the london stock exchange aim market - k&l gates london stock exchange aim market: securing...
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The London Stock Exchange AIM Market: Securing Capital through an Initial Public Listing or Dual Listing
Breakfast Briefing and Web Cast October 4, 2007
Contents Tab Number
The London Stock Exchange AIM Market: Securing Capital through an Initial Public Listing or Dual Listing .............. 1
Presentation Slides Speaker and Company Profiles .................................................. 2 Introduction to AIM Guide to AIM AIM–NASDAQ Comparison ........................................................ 3
Speaker and Company Profiles Speakers:
Richard Webster-Smith, London Stock Exchange
Jeremy Landau and Alex Gibson, K&L Gates
Steve Smith, Ernst & Young UK
Nigel Daly, Piper Jaffray & Co.
Heather Salmond, Abchurch Communications
Alex Munro, London Bridge Capital
Series Host: Stephan Coonrod, K&L Gates
1
The London Stock Exchange AIM Market:
Securing Capital Through an Initial Public Listing or Dual Listing
Presentation Topics
AIM: Supporting the Growth of Small and Midcap CompaniesRichard Webster-Smith, London Stock Exchange
Introduction to AIM – the Legal ProcessJeremy Landau and Alex Gibson, K&L Gates
Key Accounting Issues for an AIM IPOSteve Smith, Ernst & Young UK
The Nomad's Point of View - Securing Capital and Who Should Look to List on AIMNigel Daly, Piper Jaffray London
How to Communicate an IPOHeather Salmond, Abchruch Communications
Preparing Companies Before the AIM Admission ProcessAlex Munro, London Bridge Capital
2
Supporting the growth
of small and midcap
companies
October 2007
UK Companies
Total companiesDomestic: 3,281International: 666
Market capitalisationMain Market:UK listed: US$3,794bnInternational listed: US$5,061bnAIM: US$208bn
Equity turnover (Jan-July 2007)Main Market:Domestic: US$5,586 bnInternational: US$6,840bnAIM: US$103bn
Source: London Stock Exchange statistics – August 2007
London Stock Exchange - key statistics
3
UK Companies
Total number of IPOs on the LSE, Nasdaq and NYSE 2000-2007
0
50
100
150
200
250
300
350
400
450
2000 2001 2002 2003 2004 2005 2006 2007
Lon Stock ExchangeNasdaqNYSE
The platform of choice for international companies
In 2006: • London Stock Exchange - 367 new companies joined in 2006. NYSE, Nasdaq & Hong Kong Stock Exchange had 332
IPOs in 2006.• $104bn were raised on the London Stock Exchange, $40bn on NYSE, and $29bn on Nasdaq
• First half of 2007 - $26bn were raised on the London Stock Exchange. NYSE and Nasdaq raised $21bn combined.
Source: London Stock Exchange and Exchanges website – August 2007
UK CompaniesThe widest choice of proven global markets
A choice of globally respected markets supported by a wide range of institutional & retail investors
Supports more established companies seeking further
growth.1,596 issuers
Supports earlier stage companies in their initial growth period.
1,685 issuers
Main Market
Sponsor
UK Listing AuthorityNominated Adviser (Nomad)
Source: London Stock Exchange statistics – August 2007
4
UK Companies
The world’s most successful growth market
UK Companies
• AIM companies: 1,685
• Overseas AIM companies: 329
• IPOs on AIM in 2006: 341• 232 UK • 109 overseas
• IPOs on AIM in 2007: 134
• Capital raised (new & further) since 1995: US$104bn
• Capital raised (new & further) in 2006: US$31bn• $US 21bn UK companies• $US 10bn overseas companies
Key Statistics
Source: London Stock Exchange trade statistics – August 2007
5
UK CompaniesAIM – critical mass to support growth
Source: London Stock Exchange trade statistics – August 2007
Number of admission 1995 to 2007
123145
107
75102
277
177160 162
355
519
462
201
0
100
200
300
400
500
600
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Num
ber
of a
dmis
sion
s
UK Companies
0
5
10
15
20
25
30
35
2000 2001 2002 2003 2004 2005 2006 2007
Fund
s ra
ised
($b
n)
Further money raised ($bn)
Money raised at admission ($bn)
Raising new and further capital on AIM
More money was raised on AIM in 2006 ($31bn) as on NASDAQ ($29bn).
If AIM were an independent stock exchange it would be the sixth largest in the world (by money raised).
Source: London Stock Exchange trade statistics – August 2007
6
UK Companies
Flexible regulation
Admission Rules
• No minimum size to be admitted
• No minimum financial history required
• No minimum amount of shares to be in public hands
• In most cases, no prior shareholder approval required for transactions
• Admission documents not pre-vetted by Exchange or UKLA but by nominated adviser
• Nominated adviser (Nomad) required at all times
Appropriate regulation and oversight
UK Companies
Continuing obligations
AIM companies are subject to the AIM Rules which outline the continuing obligations ofbeing on a public market. Some of the key continuing obligations are:
• AIM companies must have a Nomad at all times, otherwise they will be suspended from the market
• AIM companies must disclose all price sensitive information in a timely manner including substantial transactions, related party transaction, reverse takeovers and other miscellaneous transactions
• Half yearly and annual report and accounts required in adherence with deadlines
• All directors accept full responsibility, collectively and individually for the AIM Rules
• Restrictions on deals for directors and applicable employees on AIM securities during close periods
• UK Corporate Governance standards
Appropriate regulation and oversight
7
UK CompaniesAIM: a market for companies of all sizes
Source: London Stock Exchange trade statistics – August 2007
Distribution of AIM Companies by Market Value August 2006 vs August 07
0
50
100
150
200
250
300
350
400
Less than$3.9m
$3.9m - $9.9m $9.9m -$19.8m
$19.8m -$49.5m
$49.5m -$99m
$99m - $198m $198m -$495m
$495m -$990m
$990m -$1980m
over £1980m
Market Value (US$)
No
of C
ompa
nies
No of companies August-06
No of companies August-07
UK CompaniesA diverse market
Source: London Stock Exchange trade statistics – August 2007
Top AIM sectors by market capitalisation and no. of companies Aug 07
-
5,000
10,000
15,000
20,000
25,000
30,000
Real Estate Mining SupportServices
GeneralFinancial
Oil & GasProducers
Softw are &ComputerServices
Media EquityInvestmentIntruments
Travel & Leisure
Pharmaceuticals& Biotechnology
Mkt
Val
ue (U
S$m
)
0
50
100
150
200
250
Num
ber o
f com
pani
es
Latest Market Value USD$Number of Companies
8
UK CompaniesUS companies - sectors
Sector distribution of US companies by number August 07
Other24%
Oil & Gas Producers12%
Electronic & Electrical Equipment
12%Software & Computer
Services11%
Pharmaceuticals & Biotechnology
9%
Support Services5%
General Financial5%
Health4%
Media4%
Speciality & Other Finance4%
Automobiles & Parts5%
Chemicals5%
UK CompaniesUS companies – size distribution
Distribution of US companies by market value August 07
0
2
4
6
8
10
12
14
16
18
20
22
Less than $9.9m
$9.9m - $19.8m
$19.8m - $49.5m
$49.5m -$99m
$99m - $198m
$198m - $495m
$495m - $990m
over $990m
Market Value (US $)
No.
of C
ompa
nies
9
UK CompaniesInstitutional investors understand AIM
All of the main UK institutions invest in AIM.
151413
12111098
7654321
Rank
692.1778RAB Capital719.85120F & C Asset Management
750.2054CSFB
725.0027Lansdowne Partners
750.7459UBS
1,077.3290Gartmore993.7057Schroders886.1172Goldman Sachs
1,115.16118AXA1,178.105Cede & Co1,179.3167Merrill Lynch1,290.3184AMVESCAP1,297.9750New Star Asset Management1,341.29130Artemis Investment Bank2,052.41160Fidelity
Value of Investments (US$m)No of InvestmentsMost active Institutions by value of investment
Source: London Stock Exchange trade statistics – December 2006
UK Companies
Better value than NYSE or NASDAQ
Admission fees for Non-domestic Equities US$8,980
Annual fees for Non-domestic Equities US$8,980
Source: London Stock Exchange – August 2007
Simple, cost-effective
10
UK CompaniesCase study – Clipper Windpower Plc
Core business activitiesThe Clipper Group designs wind turbines and is a developer and owner of wind development projects. Since it was founded in 2001, the group has focused on developing advanced wind turbine technology embodied in its new Liberty 2.5MW turbine. The Liberty turbine has been designed to provide a machine that is more efficient, more reliable, easier to erect and maintain and offers a significantly longer life than conventional wind turbines in the market. Through these advances, the company believes the Liberty turbine offers a lower cost of energy over a full range of wind classes than thatoffered by competitors’ turbines in the market.
ObjectivesThe net proceeds were used to fund the tooling, manufacture and assembly of the Liberty turbine and for continuing project development and construction. In addition, the Directors used a portion of the net proceeds to expand and strengthen the management and engineering team and for further development and commercialisation of its technology. Initially, the proceeds will provide funding for the manufacture of turbines for installation into Clipper’s most advanced power projects, located in Maryland, and Iowa, USA as well as providing funding for infrastructure costs of these projects.
“The AIM market has enabled our company efficiently to move to the next level of its development and build out a production platform for our industry leading turbine
technology. Clipper Windpower achieved its principal goals in the AIM offering as well as
broadening our exposure to European investors and increasing our global profile.”
Jim Dehlsen - Chairman and CEO
Transaction Synopsis
Date of Admission : 15 September 2005Market: AIMTransaction: PlacingMarket Cap. admission: $358mCapital raised initially: $149mFTSE Classification: Utilities - ElectricityCountry of Incorporation: UK re-incorporation (USA)Nominated Adviser: Lehman BrothersBrokers: Lehman Brothers
UK Companies
Overview of Clipper IPO
Clipper was admitted to AIM on 15 September 2005
July 06, Clipper Windpower and BP announce a strategic turbine supply and joint development agreement.
Shareholder % Dehlson Associated LLc 14.6
Energy Spectrum Partners II and III L.P
8.5
Hare & Co 8.0
Trustees of the Dehlson Family Trust
6.2
Lucas Energy Total Return Master Fund L.P.
