03.09.2014 opportunities for mongolian companies to raise capital in japan, mr. hidetoshi nagata

© 2014 Japan Exchange Group, Inc. and/or its affiliates. All rights reserved.

Opportunities for Mongolian Companies

to Raise Capital in Japan September 3, 2014

New Listings, Tokyo Stock Exchange, Inc.

© 2014 Japan Exchange Group, Inc. and/or its affiliates. All rights reserved. 1

2. Expansion of IPO Market in Japan

5. Listing on Tokyo Stock Exchange

4. Comparison among Major Stock Markets

1. Japan-Mongolia Relations

3. TOKYO PRO-BOND Market

2 © 2014 Japan Exchange Group, Inc. and/or its affiliates. All rights reserved.

Mongolia-Japan Economic Partnership Agreement Reached its Fundamental Consensus on July 22, 2014 On July 22, 2014, H.E. Mr. Tsakhiagiin Elbegdorj, President of Mongolia held a summit meeting with Mr. Shinzo Abe, Prime Minister of Japan.

Both sides expressed satisfaction that an agreement in principle had been reached in the negotiations of the Japan-Mongolia Economic Partnership Agreement (EPA). This is the first time that Mongolia reached a broad agreement on EPA with any nations.

Tariffs on used cars imported from Japan will be gradually abolished over the course of 10 years. Japan will gradually abolish tariffs on almost all items imported from Mongolia in the next 10 years. They shared the view that strengthening cooperation in economic areas will be important for further enhancing the “strategic partnership,” and expressed their resolve to continue to deepen reciprocal and mutually complementary relations going forward. Source： Ministry of Foreign Affairs of Japan


Japan-Mongolia Relations

Recent Political Ties 2010:Building a Strategic Partnership 2012: New level of expanded commercial

relations 2013: Developing a Strategic Partnarship

– Prime Minister Abe’s visit to Mongolia in March 2013. The two countries shared the intention to enhance mutual relations based on the following three pillars.

– Prime Minister Altankhuyag’s visit to Japan in September 2013. The two countries issued “Joint Statement” and “Mid-term Action Plan”, which would become a basis for the two countries to elevate their “strategic partnership” to even higher levels and further strengthen their mutually beneficial and complementary relationship.

Japan-Mongolia trade: US$ 311 million – Mongolia to Japan: US$ 18 million – Japan to Mongolia: US$ 293 million

Coal , 53.0%, 53%

Mineral Products (Fluorite,

etc.), 25.0%, 25%

General Machinery, 4.5%, 5%

Other, 2.0%, 2%

Textile & Clothing (Cashmere, etc.)

, 15.4%, 15%

Mongolia to Japan: US$ 18 million

Source： Ministry of Foreign Affairs of Japan


Development Bank of Mongolia Issued Samurai Bonds of JPY 30 billion Guaranteed by JBIC

JBIC provided this guarantee under the Guarantee and Acquisition toward Tokyo market Enhancement (GATE) facility as the result of exchanging views and information with DBM based on the Mid-term Action Plan agreed on between the top leaders of both countries in Sep. 2013. This was the first JBIC guarantee for issue of Samurai bonds by a Mongolian institution. By supporting the launching of Samurai bonds issued by DBM, JBIC helped diversify funding sources for DBM and the Government of Mongolia. This guarantee provision was expected to strengthen bilateral relations and contribute to more vigorous Japanese business activities in a wide range of areas.

Issuer Development Bank of Mongolia (DBM)

Date of Payment 6-Jan-2014

Maturity 10 years Coupon 1.52% Currency Japanese Yen (JPY)

Issuance Privately Placed Issue

Amount JPY 30 billion (approx. US$ 300 million)

Guarantee Fee (One-time Fee)

JPY 5.7 billion (approx. US$ 57 million)

Guarantor1 Japan Bank for International Cooperation (JBIC)

Joint Lead Arrangers Nomura Securities Co., Ltd. Daiwa Securities Co., Ltd.

Bond Administrator Mizuho Bank, Ltd.

Summary of Sumurai Bond Issuance

Source: JBIC, InfoMongolia.com Note: 1 JBIC's guarantee will cover the principal and part of the interest of the issue.


Trade and Development Bank of Mongolia (TDB) Opened Tokyo Representative Office

Trade and Development Bank of Mongolia (TDB), Mongolia’s financial gateway to the world, has expanded its operation and successfully opened its first international representative office in Tokyo, Japan on July 23, 2014.

Source： Website of Trade and Development Bank of Mongolia


Mongolian Sumo Wrestlers in Japan 28 Mongolian wrestlers play an active roles in sumo in Japan. 3 Mongolian wrestlers are “Yokozuna”, highest rank in sumo. Mongolian wrestlers occupy 59 championships of 63 tournaments since 2004.

