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London Stock Exchange - raising capital in the heart of worlds financial markets Tracey Pierce Director of Primary Markets June 2011.

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Presentation on theme: "London Stock Exchange - raising capital in the heart of worlds financial markets Tracey Pierce Director of Primary Markets June 2011."— Presentation transcript:

1 London Stock Exchange - raising capital in the heart of worlds financial markets Tracey Pierce Director of Primary Markets June 2011

2 2 London is the key global listing venue London Stock Exchange HKSE NYSE Euronext (US) NYSE Euronext (Europe) DBAG Total Market cap (1) (of which international) USD 6,826bn (USD 3,509bn) USD 2,724bn (USD 154bn) USD 14,024bn (USD 1,689bn) US 3,091bn USD 1,519 (USD 106bn) Number of listed companies (of which international) (1) 2,949 (601) 1,420 (16) 2,316 (523) 1,133 (152) 755 (74) Flagship IndexFTSE 100Hang Seng Index Dow Jones Industrial Euronext 100DAX International companies in the index YesNo Annual share turnover (1) USD 246trUSD 111trUSD 1,336trUSD 182trUSD 132tr % of share trading in intl companies listed* 14%0.52%11%0.38%4.32% Price / earnings ratio (2) 13.46x12.76x13.99x12.84x12.39x All information is as at 1 March 2011 (1) Source: World Federation of Exchanges, Individual websites, FactSet, Bloomberg and LSE (2) six month average; source: Bloomberg

3 3 We operate the largest and most liquid equities market in Europe Domestic market capitalisation of European exchanges as at 1 March 2011 Average daily traded value (ADTV) and number of trades in shares in 2010 (1) By number and mkt capitalisation of listed companies (2) by value of transacted shares Source: World Federation of Exchanges Close to 3,000 companies sharing an aggregate market cap of close to USD 7 trillion 600 international companies with aggregate market cap exceeding USD 3.5 trillion. Over 600 member firms operate on our platforms During 2010, an average of over USD 12bn worth of shares were traded daily on the LSEGs markets, more than any other exchange in Europe. LSE is the largest IPO market in Europe (1) LSEG is the most liquid secondary market in Europe (2)

4 4 Our global footprint Source: London Stock Exchange statistics. Based on country of operation We have companies from more than 110 different countries 60 + 40-59 20-39 1-19 Number of companies as at 1 March 2011

5 5 *by number of international companies listed (1) as at Feb 2011. Based on country of incorporation of the issuer, except HKSE and LSEG where country of primary business is applied. Euronext Brussels is not included. Source: FactSet, Bloomerg and LSE calculation Comparison of market capitalisation of international companies (1) London Stock Exchange is the most international exchange* LSE is a global leader in listing international companies. This enables listed issuer to compare themselves against their peers. It also creates dedicated investor community

6 6 Source: relevant exchange websites and Bloomberg. DB figures do not include Open Market London Stock Exchange leads the way in international listings NORTH AMERICAEMEARUSSIA AND CIS SOUTH AMERICA ASIA Total number of international companies admitted to trading as at 1 March 2011 INDIA

7 7 London Stock Exchange is a global leader in IPOs Source: World Federation of Exchanges Financial crisis Number of IPOs Post crisis LSE continues to lead in IPOs

8 8 LSEG is the leader in attracting companies from a wide range of sectors Comparison of market capitalisation of international companies issuers, by sector* * as at Feb 2011. Based on country of incorporation of the issuer, except HKSE and LSEG where country of primary business is applied. Euronext Brussels is not included. Source: Factset, Bloomerg and LSE calculation LSE maintains the global benchmark peer group in Oil and Gas Mining Retail Health care Telecommunications It is also leading the way in almost all other sectors.

9 9 London is a global hub for international investors USD million Assets managed in the UK and globally from London – ten largest investment firms Source: Investment Management Association: Asset Management in the UK 2009-2010 All major global investors sit in London and are able to access the London Stock Exchange listed stocks 0 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 +1 +2 +3 +4 +5 +6 +7 +8 +9 +10 +11 …sitting in a time zone which can trade with the world London trading hours

10 10 USD(bn) We provide access to the worlds largest pool of international equity assets* *Based on international equity AUM in key financial centres. (1) Data for NYSE Euronext |(US) and DBAG currently unavailable Source: Ipreo, March 2011 International equity assets under management in key financial centres Equity assets under management held by foreign investors (1) London has the largest pool of investors dedicated to international companies and also serves as a hub attracting more foreign investors compared to any other financial centre