3.2
Montecito Bank and Trust 4.4
Pioneer Asset Management SA
4.0
Lansdowne Partners Ltd 3.2
Threadneedle Asset Management
3.2
Fidelity Investments 2.5
Shell Pension 1.9
Shareholder £m $m % Market Cap, on admission 181 334
Fund Raised 75 138 – Primary 67 120 87
– Secondary 10 18.5 13
Placing price per share 190p
Free Float 65%
Case study – Clipper Windpower Plc
11
UK Companies
As companies mature and grow, the Main Market offers a migrationpath
FIRST QUANTUM MINERALS joined AIM in April 2001. Their market cap is now over C$4.5 billion, and in March 2007 they announced they will migrate to the Main Market
AIM is a platform for growth
UK Companies
To summarise… why choose AIM
• The world’s most successful growth market
• An internationally focused, professional investor base
• Comprehensive research coverage for international companies
• A more flexible approach to regulation
• Better value than NYSE or NASDAQ
The Exchange of choice for companies wishing to access the international capital markets
12
AIMTAKING YOUR COMPANY PUBLIC ON THE
LONDON STOCK EXCHANGE
INTRODUCTION
Preparing for IPOCorporate structureRegulationHow to IPO
13
KEY PREPARATIONSAppointment of advisers
Plan and prepareSpeak to your lawyers at an early stage
KEY PREPARATIONSOrganisation of company’s management
Agree a timetableSet up working groupsGet the right non-executive directors
14
CORPORATE STRUCTURERoutes for US Companies
Three main routesTax considerationsUS company admitted to AIM directly
Regulation SElectronic trading – CREST and SISIncreased liquidity
CORPORATE STRUCTURERoutes for US Companies
US company admitted via UK PLC holding company
pre-admission reorganisationshare for share exchange
US company admitted via off-shore holding company
tax considerations
15
US COMPANIESLighter regulation on AIM
No Sarbanes Oxley equivalent rulesNo Sarbanes Oxley equivalent costsGuidance on corporate governance produced by Quoted Companies Alliance
AIM has a lighter approach to regulation
The reality of SOX
Increased Cost
SOX has negatively impacted companies’ bottom line by
increasing the cost of compliance
Uncertainty
SOX has increased international companies’ uncertainty due to the
changing regulatory framework
Increased Risk
SOX has increased international companies exposure to US
litigation
Increased Threat
SOX has increased the threat to the individuals in key roles (CEO
& CFO) of personal liability claims
Lost opportunity
Acquisitions become riskier, harder and slower to complete
16
CASE STUDY – DAWSON HOLDINGS PLC
First company on AIM in 1995Printed media distributorShare price $8.25 to $15.40 in 1 yearSpringboard to full listShares as acquisition currencyTurnover up from $122m in 1990 to $1.3bn in 1999
The AIM Market of the London Stock Exchange
1. AIM in context2. Basic requirements for an AIM Listing3. AIM Admission Process
17
AIM in context
Over $30 billion funds raised by AIM companies in 2006 (c.f. $16 billion in 2005)Over 1650 companies now on AIM – combined market cap of circa £110 billionMore companies on AIM than Official ListAIM’s popularity on international stageOther secondary markets can’t competeAIM – the only credible market for SMEs
HOW TO IPO
Basic requirementsAdvisersProcess
18
HOW TO IPOBasic requirements
Requirementsno trading record neededno minimum market capno minimum public float
Only 45 AIM rulesLess stringent continuing obligations
HOW TO IPOBasic requirements
AIM Rules:Shares capable of being offered to publicAppoint and retain Nomad and BrokerNo restrictions on transfer of sharesEligibility for electronic settlement All securities of class to be listed“Lock in” requirements
19
HOW TO IPOYour Advisers!
LEGAL
CompanyBoard ofDirectors
Nominated adviser/Broker
PR PrintersRegistrar
Company'sLawyers
(UK + US)
NOMAD'sLawyers
(UK)
Auditors
ReportingAccountants
ACCOUNTING
HOW TO IPOOverview of process
Admission document draftedLegal due diligenceFinancial due diligenceVerification – protecting directorsLondon Stock Exchange formal dealing notice10-14 week timetable
20
K&L Gates: A Few FactsOver the last 2 years:
1st Spin out of businesses from NASDAQ onto AIM (life sciences)
1st Greek based company to IPO on AIM (technology)
1st Japanese company to IPO on AIM (technology)
1st Share for share takeout offer for an AIM company using Japanese paper (natural resources)
1st Fundraising to use a prospectus under the new UK Prospective Regime (financial services)
1st Spin out of a subsidiary of a JASDAQ listed Japanese company onto AIM (manufacturing)
1st US company to utilise SIS System for trading restricted US Reg. S stock
Advised on more than 40 AIM IPO’s over last two years
Advised on more than 200 IPO’s over last eight years
IPO Services
The Financial Aspects of an IPOHelping you to understand the challenges that you may face in listing your company on the Alternative Investment Market
Steve SmithIPO Leader UK NorthTransaction Advisory ServicesErnst & Young LLP+44 161 333 [email protected]
Seattle4 October 2007
21
Ernst & Young in the IPO Space
Number of dealsEY
14%
DT14%
KPMG11%
PwC12%
Other49%
Total capital raised
EY29%
DT18%
KPMG15%
PwC23%
Other15%
Source: Dealogic, Thomson Financial
Globally 2006UK IPOs (>£200m) 2006 (% of proceeds raised)
UK IPOs 2006 (% of proceeds raised)
D T10%
EY46%
KP M G3%
P WC30%
Other9%
Unkno wn2% D T
11%
EY38%
KP M G6%
P WC28%
Other11%
Unkno wn6%
Source: Dealogic, Thomson Financial
• Short form report
• Working capital report
• Long form report
• Comfort letters
Reporting Accountant
AIM Candidate
Parties involved in an IPO
• Issue audit opinion on financial statements
• Comfort letters
Auditor
• Analysis and optimization of key business processes, KPIs
• Development of IFRS compliant reporting policy & procedures
• Definition of internal controls framework
• IT Audit & Security
• Tax structuring & transfer pricing
• Management incentive schemes, Non-executive directors system
• Environmental DD
• Legal DD
Other Advisors
• Test marketing
• Identify investors
• Valuation benchmarking
• Marketing roadshow
• Book-building and pricing
Broker
Lawyers
Financial PR
Registrars
NOMAD
• Ensure that the directors of the Company have received satisfactory advice and guidance as to the nature of their obligations
• Coordinate the work of other professionals – such as accountants and lawyers who are involved in preparing a Company for the market
• Issue an opinion that it is satisfied that the Company applying to AIM is appropriate to be admitted.
Competent Person
• Resource companies
22
The AIM Admission Document
The Public Document – similar to a Prospectus
Description of the business
− A balanced appraisal of the business and its prospects
− The risk factors
− Details of the offer and the use of funds
Financial information
− Includes historical financial track record – 3 years possibly with recent stub period
› Accountant’s report
› Previously audited financial information with audit reports
Legal disclosures
− Includes working capital statement and significant change in financial position disclosure
The role of the accountant in an IPOReporting accountant
• Preparation of accountant’s (short form) report(s)
• Preparation of long form report
• Preparation of working capital report
• Other comfort letters
Tax advisor
• Structuring advice
• Independent tax diligence
• Tax clearances
• Review tax section of the prospectus/admission document
23
Short form Public report, included in document
Reports on the financial information supplied on the Company
• Typically 3 years
• US GAAP is acceptable
Gives an opinion similar to audit opinion – “true and fair view”
• Review audit files for a period of up to three years to the date of the latest audited accounts
• Perform additional audit work (if necessary) to ascertain that the report gives a true and fair view
• Reporting Accountant ensures there is adequate reliable evidence to support the opinion
Need to watch the 135 day rule (under US rule144a) for age of financial information if shares are offered in the US as well
Long form report Private document – addressed to the Nomad and the Company
Full scope due diligence report prepared to assist in the drafting of the admission document, to determine the suitability of the Company for admission and covering:
• History, development and strategy of the business
• Management, employees and organisation structure
• Financial reporting procedures and accounting policies
• Historical financial information
• Taxation
Significant amount of information required from Company
Substantial management time commitment
24
Working capital report Private document – addressed to the Nomad and the Company
Directors are required to make a statement in admission document concerning sufficiency of working capital for 12 months
Company prepares financial projections model for valuation purposes but also to support this statement
Accountant’s report on this in order to give comfort on the statement
• Detailed review of model
• Sensitivity analysis
Significant management time – taken in preparation of model and accountant’s review
Other comfort letters Pro forma financial information
• In admission document to illustrate changes due to IPO
• Reporting accountant reports on this (private report)
Profit forecast
• Try to avoid making profit forecasts in admission document
• If made, must be reported on by accountant’s
• Significant piece of work
Review of admission document
• General assistance in drafting process
• Comfort on certain financial/tax matters
US share offering would require separate ‘SAS 72’ comfort letter
25
Roles of reporting accountant vs auditorThe role of the Reporting Accountant and Auditor are different and will be conducted by different teams whether the Reporting Accountant is from the same firm or a different firm.
Based on the future structure of the Group, prepare a pro forma balance sheet and income statement that supports the marketing process
NonePro forma
Comfort on selected financial information disclosed in the ProspectusNoneProspectus
Review and report on the forecast cash flows and funding position of the Group to be listed
NoneWorking Capital Report
Formal sign off on the appropriateness of the Group’s financial reporting procedures and controls
NoneFinancial Reporting Procedures
Review and report on the affairs of the Group to be listed to enable the Sponsor to approve the IPO
NoneLong Form Report
To give a fresh, audit style, opinion on the financial informationAudit the financials of the legal entities which will eventually form part of the Group
Short Form Report
Role of the reporting accountantRole of the auditorDeliverable
In effect, the Sponsor requires support from the Reporting Accountant to meet its regulatory responsibility
Issues that may be encounteredOur experience in performing IPOs indicates that the Reporting Accountant may need to deal with issues in the following areas
The evolving nature of tax legislation of many countries may mean that changes are required to meet Nomad and market expectationsTaxation
Local historical audit evidence available may not be sufficient to enable sign-off. This may require significant reworkDocumentation
The historical accounting policies may not be in line with your peer group and may need to be amendedAccounting policies
There will be a series of related party transactions and balances that need to be appropriately disclosedRelated party disclosures
Demonstrable unencumbered title to assets (throughout their operating life) needs to be demonstratedAsset title
Public companies have additional disclosure obligationsHigher burden oftransparency and disclosure
Our approach and early issues review is designed to identify these potential issues, enabling us to design solutions which can then be implemented without disruption to the timetable.
26
To conclude
In our experience AIM is open for US companies
• It will take longer than you expect
• Plan as early as you can
Choose advisors carefully
• Knowledge
• Experience
• Reputation
ERNST & YOUNG LLP www.ey.com
Disclaimer: Information in this presentation is intended to provide only a general outline of the subjects covered.
It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place
of professional advice. Ernst & Young accepts no responsibility for any loss arising from any action taken or not taken
by anyone using this material.
The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with
registered number OC300001 and is a member practice of Ernst & Young Global.
27
The NOMAD’s Point of View Securing Capital and Who Should Look to List on AiM?
Palo AltoSan FranciscoLondon Minneapolis New YorkChicagoHong KongShanghaiBeijing
Table of Contents
Section I Securing Capital
Section II Who Should Look to List on AiM?