Hakuhō Shō Yokozuna, highest rank in sumo

Harumafuji Kōhei Yokozuna, highest rank in sumo

Kakuryū Rikisaburō Yokozuna, highest rank in sumo

Number of Championships (Jan. 2004 – Jul. 2014)

Hakuho, Mongolia, 30 times,

48% Asashoryu, Mongolia, 21times,

33%

Harumafuji, Mongolia,

6times, 9%

Kakuryu, Mongolia, Once, 1%

Kyokutenho, Mongolia, Once, 1%

Others, 4 times, 6%

Mongolian Wrestlers 59 times, 94%

Source： Nihon Sumo Kyokai


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11/01/12 01/01/13 03/01/13 05/01/13 07/01/13 09/01/13 11/01/13 01/01/14 03/01/14 05/01/14 07/01/14

TOPIX (Japan) NYSE Composite (US) Nasdaq Composite (US)FTSE All Shares (UK) S&P/HKEx Large Cap Index (Hong Kong) FTSE Straits Times Index (Singapore)KOSPI (Korea) TWSE Index (Taiwan)

Stock Market Index Performance TOPIX, which represents the movement of the Tokyo market overall, is recording a high growth rate as compared with other markets.

Source: Bloomberg Note: As of August 15, 2014. Indices rebased to 100 as of November 1, 2012.

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TSE 1st TSE 2nd TSE Mothers

Daily Average Trading Volume Daily average trading volume has exceeded US$ 20 billion on an ongoing basis since January 2013.

Source: Tokyo Stock Exchange Note: US$ = 100 JPY

Daily Average Trading Volume (TSE 1st): US$ 20 billion

Daily Average Trading Volume (TSE 1st): US$ 10 billion


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Ｎｕｍｂｅｒ

ｏｆＩＰＯ

IPOs in Japan

IPOs figures showed a significant increase to 641 in 2013 from 52 in 2012, confirming a full-fledged recovery in the Japanese IPO market. The number of IPOs is expected to increase from 2013 onward.

Note 1： The number includes Tokyo Pro Market and REITs.


Acucela Inc., (Seattle, U.S.) On Feb. 13, 2013, Acucela Inc. (TSE Mothers: 4589), a Seattle company, has successfully completed its IPO in Japan. Acucela raised US$165.6 million. The market capitalization of Acucela has exceeded US$800 million on the first trading day.

Company Profile/IPO summary

Company Name Acucela Inc. [Mothers: 4589]

Chairman, President & CEO Ryo Kubota

Foundation April 25, 2002

IPO Date February 13, 2014

Underwriter Mitsubishi UFJ Morgan Stanley Sec.

IPO Price / First Price JPY1,800 (US$18)/JPY2,300 (US$23)

IPO Amount (New Shares / Sale)

US$ 190.4 million (US$165.6 million/US$24.8 million)

Market Cap

(IPO Price /First Price) US$ 641 million/US$ 819 million

WEB http://www.acucela.com/

Business Acucela is a Seattle based clinical-stage biotechnology company that specializes in discovering and developing novel therapeutics to treat and slow the progression of sight-threatening ophthalmic diseases impacting millions of individuals worldwide. Acucela focuses on developing oral products based on Acucela’s proprietary visual cycle modulation, or VCM, compounds to address a variety of retinal diseases, primarily age-related macular degeneration, or AMD, diabetic retinopathy, or DR, and diabetic macular edema, or DME, and potentially Stargardt disease, retinitis pigmentosa and retinopathy of prematurity.

Summary of Financial Data Market Cap Chart

Product Pipeline

Note: 1 1US$ = 100 JPY.

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Source: Bloomberg

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http://www.acucela.com/


Structure of TSE Cash Equity Market JPX offers several markets with different concepts to allow companies to make an optimal choice.

- Various Sectors and

Growth Companies -

1st Section - Large-sized companies -

1,825 Companies

2nd Section - Medium-sized

companies - 551 Companies

Market Of The High-growth and

EmeRging Stocks 189 Companies

Available to both individual and professional investors

JASDAQ Standard

811 Companies

JASDAQ Growth

48 Companies

Equity Market Other Cash Products

ETF 157 ETFs

ETN 23 ETNs

REIT 46 REITs

Professional-oriented market: Only available to professional investors Note: As of August 18, 2014

Country Fund 1 Country Fund

Venture Fund 2 Venture Funds

8 Companies 9 Programs


Stock Trading Value by Investor Category (2013) Foreign investors account for more than half of trading in the TSE 1st Section. By contrast, individual investors make up the majority in the TSE 2nd Section, Mothers, and JASDAQ.

