london: a complementary public market liquidity route for
TRANSCRIPT
1
London:
A Complementary Public Market
Liquidity Route For Smaller US Growth
Companies
April 2019
2
Executive Summary
London is the international exchange – over a third of London’s new listings in 2018 were international
Step change in the number of companies listing from the Americas – 40 in the last two years
Public investment fund market has very different character to the US and offers significant opportunity for
asset managers in the Americas to access new pools of capital
London offers a supportive environment for companies in the $30-500m market cap range and a
complementary liquidity route relative to the US public markets for companies of all sizes
Much lower revenue threshold for IPO – tech companies range of $10-100m, revenue generating medtech / life sciences services and mature industrial companies with revenues as high as $500m
London’s growth market, AIM, seeing increasingly larger deals and more sector diversification
Large, high quality investor base oriented towards small and micro cap offerings – active equity investor base for AIM and Main Market essentially the same, no liquidity differential between AIM and Main Market and London liquidity is less fragmented than the US
Ongoing access to follow on capital; potential for selldown at IPO – VC backed fintech Boku excellent case study – large secondary component in IPO, subsequent selldown at substantial premium by VCs, recent acquisition using stock as currency
Third party data shows London listing means lower transaction costs, ongoing costs & litigation risk relative to US. London also has half yearly rather than quarterly reporting
3
A Snapshot of London Stock Exchange 2018 IPOs Financials and Technology are leading sectors
2018 IPOs* by sector 2018 IPOs, split of primary and secondary issuance
Source: Dealogic, January 2019
All calculations are based on a deal first trade date
*Number of IPOs per sector
**Raising more than £20m
35
21
6
5
3 3
2 2 2
Financials
Tech and Fintech
Basic Materials
Support Services
Oil & Gas
Real Estate
Consumer
Healthcare
Industrials
79
IPOs 77%
73%
23%
27%
0% 20% 40% 60% 80% 100%
AIM
Main Market
Average of Shares by Issuer as % (Primary)
Average of Shares by Shareholder as % (Secondary)
Main
Market AIM
No. of IPOs 43 35
Average Deal
Size (£m) 253 54
Average Market
Cap at IPO (£m) 717
112
Company Aquis Exchange
Market AIM
Market cap at IPO $97m
Current market cap $210m
% price change 118%
Description Cash equities trading venue
Company GRC International Group
Market AIM
Market cap at IPO $56m
Current market cap $88m
% price change 66%
Description IT service management
London’s Best Performing 2018 IPOs** London Markets 2018 Summary
4 4
Source: Dealogic, London Stock Exchange, January 2019
All calculations are based on a deal first trade date
113 New Listings in 2018 34% of new joiners are international
New Joiners to London Stock Exchange in 2018
0
2
4
6
8
10
12
14
16
18
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
IPOs Introductions
5
4
14
7
12
17
14
4
3
10
13
10
London Stock Exchange welcomed 113 new listings
this year, including 79 IPOs and 34 introductions
June was the busiest month in 2018 with 17 new
joiners, including 12 IPOs and 5 introductions
34% of all new joiners in 2018 are international (38
companies)
Some of the major introductions included Worldpay,
Cablevision Holding, Gran Tierra, Danakali, Dish
TV, MOD Resources, among others
Case study: Jadestone Energy
3 months ADTV
on TSX before joining
LSE
$9,739
8 August 2018
TSX-listed Jadestone Energy joins AIM and raises £84m
3 months ADTV
on London post
London listing
$475,124
3 months ADTV
on TSX post London
listing
$51,781
x9
greater ADTV in London vs
Toronto
432%
increase In TSX average
daily trading value
The London listing not only provides greater
liquidity, but also contributes to the liquidity of
Jadestone Energy shares in Toronto.
5 5
574
354 337
285
182
0
100
200
300
400
500
600
700
LS
E
Nasd
aq
SG
X
TS
X
NY
SE
The International Market of Choice
More international companies choose London for listing than any other exchange.
