Prepare, revise and print the preliminary prospectus Pre-marketing Road show Book-building 19-20 Pricing and finalizing offering size Prepare and print the final prospectus Allocation and closing Beyond the listing
  16. 16. 15 | P a g e 3. JAYPEE INFRATECH The Book Running lead managers for the IPO Were Morgan Stanley India Company Private Limited, DSP Merrill Lynch Limited, Axis Bank Limited, Enam Securities Private Limited, ICICI Securities Limited, IDFC – SSKI Limited, JM Financial Consultants Private Limited, Kotak Mahindra Capital Company Limited, SBI Capital Markets Limited. 4. PUNJAB AND SIND BANK The book running lead managers to the Issue, in this case were SBI Capital Market Limited, Enam Securities Private Limited and ICICI Securities Limited and LINK INTIME INDIA PRIVATE LIMITED. The following table summarizes the specific roles of IBs in India: S. No. Activity 1 Capital Structuring with relative components and formalities such as type of instruments. 2 Due diligence of the Bank‟s operations/management/business plans/legal etc. Drafting and design of Red Herring Prospectus including memorandum containing salient features of the Prospectus. The BRLMs shall ensure compliance with stipulated requirements and completion of prescribed formalities with the Stock Exchanges and SEBI. 3 Drafting and approval of all statutory advertisements and all publicity material. 4 Co-ordination for Issue Agreement and Underwriting Agreement 5 Appointment of Registrars, Financial Printers and Advertising Agencies. 8 Appointment of Bankers to the Issue and coordination for Escrow Agreement 9 Co-ordination with IPO Grading Agency 10 Co-ordination for Syndicate Agreement 11 Preparation of Road show presentation and FAQs 12 International Institutional Marketing strategy. 13 Domestic institutions/banks/mutual funds marketing strategy 14 Non-Institutional and Retail marketing of the Issue, which will cover, among other things,
  17. 17. 16 | P a g e * Formulating marketing strategies, preparation of publicity budget * Finalise Media and PR strategy * Finalising centers for holding conferences for press and brokers * Follow-up on distribution of publicity and Issuer material including form, prospectus and deciding on the quantum of the Issue material * Finalisation of bidding centres * Branch Training including identification of branches/centres, branch training material 15 Co-ordination with Stock Exchanges for Book Building Software, bidding terminals and mock trading. 16 Finalisation of Pricing, in consultation with the Bank 17 The post issue activities including management of escrow accounts, co- ordination of non-institutional allocation, intimation of allocation and dispatch of refunds to bidders. The post Offer activities for the Offer involve essential follow up steps, which include the finalisation of trading and dealing of instruments and demat of delivery of shares, with the various agencies connected with the work such as the registrar‟s to the Issue and Bankers to the Issue and the bank handling refund business. The merchant banker shall be responsible for ensuring that these agencies fulfil their functions and enable it to discharge this responsibility through suitable agreements with the Bank. 5. FRESNILLO JPMorgan Cazenove is acting as sole sponsor and financial adviser to Fresnillo and sole global co-ordinator, bookrunner and broker in relation to the Global Offer. Canaccord Adams Limited, Citigroup Global Markets U.K. Equity Limited, J.P. Morgan Securities Ltd. and UBS Limited are acting as co-lead managers 6. FLYBE Bank of America Merrill Lynch acted as Sponsor, Global Co-ordinator and Bookrunner, Investec acted as Joint Lead Manager and Execution Noble acted as Co-Lead Manager to the IPO. College Hill acted as PR advisers to the IPO.