11 11 Listing on London Stock Exchange provides for a truly international shareholder register Investor registers by country (May 2011) Pie charts show market value of each holding Source: FactSet

12 12 Money raised by CIS companies In 2005, LSE established itself as a venue of choice for Russian IPOs In 2009, London became a hub for Russian SPO deals providing much needed growth capital for listed companies Overall market conditions are improving – average and median money raised by CIS companies in 2011(YTD) are comparable to 2006 &2007 when the market was booming 20042005200620072008200920102011(YTD) No. of CIS IPOs (MM)1913196144 No. of CIS SPOs (MM)-----231 Average raised (mn$)178.0657.91503.71,286.4285.1188.5440.41,038.3 Median raised (mn$)178.0638.8748.0800.0334.5101.0400.0575.0 Source: www.RussianIpo.com, Bloomberg

13 13 London Stock Exchange is a leader in trading emerging market securities Source: Bloomberg, March 2011 Average Daily Value traded (6m) as a percentage of free float market cap - for emerging market securities trading on IOB On the London Stock Exchange, issuers from emerging markets enjoy comparable liquidity with the worlds most liquid securities. Allocation of a security on IOB or SETS does not affect its liquidity Average Daily Value traded (6m) as a percentage of free float market cap - for emerging market securities trading on SETS Average Daily Value traded (6m) as a percentage of free float market cap - for top FTSE 100 constitutes

14 14 Companies from CIS enjoy high levels of liquidity Source: www.RussianIPO.com

15 15 Q1 2011 Value Traded Rankings: 1IOBGazprom DR 2FTSERio Tinto 3FTSEHSBC 4 FTSE BHP Billiton 5 FTSE Vodafone 6FTSEBP 7 IOB Lukoil DR 8 FTSE Xstrata 9 FTSE Anglo American 10 FTSE GlaxoSmithKline 11 FTSE BG 12 FTSE Barclays 13 FTSE Standard Chartered 14 FTSE RDS B 15 FTSE BATS 16IOB MMCNorilsk DR 17IOB Rosneft DR 18 FTSE AstraZeneca 19 FTSE Tesco 20 FTSE Lloyds ……… IOB securities are leading LSEs secondary markets Source: UBS Investment Bank IOB is LSEs fully dedicated depositary receipt electronic trading platform Powered with LSEs MIT trading technology infrastructure Clearing, netting and settlement services which enhances liquidity New product development such as FTSE Russia IOB index and individual GDR option contracts, help to drive liquidity In 2011(YTD), total value traded on IOB was more than US$180 bn and accounted for around 16% of total order book value traded on LSE

16 16 Average analysts per company, by sector Source: Bloomberg. Data includes only companies on the main boards of each exchange Average analysts per company Analysts raise profile for the listed companies which they cover Analytical reports deepen issuers liquidity potential London listing provides for the largest analyst exposure compared to any other centre London Stock Exchange listing gives companies global visibility

17 17 London Stock Exchange traded companies from emerging markets outperform peers listed elsewhere LSE Emerging index represents the performance of emerging stocks on the London Stock Exchange weighted by market cap. Source: LSE calculation and Bloomberg. All indices rebased as at 1/01/2005. Return on investment in LSE listed emerging markets companies is higher than compared to on other markets. It highlights: The growth story and quality of LSE issuers That issuers listed in London gain additional investors which they would not normally attract in their home market. Index performance

18 18 London Stock Exchange offers choice of markets Main Market EU Regulated markets Exchange Regulated markets AIM Professional Securities Market Specialist Fund Market Securities admitted to official list (maintained by UKLA) Securities not admitted to official list (maintained by UKLA) The choice of market will depend on a number of factors including: Stage in companys development Complexity of the offer and securities issued Targeted investors Size of the company Company's strategy and objectives From small to large

19 19 Glencore chose London for its premium listing and HK for its secondary listing Glencore relied on London for core of its international offering, resulting in liquidity concentrating in London Source: Fidessa Comparison of average weekly trading turnover for GLENCORE International Offer / listed in London UK investors Cornerstone investors EU investors Hong Kong investors Qualifying investors (in accordance with 144A and other exemptions from the US laws) International Offer / listed in London UK investors Cornerstone investors EU investors Hong Kong investors Qualifying investors (in accordance with 144A and other exemptions from the US laws) HK offer / listed in Hong Kong Public and professional investors in Hong Kong HK offer / listed in Hong Kong Public and professional investors in Hong Kong Source: Glencore IPO prospectus May 2011 USDm Glencore cornerstone investors