Appendix A IPO Process
Appendix B Liquidity case study
Appendix C Overview of Piper Jaffray
28
SECTION ISecuring Capital
Possible reasons for considering AiM
• Access development capital
• Secure future funding rounds
• Remove inefficient financing
• Provide an exit for existing shareholders
• Achieve greater liquidity
• Gain an international shareholder base
• Facilitate expansion into Europe
• Enhance the Company’s profile and status – increase press coverage and transparency of public reporting
• Provide currency to make acquisitions
• Provide currency to incentivise staff and encourage employee share ownership
• Achieve a dual listing
• Avoid costly U.S. regulatory environment
There are several good
reasons to consider an
AiM IPO, but for smaller
U.S. companies the key
driver has often been to
avoid the costly U.S.
regulatory environment
accompanying a listing
in the U.S.
Regulatory arbitrage is
not well received by
institutional investors
“WHY AiM?” – the first question from institutional investors
29
Successful listing characteristics - generally
• Realistic valuation expectations
• Experienced management team – professional, dynamic, communicative and open
• Strong track record of delivery
• Growth potential
• Visibility of future earnings
- recurrent revenue
- company newsflow
• Well positioned in a significant and well defined market
• Clearly defined strategy and robust business plan
• Competitive advantage - innovative products/services/technology
• Protected market position
- barriers to entry
- IP
• Size of free float
- greater liquidity and free-float is valued highly by investors
- 25%+ of outstanding shares
- at least $20-25m in absolute terms
• Quality of NOMAD
The quality threshold for companies seeking an IPO is not lower on AiM
Institutional investors
are increasingly focused
on high quality
companies as the
market softens, a
situation which is
exacerbated for foreign
companies
Successful listing characteristics – U.S. companies
• Clear rationale for AiM listing
– international revenues
– international operations, preferably with a European presence
– defined international expansion plans
• Adoption of, or readiness to adopt, UK plc practices
– Board structureChairman and CEO separate
independent non-executives – at least two
regular re-election
audit, remuneration and nomination committees
– investor protectionspre-emption rights
disclosure of substantial share interests
mandatory take-over provisions
– non-U.S. holding companymay be beneficial to avoid SEC registration obligations
but consider tax implications
– preferred stock converted into ordinary shares
U.S. companies can increase the warmth of welcome by investors by articulating clear business reasons to list on AiM and by adopting certain corporate governance good practices
30
Other key issuesPrimary vs. Secondary• Primary preferred by investors but must be clear rationale and justification• Partial exit possible
– small proportion of overall offering size: more than 50% exceptional– small proportion of holders’ shares sold – shares being sold by longer term shareholders, though wary of founders cashing-out– but positive effect on offering size and liquidity– often through Greenshoe
Board presence• Remote in distance and time zones
– executive management regularly required to be in UK – recommend one director to be based in the UK
Share option schemes• Needs justification to price at less than the IPO price• The longer between award and IPO the better if priced at a discount, even if priced at ‘fair
value’• Performance hurdles
Other key issues (cont’d)Accounting standards and financial history• U.S. GAAP is permissible• A three year track record will not be required
Company lock-up
• 6 – 12 months– with 6 - 12 month orderly market agreement
Shareholder lock-ups• For companies whose main business activity has not been independent and revenue earning
for two years prior to Admission, 12 months lock-up for Directors, Substantial Shareholders (≥10%) and their Associates and Applicable Employees (≥0.5%) (Rule 7 of the AiM Rules for Companies)
• Otherwise,– 12 month lock-up for senior management– with 6 - 12 month orderly market agreement– may be longer if selling stock on IPO
• Limited exceptions – take-over offer, death or court order or, if not Rule 7, with agreement of NOMAD
31
Other key issues (cont’d)Transfer restrictions of stock• Under Reg. S offerings, no offers or sales of shares in the U.S. or to U.S. Persons (for 12
month period)– no distribution to LPs possible– possible to sell to QIBs through Rule 144A if require U.S tranche
• Traded in certificated form or electronically through SIS to enable non-U.S. persons compliance
– impacts secondary market liquidity– set up second line of stock that can be CREST settled once seasoned (Protonex)
U.S. securities filings• Will not be avoided if over 300 stockholders worldwide (for a U.S. issuer) – difficult to control
Recent corporate activity• Such as funding rounds or awards of share options (even if at ‘fair market value’)
– provides a valuation reference point for investors– strong justification needed for uplift– the more time and more newsflow after activity the easier to justify
Collation of all significant information for drafting of the Admission document/prospectus Review of all material company contracts, etc
Due diligence and preparation of offering
documents
Research forms a key part of the marketing process by raising investor awareness prior to offeringProvides investors with an objective and independent view of valuation
Research analysts accumulate investor feedback on valuation and story Establish price range for the offering
Senior management communicate ‘equity story’ to key investors globallyAssessment of quality and price sensitivity of demand
Recommend IPO price by bookbuilding analysis of demand and quality of investorsPricing to provide stock with the right momentum in aftermarket
Committing capital to market makingPeriodic presentations to keep investors informed of the Company’s progress and prospects
Research
Investor education
Roadshow and bookbuilding
Pricing/Closing
On going support
Overview of IPO process
32
Indicative timetable
ADMISSION
WEEK 12
WEEK10
WEEK 8
WEEK 7
WEEKS 2-6
WEEK1
• Pricing and allocation of the IPO• Six copies of final Admission documents submitted to the LSE• AiM declaration submitted • Nominated Adviser announcement
• Final draft accountants report• Final draft Admission document• Ten day announcement released• Marketing to institutions
• First draft accountants report• Second draft Admission document
• First draft Admission document• Draft due diligence reports
• Appoint accountants and lawyers• Due Diligence – legal• Due Diligence – financial• Due Diligence – commercial• Due Diligence – IT / other
• Appoint Nominate Adviser• Appoint Broker
Outline timetable
Valuation process overview
Investor educationResearch preparation/ Build investment case Roadshow
PricingBalance price and demand
through stable allocations to ensure strong aftermarket
performance
• Set guidelines for pre-marketing approach to valuation discussion with investors
• Piper Jaffray receives investor feedback on valuation and story
• Establish indicative price range for prospectus
• Education on operating and financialassumptions
• Ongoing dialogue withsyndicate analysts
• Articulation of keyinvestment themes
• Consensus generationon projections andvaluation framework
• Senior management communicates ‘story’ to investors – bookbuilding commences
• Assessment of quality and price sensitivity of demand (consideration of aftermarket performance)
• Recommend IPO price
Company projectionspreparation
• To be able to determine an indicative valuation range, Piper Jaffray will work closely with the company to produce detailed financial projections based on company assumptions
• Company will be benchmarked against its peers• A DCF model will then be constructed, against which a
valuation range can be benchmarked
IPO ‘Pricing’
Initialvaluation range
Research analyst
presentation
Indicative price range set and Preliminary prospectus distributed
IPO pricingagreed
3-4 weeksBuild investment
case
1-2 weeksEncourage perception of
scarcity/competition among investors
1-2 weeksCreating demand
tension
Researchpublication (including
valuation)
Low
High
Potential‘Valuation
Range’
TodayBuild detailed
financial model
33
SECTION IIWho Should Look to List on AiM?
A market for companies of all sizes
Distribution of AIM Companies by M arket Value August 2006 vs August 07
123
178
222
367
233
199
145
2310 6
104
171
227
359
274
242
183
68
204
0
50
100
150
200
250
300
350
400
Less than$3.9m
$3.9m - $9.9m $9.9m - $19.8m $19.8m -$49.5m
$49.5m - $99m $99m - $198m $198m -$495m
$495m -$990m
$990m -$1980m
over $1980m
M arket Value (US$)
No.
of C
ompa
nies
The majority of AiM
companies have a
market cap below
$200m – a striking
contrast to NASDAQ
and the LSE Official List
– although sizes are
growing
60% of AiM companies
by value now have a
market cap. greater than
$200m
U.S. companies on AiM
tend to be larger than
the market as a whole
No. of companies August-06
No. of companies August-07
Distribution of US companies by Market alue August 07
6 6
14
16
21
65
2
0
2
4
6
8
10
12
14
16
18
20
22
Less than $9.9m
$9.9m - $19.8m
$19.8m - $49.5m
$49.5m -$99m
$99m - $198m
$198m - $495m
$495m - $990m
over $990m
Market Value (US $)
No.
of C
ompa
nies
Source: London Stock ExchangeData through Aug 31, 2007
34
A market for companies of all sectors
Sector distribution of US companies by number August 07
9 9
8
7
4 4 4 4
3 3 3
0
1
2
3
4
5
6
7
8
9
10
Electronic &Electrical
Equipment
Oil & GasProducers
Software &ComputerServices
Pharmaceuticals&
Biotechnology
Automobiles &Parts
Chemicals GeneralFinancial
SupportServices
Health Media Speciality &Other Finance
No.
of C
ompa
nies
While real estate,
natural resources,
support services and
financials lead the pack,
AiM is a market open to
all sectors
For U.S. companies,
Technology, Healthcare
and Oil & Gas
companies dominate
Top AIM sectors by market capitalisation and no. of companies August 07
106179
146 193102
143 116 66 8876
-
5,000
10,000
15,000
20,000
25,000
30,000
Real Estate Mining SupportServices
GeneralFinancial
Oil & GasProducers
Softw are &ComputerServices
Media EquityInvestmentIntruments
Travel & Leisure
Pharmaceuticals& Biotechnology
Mkt
Val
ue (
US$
m)
0
50
100
150
200
250
Num
ber o
f com
pani
esMarket Value USD$Number of Companies
Source: London Stock ExchangeData through Aug 31, 2007
A market for companies seeking to secure capital
Number of admissions 1995 to 2007
123145
107
75102
277
177160 162
355
519
462
201
0
100
200
300
400
500
600
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Num
ber o
f adm
issi
ons
AiM is maturing as a
market – the average
amount raised by
companies floating on
AiM is now c. $95m*
and growing
However, the climate for
IPOs on AiM, and
foreign companies in
particular, has cooled
recently
* Excluding IPOs <$5m; 2007 YTD
Note: Includes transfer and relistings
3.51.2 1.0 2.2
5.5
12.8
19.7
10.62.6
1.1 1.02.0
3.7
4.9
11.4
15.3
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2000 2001 2002 2003 2004 2005 2006 2007
Fund
s ra
ised
($b
n)
Further money raised ($bn)
Money raised at admission ($bn)
35
A market for high quality growth companies
• No minimum capitalisation, free float or shareholder requirements– allows earlier stage, smaller companies to float– attracts investors seeking high growth opportunities– ‘Bigger fish in a smaller pond’
• No operating history and trading record required (if no offer to the public and prospectus)– companies can be admitted to AiM before they are old enough to list on the Main
Market in London or on NASDAQ
• Internationally orientated institutional investors hungry for high quality, high growth stories, regardless of country of incorporation
– companies that meet the standards discussed earlier will attract strong investor interest
AiM allows high quality
companies with a strong
equity story to achieve a
public market quotation
sooner than on the full
Official List in London or
on NASDAQ
APPENDIX AIPO Process
36
Preparation: due diligence and documentation
Regulatory and legal requirements and market practice oblige Piper Jaffray and transaction counsel to undertake extensive due diligence
Due diligence process:
• Piper Jaffray and lawyers meet with Issuer’s management, board and auditors• The Admission document/prospectus must fully and accurately portray the issuer’s affairs with no material omissions• Key selling messages developed
– position the Issuer– address potential concerns
Admission document/Prospectus:Admission document/prospectus serves two functions – a disclosure document (approved by, and filed with, the UKLA if a prospectus) and a marketing document to sell the offer. The Admission document/prospectus contains:
• business activities• trading history • management structure• future direction
Research report – prepared by the senior syndicate managers’ research analysts (who give their independent view), distributed before the offering and used as the managers’ principal marketing tool, guiding investors towards the appropriate valuation. One-on-one and roadshow presentations – used to market the Issuer and its investment case to investors.