  18. 18. 17 | P a g e The following table summarizes the specific roles of IBs in Europe: S.No Activities 1. Processes  Execution kick-off meeting  Weekly meeting/conference calls  Due diligence  Long form report  Preparation of audited numbers 2. Valuation and capital structure  Forecasts finalised  Working capital report  Valuation discussion  Capital structure discussions  Agree offer size 3. Documentation  Draft prospectus  Prospectus filed with UKLA  UKLA review prospectus  Publish pathfinder prospectus  Publish final prospectus  Preparation of placing agreement  Auditors‟ comfort letters 4. Marketing and roadshows  Week  PR process  Analysts prepare and deliver presentation  Research prepared and reviewed  Prepare and rehearse roadshow  Announce intention to float  Publish research  Pre-marketing  Price range set  Road show  Bookbuilding  Pricing/allocation  Settlement and closing  Stabilisation
  19. 19. 18 | P a g e G. ANNEXURES 1. LINKEDIN VALUATION Present --------------------------------------- ---------- --------- -------- ---------- --------- --------- Year 2010 2011 2012 2013 2014 2015 --------------------------------------- ---------- --------- -------- ---------- --------- --------- A. Net Revenues 243.10 386.24 613.65 974.97 1549.04 2461.11 B. Total OperatingCost&Expenses (203.97) (308.99) (490.92) (779.98) (1239.23) (1968.89) C. Other Income(Expense) (0.61) (0.61) (1.22) (1.83) (2.44) (3.05) D. EBDIT 38.52 76.64 121.51 193.16 307.37 489.17 E. Depreciation & Amortization 19.55 31.06 49.34 78.39 124.55 197.89 F. EBIT 18.97 45.58 72.17 114.77 182.81 291.28 G. NOPLAT 15.36 36.92 58.46 92.96 148.08 235.94 H. Property & Equipment 56.74 90.15 143.23 227.56 361.55 574.42 I. Depreciation & Amortization 19.55 31.06 49.34 78.39 124.55 197.89 J. Δ NWC (5.15) (5.15) (5.15) (5.15) (5.15) (5.15) K. CaPEX (31.01) (33.40) (53.08) (84.33) (133.99) (212.88) L. Free Cash Flows (1.25) 29.42 49.57 81.88 133.49 215.80 Continueing value 3441.81 Long-Term Growth Rate: 2015 Cash and Cash Equivalents 92.95 NOPAT 235.9 The value of equity 2551.09 2798.15 Invested Capital 574.4 Outstanding Shares 90.50 ROC 41.1% Value/Share($) 28.19 30.92 Net Reinvestment 20.1 Tax Rate 19.00% NOPAT 235.9 Growth Assumption( for the 1st 5 yrs) 58.88% Reinvestment Rate 8.5% Other Income(Expense) 0.25% Depreciation 34.45% Est. Terminal Growth Rate 3.51% Property & Equipment (% of Net Revenues) 23.34% Terminal Growth 3.51% WACC 10.00% LINKEDIN VALUATION FINANCIAL PROJECTIONS (values in million$ except no. of shares) Projected
  20. 20. 19 | P a g e 2. TESLA MOTORS RELATIVE VALUATION ------------------------------------ -------------- ------------ ------------- ----------- -------------- ------------ Year 2010 2011 2012 2013 2014 2015 ------------------------------------ -------------- ------------ ------------- ----------- -------------- ------------ Revenues 116697.50 145871.88 583487.50 1166975.00 2333950.00 3267530.00 YOY Growth % 0.25 0.25 3.00 1.00 1.00 0.40 Gross Margin % 0.10 0.15 0.20 0.20 0.25 0.35 Gross Profit 11669.75 21880.78 116697.50 233395.00 583487.50 1143635.50 R&D expense % 0.50 0.50 0.20 0.20 0.20 0.10 R&D expense 58348.75 72935.94 116697.50 233395.00 466790.00 326753.00 SG&A expense % 0.30 0.30 0.40 0.15 0.12 0.12 SG&A expense 35009.25 43761.56 233395.00 175046.25 280074.00 392103.60 EBIT (81688.25) (94816.72) (233395.00) (175046.25) (163376.50) 424778.90 NOPLAT (57181.78) (66371.70) (163376.50) (122532.38) (114363.55) 297345.23 Property and Equipment 24808.60 31606.16 40266.25 51299.20 65355.18 83262.50 Depreciation & Amortization 5296.02 6747.12 