Youth Involvement in an Innovative Coconut Value Chain by Mwalimu Menza
2012, PRESENTATION, Global capital markets where does your equity story fit, Tim Goldsmith
1. Global Capital Markets – where
does your equity story fit?
Mines and Money, Hong Kong
March 2012
www.pwc.com/mining
2. PwC
Presenter
2
Partner, PwC Australia
Global Mining Leader
PwC Australia China Practice Leader
Tim Goldsmith
E mail: tim.goldsmith@au.pwc.com
Tel.: +61 (3) 8603 2016
Mob.: +61 (0) 419 201 877
3. PwC
PwC Global Mining Network
3
We are a network of firms in 158 countries with close
to 169,000 people who are committed to delivering
quality in assurance, tax and advisory services
168,710
1,500
PwC has in excess of 1,500 mining professionals
across the globe located in all significant
mining territories
We have been providing
professional services to
mining companies for over
100 years.
We audit:
• 25% of Top 40 global mining
companies
• 37% of the FTSE 100
• 32% of ASX listed
mining companies
• 24% of the TSX listed mining
companies
4. PwC
Our selected mining deal credentials
IPO on the Official List
of the LSE
£581m
pwc
March 2010
Reporting Accountant
IPO on the Official List
of the LSE
$3,042m
pwc
December 2007
Reporting Accountant
IPO on AIM
$60m
pwc
September 2010
Reporting Accountant
IPO on the Official List
of the LSE
£707m
pwc
July 2010
Reporting Accountant
I
IPO on the Official List
of the LSE
$185m
December 2007
pwc
Reporting Accountant
IPO on the Warsaw
Stock Exchange
$1,960m
pwc
July 2011
Reporting Accountant
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IPO on AIM and TSX
$100m
pwc
February 2007
Reporting Accountant
IPO on TSX
$280m
Reporting Accountant
pwc
December 2010
$3bn acquisitions and
listing on the Official
List of the LSE
Introduction only
pwc
Feb/Jun 2011
Reporting Accountant
IPO on the Main Board
of the HKEx
$1,900m
December 2006
Reporting Accountant
pwc
First listing of Hong
Kong Depository
Receipts on HKEx
Introduction only
December 2010
pwc
Reporting Accountant
pwc
5. PwC
IPO volumes are expected to restart growing in 2012
... despite continuing volatility and a disappointing H2 2011
• China and HK the largest contributors to overall IPO volumes
• 51% of all IPO proceeds raised in Asia in 2011 – although
significantly less than 65% in 2010
• EMEA volumes almost matching Americas’ – boosted by ‘jumbo’
IPO of Glencore and Spanish banks’ floats
• Recovery in the US market, with a number of successful PE exits
and technology floats
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Source: Thomson ONE
6. PwC 6
Over 250 IPOs cancelled or postponed globally in 2011
Recent deals have been vulnerable to market volatility and changes
in investor risk appetite – although pipeline is the strongest since
GFC
Source: Yahoo Finance
Eye of the storm and impact
of the financial crisis
Eurozon
e
financial
crisis
Sovereign
debt crisis
7. PwC
Some of mining stories of 2011
Conditions remained difficult, but good stories still sold
Company Market
Country of
ops
Amount
raised
Comments
Glencore International PLC LSE, HKEx Swiss/Int’l $9.8bn
London and HK listing of the largest commodities trader in
May 2011, merger with Xstrata in progress
Resourcehouse Ltd HKEx Australia Cancelled
Major Australian iron ore and coal group pulled $3.6bn PO
after a number of attempts to attract Chinese investors
Evraz LSE Russia
Introduction
only
Russian steelmaker moved up from GDRs to premium
listing and entered FTSE 100
Erdenes Tavan Tolgoi LSE, HKEx Mongolia Postponed
One of the largest coal deposits in the world, initially
expected to list on LSE, HKEx and MSE
JSW SA WSE Poland $1.9bn
One of the largest IPOs in Europe in 2011, privatisation of
largest coking coal producer in Europe
Vallar plc / Bumi plc LSE EM/Indonesia $1.1bn
July 2010 IPO of a SPAC raising $1.1bn, followed by $3.3bn
acquisition of Indonesian coal interests completed in Feb
2011, with premium listing on the LSE in June 2011
PhosAgro LSE Russia $0.7bn
Russian potash producer floating in London in July 2011 at
lower valuation
Polymetal LSE Russia $0.8bn
Russian gold miner moved up from GDRs to premium
listing and entered FTSE 100
Nord Gold LSE Russia Postponed
Gold-mining unit of Severstal withdrew $0.7bn listing due
to market conditions
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Source: Thomson ONE
8. PwC
Continuing
popularity of gold
and coal
Increasing competition
between key financial
centres
Increased activity
from PE funds, SWFs
and SOEs
Secondary and dual listings
in HK, success mixed
Resource nationalism
driving listing decisions
Current trends and outlook
Mining sector remains one of the hottest for IPO activity in 2012
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Cross-border listings
of emerging market
miners
Governments seeking
to raise funds via
privatisations
Spin-offs and
demergers to
continue
9. PwC
Longer term global shift in capital markets
Emerging markets could account for over half the global market
capitalisation in 20 years
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2030: Global market cap composition
• Over the next 20 years, the market
capitalisation of companies listed on
stock exchanges in emerging
markets is expected to rise from
31% to 55% of the total global
market cap.
• This shift will be driven by higher
GDP growth and deeper capital
capacity in those markets.