• details of offering
• current shareholders
• risk factors
• other financial and legal information
Pre-marketing
Roadshow
Bookbuilding
Pricing/Allocation/
ClosingStabilisationDue
Diligence
Preparation of offering materials
Research
Legal documentation
• Regulates the offering and placement of shares• Partly based on letter of engagement, but also includes representations and warranties by the
Issuer and selling shareholdersUnderwriting Agreement
• General agreement between the Issuer and Piper Jaffray • Regulates rights and obligations in the course of preparation of the issue, including
commission and reimbursement of costsEngagement Letter
• Auditors’s confirmation regarding accuracy of financial data published in the prospectus• Negative assurance of no material change since last auditLetter of Comfort
• Submitted by lawyers• 10b5 opinion not required if no selling into the USLegal Opinion
• Company, directors, selling shareholders• Designed to protect investorsLock up
Pre-marketing
Roadshow
Bookbuilding
Pricing/Allocation/
ClosingStabilisationDue
Diligence
Preparation of offering materials
Research
37
Importance of research
It is important for the Issuer to appoint a Lead Manager whose investment research is highly regarded
Piper Jaffray would produce comprehensive research and co-ordinate research production by any other syndicate members
Institutional investors rely heavily on research in making investment decisions
Research forms a key part of the marketing process for any new issue
• raises investor awareness prior to offering
• explains valuation
• provides investors with an objective and independent view
• induces investors to alter portfolio allocationsInvestor education enables the indicated size and price range to be based on accurate feed-back
Approximately two weeks prior to launch, specific investor education of the issue would commence
From this pre-marketing a picture of the likely level of investor demand will emerge. Based on this feedback, the Issuer and Piper Jaffray set the expected size and the anticipated price range of the offering. This allows extensive but directed ‘price talk’with institutions during the building of the book of demand, creating price tension
Pre-marketing
Roadshow
Bookbuilding
Pricing/Allocation/Closing
StabilisationDueDiligence
Preparation of offering materials
Research
Germany
ActivestAllianz/DIT Bayern Invest Cominvest DWS DeutscheDGZ-DekaBankFrankfurt TrustInvesco Kapital
Lupus AlphaNordinvestOppenheimDeutsche Postbank SEBUnion InvestWest AM
France
Spain
Scandinavia
AP3BankInvestCarnegie AMDanske Capital
Den Danske Bank NordeaUnibank
Netherlands
ABN AmroASWDelta LloydDe MelloDSM PFGo Capital
INGInsingerMacCapitalProgress (Unilever) Robeco
Belgium/Luxembourg
Banque de LuxembourgBGL InvesmentCorluyDexiaEthiasFortisGIMV
KBCINGPetercamPuilaetcoQuest for GrowthSERCAM
Italy
SwitzerlandAdamantBank Julius Baer & Co.Bank ThalerBank LeuBellevue Asset ManagementClariden BankCompania Intl FinancieraCredit Suisse Asset Mgmt.EFG International
Lombard Odier Darier MicroValue AGPictet & CieSuvaSwissca Portfolio Mgmt.Swissfirst Bank (Zurich)UBS GAMUnion Bancaire Privee
Aletti Gestielle AM.Anima S.G.R.p.AAntonveneta ABN AmroArcaAzimutBNL Gestioni Bipiemme Gestioni S.G.R.S.p.A
CapitalgestCAAM IMErselEuromobiliare AMGenerali AM.Julius BaerMonte Paschi AMRAS AMSanpaolo IMI AM
Roadshows
UK Jupiter LansdowneLegal & General LiontrustM & G MarlboroughMarathon AM Merrill Lynch IMMilleniumMKM LongboatMorgan Stanley AM Morley New Star AM Newton IMOdey Old Mutual AMPolar Capital PolygonPutnamRAB CapitalRCM (U.K.) LtdReabourne LtdRothschild AMRoyal London AMSarasin IM.Schroder IMScottish WidowsSoc Gen AM. UKStandard LifeThreadneedle AMTT InternationalUniversities Superannuation UBS Walter Capital Axa
BNP Paribas CCRCDCCGU Victoire AM
Credit LyonnaisLCF RothschildFortisMeeschaertOptigestionSGAM
Banco Popular Barclays FondosBBVABSCH
CaixagestCaixa CatalunyaGesbetaGesmadridSantander
AberforthAbingworthABN Amro AdelphiAegon IMAlliance Trust ArtemisAxa FramlingtonBaring AMBlackrockBlueCrest BradshawCanada lifeCapital InternationalCCLACheyne CloseCQSFidelity Findlay Park First State F&CGartmoreGLG PartnersHealthcorHenderson Herald IMHermesInsight IMINVESCO Perpetual JO HambroJP Morgan AM
Pre-marketing
Roadshow
Bookbuilding
Pricing/Allocation/ Closing
StabilisationDueDiligence
Preparation of offering materials
Research
38
Bookbuilding
Offer launched on indicative pricing termsOffer price fixed after marketing/roadshows completedUnderwriting occurs after bookbuilding completeAllocation to investors
The bookbuilding process is designed to identify sources of highest demand and create ‘competitive tension’ among investors
Build book of demand
Sizing and pricing
Indicative valuation
Pre-marketing
Pricerange
Determine demand at different prices
Provide feedback to investors
Bookbuilding is designed to achieve the optimum price for the offering• pricing which reflects genuine demand in the marketplace and offers transparency of investor demand, allowing
assessment of investor quality and the effect of changes in price upon demand
Pre-marketing
Roadshow
Bookbuilding
Pricing/Allocation/
ClosingStabilisationDue
Diligence
Preparation of offering materials
Research
Setting the price
Price range
• Attractive value proposition to investors within range
• Large enough range around fair price to allow for market adjustments
• Ensure price range creates pricing discussion
• High level of confidence in achieving forecasts underpinning valuation
• Flexibility to move price range if required
+
Roadshow• Management convincing investment
community of strategy (vision) and business plan
• Broader introduction to financial markets
Market• General market sentiment• Share price movements in direct
comparables • Newsflow on sector
- earnings- industry trends
Investor interest• Anchor investors, setting trend and
building momentum in the book• General level of oversubscription of
quality accounts• Price limits• Indications on aftermarket interest
+
Offer price
• Maximise value for selling shareholders whilst
• Giving stock right momentum in aftermarket
• Offering fair value for balanced investor group
• Giving management opportunity to deliver and provide medium-term impetus to stock
Pre-marketing
Roadshow
Bookbuilding
Pricing/Allocation/
ClosingStabilisationDue
Diligence
Preparation of offering materials
Research
39
Allocation criteria
• Price leadership; price limits• Size of order (relative to average holding size)• Timing of order• Stability of order (demand increase; limit changes)• Seriousness of order - record in similar investments; level of analysis completed• Participation in one-on-one, roadshow and research call• Anticipated aftermarket behaviour (previous experience of aftermarket holding/buying/selling• Behaviour in previous offerings
Allocation
Pre-marketing
Roadshow
Bookbuilding
Pricing/Allocation/
ClosingStabilisationDue
Diligence
Preparation of offering materials
Research
Time
Pric
e
Stabilisation supports aftermarket, if requiredObjective is to stabilise aftermarket performance of the IPO and to ensure an orderly market for investors with sufficient trading liquidity and demand to absorb any selling pressure if required
The Lead Manager is given a ‘Greenshoe’ over-allotment option by the issuer/selling shareholder to facilitate stabilisation – usually 15% of offering
The existence of the option provides investors with confidence when bidding, maximising proceeds, that there will be stabilisation
As a successful offering will be oversubscribed, the Greenshoe will be allocated, thus creating a short position for the syndicate
• if the share price falls in initial trading, Piper Jaffray will place a bid in the market at issue price to absorb any shares offered, thus reducing the short position
• if share price rises in initial trading, Piper Jaffray will exercise the Greenshoe to prevent losses that syndicate would incur in covering short position above issue price
Stabilisation
Pre-marketing
Roadshow
Bookbuilding
Pricing/Allocation/
ClosingStabilisationDue
Diligence
Preparation of offering materials
Research
40
Aftermarket support
• Aftermarket support is provided at Piper Jaffray by the Corporate Broking team• Continuing research coverage
– regular reports– ad hoc reports on newsflow
Roadshow management and investor targeting
Co-ordination of institutional company visits/meetings undertaken to build and maintain investor relationships, including for• Results• Site visits• Lunches• Corporate activity
Selective investor targeting for effective use of management timeFeedback exercise undertaken and provided to client
APPENDIX BLiquidity Case Study
41
0
20
40
60
80
100
120
140
Jul-0
4
Aug
-04
Sep-
04
Oct
-04
Nov
-04
Dec
-04
Jan-
05
Feb-
05
Mar
-05
Apr
-05
May
-05
Jun-
05
Jul-0
5
Aug
-05
Sep-
05
Oct
-05
Nov
-05
Dec
-05
Jan-
06
Feb-
06
Mar
-06
Apr
-06
May
-06
Jun-
06
Jul-0
6
Aug
-06
Six month lock-upexpiry
Market cap onadmission of £60m,
£20m raised
First development phase of Gyrohaler completed
Interim results to30 Sep-04 announced
$375m licensing agreementsigned with Novartis forAD237, $15m up front
Final results to 31 Mar-05
Interim results to 30 Sep-05 announced
Collaborative agreement signed for VR315,
EUR23m in milestones anddevelopment funding
Collaboration agreementsigned with Boehringer
Ingelheim to developbranded DPI, €15m