Our issuers operate in over 100 countries around the world – including c. 150 Americas companies listed in London
23 Americas companies chose London for their listing in 2017 and 17 in 2018.
Selected Recent North American Listings in London London Has More International Companies Than Any Other Exchange
Source: London Stock Exchange, FactSet, Dealogic, February 2019
Our country of primary business methodology uses FactSet data and takes into account the country of largest revenue exposure, headquarters and incorporation
Int'l Companies as %
of total companies
SGX 51%
LSE 37%
TSX 37%
NASDAQ 14%
NYSE 10%
Name
Mkt Cap at
Listing
($m)
Deal Size
($m) Sector
% Change
Offer to
Current Renalytix AI 81 29 Healthcare +3
Argo Blockchain 62 33 Technology -80
Jadestone 211 110 Oil & Gas +83
Transglobe 200 - Oil & Gas -32
Serinus 40 - Oil & Gas +2
Polarean Imaging 16 4 Healthcare +17
Boku 165 59 Fintech +52
ContourGlobal 2,202 579 Renewables -33
TI Fluid Systems 1,744 536 Consumer
Goods -25
Bacanora 158 8 Basic
Materials -73
SDX 23 11 Oil & Gas +119
Diversified Gas & Oil 86 50 Oil & Gas +78
LoopUp Group 53 11 Technology +205
MaxCyte 43 14 Healthcare +164
PureTech Health 571 195 Healthcare +6
6
Opportunity for Asset Managers More closed-end investment fund IPOs than any other global exchange
Source: London Stock Exchange, Dealogic, FactSet, Morningstar, February 2019
Note: Investment funds include closed-end funds, investment companies, vehicles and SPACs
:
30% Proportion of
total IPO capital
on London Stock
Exchange raised
by investment
funds
35 Listings of
investment funds
in 2018
2% Average trading
premium to NAV
of closed-end
investment fund
IPOs in 2018
Biopharma Credit Providing debt financing to life science companies
Americas strategies welcomed in 2018
Marble Point Loan
Financing
Providing exposure to a diversified portfolio of US Dollar
denominated, broadly syndicated floating rate senior
secured corporate loans.
Trian Investors 1
Aiming to obtain a substantial minority investment in a
high quality, but undervalued and underperforming,
company publicly listed in the UK or US.
CEIBA Investments
The largest listed foreign investor in Cuba, with a
a portfolio of Cuban real estate assets, including tourism-
related and commercial properties.
“The strong support we have received from institutional investors, which has resulted
in the issue exceeding our original target to raise $300m, demonstrates the attraction
of the investment proposition Biopharma Credit offers the market.”
Jeremy Sillem, Chairman, Biopharma Credit
— Managed by NYC based Pharmakon / Royalty Pharma
— Raised $761.9m in March 2017 to provide debt financing to life science companies
— Has since returned to market on 3 occasions, raising over $622m, with their largest
and most recent in November
— Trading at a 6% premium to Net Asset Value
London’s public investment fund market has very
different profile to the US. Offering access to large new
pools of capital under a flexible regulatory regime
7
Main Market – Premium Main Market – Standard AIM
Advisor Listing sponsor n/a Nominated Advisor (NOMAD) all
times
Free Float 25% 25% * n/a
Revenue Track Record 3 years for 75% of business ** n/a n/a
Corporate Governance
UK combined code
(Independent non-executive Chairman,
half board independent)
Statement on Corporate Governance
Adherence to recognised code
(Board Committees, Multiple Non-
Executive Directors)
Reporting Half Yearly Half Yearly Half Yearly
Investors at IPO Institutional / Retail Institutional / Retail Institutional / Certain Individual
Investors***
Significant Transactions
(Acquisitions / Divestitures)
Class Tests - Often shareholder
approval needed n/a
Class Tests - Usually only regulatory
disclosure / press release required
Confidential Filing Registration statement issued before
equity deal research published
Registration statement issued before
equity deal research published
Yes, sometimes issue intentional to
float when deal research published.
