1. Public To Privates: A Growing Trend? Nikos Stathopoulos Partner, Apax Partners 16 th June 2004

2. Stock Market Investors Are Now Short- Term Investors  Financial markets have become very short-term under influence of mutual funds and hedge funds, which have short-term targets to meet.  Markets are much more volatile: - 1990-1997: Outlier* days varied between 1% and 7% p.a. - 2000-2003: Outlier days have averaged 35% p.a.  Role of a public company is now ‘To deliver short-term profits and the expectation of long-term profits’ *Outlier day = the NASDAQ 100 was up or down >3%

3. The Private Equity Industry Is Therefore Becoming The Long-Term Funder Of Large Corporations  When public companies miss their targets, share price falls in overreaction of volatile markets  Private equity firms are funded by long-term investors and are capable of stepping in, taking a long term view and returning the companies later to public markets  In addition to their traditional role of acquiring divisions of companies

4. What Is A “Public To Private” Transaction?  A private equity backed bid for a publicly listed company.  Backing management team of the target company (MBO) or introducing “Buy In” management.  Traditionally, Public to Private deals have been “friendly” and are recommended or supported by target’s major shareholders.  Common characteristics of Public to Private (PTP) candidates are: - A large cash position relative to market capitalisation - Limited equity research and attention - A need to restructure to achieve profitability

5. There are Several Drivers of Public To Private Deals  Target companies are often neglected by the market leading to a reduction in share price relative to their underlying value.  Valuation discounts are driven by: -Concentration of funds in the institutional fund management community -Increasing demand for investments in corporates with larger market capitalisation and greater liquidity -Shift of Investment Banks’ research away from smaller companies  Loss of research and trading coverage can increase volatility and reduce liquidity further.  Increasing regulation and disclosure requirements for public companies.  Dissatisfaction by management of small to mid-cap companies: -Lack of liquidity -Lack of flexibility -Lack of interest  Constant pressure for companies to demonstrate performance  Target company may need to undergo: -A fundamental reorganisation -A restructuring of its debt/equity financing away from limelight of public arena -Generate an exit route for major shareholders, when no other viable alternative exists ExternalInternal

6. But PTPs face Significant Challenges  Requirement for regular announcements during the transaction.  Amount of due diligence is often restricted.  Limited warranty comfort.  Considerable advisers’ fees incurred by the bidder before announcing the deal.  Time consuming.  Regulatory control.  Strict timetable.

7. Public To Private Buyouts In Europe By NumberBy Value (% Of Deals) UK represented ½ of the value of PTPs in Western Europe in 2003

8. Public To Private Buyouts/BuyIns in the UK In 2003, value of PTPs outweighed the money raised in IPOs for the first time in 3 years Source: CMBOR/Barclays Private Equity/Deloitte & Touche 2003 saw the highest level of PTPs since 2000

9. Industrial Distribution Of UK PTPs Deals By Value (2000-2003) Value £m

10. In 2003, PTPs Accounted For A Quarter Of Total Market Value Of Buyouts In The UK By VolumeBy Value (% Of Deals)

11. London Stock Market: A Source of Public to Private Buyouts YearMain Market AimTotal Exits Buy-Outs ( Number) Buy-Outs ( % Of Total) 1997 1998 1999 2000 2001 2002 2003 126 200 250 222 208 167 179 42 70 97 100 72 85 112 168 270 347 322 280 252 291 7 27 46 42 33 22 36 4 10 13 12 9 12 Source: CMBOR/London Stock Exchange

12. Athens Stock Exchange: A Source of PTPs too?  150 companies have a market cap below €30m.  110 companies have market cap below €20m.  30 companies have market cap below €10m.  Turnover of listed companies in Athens Stock Exchange ranges from €2m to €5bn. Market Cap (1) Number Of Companies €1 billion + €500-1,000m €250-500m €100-250m €50-100m €1-50m 17 11 17 50 55 198 _____ 348 (1) As of 10 June 2004

13. Looking Ahead  2003 was a record year partly due to unusual market conditions making PTPs affordable: -Low equity valuation -Low interest rates  Future is less certain: -Improving company valuations in Europe -Major stock markets recovering -Impact of currency markets (weak US Dollar) -Resistance from institutional fund managers to “cheap takeovers” -Requirement for “certain funds” in the EU -Funds unconditionally available to fund bid before announcing offer -Complication of PTPs Question is: Do the advantages of being a public company outweigh the disadvantages?