Average Daily Trading Value

US$ 26,130 M

TSE

2nd

Sect

ion

TSE

1st S

ecti

on

TSE

Mot

hers

TSE

JASD

AQ

Source: TSE Note: 1 US$= 100 JPY

54% 13%

9%

24%

Foreign Investors

Proprietary Trading

Domestic Institutional

Investors

Individuals

Average Daily Trading Value

US$ 1,136 M

Average Daily Trading Value US$ 964 M

Average Daily Trading Value US$ 146 M

15% 3%

12%

70%

16% 3%

8%

73%

17% 3%

9%

71%

Foreign Investors

Foreign Investors

Foreign Investors

Individuals Individuals

Individuals


Investors

Proprietary Trading


Investors

Proprietary Trading


Investors

Proprietary Trading


Mining Sector

Source: Bloomberg Note: As of August 22, 2014

Ticker Sector NameRevenue(US$ M)

Net Profit(US$ M)

Net Asset(US$ M)

Market Cap(US$ M)

PER(x)

PBR(x)

8058MITSUBISHI CORP

76,352 3,614 55,394 35,266 9.8 0.64

8031MITSUI & CO LTD

57,319 3,501 41,003 30,837 8.8 0.75

8001ITOCHU CORP

55,875 2,453 23,995 22,067 9.0 0.92

8053SUMITOMO CORP

33,174 2,231 25,402 16,752 7.5 0.66

8002MARUBENI CORP

70,557 2,109 15,332 13,130 6.2 0.86

2768SOJITZ CORP

18,031 273 4,930 2,165 7.9 0.44

1605INPEX CORP

13,346 1,837 29,960 21,825 11.9 0.73

1662JAPAN PETROLEUM EXPLORATION

2,766 290 4,969 2,206 7.6 0.44

1515 LimestoneNITTETSU MINING CO LTD

1,143 39 848 373 9.5 0.44

1518MITSUI MATSUSHIMA CO LTD

773 15 328 189 12.3 0.57

1514SUMISEKI HOLDINGS INC

246 4 58 71 18.3 1.21

Average (Trading Cos) 51,885 2,363 27,676 20,036 8.2 0.71Median (Trading Cos) 56,597 2,342 24,699 19,409 8.4 0.71

Average (excluding Trading Cos) 3,655 437 7,233 4,933 11.9 0.68Median (excluding Trading Cos) 1,143 39 848 373 11.9 0.57

Average (Coal Cos) 510 10 193 130 15.3 0.89Average 29,962 1,488 18,384 13,171 9.9 0.70Median 18,031 1,837 15,332 13,130 9.0 0.66

TradingCompany

Oil, Gas

Coal


Privatization Ticker Sector Name

Revenue(US$ M)

Net Profit(US$ M)

Net Asset(US$ M)

Market Cap(US$ M)

PER(x)

PBR(x)

1605INPEX CORP

13,346 1,837 29,960 21,825 11.9 0.73

1662JAPAN PETROLEUM EXPLORATION

2,766 290 4,969 2,206 7.6 0.44

9513PowerUtilities

ELECTRIC POWER DEVELOPMENT CO7,068 287 5,195 5,630 19.6 1.08

9432NIPPON TELEGRAPH & TELEPHONE

109,252 5,855 109,248 78,546 13.4 0.72

9437NTT DOCOMO INC

44,612 4,647 56,935 79,639 17.1 1.40

2914 TobaccoJAPAN TOBACCO INC

23,998 4,280 25,961 72,610 17.0 2.80

9020EAST JAPAN RAILWAY CO

27,029 1,999 21,994 33,030 16.5 1.50

9022CENTRAL JAPAN RAILWAY CO

16,525 2,557 18,023 30,993 12.1 1.72

9021WEST JAPAN RAILWAY CO

13,310 656 8,074 9,542 14.5 1.18

Average (Mining) 8,056 1,064 17,465 12,016 9.7 0.59Average 28,656 2,490 31,151 37,114 14.4 1.29Median 16,525 1,999 21,994 30,993 14.5 1.18

Railway

Mining(Oil, Gas)

Telecom

Source: Bloomberg Note: As of August 22, 2014


Successful Small IPOs - IPO Companies Size (2010-2014 1H)

TSE 2nd

JASDAQ

Mothers

Revenue Ordinary

Profit Net Asset Market Cap (First Price) IPO Amount2

US$ 52,253M

US$ 1,651M US$ 153M

1,977M

US$ 104M US$ 16M

9,485M

US$ 843M US$ -35M

US$ 16,000M

US$ 970M US$ 297M

US$ 10,089M

US$ 364M US$ 67M

US$ 755M

US$ 215M US$ 41M

US$ 34M

US$ 11M US$ 3.0M

US$ 130M

US$ 57M US$ 13M

US$ 183M

US$ 64M US$ 34M

US$ 102M

US$ 15M US$ 5.2M

US$ 1,173M

US$ 69M US$ 0.6M

US$ 49M

US$ 4M US$ -13M

US$ 91M

US$ 17M US$ 1.6M

US$ 1,477M

US$ 40M US$ 9.6M

US$ 73M

US$ 8M US$ 3.6M

US$ 283M

US$ 20M US$ 2.1M

US$ 26M

US$ 2.1M US$ -11M

US$ 177M

US$ 6.7M US$ -0.8M

US$ 1,018M

US$ 97M US$ 23M

US$ 190M

US$ 10M US$ 1.7M

TSE 1st

Max Median

Min

Source: TSE Note: 1 Excluding REIT. US$ = 100JPY. 2 Total of offering and sales.