Prospectus available after pricing
Voting Rights Multiple classes not permitted,
pre-emption rights
Multiple classes permitted,
pre-emption in some cases
Multiple classes permitted,
pre-emption in some cases,
usually dis-applied for placings
Typical
Size
Average IPO Deal Size 2018 $253m $54m
Average Market Cap at IPO
2018 $717m $112m
* If depositary receipts applies to DRs only
** Exemptions apply for “scientific research” companies, usually biotechnology companies
*** Subject to company being deemed eligible, individual accredited investors under tax incentivised investment schemes such as EIS may
invest subject to annual cap
London’s Corporate Listing Alternatives
8 8
127
84
325
142
192
39 14
0
50
100
150
200
250
300
350
$0-5m $5-10m $10-50m $50-100m $100-500m $500m-1bn $1-5bn
Source: London Stock Exchange statistics, January 2019
The Changing Face of AIM AIM is now a more diverse, mature and high quality market
923 companies,
aggregate value of
$116bn (142 Int’l
companies)
Profile of AIM Companies Industries represented (by no. companies)
Average market cap of AIM companies Average money raised at IPO by AIM companies
Industrials, 159
Financials, 155
Basic Materials, 123 Technology, 119
Oil & Gas, 103
Consumer Services, 101
Health Care, 89
Consumer Goods, 54
Utilities, 11 Telecommunications, 8
69
126
0
20
40
60
80
100
120
140
2005 2018
$m
28
54
0
10
20
30
40
50
60
2005 2018
$m
9 9
Source: Dealogic, Bloomberg, FactSet, Morningstar, January 2019
Median offer size and market cap at IPO of AIM companies, 2009-2018
—AIM stocks’ representation in funds have continued to grow in recent years as fund remits have broadened to allow a
greater proportion of their assets to be invested in AIM-listed stocks
—This has seen the average offer size and market cap at IPO grow, and market liquidity follow its upward trend
Volume of FTSE AIM All-Share shares traded
AIM Offer Sizes Continue to Grow Liquidity rises as institutional investor pool expands
0
1
2
3
4
5
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Vo
lum
e tra
de
d (
bill
ion
s)
0
20
40
60
80
100
120
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
$m
Median Deal Size
Median Market Cap at IPO
10 10
- London Stock Exchange’s Main Market is consistently less volatile when compared to US markets. Much of this is driven by its
diversified international investor base and focus on institutional investment.
- AIM displays relatively higher volatility due to its focus on high growth companies.
- Despite this, in recent years IPOs on AIM have been more stable compared to the US exchanges.
Lower Price Volatility
Source: Dealogic, FactSet, London Stock Exchange Calculation, January 2019
Note: All IPOs since 2011. Daily price volatility since listing annualized
Price volatility across markets, year by year
0
20
40
60
80
100
120
140
2011 2012 2013 2014 2015 2016 2017 2018
AIM London Nasdaq NYSE
11 11
FINRA TRF 20%
NASDAQ 16%
Dark Pools 15%
NYSE 13%
Arca 11%
DirectEdgeX 7%
BATS 7%
Other Exchanges 11%
U.S. Market Split by Venue, 20152
Not All Liquidity Is The Same US markets see higher level of fragmentation and proportion of High Frequency Trading
LSEG 68%
Bats Europe 30%
Other 2%
U.K. Market Split by Venue, 2015 1
LSEG NYSE Group
Total # Trade -1y 145m trades 218m trades
Avg trade size 785 shares/trade 214 shares/trade
“Markets today are fragmented across
11 exchanges and over 60 electronic
crossing networks and Alternative
Trading Systems (ATS).
No single trading venue or exchange
accounting for more than
20% of total market volume.”
The majority of turnover in London listed
stocks match on LSEG.
LSEG accounts for more than two thirds of
trading. LSEG, therefore, has a
comprehensive view of trading activity of
stocks listed in London.
Fragmentation
adds to cost and
complexity.
“Given that
custodians charge
by trade,
fragmentation and
execution through
multiple brokers
has had cost
implications for
institutional
investors”3
0
10
20
30
40
50
60
70
80
New York London
% of HFT in Trading1
1Source: Fidessa, Jan 2017, The Brattle Group and CS Trading Strategies report. FTSE 100 trading split by venue owner, Jan 2017 2 Credit Suisse Trading Strategy 3The Impact of Equity Market Fragmentation and Dark Pools on Trading and Alpha generation
https://investments.voya.com/idc/groups/public/documents/investor_education/fundspace_bswp-darkpools.pdf
12 12
A Vibrant Small Cap IPO Ecosystem UK typically more supportive of small / micro caps than US
Source: London Stock Exchange database, Dealogic, February 2019
.