20 20 Case Study: Glencore International PLC Company Profile Glencore PLC is a leading integrated producer and marketer of commodities, with worldwide activities in the marketing of metals and minerals, energy products and agricultural products and the production, refinement, processing, storage and transport of these products. Headquartered in Switzerland, Glencore operates globally, leveraging on its expertise and relationships with a broad supplier and customer base from diverse industries and geographic regions. Listing story Glencore joined the Main Market of the London Stock Exchange in May 2011 and was also admitted to the FTSE 100 – the first company in 25 years to be launched straight into the FTSE 100 at IPO. Following a successful book-building that was 6 times oversubscribed, Glencore raised USD 7bn. After listing According to its prospectus, Glencore intends to apply the proceeds from the global offer towards: acquisitions of additional stakes in strategic partners; capital expenditure in some of its existing projects; reducing the cost of borrowing and improving financial flexibility. The listing is particularly prudent as the current structure enables the company to draw- down on more funds from investors through either new or existing facilities. The biggest IPO in 2011 YTD raising over USD 10bn Source: publicly available information. Please refer to the end of the presentation for legal disclaimer Main Market – Premium Equity Commercial Company Admission Date: Country of incorporation: Main country of operation: Money Raised at Admission: TIDM: IPO advisers: 19 May 2011 Jersey Global USD 10 bn GLEN CITI, Credit Suisse, Morgan Stanley Index: Website: FTSE 100 http://www.glencore.com Share price Market Cap at IPO: USD 56.3bn Market Cap as at 1/06: USD 57.4bn

21 21 Case Study: Exillon Energy PLC Main Market – Premium listing Admission Date: Country of incorporation: Main country of operation: Money Raised at Admission: TIDM: IPO advisers: 17 Dec 2009 UK Russia US$101mln EXI ING Bank, BAML, Mirabaud Securities Index: Website: FTSE 250 www.exillonenergy.com Company Profile Exillon Energy is a Russia-focused oil producer with upstream operations located in two oil rich regions of northern Russia, Timan-Pechora and West Siberia. The company has a high quality reserve base and has a proven track record in discovering and producing high quality crude oil. Listing story Exillon Energy was the first Russian company to IPO since the crisis struck in 2008. The vast majority of the IPO was bought by London based investors specialising in Oil & Gas. The company raised just over US$100mln in a purely primary offering. The IPO represented just under a third of Exillon's share capital and valued the group at US$313 million. After listing The company used the proceeds to finance new projects and repay debt. After its successful IPO in 2009, the company came back to the market on two occasions raising a further US$34mln in 2010 and US$150mln in 2011. Share price Market Cap at IPO: USD 313 mln Market Cap Today: USD 1,164 mln The first London IPO from Russia after the financial crisis struck in 2008

22 22 Case Study: VTB Bank Company Profile VTB is a leading Russian bank with strong international presence. VTB Group operates international network of affiliates and subsidiaries with over 20 banks and financial companies in 19 countries worldwide. VTB offers its services in several regions including the CIS, Europe, Asia, and Africa. In the Russian market, VTB Group is highly ranked based on all major banking indicators. Listing story In 2007, VTB Bank raised a total of USD 7.9bn via GDR offering in London and share offering on MICEX and RTS. The deal was eight times oversubscribed and resulted in a 22.5% free float. It was the largest global IPO by a banking institution in 2007. VTB Bank became the first Russian bank to offer Global Depositary Receipts (GDR) on the London Stock Exchange (LSE). In February 2011, VTB Bank completed a secondary share offering rising further USD 3.3bn on LSE. After listing VTB Bank has used the proceeds to develop and expand its retail, corporate and investment banking operations in Russia and CIS. It delivered a strong top-line performance in the consecutive years and established high quality portfolio of retail and corporate loans. VTB is one of the most liquid securities on the International Order Book and is a part of the FTSE Russia IOB index. The largest global IPO by a banking institution in 2007 Source: www.RussianIpo.com and publicly available information. Please refer to the end of the presentation for legal disclaimer Market Cap: USD 35bn Main Market – Standard Listing, Depositary Receipts Admission Date: Country of incorporation: Main country of operation: Money Raised at Admission: TIDM: IPO advisers: 17 May 2007 Russia $7,9bn VTBR Citigroup, Deutsche Bank, Goldman Sachs, RenCap, Index: Website: FTSE Russia IOB www.vtb.com Share price