Deep and Diverse Investor Base Participation by various types of investors in the TSE market creates fair and reliable valuations of its listed companies.

The World's Largest Institutional Investor − Japan is the primary investment focus for the Government Pension Investment Fund, Japan (GPIF),

the largest institutional investor in the world. − As of the end of 2012, assets under management at GPIF was valued at US$1.3 trillion, an amount

comparable to the GDP of South Korea (US$ 1.1 trillion, 2012). GPIF’s investments in foreign stocks accounted for 12.35% of its entire portfolio, an amount valued at US$160 billion as of the end of 2012.

− There are also other pension funds that manage huge amounts of funds.

High Net Worth Individuals − Financial assets held by Japanese individuals stood at US$15.68 trillion at the end of 20131. − This is comparable to 2.6 times Japan's GDP (US$5.96 trillion, 2012 year end).

Accessibility to Japanese Markets for International Investors − Foreign investors are the largest players in Japan. The increase in investments by foreign investors

can be seen from their trading value, which reached US$6.5 trillion1, 2 in 2013. − Globally reputable investors from many countries have shown interest in the Tokyo market. A TSE

listing promises a company access to investment by international investors.

1

2

Source: GPIF web site, BOJ, World Bank Note: 1 US$= 100 JPY 2 Total amount of buy and sell

3


Top 10 Pension Funds GPIF (Government Pension Investment Fund) is the largest investor in the world.

Source： P&I / TW Top 300 Pension Funds Analysis as at 2012 year end

Rank Fund MarketTotal Asset

(US$ billion)1 Government Pension Investment Japan 1,2922 Government Pension Fund Norway 7133 ABP Netherlands 3734 National Pension South Korea 3685 Federal Retirement Thrift U.S. 3266 California Public Employees U.S. 2457 Local Government Officials Japan 2018 Central Provident Fund Singapore 1889 Canada Pension Canada 18410 National Social Security China 177


Total Value of Fund Assets

Total Value of Fund Assets (Split by fund domicile)

Source： P&I / TW Top 300 Pension Funds Analysis as at 2012 year end

US, 35.0%

Japan, 14.7% Netherlands,

6.6%

Canada, 5.5%

UK, 5.2%

Norway, 5.1%

Australia, 3.4%

South Korea, 2.7%

Denmark, 2.2%

Sweden, 2.1% Germany, 1.9%

Switzerland, 1.7%

Finland, 1.2%

Brazil, 1.0% Other, 11.6%

# Country% of

Total Value No. funds1 US 35.0% 1242 Japan 14.7% 173 Netherlands 6.6% 134 Canada 5.5% 195 UK 5.2% 266 Norway 5.1% 17 Australia 3.4% 158 South Korea 2.7% 29 Denmark 2.2% 810 Sweden 2.1% 711 Germany 1.9% 1212 Switzerland 1.7% 1213 Finland 1.2% 514 Brazil 1.0% 315 Other 11.6% 36

Total 100.0% 300


High Net Worth Individuals Financial assets held by Japanese individuals stood at US$15.68 trillion at the end of 2013 and is comparable to 2.6 times of Japan's GDP. This is a very high level worldwide.

Source: Bank of Japan Note: US$ = JPY 100

Cash/Deposits, US$8,474 B,

54.0%

Insurance and Pension

Reserves, US$4,327 B,

27.6%

Stocks and Equity

Contributions, US$1,223 B,

7.8%

Outbound Securities

Investments, US$81 B, 0.5%

Others, US$1,579 B,

10.1%


Outbound Securities Investments

Source: Bank of Japan Note: US$ = JPY 100

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The value of outbound securities investments from household assets by Japanese individual investors shows a continued upward trend. Japanese investors also warmly welcome foreign stock listings on the TSE market.


What is TOKYO PRO-BOND Market?

A new bond issuance market for professional investors operated by Tokyo Stock Exchange (Established in March, 2012)

A bond issuance market regulated by the principle-based approach – Less regulated bond market by Regulators but appropriately self-regulated by

market participants – Much concise disclosure compared with conventional format of registered bond

issuance in a Samurai bond market because of the market for professional investors

– Concise disclosure requirement – Acceptance of English language documentation and financial statements

in US-GAAP and IFRS – User friendly documentation and listing process

Efficient access to Japanese professional investors – Program listing which allows flexible and timely bond issuances in response to

market conditions – Wider bond issuance window than a Samurai bond market because translation

is unnecessary

As of today, 9 programs and 8 kinds of bonds are listed.