investment in cash andshares
Final results toMarch 2006
£45m fundraising announced
11m VC shares placed
2m VC shares placed
3m VC shares placed
3m VC shares placed
6m VC shares placed
Sha
re p
rice
(pen
ce)
Liquidity case study: Vectura Group Plc
25m+ VC shares placed
Liquidity case study: Vectura Group Plc (cont’d)
• UK emerging pharmaceutical company developing a range of inhaled drugs for the treatment of lung diseases and other conditions where delivery via the lungs can provide significant benefits
• Raised £20m ($38m) new money through an AiM IPO in June 2004 - £60m ($114m) market cap
• Immediately after IPO, pre-IPO shareholders comprised approximately 55% of the share register–- locked-up (hard) for 6 months with a further 6 month orderly market agreement
• Diverse group of key pre-IPO shareholders, including a number of “classic” VC investors, founding shareholders (several private individuals and a university) and former directors
• Imperative that the placing of VC stock in the market is carried out in a co-ordinated way to capitalise fully on liquidity opportunities
• As each pre-IPO shareholder had different intentions and exit strategies following the IPO, essential that close proactive contact was maintained by the NOMAD with each party in the lead-up to, and throughout, the sell-down process
–- allow fast reaction to liquidity opportunities –- ensure all pre-IPO shareholders are treated on an equitable basis –- avoid “breaking of ranks”
• Since IPO lock-up expiry, over 25 million Vectura shares have been placed in the market by the Piper Jaffray teamon behalf of pre-IPO shareholders
42
Liquidity case study: Vectura Group Plc (cont’d)
• Shares placed in a co-ordinated fashion, to capitalise on positive company news flow and successful investor road shows
• Larger blocks of VC stock targeted at particularly liquid and receptive periods in the market, generally on the back of positive company news flow - ensure such large stock placements did not negatively impact the share price
• From 55% at IPO in June 2004, Vectura’s VC shareholding was below 10% by April 2006 with those VCs remaining shareholders doing so through choice
• In June 2006, Piper Jaffray lead-managed a £45 million ($86m) fundraising for Vectura, the largest secondaryfundraising ever for an AiM-listed biotechnology company
• Conclusion: Liquidity is not a function of AiM vs. LSE or NASDAQ but instead a function of:– quality of company– quality of management team– company newsflow & delivery on expectations– business plan and track record– size of free float– quality of NOMAD
• AiM now represents a highly credible option for VCs seeking timely liquidity opportunities from high growth, quality newsflow-rich companies
APPENDIX COverview of Piper Jaffray
43
- leading sector focused middle market investment bank
Key factsKey facts
• 10 offices worldwide• More than 1,000 employees• Publicly listed in New York• $1.0bn market capitalisation• Over 350 growth companies covered • Focus on 6 core sectors
• 10 offices worldwide• More than 1,000 employees• Publicly listed in New York• $1.0bn market capitalisation• Over 350 growth companies covered • Focus on 6 core sectors
*Securities and products are offered in the United Kingdom through Piper Jaffray Ltd., which is authorized and regulated by the Financial Services Authority
• Client-focused, independent, publicly held securities firm founded in 1895
• Leading growth-oriented, middle market investment bank
• Top ranked middle market M&A adviser
• Ranked No.1 in IPOs completed in our focus sectors
• Lead manager on the top performing IPOs in the industry in recent years
• NOMAD and broker to leading growth companies
• Full service capabilities and unparalleled transaction execution
• Client-focused, independent, publicly held securities firm founded in 1895
• Leading growth-oriented, middle market investment bank
• Top ranked middle market M&A adviser
• Ranked No.1 in IPOs completed in our focus sectors
• Lead manager on the top performing IPOs in the industry in recent years
• NOMAD and broker to leading growth companies
• Full service capabilities and unparalleled transaction execution
Piper JaffrayPiper Jaffray
Minneapolis (HQ)
Chicago BostonNew York
London*
Shanghai
San Francisco
Palo Alto
Hong Kong
Beijing
70+ employees in Europe focussed on Technology, CleanTech, Healthcare and ConsumerAcquisition of Goldbond Capital holdings, Hong Kong based investment bank with 70 employee
Growth sector focus, integrated approach
TechnologyTechnology
Clean TechClean Tech
ConsumerConsumer
Financial InstitutionsFinancial Institutions
HealthcareHealthcare
Industrial GrowthIndustrial Growth
Investment Banking
Institutional Equity Sales
Equity Trading
Equity & Debt
Capital Markets
Convertible Securities
High-Yield &
AcquisitionFinance
Equity & Fixed
Income Research
Piper Jaffray offers the advantage of scale without sacrificing impartiality of advice or client focus
Sectors Global presence Products
Inte
grat
ed a
ppro
ach
44
• Highly experienced investment banking team with considerable expertise in LSE Official List and AiM equity offerings (IPOs, secondary offerings & block trades) as well as cross-border mergers and acquisitions – 21 equity offerings ($1.25bn) executed since the beginning of 2006
• Top ranked M&A advisor – 21 M&A engagements (>US$5bn) since the start of 2006
Piper Jaffray – leading NOMAD & broker in the UK
Piper Jaffray is an
established, highly
regarded, NOMAD and
broker focusing on
premier growth
companies
Piper Jaffray provides a
genuine global
small/mid-cap growth
company broking, equity
sales & trading,
corporate finance and
M&A advisory service
Investment
Banking
Regulatory
• Member of the London Stock Exchange and approved Broker• Authorised and regulated by the UK Financial Services Authority• NOMAD and approved Sponsor
Sales & Trading
Research
• 20 European specialist sales & trading professionals located in London and Brussels
• Strong relationships with small/mid-cap generalist and specialist institutional accounts throughout the UK and Continental Europe
• Good access to European long-only hedge funds• Highly experienced sales force - average tenure of UK sales force is 22
years • Market maker in 70 UK quoted stocks, committing our capital
• Seasoned team of UK, US and Continental European research analysts• It is normal for an equity research analyst to provide independent research
on companies to which we are retained broker and financial adviser• Research made available to all fund managers and buy-side analysts• Piper Jaffray’s European research is also published in the US
AiM investors rate
Piper Jaffray at the top
of UK brokers and #1
among U.S.-based
NOMADs
Strong reputation among UK institutional investors
Source: Investor Chronicles’ 2006 Annual Top 30 AiM Brokers
I would invest in I make time to read I would meet I get updates after Generally, I respect Overallits IPOs its research companies it floats I've invested this broker Score
Broker Country (max score: 5) (max score: 5) (max score: 5) (max score: 5) (max score: 5) (max score: 5)
Investec South Africa 4.2 4.8 4.7 4.3 4.5 4.50ABN Amro Netherlands 4.0 4.5 4.5 4.5 4.8 4.46Brewin Dolphin United Kingdom 4.2 4.2 4.4 4.4 4.2 4.28Panmure Gordon United Kingdom 3.8 4.2 4.2 4.0 4.3 4.10Bridgewell Securities United Kingdom 3.5 4.4 4.2 4.2 4.2 4.10Piper Jaffray United States 4.0 4.0 4.3 4.0 4.0 4.06KBC Peel Hunt Belgium 4.0 4.0 4.2 3.8 3.8 3.96Arden Partners United Kingdom 3.6 4.3 3.8 4.0 3.8 3.90Altium Capital United Kingdom 3.2 4.0 3.6 4.0 3.7 3.70Code Securities United Kingdom 3.6 4.0 3.8 3.4 3.4 3.64Oriel Securities United Kingdom 3.3 3.6 3.3 3.5 3.5 3.44Numis Securities United Kingdom 3.2 3.7 3.5 3.2 3.2 3.36Collins Stewart United Kingdom 3.7 3.0 3.5 3.3 3.0 3.30Noble & Co United Kingdom 3.3 2.2 3.3 3.3 3.3 3.08Shore Capital 3.0 3.8 3.0 2.8 2.8 3.08Rowan Dartington United Kingdom 2.6 3.2 3.4 3.0 3.0 3.04Arbuthnot Securities United Kingdom 2.4 3.2 2.8 3.3 2.8 2.90Williams de Broe United Kingdom 2.4 2.8 3.0 3.0 2.8 2.80Evolution Securities United Kingdom 2.8 2.7 3.2 2.5 2.7 2.78Canaccord Adams Canada 3.0 2.8 2.8 2.5 2.5 2.72Seymour Pierce United Kingdom 2.7 3.0 3.0 2.3 2.5 2.70Cenkos Securities United Kingdom 3.3 1.7 3.0 2.7 2.7 2.68Teather & Greenwood Iceland 2.8 2.8 2.8 2.4 2.6 2.68WH Ireland United Kingdom 2.3 3.3 2.0 2.3 3.0 2.58
Charles Stanley United Kingdom 2.7 2.5 2.6 2.5 2.2 2.50Corporate Synergy United Kingdom 2.0 2.5 2.5 2.7 2.3 2.40Ambrian Partners United Kingdom 1.7 2.0 2.0 3.0 3.0 2.34Libertas Capital United Kingdom 2.3 2.3 2.7 2.3 2.0 2.32Daniel Stewart & Co United Kingdom 1.8 1.7 2.0 2.3 1.7 1.90JM Finn United Kingdom 1.5 2.3 1.8 1.5 1.5 1.72
2006 Annual Top 30 AiM Brokers
United Kingdom
45
Retained corporate advisory/broking clients
*As of 26 Sept, 2007
Company Listing Mkt. Cap*
AGI Therapeutics AIM £103m
Alizyme Full £155m
Antisoma Full £155m
Ardana Full £60m
Ark Therapeutics Full £198m
Axis-Shield Full £136m
Biocompatibles Full £66m
BTG Full £150m
Corin Group Full £258m
Genetix Group AIM £42m
Inion Full £30m
Intercytex Group AIM £44m
Macro 4 Full £44m
ProStrakan Group Full £136m
Protherics Full £159m
Sinclair Pharma Full £78m
SkyePharma Full £143m
Spacelabs AIM £53m
Vectura Group Full £224m
Vernalis Full £134m
xG Technology AiM £1,010m
Leading execution capabilities in Europe*
US $25,800,000
acquired Applied Imaging Corp.