23 23 Case Study: Petro Matad Company Profile Petro Matad is the parent company of a group focused on oil exploration, as well as future development and production in Mongolia. The Groups principal asset is the Production Sharing Contract (PSC) over Matad Block XX, a petroleum block with an area of 14,250km2 in the far eastern part of Mongolia, near the Chinese border. Recently the company signed two more Production Sharing Contracts on Bogd Block IV and Ongi Block V, a total of approximately 71,000km² in central Mongolia. Listing story Petro Matad is the first substantially Mongolian owned company to have its shares admitted to trading on a major international stock exchange. Since its Introduction to AIM, Perto Matad has successfully came back to the market multiple times and raised a total of US$67.4mln in further issues. Its Market capitalisation increased more than 15 times since its admission to AIM in 2008. The first Mongolian company to join a major international stock exchange 1 Source: publicly available information. Please refer to the end of the presentation for legal disclaimer AIM market – Introduction Admission Date: Country of incorporation: Main country of operation: Avg. Daily Trading Value (6m) Further Money Raised Free-float TIDM: IPO advisers: 1 May 2008 UK Mongolia $1.6mln US$67.4mln 61% MATD Hanson Westhouse, PKF, Norton Rose Index: Website: FTSE AIM 100 www.petromatad.com Share price Market Cap at IPO: $36.0mln Market Cap as at 05/2011: $540.1mln 1 - first substantially Mongolian owned company

24 24 Please refer to the end of the presentation for legal disclaimer Share price The London Stock Exchange is the most international exchange in the world, with close to 600 international companies from over 110 countries, listed and traded on its markets. The London Stock Exchange offers a wide choice of routes to market. The choice of markets is open equally to UK and international companies, and differentiated trading platforms offer tailored solutions to maximise liquidity and investor participation. We provide cost-efficient access to the worlds largest pool of international equity assets. Over USD 1.85 trillion of equities are managed out of London, with USD 1.26 trillion invested in international equity assets, more than any other major financial centre. With close to 3,000 companies quoted on its markets and over 500 member firms, the London Stock Exchange Group operates one of the most liquid equity marketplaces globally. Conclusions

25 25 Disclaimer This document has been compiled by the London Stock Exchange plc (the Exchange). The Exchange has attempted to ensure that the information in this document is accurate, however the information is provided AS IS and on an AS AVAILABLE basis and may not be accurate or up to date. The Exchange does not guarantee the accuracy, timeliness, completeness, performance or fitness for a particular purpose of the document or any of the information in it. The Exchange is not responsible for any third party content which is set out in this document. No responsibility is accepted by or on behalf of the Exchange for any errors, omissions, or inaccurate information in the document. No action should be taken or omitted to be taken in reliance upon information in this document. The Exchange accepts no liability for the results of any action taken on the basis of the information in this document. All implied warranties, including but not limited to the implied warranties of satisfactory quality, fitness for a particular purpose, non- infringement, compatibility, security and accuracy are excluded by the Exchange to the extent that they may be excluded as a matter of law. Further, the Exchange does not warrant that the document is error free or that any defects will be corrected. To the extent permitted by applicable law, the Exchange expressly disclaims all liability howsoever arising whether in contract, tort (or deceit) or otherwise (including, but not limited to, liability for any negligent act or omissions) to any person in respect of any claims or losses of any nature, arising directly or indirectly from: (i) anything done or the consequences of anything done or omitted to be done wholly or partly in reliance upon the whole or any part of the contents of this document; and (ii) the use of any data or materials in this document. Information in this document is not offered as advice on any particular matter and must not be treated as a substitute for specific advice. In particular information in the document does not constitute professional, financial or investment advice and must not be used as a basis for making investment decisions and is in no way intended, directly or indirectly, as an attempt to market or sell any type of financial instrument. Advice from a suitably qualified professional should always be sought in relation to any particular matter or circumstances. The contents of this document do not constitute an invitation to invest in shares of the Exchange, or constitute or form a part of any offer for the sale or subscription of, or any invitation to offer to buy or subscribe for, any securities or other financial instruments, nor should it or any part of it form the basis of, or be relied upon in any connection with any contract or commitment whatsoever. London Stock Exchange and the London Stock Exchange coat of arms device are registered trade marks of London Stock Exchange plc. Other logos, organisations and company names referred to may be the trade marks of their respective owners. © May 2011 London Stock Exchange plc 10 Paternoster Square London EC4M 7LS Telephone +44 (0)20 7797 1000 www.londonstockexchange.com


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