8595.84 10951.10 13951.70 17774.46 GCF (51885.76) (59624.58) (154780.66) (111581.28) (100411.85) 315119.69 CAPEX 105335.60 6797.56 8660.09 11032.95 14055.98 17907.32 Current Assets 171535.00 222995.50 289894.15 376862.40 489921.11 636897.45 Current Liabilities 73198.80 87838.56 105406.27 126487.53 151785.03 182142.04 NWC 98336.20 135156.94 184487.88 250374.87 338136.08 454755.41 Δ NWC 27385.20 36820.74 49330.94 65886.99 87761.21 116619.33 Free Cash Flows (184606.56) (103242.88) (212771.69) (188501.22) (202229.05) 180593.05 WACC 12.40% Terminal Growth Rate 4.00% Continuing Value 2235913.89 Enterprise Value 709241.70 Debt 6337.00 Cash & Cash EQ 106547.00 Equity Value 809451.70 No of shares 53454.00 Share price 15.14 Tax Rate 30.00% Shares already issued 4235400.00 TESLA MOTORS VALUATION FINANCIAL PROJECTIONS (values in thousand$ except no. of shares) A123 systems P/E -2.64 P/BV 1.45 TESLA Motors Earnings -31500000 No Of Shares 42354000 EPS -0.7437314 P 1.96345091(assuming P/E of A123 systems can be used for TESLA motors) Book Value 44179000 BV/Share 1.0430892 P 1.51247934(assuming P/BV of A123 systems can be used for TESLA motors)
  21. 21. 20 | P a g e 3. JAYPEE INFRATECH Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 1 2 3 4 5 6 7 8 Sales 0.00 554.54 640.65 832.85 1082.70 1407.51 1829.76 2378.69 3092.30 4019.98 5225.98 Expenses 3.59 238.68 48.55 83.28 108.27 140.75 182.98 237.87 309.23 402.00 522.60 Expenseas%ofSales 43.04% 7.58% EBIDTA -2.82 317.57 604.30 749.56 974.43 1266.76 1646.78 2140.82 2783.07 3617.99 4703.38 Depreciation 8.47 13.97 16.19 8.63 10.36 12.43 14.91 17.90 21.47 25.77 30.92 EBIT -11.29 303.60 588.11 740.93 964.07 1254.33 1631.87 2122.92 2761.59 3592.22 4672.46 InterestPaid 0.00 0.00 0.76 SecuredLoan 199.99 1867.54 5721.00 Tax 0% 12.049% 16.980% NOPAT -11.29 267.020 488.250 503.83 655.57 852.94 1109.67 1443.59 1877.88 2442.71 3177.27 NetWorkingCapital 131.79 541.29 2473.5 ChangeinWC(FCF) 409.50 438.17 468.84 501.66 536.77 574.34 614.55 657.57 703.60 752.85 CapitalExpenditure 620.14 887.08 975.79 1073.37 1180.70 1298.77 1428.65 1571.52 1728.67 1901.53TerminalValue FreeCashFlow -748.65 -820.81 -932.16 -909.10 -852.10 -748.53 -581.72 -329.73 36.21 553.81 16933.85 PresentValueofFCF 6371.39 -867.92 -788.12 -687.80 -562.57 -407.07 -214.83 21.97 312.81 9564.91 FCFF 6371.39 NetDebt 3938.03 FCFE(inCrores) INR2,433.36 TotalShareIssued(incrore) 22.70 SharePrice INR107.20 PROJECTEDHistorical
  22. 22. 21 | P a g e 4. PUNJAB AND SIND BANK --------------------------------------- ---------- ---------- --------- ---------------- --------- --------- Year 2010 2011 2012 2013 2014 2015 --------------------------------------- ---------- ---------- --------- ---------------- --------- --------- A. Net Revenues 43.26 57.34 76.00 100.73 133.51 176.95 B. Total OperatingCost&Expenses (34.61) (45.87) (60.80) (80.58) (106.81) (141.56) D. EBDIT 8.65 11.47 15.20 20.15 26.70 35.39 E. Depreciation & Amortization 0.06 0.50 0.66 0.83 1.02 1.23 F. EBIT 8.59 10.97 14.54 19.32 25.69 34.16 G. NOPLAT 5.76 7.35 9.74 12.94 17.21 22.89 I. Depreciation & Amortization 0.06 0.50 0.66 0.83 1.02 1.23 J. Δ NWC (5.82) (12.94) (15.20) (17.54) (19.76) (21.54) K. CaPEX (0.93) (1.10) (1.29) (1.51) (1.77) (2.08) L. Free Cash Flows (0.94) (6.19) (6.08) (5.28) (3.31) 0.50 A. Fixed Assets 5.39 6.32 7.42 8.71 10.22 11.99 14.07 B. Capital expenditure 0.93 1.10 1.29 1.51 1.77 2.08 C. Acc. depreciation 4.86 4.92 5.42 6.08 6.91 7.92 D. Net block 1.46 2.50 3.28 4.14 5.08 6.14 E. Depreciation 0.06 0.50 0.66 0.83 1.02 1.23 F. Current Assets 560.46 742.78 984.40 1304.63 