November 2006
US $9,000,000
has acquiredproducts from
Cellegy Pharma
November 2006
£11,000,000
Vendor Placing &Open Offer
September 2006
CHF 88,500,000
Initial Public Offering
November 2006
US $25,000,000
has acquiredMacroMed
December 2006
CHF 370,000,000
Rights Issue
March 2007
£12,000,000
Vendor Placing
May 2007
£120,000,000
Transfer to Full List
April 2007
CHF 136,875,000
Initial Public Offering
May 2007
£14,500,000
Vendor Placing
December 2006
£26,300,000
Vendor Placing
December 2006
£38,200,000
Vendor Placing &Open Offer
December 2006
Undisclosed
has soldmajority stake to
January 2007
€129,700,000
Rights Issue
February 2007
EUR 40,000,000
Initial Public Offering
March 2007
£131,000,000
has acquired
January 2007
DKK 64,000,000
Cash Placing
February 2007
NOMAD and Financial Advisor
Sept 2007
€655,000,000Value N/D
Disposable of it Subsidiary
February 2006
£231,000,000
April 2006
Recommended offer by Golden Gate Capital
Management buy out and sale to Carlyle Group
May 2006
Acquisition Of
Value N/D
January 2006
£11,300,000
Vendor Placing
July 2006
£11,300,000
Vendor Placing
July 2006
£11,300,000
Vendor Placing
July 2006
£11,300,000
Vendor Placing
July 2006
£11,300,000
Vendor Placing
July 2006
Since the start of
2006, we have
completed 21 capital
raisings, amounting
to over US$1.25bn
In the same period,
our European team
has also been
engaged in executing
21 M&A deals,
amounting to c.$5bn
* Based on deals completed by European Investment Banking team members
46
www.abchurch-group.com100 Cannon Street, London, EC4N 6EU Tel: 020 7398 7700 Fax: 020 7398 7799
West One, Wellington Street, Leeds LS1 1BA Tel: 0113 203 1340 Fax: 0870 762 7015
Heather Salmond, Director
An IPO is a one-off opportunity to raise significant funds and also to
really put your business on the map
47
Recent IPOs & Placings
IPO1 June 2007£25m Placing
£110m mkt cap
IPO13 Dec 2006
US$40m PlacingUS$120m mkt cap
IPO30 March 2006£120m Placing£321m mkt cap
IPO06 Aug 2007
£7.5m Placing£27.6m mkt cap
IPO07 Sept 2006£3.8m Placing£20m mkt cap
IPO26 Oct 2006£7m Placing
£29.5m mkt cap
IPO05 Dec 2006
£1.5m Placing£13.55m mkt cap
IPO06 Dec 2006
£0.5m Placing£25m mkt cap
IPO28 March 2007£7.5m Placing
£17.6m mkt cap
IPO21 June 2007£32m Placing
£171m mkt cap
IPO13 Aug 2007£75m Placing
£204m mkt cap
10 May 2007£279m Placing
N.B. Market caps shown are at time of Listing
IPO01 Nov 2006
£2.5m Placing£31.7m mkt cap
4 April 2007£43.7m Placing
IPO12 Dec 2006
£600,000 Placing£10m mkt cap
48
Communication objective
Investment in PR / IR & marketing
Retail & institutional
demand
Greater awareness
More partners & customers
Share price reflects true
value
Investor interest
Commercial benefits
Increased revenues
Your target audiences
Analysts
Media
Customers
Employees
Trade partners
RetailInvestors
InstitutionalInvestors
Private ClientBrokers
Company
49
Photo shoot Website content
Presentation preparation
IPO communications process
Comms tool kit
Announcement weekend
Monday media coverage
Release and Pathfinder prospectus
Follow up in trade and B2B
Marketing
Information infrastructure
Analyst meetings
10 day announcement
(AIM only)
Pricing / impact day release (Official List only)
First day of dealings
LSE Welcome
After market
Target profiling
Market columns
Private client broker meetings
Corporate and financial PR
IR
B2B and trade PR
Q&As FAQs
spokes-persons
notes to editors
photojournalism
commstraining
issues-management
key messages descriptor
define audiences
Preparation
51
Photo shoot Website content
Presentation preparation
IPO communications process
Comms tool kit
Announcement weekend
Monday media coverage
Release and Pathfinder prospectus
Follow up in trade and B2B
Marketing
Information infrastructure
Analyst meetings
10 day announcement
(AIM only)
Pricing / impact day release (Official List only)
First day of dealings
LSE Welcome
After market
Target profiling
Market columns
Private client broker meetings
Corporate and financial PR
IR
B2B and trade PR
Business broadcast
52
An IPO is just the beginning…
Maintain momentum
Refresh Communications Tool KitUpdate Report Medicsight/Abchurch meeting
Media interviews surrounding announcement
One-on-one analyst meetings (w/c 3 December)
Shareholder register analysis report
Trading update
December
Update Report
Medicsight/Abchurch meeting
Media site vistShareholder register analysis report
Website reviewNovember
Medicsight at China CCR annual (Oct)
Medicsight/ Toshiba CTC training day at JDDW (Oct)
Medicsight ColonCAD/ clinical presentation at Boston (Oct)
Update Report Medicsight/Abchurch meeting
Media interviews surrounding announcement
Shareholder register analysis report
Peer Group analysis
Ongoing updates to IR website
Private Client Broker meeting
Contract announcement
Q3 Results
October
Update Report
Medicsight/Abchurch meeting
Analyst feedback report
Analyst site visit
Analyst feedback reportSeptember
Features:•Pharma – Medical DevicesEvents:•National Pharmacist Day - USA
Update Report
Medicsight/Abchurch meeting
Results preparation
Results evaluation report
Media briefings at results
Shareholder register analysis report
Website Review
Notice of results
Interim results
August
CPR / Speaking OpsClient managementFinancial PR/ Media Relations
Investor RelationsFinancial Calendar / RNS
53
Ongoing PR
£15M contract win
SharesInvestors Chronicle
Shares
Interims
Shares and Investors Chronicle
£50M
contract win
Bloomberg: stocks towatch in
2005
IPO of the Year
Award
Samsung contract win
DailyMail
£8M contract win
£25M contract win
AGM
AIM & Ofex
Investing for Growth
Hyundai contract win
£29M, two contracts
Interims
Site Visit£20M contract win DSME
Share price performance for Hamworthy
£13M contract win
£15M contract win
Acquisition of Serck
£15M contract win
Interims
Issuesmanagement
Comprehensive investor relations offering
B2B & T&T PR
Contribution to full
marketing mix
Major transaction/ M&A capability
Value add
International reach, IPREX
/ Northern region
Core corporate
& financial
programme
54
www.abchurch-group.com100 Cannon Street, London, EC4N 6EU Tel: 020 7398 7700 Fax: 020 7398 7799
West One, Wellington Street, Leeds LS1 1BA Tel: 0113 203 1340 Fax: 0870 762 7015
4 October 2007 London Bridge Capital
London Bridge Capital
Corporate Finance AdvisoryFund managementTrading / Brokerage servicesNot a NomAd / Broker
4 October 2007 London Bridge Capital 108
We exclusively offer financial and strategic advice to companies operating in the cleantech sector.
Our Advisers have brought 5 major West Coast companies to market:Gatekeeper (CA)HaloSource (WA)Libra Natural Resources (WA)Prometheus Energy (WA)Solar Integrated Technologies (CA)
55
4 October 2007 London Bridge Capital4 October 2007 London Bridge Capital 109
The London Edge - a ‘cluster’
London / UK plc – the place to do business
Government and trade body support for your business, whether UK-based planning to go global, or outside the UK wanting to invest here
World’s leading capital markets
The London Stock Exchange markets –providing the financial platform that supports your strategic ambitions
A specialist financial network
Corporate finance, lawyers, fund managers, investor & public relations, accountancy
London continues to hold the deepest pool of Europe’s capital.
4 October 2007 London Bridge Capital4 October 2007 London Bridge Capital 110
The London IPO: Money and Study
In 2006:541 companies joined our markets raising £28bn
Main Market £20bn; AIM £8bn346 IPOs took place
More than all of Western Europe combinedMore than NASDAQ, NYSE and Hong Kong combined
The overall cost of Capital on London’s Public markets is considerably less than in the US
33% more efficient IPO pricing (less discounting)
Underwriting fees are some 50% less
56
4 October 2007 London Bridge Capital4 October 2007 London Bridge Capital 111
Your IPO
The directors of the issuer
Major shareholders
Sponsor / Nominated Adviser
Broker
Research Analyst
Lawyers – for company and
underwriters
Experts
Reporting accountants
Public relations adviser
With all that’s going on for your IPO, it can seem pretty daunting...
Our US/Canadian clientele want someone to manage, to negotiate, and to facilitate the process on site and in situ.
4 October 2007 London Bridge Capital4 October 2007 London Bridge Capital 112
Determining your valueBottom-up: business fundamentalsMarket characteristics (size, growth, etc)Risk factors
Discounted Cash FlowApplication
Combine assumptions with well known valuation tools:
Peer GroupEV/Sales, EV/EBITDA, P/ELast VC round Invested capital to date
Valuation Remember…Be realistic Have a contingency
plan
57
4 October 2007 London Bridge Capital4 October 2007 London Bridge Capital 113
Current Market ConditionsInvestors are:
More selectiveSome are closed off to early -stage companies
What you need:Revenues, contracts – an order bookAttractive valuation (risk/return)Market cap and liquidity cannot be overstated enough
This has raised the bar for IPOs
But deals are still getting doneGreen IPOs so far in 2007 raising at least £20m of new money
Applied Intellectual Capital Modern WaterPlanticTechnologiesPV CrystaloxSolarVECTRIX
Success for unique or establishedbusiness models at realisticvaluations
4 October 2007 London Bridge Capital
Corporate Finance
Contacts:
Peter Greensmith, CEO; [email protected] Finston, MD; [email protected] Munro, Senior VP; [email protected]
London Bridge CapitalLevel 2 - City Tower40 Basinghall StreetLondon, UKEC2V 5DE+44 (0) 207 877 5040
4 October 2007 London Bridge Capital 114
58
4 October 2007 London Bridge Capital4 October 2007 London Bridge Capital 115
APPENDIX 1: Environmental industries - the energy case
£ Millions raised at IPO combined AiM & Main for Alternative Energy Companies.
Questions and Answers
Richard Webster-Smith is responsible for the London Stock Exchange’s International Business Development activities in the USA and Canada. He plays an integral role in building and maintaining the Exchange’s profile and presence in the adviser communities in London and the finance centres of North America, focusing on attracting international companies to the London markets. Richard was previously in charge of media relations for the Exchange’s AIM market, and has also worked in the Exchange’s Public Affairs team where he worked on both UK and EU public policy issues. He joined the Exchange in 2000. +44 (0)20 7797 1058 [email protected] The London Stock Exchange is one of the world’s oldest stock exchanges and can trace its history back more than 300 years. Starting life in the coffee houses of 17th century London, the Exchange quickly grew to become the City’s most important financial institution. Today, The London Stock Exchange is at the heart of global financial markets and is home to some of the best companies in the world. The aim of the exchange is to compete in the global market for financial transaction services to become the supplier of choice – providing customers with the most efficient, trusted and reliable services, and shareholders with the most successful exchange business.