Deal Size vs Market Cap at IPO in 2018 Number of IPOs by Companies of Market Cap lower than $250m
Small Cap Post-IPO Performance (2014 – 2018)
London’s AIM provides companies with smaller
market caps access to long-term capital
London is home to a similar number <$250 million
market cap IPOs to the US, despite the size of the
US economy. If biotech and blank check IPOs are
excluded, London has a clear lead
IPOs in this market cap bracket have performed
better in the UK than in the US
112
717 843
2,221
54
253 171
447
0
500
1,000
1,500
2,000
2,500
London AIM Lonond Main Market Nasdaq New York
Deal
siz
e a
nd
mark
et
cap
in
US
D
millio
n
Avg Market Cap Avg Deal Size
73
56 51
80
57
97
63
39
53
65
8 10 8 12
7
0
20
40
60
80
100
120
2014 2015 2016 2017 2018
LSE Nasdaq NYSE
8.6%
4.5% 4.3% 4.5%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
LSE Nasdaq NYSE United States
13 13
Diversified Gas & Oil Boku LoopUp
Industry Oil & Gas Fintech Technology
Country of Origin
Country of Incorporation UK US UK
Listing Date 3 Feb 2017 14 Nov 2017 19 Aug 2016
Market Cap at IPO $88.1m $165.1m $53.5m
Current Market Cap $828.0m $263.5m $221.2m
Deal Size $49.7m $58.9m $11.1m
% Primary / % Secondary 100 / 0 33.3 / 66.6 100 / 0
Historical Revenue at IPO $13.7m $17.1m $13.4m
Key shareholders
HSBC
Premier Fund Managers
Blackrock
Standard Life Aberdeen
Khosla, Andreesen Horowitz,
Benchmark, Index, NEA, River &
Mercantile Group
Merian Global Investors
Jupiter Asset Management
Baillie Gifford
Octopus Capital
Follow On Offerings
$35.1m – Jun 2017
$187.6m – Jan 2018
$248.0m – Jun 2018
$32.2m – Dec 2018
$52.9m – Sep 2018 $67.6m – May 2018
$12.0m – Sep 2017
Geographical Exposure
Source: FactSet, Dealogic, January 2019
.
US 100%
UK 40%
US 51%
Europe 5%
RoW 4%
Japan 43% Germany
30%
UK 23%
Taiwan 4%
Lower Revenue & Market Cap Threshold Offering support to smaller North American companies
14 14
Maxcyte Creo Medical Renalytix AI
Company Description
MaxCyte is a Gaithersburg, MD based
developer and supplier of electroporation
technology and instrumentation to
biotechnology and pharmaceutical firms
engaged in cell therapy, drug discovery
and development, bio manufacturing, gene
editing and immuno-oncology.
Creo Medical Group Plc operates as a
medical device company that focuses on
surgical endoscopy. It develops CROMA,
an electrosurgical platform that delivers
microwave and bipolar radio frequency for
precise localized cutting and microwave for
controlled coagulation.
Founded in 2018, Renalytix AI Plc
manufactures medical devices and
equipment. It offers artificial intelligence for
kidney disease.
Country of Origin
Country of
Incorporation United States United Kingdom United Kingdom
Listing Date 29 March 2016 09 December 2016 06 November 2018
Market Cap at IPO $43.2m $103.2m $81.2m
Current Market Cap $124.8m $364.2m $88.5m
Deal Size $14.2m $25.4m $28.9m
% Primary / %
Secondary 100/0 100/0 100/0
Key shareholders
Legal & General Investment Mgt
Unicorn Asset Management
Hargreave Hale
BlackRock Investment Mgt
Hargreave Hale
Baillie Gifford
AXA Investment Managers
Octopus Investments
Lombard Odier, Legal & General
Investment Mgmt, Polar Capital
Follow On Offerings $24.9m – March 2017
$14.0m – February 2019 $64.0m – July 2018 -
London Also Supports Smaller Life Sciences
Companies
Source: FactSet, Dealogic, February 2019
15 15
Source: EPFR Global, December 2018
Referendum, June 2016
Article 50 triggered, March 2017
Total Net Assets into