• The market capitalisation of Chinese
companies is expected to outstrip
the US by 2030 and reach $41.4
trillion.
Source: Goldman Sachs ; Global economics paper No: 204
10. PwC
Shift in power base of the mining industry
• Composition of Top 40 miners also shifting to emerging markets
• Additional new players on the horizon (e.g. traders, new emerging market IPOs)
Source : PwC Analysis
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11. PwC
What is your equity story – and who will buy it?
Development
Early production
Maximising value of
asset portfolio
Commodity
synergies
Proximity to
emerging market
customers
Positive commodity
prices outlook
Well thought
through capex
plans
Good access to
transportation
routes
Efficient cost
management
Understanding
stage of
development
Competition and
market share
Quality of resource
base
Market position of
assets
Off-take
agreements
Credibility of
management
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Established production
Exploration
13. PwC
How does your equity story influence your choice of
market?
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Regulation and process Ease of further fundraising
Market
Domestic
Regional
International
Global
Regulated/
Unregulated
Single/primary or
Dual/secondary
listings
Valuation
Ongoing obligations
Corporate governanceLikely investor base
Geographic proximity
Market size and liquidity
14. PwC
Evolution of the mining industry capital markets
Increasing choice for issuers and strong competition amongst
exchanges
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15. PwC
At 31 December 2011 London Australia Toronto Hong Kong
Main
Market
AIM ASX TSX TSXV
Main
Board
Total number of issuers 1,376 1,143 2,079 1,588 2,249 1,326
Total market cap, US$ bn 5,584 101 1,198 1,967 48 2,247
Number of international cos 312 225 96 194 158 24
No. of mining issuers listed 44 136 687 371 1,274 69
Mining market cap, US$ bn 405 20 308 391 28 243
Average market cap, US$ m 9,205 147 448 1,054 22 3,522
New mining IPOs in 2011 3 9 49 6 42 7
Proceeds of mining IPOs in
2011, US$ m
10,907 67 471 202 145 2,124
Average raise 3,636 7 10 34 3 303
Total mining equity raised in
2011, US$m
10,972 378 7,273 4,813 1,007 3,419
Comparison of stock exchanges
Converted at:USD:AUD of 1.02, USD:CAD of 0.98, USD:GBP of 1.55, HKD:USD of 7.76
sources: World Federation of Exchanges, stock exchanges, ThomsonOne data, PwC research
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16. PwC
Which market – which investors will buy your story?
LSE
• Significant liquidity and
appetite for resource
companies
• Leading exchange for
inbound listings
• Global diversified miners
account for c.30% of
market value of sector
• Well developed market
infrastructure including
large number of mining
analysts and investors
• High concentration of
small cap companies
• Investors have
significant experience
with international
exploration &
development assets
• Proximity to US capital
• Fewer large scale IPOs
• Flexible listing regime
• Lower trading volumes
than other global
exchanges
ASX TSX HK
• High concentration of
mid/small cap companies
• Investors have significant
experience with
international exploration
& development assets
• Rio Tinto and BHP
Billiton account for over
2/3 of mining sector value
• Limited large scale IPOs
in resources
• Fewer number of resource
companies, large Chinese
SOEs
• Investors less familiar with
international miners
although increasing
interest
• Lack of understanding of
exploration assets,
companies with only
inferred resources not
eligible to list
• Complex regulatory process
• Limited analyst coverage
• Higher proportion of retail
investors
• Largest listing venue for
copper companies by
market value, strong
presence of precious
metals
• Most international venue,
particularly well
represented Russia / CIS
and Africa
• Most diversified listing
venue with balanced mix
across all commodities
• Largest listing venue for
iron ore by market cap
• Predominantly projects in
Australia, SE Asia and
increasingly Africa
• High concentration of
precious metal
companies especially
gold
• Uranium and potash
miners well represented
• International companies
mainly from US and
Australasia
• Largest listing venue for
coal companies by market
value
• Proximity to Chinese base
is an advantage
16
17. PwC
Dual and secondary listings – is it worth it?
It takes time to create liquidity in a new market and may not work
for all
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South GobiGlencore Rusal
BHP Billiton Rio Tinto Kazakhmys
Source: Factiva. Average trading volume for last 12m or shorter period if newly listed
18. PwC
Which market – considerations to help your decision
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Likely investor base
Management track record
Commodity fit, degree of diversification
Size and stage of development of assets,
extent of capital required
Quality and risks of assets
Geographic proximity
Location of management
Location of mines
Proximity to emerging market
customers, especially China
Market
Market capitalisation and liquidity
Number of listing location peers
Total money raised from resource IPOs
Presence of mining analysts
Regulation and process
Admission criteria, including CPR
requirements
Ongoing obligations
Speed and cost
Index inclusion
Where to list a
mining company?
19. Key decisions on the road to an IPO
Strategy and equity story, which
businesses/assets to float
Tax and legal structuring,
holding company location
Choice of market and timing
People and resources,
key management
Appointment of advisors, esp
Mineral Expert
Financial reporting and track
record audit requirements
Management information
systems
Transparency and corporate
governance
Board composition
Start of
preparation
IPO launch
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20. PwC
Have you got your equity
story right? Are you clear
about your strategy?
Summary
Are you ready? Have
you got an up to date
Competent Person’s
Report?
Have you decided which
market best suits you?
PwC
Services:
IPO
Readiness
Which
Market?
Governance
and controls
Reporting
Accountant
Tax
structuring
Pipeline remains strong
with fundamental demand
and supply drivers in place
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