Jeremy Landau is a partner in the firm’s Corporate, Private Equity, AIM, and Telecom, Media and Technology practice groups. He has particular experience in advising both public and private companies on their corporate and commercial transactions and requirements in a broad range of sectors, with particular emphasis on the Technology and Telecommunications, Life Sciences, Leisure and Retail sectors, including dealing with domestic and cross border mergers & acquisitions, disposals, private equity and corporate finance transactions. In particular, Mr. Landau has a wealth of experience of advising companies (both domestic and international), as well as investment banks on IPOs and fundraisings on the London Stock Exchanges' Full List and AIM markets. Mr. Landau is also listed in Chambers Guide to the Legal Profession as a leading lawyer in relation to Technology/Telecoms transactions. +44 (0)20 7360 8114 [email protected] K&L Gates comprises approximately 1,400 lawyers located in 22 offices on three continents. The firm represents capital markets participants and leading global corporations, growth and middle-market companies, and entrepreneurs in every major industry group as well as public sector entities, educational institutions and philanthropic organizations. The firm’s practice is at once regional, national and international in scope, cutting edge, complex, and dynamic. K&L Gates lawyers are experienced in serving clients’ corporate legal needs, from general business planning to highly specialized and critical emergency matters. The firm serves as general or special legal advisors to many public and privately-held companies, as well as partnerships, formal and informal strategic alliances and joint ventures. In providing a full range of corporate services, K&L Gates is focused on working with clients to solve problems and achieve their objectives in the most efficient, effective and time-sensitive manner. The firm’s practice expertise includes corporate governance, transactions, with all of the ancillary practice capabilities, finance, real estate, bankruptcy and restructuring, securities and private equity and venture capital.
Alex Gibson is an associate in the firm’s Corporate practice group. He practices in the area of general corporate law, with a focus on mergers and acquisitions, corporate finance and joint ventures. +44 (0)20 7360 8245 [email protected] K&L Gates comprises approximately 1,400 lawyers located in 22 offices on three continents. The firm represents capital markets participants and leading global corporations, growth and middle-market companies, and entrepreneurs in every major industry group as well as public sector entities, educational institutions and philanthropic organizations. The firm’s practice is at once regional, national and international in scope, cutting edge, complex, and dynamic. K&L Gates lawyers are experienced in serving clients’ corporate legal needs, from general business planning to highly specialized and critical emergency matters. The firm serves as general or special legal advisors to many public and privately-held companies, as well as partnerships, formal and informal strategic alliances and joint ventures. In providing a full range of corporate services, K&L Gates is focused on working with clients to solve problems and achieve their objectives in the most efficient, effective and time-sensitive manner. The firm’s practice expertise includes corporate governance, transactions, with all of the ancillary practice capabilities, finance, real estate, bankruptcy and restructuring, securities and private equity and venture capital.
Steve Smith is a partner in Ernst & Young’s transaction support team where his prime focus is assisting companies with stock exchange or private equity transactions. As UK North Region IPO Leader he advises companies of the pros and cons of different transaction structures and helps prepare them in the build up to a transaction. Steve has experience of helping companies float on all UK markets. His flotation credentials include: LSL Property Services (full list), Optos (full list), Clean Air Power (AIM), BNS Telecom (AIM), Powerleague (AIM) and Ascribe (AIM). He is also a member of the Stock Exchange Regional Advisory Group. +44 161 333 2667 [email protected] Ernst & Young is a US$21 billion global business, drawing on the strength of some 130,000 employees across seven global Areas and 140 countries. Its people pursue the highest levels of integrity, quality and professionalism in providing a range of sophisticated services centered on the core competencies of auditing, accounting, tax and transactions.
Nigel Daly is a Principal in Piper Jaffray’s Technology Investment Banking Group based in the London office. He is responsible for originating and executing M&A transactions and public and private equity financings for European Technology companies and giving general corporate finance and strategic advice. Nigel has over 15 years of European M&A and capital markets experience, including many M&A transactions, IPOs and other capital raisings not only in the Technology sector but also, broadly, across a number of other sectors, including Alternative Energy, Real Estate and Retail, and regions, including the Far East and Central & Eastern Europe as well as the UK and the rest of Western Europe. +44 (0)20 3142 8722 [email protected] Piper Jaffray & Co. is a leading, international middle-market investment bank and institutional securities firm, founded in 1895. Piper Jaffray serves the needs of middle-market corporations, private equity groups, public entities, nonprofit clients and institutional investors. It has 10 offices worldwide, over 1,000 employees and focuses on 6 core sectors covering over 350 growth companies. It is publicly listed with a market capitalization of $1.0bn.
Heather Salmond is co-founder and Director of Abchurch Communications. She is a corporate and financial communications specialist with more than ten years' international PR experience. She has worked in the New York and London offices of Shandwick Consultants, predominantly advising venture capital companies, including Arts Alliance and 3i on communicating their TMT investments. In 2000 Heather joined New York based start up SkyScout as Manager of Corporate Communications before setting up her own PR consultancy in Edinburgh, Scotland. Heather graduated from the University of St Andrews with MA Honours in Modern Languages (Spanish and French). She regularly speaks on the role of Financial PR in the IPO-LSE roadshows. +44 (0) 20 7398 7704 [email protected] Abchurch is one of the UK’s leading financial, investor and corporate communications consultancies, advising more than 75 clients, over 60 of which are Listed on the London Stock Exchange. The aggregate market capitalisation of its client base is in excess of £3.2 billion. Abchurch was voted Financial PR Company of the Year in the 2007 Growth Company Investor Awards, voted for by CEOs of listed companies. Abchurch is recognised as a specialist in IPOs, advising both domestic and overseas companies on successful communications surrounding a UK Listing and the aftermarket. Abchurch also has extensive experience of advising companies on mergers and acquisitions. In addition to financial communications and investor relations advice, Abchurch has a well established corporate, trade & technical, and business-to-business practice, enabling it to provide companies with a total communications solution.
Alex Munro moved to London Bridge Capital Limited from Fortis Bank, for which he worked as an International Associate in the development and growth of new offices and energy portfolios for its Global Energy Group. His specialisations in this capacity were structured, corporate, and project finance in the areas of renewable energies and alternative fuels. Prior work experience includes renewable energy strategy consulting for the BOC Group, hydrogen infrastructure and business development, and environmental management systems and consulting. Alex holds a BSc in Environmental Science from the University of Western Ontario (Canada), and an MBA from the Rotterdam School of Management (Netherlands) and the University of California, Berkeley (USA). +44 (0) 77 7572 5269 [email protected] London Bridge Capital provides niche investment banking services to companies active in the environmentally oriented clean technology sector and in "clean technology" generally. LBC’s goal is to provide niche services to those small and medium enterprises seeking advice in relation to corporate structure, funding, pre-IPO funding and entry to any of the UK markets, with particular emphasis on AIM and PLUS Market listings.
Stephan Coonrod is a partner in K&L Gates’ Seattle office. He has a domestic and international business practice centering on acquisitions, venture capital and other equity investments, transborder transactions, trade issues and technology transfers. In addition, Mr. Coonrod handles general corporate matters for the firm’s clients. Mr. Coonrod is fluent in French. He also spent two years in Japan working with a law firm handling international financings, U.S. investment in Japan, and joint ventures, licensing and distributorship agreements. 206 370 8316 [email protected] K&L Gates comprises approximately 1,400 lawyers located in 22 offices on three continents. The firm represents capital markets participants and leading global corporations, growth and middle-market companies, and entrepreneurs in every major industry group as well as public sector entities, educational institutions and philanthropic organizations. The firm’s practice is at once regional, national and international in scope, cutting edge, complex, and dynamic. K&L Gates lawyers are experienced in serving clients’ corporate legal needs, from general business planning to highly specialized and critical emergency matters. The firm serves as general or special legal advisors to many public and privately-held companies, as well as partnerships, formal and informal strategic alliances and joint ventures. In providing a full range of corporate services, K&L Gates is focused on working with clients to solve problems and achieve their objectives in the most efficient, effective and time-sensitive manner. The firm’s practice expertise includes corporate governance, transactions, with all of the ancillary practice capabilities, finance, real estate, bankruptcy and restructuring, securities and private equity and venture capital.
IntroductionThe AIM Market was opened in 1995 by
the London Stock Exchange plc (the
"LLSSEE") for the purpose of providing
companies for which the requirements of
the Official List of the UK Listing
Authority (the "UUKKLLAA") were not
appropriate, with a means of raising
capital and having access to a public
market for their securities. AIM is
operated, regulated and promoted by the
LSE.
Companies traded on AIM span the
entire spectrum of business sectors and
encompass both growing companies as
well as mature companies. In addition,
UK incorporated as well as companies
incorporated in any other country world
wide can be admitted to AIM.
The total number of admissions to AIM
from its inception to the end of
December 2005 stood at 2,202 of which
274 were non-UK companies.
At the end of December 2005 there were
1,399 companies trading on AIM with
total market capitalisation in excess of
£56 billion and individual market
capitalisations ranging from less than £2
million to more than £1 billion.
K&L Gates advises both companies
admitted to AIM and the professional
advisers specialising in AIM companies.
The purpose of this guide is to provide a
brief introduction to AIM and an
overview of the admission process.
Benefits of an AIM ListingThere are a number of advantages in a
company being admitted to AIM:
� GGiivveess sshhaarreess ooff tthhee ccoommppaannyy
""ttrraaddaabbiilliittyy" thereby broadening the
company’s investor base (for example,
with institutional investors who may
not be mandated to invest in
unquoted companies) and enabling
existing shareholders to realise some
of their investment;
� TTaaxx aaddvvaannttaaggeess including the
availability of tax reliefs to investors in
the form of the Enterprise Investment
Scheme and the Venture Capital Trust
Scheme which are not available in
respect of companies on the Official
List;
� MMoottiivvaatteess eemmppllooyyeeeess by improving
the attractiveness of employee share
schemes as shares are now tradable
and by providing proof of their
organisation's success;
� EEnnhhaanncceess ccoommppaannyy''ss pprrooffiillee aanndd
vviissiibbiilliittyy as a result of increased press
coverage and analysts' reports which in
turn will facilitate the continued
liquidity of the company's shares;
� OObbjjeeccttiivvee vvaalluuee ooff hhoollddiinnggss ffoorr
sshhaarreehhoollddeerrss in contrast to a
shareholder in an unquoted company
“The K&L Gates AIM team provides the full spectrum of services your company needs to float on
AIM and to meet your requirements after admission.”