UK Mandated Funds
is up 3% to $276bn
since the Referendum
$276bn
Since June 2016
global AuM of UK
equities has
increased by $150bn,
76% of this increase
has occurred
following Article 50
+$150bn
Monthly Flows and Allocations into UK Mandated Funds
All Country Flows and Allocations into UK Equities
Dedicated Pool of UK Capital $276bn available that can only be invested in UK listed companies
267 276 276
-4
-3
-2
-1
0
1
2
0
50
100
150
200
250
300
350
400
Dec-1
5
Jan
-16
Fe
b-1
6
Ma
r-16
Ap
r-16
Ma
y-1
6
Jun
-16
Jul-1
6
Au
g-1
6
Se
p-1
6
Oct-
16
Nov-1
6
Dec-1
6
Jan
-17
Fe
b-1
7
Ma
r-17
Ap
r-17
Ma
y-1
7
Jun
-17
Jul-1
7
Au
g-1
7
Se
p-1
7
Oct-
17
Nov-1
7
Dec-1
7
Jan
-18
Fe
b-1
8
Ma
r-18
Ap
r-18
Ma
y-1
8
Jun
-18
Jul-1
8
Au
g-1
8
Se
p-1
8
Oct-
18
Nov-1
8
In/o
ut
flo
w (
$b
n)
Au
M (
$b
n)
AuM In/out flow
716 752
866
-8
-6
-4
-2
0
2
4
6
8
10
0
200
400
600
800
1000
1200
Dec-1
5
Jan
-16
Fe
b-1
6
Ma
r-16
Ap
r-16
Ma
y-1
6
Jun
-16
Jul-1
6
Au
g-1
6
Se
p-1
6
Oct-
16
Nov-1
6
Dec-1
6
Jan
-17
Fe
b-1
7
Ma
r-17
Ap
r-17
Ma
y-1
7
Jun
-17
Jul-1
7
Au
g-1
7
Se
p-1
7
Oct-
17
Nov-1
7
Dec-1
7
Jan
-18
Fe
b-1
8
Ma
r-18
Ap
r-18
Ma
y-1
8
Jun
-18
Jul-1
8
Au
g-1
8
Se
p-1
8
Oct-
18
In/o
ut
flo
w (
$b
n)
Au
M (
$b
n)
AuM In/out flow
16
UK-Dedicated AuM Remains Robust Europe’s largest pool of dedicated capital stands at $276bn
Source: EPFR Global, as of January 3, 2019
2.4x
4.0x
4.8x
7.0x
30x
44x
47x
95x
Largest Western European country-dedicated AuM
Relative size of
UK pool vs other
W. European
countries
The UK has a significantly larger
pool of dedicated capital compared
to its European peers with $276bn in
dedicated AuM
UK dedicated pool of capital has
remained consistently larger despite
downward pressure on UK equity
markets and GBP in 2018
A listing on the Main Market/AIM
enables access to a broad pool of
European-dedicated capital in
addition to UK-only capital (which is
unavailable to other European
destinations) 2
2
3
6
6
9
39
58
70
116
276
0 100 200 300 400
Belgium
Netherlands
Austria
Italy
Norway
Spain
France
Sweden
Germany
Switzerland
United Kingdom
AuM of Country Mandated Funds ($bn)
126x
170x
UK 47%
Europe ex UK 53%
17 17
Source: FactSet, January 2019
Access to Blue Chip Investors For London-listed American small cap growth companies
Boku
Old Mutual Global Investors
River & Mercantile Asset
Management
Legal & General Investment
Management
Maxcyte
Legal & General Investment
Management
Unicorn Asset Management
Hargreave Hale
Verseon
Lazard Asset Management
City Financial
Artemis Investment
Management
Top investors in selected Americas IPOs
PureTech Health
Herald Investment
Management
Woodford Investment
Management
Taaleri Varainhoito Oy
Top Institutional Holders of AIM Equities Value Held ($bn)
Canaccord Genuity Group, Inc. 3.8
Invesco Ltd. 3.5
Standard Life Aberdeen Plc 2.7
Old Mutual Global Investors (UK) Ltd. 2.3
Woodford Investment Management Ltd. 2.3
BlackRock, Inc. 2.3
Liontrust Asset Management Plc 2.1
Octopus Capital Ltd. 1.9
Hargreaves Lansdown Plc 1.9
Schroders Plc 1.8
Investec Plc 1.3
The Capital Group Cos., Inc. 1.3
Baillie Gifford & Co. 1.2
AXA SA 1.2
Janus Henderson Group Plc 1.1
Miton Group Plc 1.1
Fidelity 1.0
Affiliated Managers Group, Inc. 1.0
T. Rowe Price Group, Inc. 1.0
JPMorgan Chase & Co. 0.9
18 18
AIM Offers VC/PE Monetisation Route for Smaller Portfolio Companies
Source: Dealogic, February 2019
Selected AIM FO’s with Secondary component post an AIM IPO (IPOs in 2014 - )