1

2

3

4


Advantages over Samurai Bonds

Traditional Samurai Bond transactions TOKYO PRO-BOND Market

Investor Base All Investors including General Investors All type of Professional Investors

Listed on Not Listed

(Needs to disclose the information on J-FSA’s disclosure system : EDINET)

Governing institution Government Tokyo Stock Exchange Disclosure Language Japanese2 Japanese or/and English

Accounting Standards J-GAAP or IFRS3,4 Japan GAAP, IFRS, US GAAP, Other standards approved by TSE

Issuing Methods Stand-alone (Shelf registration allowed) EMTN type program or Stand-alone Offering in Japan Public Offering Private Placement for Specified Investors

Financial Disclosure Document

J-FSA Format: Securities Registration Statement or Shelf Registration Statement

Format approved by TSE: Specified Securities Information5

(Euro Format is applicable) Frequency of Continuous

Disclosure Twice or Four times a year Once a year

Period6, 7 Approx. 3 Months8 A Few Weeks9

Upfront Cost6 Approx. $200-300 thousand Approx. $100-150 thousand Annual Running Cost6 Approx. $20-30 thousand Minimal cost

Note: 1 USD= 100 JPY 2 English disclosure is available when the certain conditions are met. 3 IFRS is allowed using for the consolidated financial statement of companies submitting consolidated financial statement. 4 If the company has disclosed financial statements in another country before and the Commissioner of J-FSA determines that financial statements are appropriate in light of the public interest or

the investor protection, the foreign issuer may use the financial statements as disclosed in the home country or another country. This approval will be made on a case-by-case basis. 5 Description of corporate information can be referred to Annual Report in the home country by noting its website address 6 Common example 7 The period is from the beginning of drafting disclosure documents to the closing day 8 In the case of first issue in Japan 9 If the issuers disclose their annual report in their home countries


Programs Listed on TOKYO PRO-BOND Market 5 programs newly listed on TOKYO PRO-BOND Market in 2014.

Date of Initial Filing Issuer Name Nationality Program Amount Remarks

Mar. 30, 2012 ING Bank N.V. Netherlands JPY 400 billion

Jul. 27, 2012 Nomura Bank International plc

(NBI) Nomura Europe Finance N.V.

(NEF)

NBI:Netherlands NEF:England

NBI: USD 5 billion NEF: USD 30 billion

Multiple Listing (Lux)

Jun. 18, 2013 ICICI Bank Ltd. India JPY 50 billion

Nov. 11, 2013 Asian Development Bank Supranational Note 1 Multiple Listing (Lux)

Mar. 07, 2014 Bank of America Corporation USA USD 65 billion Multiple Listing (LSE)

Apr. 02, 2014 Banco Santander-Chile Chile JPY 200 billion

May 01, 2014 Malayan Banking Berhad Malaysia USD 5 billion Multiple Listing (SGX)

Jun. 10, 2014 First Gulf Bank P.J.S.C. UAE USD 1 billion Multiple Listing (LSE)

Jun. 27, 2014 Deutsche Pfandbriefbank AG Germany JPY 500 billion

Note 1: Program amount in any calendar year will not exceed the amount authorized by the Board of Directors of ADB in its global borrowing authorization for such calendar year.

Programs Listed on TOKYO PRO-BOND Market as of Aug. 2014


Bonds Listed on TOKYO PRO-BOND Market 6 kinds of bonds newly listed on TOKYO PRO-BOND Market in 2014.

Bonds Listed on TOKYO PRO-BOND Market as of Aug. 2014

Listing Date1 Issuer Name Nationality Tranche

Size Coupon Tenor (Year) Settlement

Dec. 20, 2012 ING Bank N.V. Netherlands

JPY 164.5 billion 0.96% 3

JASDEC

JPY 11.4 billion 3M JPY-LIBOR-BBA + 80bp 3

Apr. 25, 2014

Banco Santander-Chile Chile

JPY 2 billion 0.72% 3

JASDEC JPY 18.7 billion 0.97% 5

JPY 6.6 billion 3M JPY-LIBOR-BBA + 55bp 3

May 23, 2014

Malayan Banking Berhad Malaysia

JPY 31.1 billion 0.4375% 3 Euroclear and Clearstream, Luxembourg Aug. 22,

2014 JPY 20 billion 0.52% 5

Jul. 03, 2014

First Gulf Bank P.J.S.C. UAE JPY 10 billion 0.863% 5 Euroclear

Note: 1 Generally, listing date is the next business day of the payment date.