1729.03 2291.48 G. Current Liabilities 502.91 672.29 898.72 1201.41 1606.04 2146.95 H. NWC 57.55 70.49 85.69 103.22 122.99 144.52 Cost of equity Cost of capital Long-TermGrowth Rate: 2015 Continueing value 10.94 NOPAT 22.9 Long Term Debt 14.70 Invested Capital 523.0 Cash and Cash Equivalents 47.55 ROC 4.3763% The value of equity 23.61 38.41 Outstanding Shares 0.18 Net Reinvestment 22.1 Value/Share 128.92 NOPAT 22.9 Reinvestment Rate 96.3% Tax Rate 33.00% Growth Assumption( for the 1st 5 yrs) 32.54% Est. Terminal Growth 4.22% Expenditure(% of net revenues) 80.00% Depreciation (% of Net Block) 20.00% Fixed Assets 17.34% Terminal Growth 4.20% WACC 8.96% PUNJAB AND SIND BANK VALUATION FINANCIAL PROJECTIONS (values in billion(Rs) except no. ofshares)
  23. 23. 22 | P a g e 5. FRESNILLO Plc 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1 2 3 4 5 6 7 8 Sales 417.072 555.39 647.94 777.53 933.03 1119.64 1343.57 1612.28 1934.74 2321.69 2786.02 Expense 283.82 358.61 430.31 529.28 651.02 800.75 984.92 1211.45 1490.09 1832.81 2254.36 EBITDA 199.24 325.00 269.87 314.07 365.52 425.39 495.07 576.16 670.54 780.37 908.20 Depreciation 34.5 41.41 49.87 59.84 71.81 86.18 103.41 124.09 148.91 178.69 214.43 EBIT 164.74 283.47 220.00 254.23 293.71 339.22 391.66 452.07 521.63 601.68 693.77 InterestPaid 14.89 15.70 SecuredLoan Tax 35.43 87.63 74.68 NOPAT 195.84 145.32 172.88 199.72 230.67 266.33 307.41 354.71 409.14 471.76 NetWorkingCapital 114.45 171.58 235.00 ChangeinWC 57.13 63.42 69.76 76.74 84.41 92.85 102.14 112.35 123.59 135.95 CapitalExpenditure 78.77 103.45 113.80 125.17 137.69 151.46 166.61 183.27 201.59 221.75TerminalValue FreeCashFlow 101.35 28.32 49.16 69.62 94.74 125.43 162.76 208.00 262.65 328.49 2007.17 PresentValue 905.68 40.62 47.54 53.45 58.47 62.70 66.21 69.08 71.39 436.22 FCFF NetDebt 0.00 FCFE 905.68 TotalShareIssued(inmillion) 82.89 SharePrice($) 10.93 FRESNILLOPLC ProjectedHistorical Yearended31December
  24. 24. 23 | P a g e 6. FLYBE Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Note:in₤'million 1 2 3 4 5 6 Sales 367.474£ 535.864£ 572.389£ 570.500£ 656.075£ 754.486£ 867.659£ 997.808£ 1,147.479£ 1,319.601£ Depreciation 11.585£ £ 16.226 £ 23.189 £ 29.000 32.770£ 37.030£ 41.844£ 47.284£ 53.431£ 60.377£ EBIT 13.881-£ £ 33.223 £ 7.906 £ 27.600 33.120£ 39.744£ 47.693£ 57.231£ 68.678£ 82.413£ EBITMargin 6% 1% 5% 5.05% 5.27% 5.50% 5.74% 5.99% 6.25% InterestPaid 3.461£ 8.772£ 9.591£ 3.200£ SecuredLoan 153.516£ 103.814£ 89.681£ 83.400£ Tax 22% 28% 30% 28% NOPAT 10.827-£ 23.921£ 5.534£ 19.872£ 21.528£ 25.834£ 31.000£ 37.200£ 44.640£ 53.569£ NetWorkingCapital £ 29.300 £ 24.000 £ 12.240 £ 8.900 ChangeinWC -£ 5.300-£ 11.760-£ 3.340-£ 3.607-£ 3.896-£ 4.207-£ 4.544-£ 4.908-£ 5.300-£ CapitalExpenditure 41.255£ 4.019-£ 11.928-£ 10.800£ 52.486£ 60.359£ 69.413£ 79.825£ 91.798£ 105.568£ TerminalValue FreeCashFlow 40.497-£ 49.466£ 52.411£ 41.412£ 5.419£ 6.401£ 7.639£ 9.204£ 11.180£ 13.677£ 135.09 PresentValueofFCF 97.708£ 4.790£ 5.002£ 5.277£ 5.620£ 6.035£ 6.526£ 64.46 FCFF 97.71£ NetDebt 37.30 FCFE(inmillions)) 60.41£ TotalShareIssued(inmillions) 20.380 SharePrice 2.964£ Historical PROJECTED
  25. 25. 24 | P a g e H. References  www.capitaline.com  http://www.sebi.gov.in/  www.sec.gov  www.nse-india.com  www.fresnillo.com  www.teslamotors.com  www.linkedin.com  www.flybe.com  www.jaypeeinfratech.com  www.londonstockexchange.com  www.psbindia.com  www.uk.finance.yahoo.com  www.in.finance.yahoo.com  www.bloomberg.com  www.uk.reuters.com  www.moneycontrol.com  www.bse-india.com  www.fsa.gov.uk

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