AIM Company FO date FO Capital
Raised ($m)
Market Cap
at FO ($m) Sector
% of Company
Sold
Shares by
Issuer as %
Shares by
Shareholder as % IPO date
MaxCyte Inc 05/02/2019 14 138 Healthcare 10.9 94.9 5.1 29/03/2016
Focusrite plc 24/01/2019 10 376 Tech 2.5 0 100 11/12/2014
Gamma Communications plc 13/12/2018 38 1009 Telecommunications 4.1 0 100 07/10/2014
K3 Capital Group plc 25/09/2018 6 175 Financials 3.6 0 100 11/04/2017
Boku Inc 21/09/2018 53 518 Tech 11.7 0 100 14/11/2017
Bilby plc 04/09/2018 16 55 Industrials 31.3 0 100 06/03/2015
Fevertree Drinks plc 07/08/2018 134 5510 Consumer 2.6 0 100 04/11/2014
IMImobile plc 11/07/2018 16 261 Tech 6.1 0 100 27/06/2014
Fevertree Drinks plc 23/03/2018 117 4822 Consumer 2.6 0 100 04/11/2014
Morses Club plc 21/02/2018 33 243 Financials 14.2 0 100 29/04/2016
Ramsdens Holdings plc 08/12/2017 21 73 Financials 30.7 0 100 02/02/2017
Focusrite plc 30/11/2017 34 253 Consumer 13.8 0 100 11/12/2014
K3 Capital Group plc 28/09/2017 6 85 Financials 7.5 0 100 11/04/2017
LoopUp Group plc 25/09/2017 12 160 Tech 8.4 0 100 19/08/2016
boohoo.com plc 08/06/2017 169 3268 Tech 5.2 38.3 61.7 07/03/2014
Cerillion Technologies Ltd 26/05/2017 7 56 Tech 14.2 0 100 14/03/2016
Gear4music (Holdings) plc 19/05/2017 13 190 Tech 7.0 42.1 57.9 28/05/2015
Watkin Jones plc 24/03/2017 88 491 Industrials 19.7 0 100 17/03/2016
Purplebricks Group plc 16/03/2017 29 1002 Financials 2.9 0 100 03/12/2015
0
10
20
30
40
50
60
$0-250m $250-500m $500m-1bn $1bn+
Average % of IPO size consisting of secondary selldown, 2015-2018
London Nasdaq NYSE
87
92
75
78
77
13
8
25
22
23
0% 20% 40% 60% 80% 100%
2014
2015
2016
2017
2018
AIM IPOs Average Primary/Secondary Allocation (%)
Average of Shares by Issuer as %
Average of Shares by Shareholder as %
19 19
50%
37%
0%
10%
20%
30%
40%
50%
60%
% IPOs that have returned forFO(s)
% IPOs that have returned formore than 1 FO
Source: Dealogic, January 2019
1) Companies considered are those that had a primary raise at IPO since 2015. Median multiple of 30 days trading: The block size compared to the average daily trading in the 30 days
preceding the issue. (Average of Total Shares / Average ADTV Previous 30 Trading Days).
2) premium/discount defined as percentage change from last trade before follow-on offer to offer price. Negative value indicates a discount.
Unparalleled Follow On Environment Newly listed companies are able to raise additional capital
IPOs and FOs, 2013 – 2018
Over the last 5 years, nearly 50% of newly public
companies have accessed additional equity capital in
follow on transactions
Approximately 15% of all FOs since 2013 have been
conducted by companies that have gone public in the
same period
-6.7%
Median Discount 2 Median Multiple (x, multiple of previous 30
days trading) 1
126x
20
Source: Bloomberg, Dealogic, Factset, London Stock Exchange Computations, March 2019
*No primary capital received – selldown of existing shares held by Trive Capital received as consideration in Core Appalachia deal
Admission Date 03 Feb 2017
Money Raised $49.7m
Market Cap at IPO $86.1m
Current market cap $804.9m
Diversified Gas & Oil Growth Story Post IPO Using AIM as an Acquisition Platform
Follow On Capital Markets
Transactions
Date Deal Size
15 June 2017 $35.1m
31 January 2018 $187.6m
29 June 2018 $248.0m
13 December 2018 $32.2m*
Share
price (
$)
Top 5 Institutional Investors
(value held $m)
Sand Grove Capital Management
Premier AM Holdings
BlackRock, Inc.