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GDP (US$ billion)

Asia, Oceania North America EuropeSource: World Bank Note: Circle size indicates relative GDP

GDP and GDP per capita (2012) Japan is a leading global economy with world-class GDP and per capita GDP.

United States

China

Japan

Germany France

U.K.

India

Russian

Korea

Canada

Indonesia Thailand

Malaysia

Singapore

Hong Kong

Philippines

Vietnam

Japan GDP: US$ 5,960 billion GDP per capita: US$ 46,720

Australia


Number of Listed Companies Tokyo Stock Exchange exceeds NYSE and NASDAQ in terms of number of listed companies.

Source: WFE Note: Number of listed companies as of the end of December 2013

3,886 3,419

2,736 2,637 2,371

1,813 1,643 1,536 953 866 776

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(US)

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HongKong

Exchanges

ShenzhenSE

ShanghaiSE

TaiwanSE

SingaporeExchange

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Market Capitalization Tokyo Stock Exchange ranks No.3 globally and No. 1 in Asia by market capitalization.

17,397

//

//

Source: WFE Note: Domestic market capitalization as of the end of December 2013

6,085

4,543 4,429

3,101 2,497 2,114

1,452 1,235 823 744 0

1,000

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NYSEEuronext

(US)

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TMXGroup

ShenzhenSE

KoreaExchange

TaiwanSE

SingaporeExchange

Mar

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S$ b

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17,950


Value of Share Trading in the World Tokyo Stock Exchange ranked No. 1 outside of the U.S. by value of share trading.

Source: WFE Note: Value of share trading - Electronic order book trades in 2013

13,700

9,585

6,305

3,859 3,731 2,233

1,371 1,323 1,285 624 281 0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

NYSEEuronext

(US)

NASDAQOMX

TokyoStock

Exchange

ShenzhenSE

ShanghaiSE

LondonSE Group

TMXGroup

Hong KongExchanges

KoreaExchange

TaiwanSE

SingaporeExchange

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Valuation: PER Valuations for Japanese companies are higher than other markets based on PER.

Source: Bloomberg Note: Based on estimated PER from Bloomberg as of January 6, 2014. PER = Price/Estimated EPS Ratio

15.6 15.4 15.0 14.7 14.6 13.7 13.3

9.9 9.8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

TOPIX(Japan)

S&P 500(US)

ASXS&P 300

(Australia)

S&P/TSXComposite(Canada)

TWSE Index(Taiwan)

FTSE StraitsTimes Index(Singapore)

FTSEAll Shares

(UK)

S&P/HKExLarge Cap

Index(Hong Kong)

KOSPI(Korea)

PER

(x)


Key Benefits of Listing on TSE

Fundraising

Expansion of Business in Japan

M&A with Japanese Companies

Expand fundraising opportunities with High Net Worth Individuals that hold US$15.68 trillion in assets as of end of 2013

High valuation due to great interest in foreign stocks

Enhance corporate profile and credibility in Japan Expand opportunities for strategic alliances with Japanese

corporations

Increase chances of M&A with Japanese corporations


Expansion of Business in Japan

Fundraising

Prospective Companies

Benefits of listing on TSE Prospective companies Examples

In countries and sectors that cannot raise enough funds in the

home country

In sector with a gap in valuation

Have a high profile in Japan

Currently have business in Japan

Have plans to expand business in Japan

Games, IT, and healthcare sectors

Companies with offices in Japan

Excellent companies in emerging countries with

immature financial markets


Listing Schedule Depending on the internal systems of the company, however, it takes about one year from kick-off to listing. Note that the company needs to be audited for two business years.

Offering Listing examination by TSE

Underwriting examination Listing preparation Selection of parties

involved in the listing

Selection of parties involved in the listing

Lead underwriter Lawyers (specialized

in Japanese law) Lawyers (specialized

in applicant's home country laws)

Audit firm Financial printer Trust and banking company

Preparation of application forms

Underwriting examination by lead underwriters

List

ing

appl

icat

ion

List

ing

appr

oval

List

ing

About 3 months

Identification of issues to be addressed

Design and implementation of system and improvements hereto

1 month

Offering

Listing examination

by TSE

Submission of Confirmation Report prior to Initial Listing Application (for Trading Participant Handling Matters)

Submission of Confirmation Report prior to Initial Listing Application

(for Applicant Company)


Listing Examination Schedule

Resolution of board of directors authorizing listing application

Listing Application (Major documents to be submitted) • Application for Listing of Securities • Securities Report for Listing Application • Articles of incorporation • Annual Reports • Business Plan

Approval of listing by TSE (Public announcement)

Filing of the Securities Registration Statement with Prime Minister

Effective date of the Securities Registration Statement

Public offering and sales completed Listing Date

abou

t 3

mon

ths

1 m

onth

15 days

Procedure of public offering

Application entry

Preliminary confirmation

First questions and answers in writing and interview

Second questions and answers in writing and interview

On-site examination

Third questions and answers in writing and interview

Meeting with president, statutory auditor and accounting auditor

Notes:

1. The schedule shown here is a typical example and may be subject to change.

2. TSE shall examine the regulatory system of the home country of an applicant company in preliminary confirmation procedure. Note that, it may take longer time than the others when the applicant company is the first from its country to apply.


Roles of Each Party Involved in an IPO

Financial Services Agency

Trust and Banking Company

Lead Underwriter

Issuer

Law Firm (Japanese law

/home country laws)

Audit Firm (foreign audit

firm, etc.)

TSE and JPX Regulation

Listing examination

Consultation and underwriting examination

Submission of a “Sponsor’s Letter of Recommendation”

Filing of statutory disclosure documents

Financial Printer

Legal check and review Legal opinion Assistance in preparing

disclosure documents

Audit (audit opinion)

Printing of prospectus

Assistance in preparing disclosure documents

Shareholder services Dividend payment bank Issuance of JDRs

Lead underwriting agreement


Roles of Each Party Involved in an IPO The following are the key parties in Japan and the home country who support the listing of a foreign company on TSE. These participants work together closely during the pre-listing process to support preparations for a listing.

Lead Underwriter (TSE trading participant), is comprehensively involved in the procedures and preparations for listing overall. It provides underwriting business by entering into a lead underwriting agreement with an issuer and provides advice and consultation on the listing and listing schedule. At the time of listing, the lead underwriter submits a Sponsor’s Letter of Recommendation to TSE.

Law Firm, checks and reviews listing-related matters from a legal perspective and prepares a legal opinion. It also helps the applicant prepare disclosure documents. After listing, it discloses corporate information as a legal representative of the listed foreign company.

Audit Firm (foreign audit firm, etc.), provides provides advice on the design and implementation of the accounting organization and financial statements and also audits the financial statements (expression of an audit opinion).

Trust and Banking company, acts as a shareholder services agent for Japanese shareholders after the listing and may act as a dividend payment bank to provide services related to dividend payment. If a foreign company lists through JDRs, the trust and banking company will be responsible for the issuance of the JDRs. Please see section 7 for details on listing through JDRs.

Tokyo Stock Exchange, explains its listing system to companies, IPO-related parties, and so on, and provides preliminary or prior consultation on the listing.


Formal Requirements for Listing Each market has different criteria in line with its concept.

Note: 1US$ = 100JPY

1st Section 2nd Section Standard GrowthNumber of shareholders 2,200 or more 800 or more 200 or more ―Tradable shares

Number of tradable shares 20,000 unitsor more

4,000 unitsor more

2,000 unitsor more

―

Market capitalization oftradable shares

JPY 1 billion(USD 10m)

or more


or more

JPY 500 million(USD 5m)or more

―

Ratio of tradable shares tolisted shares 35% or more 30% or more 25% or more ―

Public offering ― ―500 trading units

or more ―

Market capitalization of listedshares


or more


or more


or more―

Number of years of businessoperation 1 year or more ―

Shareholders' equity ―JPY 200 million

(USD 2m) or more Not negative ―

Amount of profits or Marketcapitalization ―

[Ordinary profit]JPY100 million(USD 1m) or more[Market cap]JPY5 billion(USD 50m) or more

― ―

―

Main MarketMothers

JASDAQ TOKYOPRO Market

3 years or more

JPY 1 billion (USD 10m) or more

[Ordinary profit]Total amount of JPY500 million (USD 5m) or morein the last 2 fiscal years[Market cap]Market cap: JPY 50 billion (USD 500m) or moreSales: JPY 10 billion (USD 100m) or more

10 percent or moreor 1,000 trading units

200 or more

JPY 500 million(USD 5m)or more

―

―

―


Overview of Listing Examination for Mothers TSE examines the company, which meets “Formal Requirements” and conducts an examination based on the “Eligibility Requirements.” When applying TSE rules to a foreign country or a foreign corporation where the foreign country or the foreign corporation is an issuer of a listed security, TSE shall also take into account the legal systems, practices and customs in such foreign country or the country of the foreign corporation.

Appropriateness of the Disclosure of Corporate Information, Risk Information, etc. – The company is able to make disclosure of the corporate information, risk information, etc.

may be carried out in an appropriate manner

Soundness of Corporate Management – The company is carrying out business in a fair and faithful manner

Effectiveness of Corporate Governance and Internal Management System of an Enterprise – Corporate governance and internal management system are developed in accordance with

the size, corporate maturity, etc. of the enterprise, and functioning properly

Reasonableness of the business plan – The listing applicant has developed reasonable and suitable business plans, and has

developed the operating base necessary for executing such business plans, or there is reasonable expectation that it will develop such operating base

Other matters deemed necessary by the Exchange from the viewpoint of the public interest or the protection of investors

a. Shareholders’ rights and exercise of such rights are not unduly restricted. b. Relationship with a parent company is deemed appropriate. c. Other matters are deemed appropriate in light of public interest and investor protection.