Pendal Group
Man Group
69.1
54.5
42.4
26.9
23.4
Alabama headquartered with assets in the Appalachian
basin, Diversified Gas & Oil floated in Feb 2017 with a
market cap of $86m and less than 3,000 boepd of
production. In approximately 2 years, DGOC completed 8
acquisitions with total value of $1.2bn and 3 follow on equity
raises totalling $465m. It now has a market cap of $800m
and production of c. 70,000 boepd
21 21
3.8%
6.5%
5.7%
3.5%
6.4%
5.8%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
LSE NASDAQ-US NYSE
Un
derw
riti
ng
fee %
London Stock Exchange
2017 2018
Comparison of Underwriting Costs for IPOs (%)
UK vs US IPO Cost Comparison UK typically lower cost
Source: Dealogic, January 2019
22
Source: Stanford Law School in collaboration with Cornerstone Research, http://securities.stanford.edu/research-reports/1996-2017/Cornerstone-Research-Securities-Class-
Action-Filings-2017-YIR.pdf
*DDL- The total decline—that is, the dollar value change—in the market capitalisation of a defendant company from the trading day immediately preceding the end of the
class period to the trading day immediately following the end of the class period. Mega DDL filings have a dollar loss of at least $5 billion. **Source: SEC Website
Comparison of US and UK Regulatory Regimes
Key Issue United States United Kingdom
Quarterly
Reporting
Liability regime
arising from
disclosure
Sarbanes Oxley introduces a risk of
personal criminal liability for CEO
and CFO who must sign-off on
disclosure, financial and accounting
controls and disclosure in SEC filed
annual report.
Directors responsible for content of
annual report, would not incur
personal criminal liability except in
cases of fraud.
Directors and
Officers Insurance
D&O Insurance costs are typically 3x
more expensive for a company
listed in the US due to the
significantly more litigious
environment compared to the UK.
Owing to the less litigious
environment, D&O Insurance is
generally far cheaper in the UK than
the US
Litigation
Plaintiffs filled a record 412 new
federal class action securities
cases in 2017
This is 52% higher than 2016 and
more than 2x than 1997-2016
average
Snap Inc (NYSE.SNAP) was
subject to class action filing 2
months after listing.
In January 2018, Brazilian oil
company Petrobras agreed to pay
$3bn as settlement to a class
action lawsuit
We were not able to identify a class
action in the UK against any
London listed foreign company.
This compares to 336 class actions
against foreign US listed companies
since 2008.
0 1000 2000 3000
US Corporate
Foreign Corporate
USDm
FCPA 2016 Settlements against US vs Int’l firms**
Market Cap loss that preceded class action
(Direct Dollar Loss* by size Average (1997-2015))
54%
11%
8%
10%
8%
6% 3%
Mega ≤$500M ≤$1B ≤$2B ≤$3B ≤$4B ≤$5B
23
US Litigation Environment Class Action lawsuits are increasing in frequency
On 2018 levels, companies
publicly traded in the US are
being sued at an annualized rate
of nearly 9%. This compares to
2016 rate of 5.6%, and the 1996
– 2015 average of 2.5%.2
— 24 foreign
issuers sued in
H1 2018
— 50 foreign
issuers sued in
2017
2018 was third most litigious year since 1996. Only 2001 and 2017 saw more filings :
— In 2018, there were 396 class action law suits.
— Significantly above historical average of 203 per year.
— Following the 412 lawsuits in 2017, the trend of an increasing number of class
actions continues.1
1 http://securities.stanford.edu/
2 http://www.dandodiary.com/2017/04/articles/securities-litigation/need-know-ytd-securities-class-action-lawsuit-filings-off-charts/
3 https://www.cornerstone.com/Publications/Reports/Securities-Securities-Class-Action-Filings%E2%80%942018-Midyear-Assessment
24
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Sarah E Baker
Head of Strategic Engagement, North America
LSEG New York office
+1 917 582 1815
Chris Mayo
Head of Primary Markets, Americas
LSEG Chicago & New York offices
+1 646 925 9811