1

2

3

4

5


Listing Fees to Tokyo Stock Exchange

When TSE is the main market When TSE is not the main market

Mothers JASDAQ First Section Second Section First & Second Sections Listing Examination Fee US$ 40,000 US$ 20,000 US$ 20,000 US$ 20,000

Initial Listing Fee US$ 150,000 US$ 120,000 US$ 25,000

+ Fixed rate fee (See below)

US$ 10,000 US$ 60,000

Public Offering/Sales Fee

Number of new shares offered×offer price× (9/10,000)

Number of existing shares sold×sales price× (1/10,000)

―

Number of new shares offered×offer price× (9/10,000)

Number of existing shares sold×sales price× (1/10,000)

―

Note: 1 1US$ = 100JPY 2 Furthermore, in cases where an applicant previously filed a listing application or preliminary application and the applicant intends to file a re-application within three years counting from the

beginning of the business year to which the most recent application date belongs (in case of the preliminary application, the date which was described in the preliminary application form for listing of securities as the date on which the listing application was expected to be filed), the listing fees is expected to be halved.

3 When TSE implements a on-site visit or meeting, etc. at locations remote from Japan, in particular including Europe, the US, and so on, TSE will separately charge the applicant the amount equivalent to actual expenses incurred for the on-site visit and meeting purposes.

Fees for Initial Listing on TSE

Initial Listing Fee for Foreign Stock, etc. with a Main Market Listing on any Overseas Exchange

Initial listing fee for foreign stock, etc. with a main market listing on any overseas exchange is computed as JPY2.5 million plus a fixed rate fee as shown in the table below:

Ratio of number of foreign stock, etc. held by individuals and legal entities having address and residence in Japan to the total number of listed foreign stock. etc.

Initial Listing Fee

More than 5% US$ 25,000＋Number of Listed Foreign Stock, etc.× (225/10^6) ×1/10 More than 2% and less than or equal to 5% US$ 25,000＋Number of Listed Foreign Stock, etc.× (225/10^6) ×1/20 Less than or equal to 2% US$ 25,000＋Number of Listed Foreign Stock, etc.× (225/10^6) ×1/50 Note: 1 1US$ = 100JPY


Region Country Ticker Issue name Market Sector Stock ／DR

English Disclosure

Accounting standard

Multiple /Single

Asia

S. Korea 5412 POSCO TSE 1st Iron & Steel ADR － K-IFRS Multiple

Malaysia 1773 YTL Corporation Berhad TSE 1st Construction Stock － Malaysia GAAP Multiple

The Cayman Islands 9399 Xinhua Holdings Limited Mothers Information &

Communication Stock － JGAAP Single

Europe UK 3827 Japaninvest Group plc Mothers Information & Communication Stock － UK GAAP Single

North America

US 4850 THE DOW CHEMICAL COMPANY TSE 1st Chemicals Stock － US GAAP Multiple

US 8634 JPMorgan Chase & Co. TSE 1st Banks Stock － US GAAP Multiple

US 8648 Bank of America Corporation TSE 1st Banks Stock － US GAAP Multiple

US 8685 American International Group, Inc. TSE 1st Insurance Stock Conducting US GAAP Multiple

US 8686 Aflac Incorporated TSE 1st Insurance Stock － US GAAP Multiple

US 8710 Citigroup Inc. TSE 1st Banks Stock Conducting US GAAP Multiple

US 4589 Acucela Inc. Mothers Pharmaceuticals Stock - US GAAP Single

US 4875 MediciNova, Inc. JQ Pharmaceuticals Stock － US GAAP Multiple (IPO)

List of TSE-listed Foreign Companies Asian companies on TSE include those based in Korea, Malaysia, and China. U.S. drug development companies, MediciNova and Acucela, had successful IPOs on TSE.

© 2014 Japan Exchange Group, Inc. and/or its affiliates. All rights reserved.

Hidetoshi Nagata (Mr.)

General Manager, Head of Global Listing Tel : +81-50-3377-7763 (Direct) E-mail : [email protected]

Please note that this presentation is for informational purposes only. Japan Exchange Group, Inc. and Tokyo Stock Exchange, Inc. are not responsible for any damage caused by using the information contained herein. Please also note that the information is not guaranteed to be complete, correct, or up-to-date, and may be changed without notice. Unauthorized copying, reproduction, republishing, uploading, posting, transmitting or duplicating any part of the material is prohibited.

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