Whatever your company's size or industry sector our AIM team
has the experience to provide a seamless service.
who will often find it difficult to assess
the value of their holding;
� OOffffeerrss aa mmeeaannss ooff ggaaiinniinngg ffiirrsstt
eexxppeerriieennccee ooff aa ppuubblliicc mmaarrkkeett and
enables a company, who intends to do
so, to progress towards satisfying the
eligibility criteria required for entry
onto the Official List, for example by
increasing the number of shares held
in public hands;
� FFlleexxiibbiilliittyy in areas such as making
acquisitions as the company will have
access to currency in the form of
quoted shares and the rules governing
acquisitions by AIM companies are
less stringent than the rules governing
acquisitions by companies on the
Official List;
� AAcccceessss ttoo aa wwiiddee ppooooll ooff iinnvveessttmmeenntt
ccaappiittaall for growth affording
opportunities to a company to raise
finance both on admission and
afterwards; and
� IImmpprroovveess aa ccoommppaannyy''ss ssttaattuuss with both
customers and suppliers as a company
admitted to trading on AIM has to
comply with regulatory standards.
Advantages to listing on AIM asopposed to the Official List � No required minimum of shares to be
held by the public. For the Official
List, at least 25 per cent of shares must
be held by the public.
� No requirement for a trading record.
For the Official List, a three year
trading record is usually required.
� Admission documents are not vetted
by the LSE nor by the UKLA in most
circumstances. The UKLA will only
vet an AIM admission document
where it is also a prospectus under the
FSA's rules relating to prospectuses
(implementing the EU's Prospectus
Directive) (the "PPrroossppeeccttuuss RRuulleess").
For the Official List, the UKLA will
always pre-vet admission documents.
� No minimum market capitalisation
requirement. For the Official List, a
market capitalisation of at least
£700,000 of shares is required.
� Acquisitions and disposals are less
stringently regulated on AIM than on
the Official List and, other than for a
reverse takeover, an acquisition that
does not involve offering shares to the
public does not require shareholder
consent unlike the Official List.
Other important factors Other factors will come into play when
deciding whether to admit a company to
AIM. These include:
“AIM’s success is built on a simplified regulatory environment which has been specifically
designed for the needs of smaller companies.”
The London Stock Exchange
� Regulatory requirements and the
continuing obligations of being an AIM
listed company will result in some
additional administration for a
company;
� Closer scrutiny of the company, in
particular its directors, its finances and
its business strategy and performance;
� The interests of outside shareholders
will affect decisions to a greater degree;
and
� Uncertain market conditions which
may be outside the control of the
company may have an effect on the
company's share price.
The key requirements for admission The key requirements for admission to
AIM are straightforward.
� The company must be capable of
offering its shares to the public.
� The company must appoint and retain
a nominated adviser and broker at all
times.
� There must be no restrictions on the
transferability of the company's shares
although there are limited exceptions
where a countries' securities laws
require restrictions to be imposed.
� The securities to be admitted must be
eligible for electronic settlement. The
principal electronic settlement in the
UK is CREST. While foreign
securities are not eligible for settlement
directly in CREST, in practice
arrangements can usually be made with
CRESTCo or a UK registrar to act as a
depository for the issued securities and
a form of CREST-eligible depositary
interest in the underlying foreign
security can instead be electronically
traded through CREST.
� All securities within a particular class
must be admitted and not part only of
that class.
� The company must comply with any
special conditions imposed by the LSE.
� The company must ensure that if its
business has not been independent and
earning revenue for at least two years,
related parties and applicable
employees enter into an agreement not
to dispose of any interests in the
securities for one year from the date of
admission of the securities (a "lock-in").
Related parties include directors of the
company or any group company,
shareholders owning ten per cent or
more of the class of security to be
admitted or ten per cent or more of the
voting rights relating to the company,
and their respective families.
Applicable employees are (a) those
employees holding 0.5 per cent or more
of the class of security to be admitted
and (b) those employees in possession of
price sensitive information because of
their employment, regardless of their
interest or holding in the shares.
� LLaawwyyeerrss
The lawyers to the company will
advise on issues such as the legal
aspects of preparing the company for
admission to AIM including any
restructuring required (for example,
the re-registration of the company as a
plc). The lawyers will also undertake a
legal review of the company (covering
matters such as any litigation, terms of
employment contracts and the
corporate structure of the company) on
behalf of Nomad so that the Nomad is
able to ascertain the suitability of the
company for admission to AIM. The
lawyers, will, in addition, verify the
statements made in the admission
document or prospectus and advise the
board of the company on its legal
duties and responsibilities in relation
to any admission.
� RReeppoorrttiinngg AAccccoouunnttaannttss
The reporting accountants will
conduct an independent review of the
company's financial records and assist
in preparing any financial information
required to be published.
� FFiinnaanncciiaall PPRR CCoonnssuullttaannttss
The financial PR consultants will
manage the flow of information
concerning the admission of the
company and generate positive
publicity and press interest.
� SSppeecciiaalliisstt aaddvviisseerrss
Depending on the company's business,
advisers may also need to be appointed
e.g. property surveyors, actuaries and
independent experts.
Procedure for admissionThe admission process for AIM generally
takes approximately three months.
However, the actual length of time will
depend upon (a) the type of company, (b)
the speed with which accurate
information can be provided for
incorporation in the prospectus or
admission document and (c) whether it is
a prospectus or an admission document
that needs to be prepared (as a prospectus
must be vetted and approved by the FSA
prior to publication).
� PPrreeppaarraattiioonn ooff aann aaddmmiissssiioonn ddooccuummeenntt
oorr pprroossppeeccttuuss A prospectus rather than an admission
document will be required where an
issuer is making an offer of transferable
securities to the public and where an
issuer is seeking admission to a
regulated market. The information
required to be included in such a
prospectus is set out in the Prospectus
Rules and the prospectus is required to
be pre-vetted by the UKLA.
AIM ceased to be a regulated market
on 12 October 2004 becoming an
The Admission Team� NNoommaadd
An AIM company must appoint and
retain a nominated adviser ("NNoommaadd")
at all times. The LSE approves, and
maintains a list of, firms who are
qualified to act as Nomads.
The Nomad will judge whether the
company is suitable for admission to
AIM, as well as explain the AIM Rules
to the directors and ensure that they
understand their responsibilities and
obligations. Once the company has
been admitted to AIM, the Nomad will
continue to give advice and guidance
on the AIM Rules to the company.
To highlight the importance of the
Nomad, the AIM Rules provide that if
a company ceases to have a Nomad,
the LSE may suspend trading in its
securities. If within one month the
company has failed to appoint a
replacement Nomad the company's
quote may be cancelled.
� BBrrookkeerr
An AIM company must appoint and
retain a broker at all times. A broker
must be a securities house which is a
member of the LSE. In practice this
role is often combined with that of the
Nomad. The broker is responsible for
dealings in the company's shares.
“Leading City lawyers who know and understand the
UK markets - Official List, AIM and OFEX.”
CBI 2004
"exchange regulated market" instead.
As a result, an AIM admission
document will only be required to be a
prospectus and approved by the UKLA
when an "offer to the public" is also
being made. An AIM float effected via
a placing will not normally entail an
"offer to the public" for these purposes
and instead, a straightforward
admission document would need to be
produced. Nevertheless, in
determining the minimum content
requirements for an admission
document, the LSE has used the
requirements set out in the Prospectus
Rules as a starting point. However,
certain of the more onerous disclosure
requirements of the Prospectus Rules
have been carved out or left to the
discretion of the Nomad.
� TTeenn ddaayy aannnnoouunncceemmeenntt
The applicant must provide to the
LSE, at least ten business days before
the expected date of admission to
AIM, certain information including the
company's name, address and country
of incorporation, a description of the
company's business and the name and
address of the nominated adviser and
broker. On the same day, the LSE will
make an announcement that an
application has been received from the
company for its securities to be
admitted to trading on AIM.
� AApppplliiccaattiioonn ddooccuummeennttss
At least three business days before the
expected date of admission and in
addition to a cheque for the admission
fees, the company must submit to the
LSE an electronic version of the
admission document together with a
completed application form which
includes confirmation that the
company will comply with the AIM
rules and a declaration by the Nomad
which includes confirmation that the
company is suitable for AIM.
� AAddmmiissssiioonn ttoo AAIIMM
Admission becomes effective when the
LSE issues a dealing notice to that
effect.
Fast track to AIM� The LSE has introduced a fast track
admission route to AIM whereby
companies already listed on one of the
"designated markets" and which have
been trading on a designated market
for at least 18 months can use their
existing annual report and accounts as
a basis for admission to trading on AIM
rather than having to prepare an
admission document.
Designated markets include the
following markets:
(a) Australian Stock Exchange;
(b) Euronext;
(c) Deutsche Börse;
(d) Johannesburg Stock Exchange;
(e) NASDAQ;
(f) New York Stock Exchange;
(g) Stockholmbörsen;
(h) Swiss Exchange;
(i) Toronto Stock Exchange; and
(j) UK Official List.
Continuing obligationsOnce a company has been admitted to
AIM, it is subject to continuing
obligations in order to maintain its quote.
Such obligations include:
� RReessttrriiccttiioonnss oonn ddeeaalliinnggss bbyy ddiirreeccttoorrss
Neither directors nor applicable
employees may deal in any of the
company's securities during certain
periods prior to publication of results
and when the company is in
possession of unpublished price
sensitive information;
� GGeenneerraall oobblliiggaattiioonnss ooff ddiisscclloossuurree
The company must issue a notification
without delay of any new
developments which are not public
knowledge concerning a change in:
(a) its financial condition;
(b) its sphere of activity;
(c) the performance of its business; or
(d) its expectation of its performance.
“Experts say AIM is attractive to overseas companies because the fundraising
firepower in London is substantial, they can get their message across to a wider
audience (including the American market) and listing is relatively cheap and quick.”
“Taking AIM: Annual Survey 2005”
� NNoottiiffiiccaattiioonnss ooff cceerrttaaiinn ttrraannssaaccttiioonnss
The Company must notify the
Exchange without delay as soon as the
terms of any of the following
transactions are agreed:
� SSuubbssttaannttiiaall TTrraannssaaccttiioonnss
These are defined as transactions
which exceed ten per cent in any of
the class tests. Class tests involve a
percentage comparison between the
size of the transaction with the AIM
company (for example the turnover
of the company);
� RReellaatteedd PPaarrttyy TTrraannssaaccttiioonnss
A related party transaction is any
transaction made between the
company and amongst others, (a) a
director, (b) a shareholder with a
holding of more than three per cent
of the Company's securities, or (c)
the family or a trustee of (a) or (b)
which exceeds five per cent in any
of the class tests; and
� AA rreevveerrssee ttaakkee--oovveerr
A reverse takeover is a transaction
where any of the ratios relating to
class tests exceed 100 per cent or
where there is a fundamental
change in business, board or voting
control. A reverse takeover requires
shareholder approval, following
which trading in the company's
shares on AIM will be cancelled and
the company must apply for re-
admission.
“A clear understanding of AIM, its players and your objectives.”
Clients First
We believe in the power of partnership. In whatever area of law you seek counsel, we will partner with you to evaluate risk and
recommend a course of action based on your business priorities. We want to hear what you have to say, whether you're a longtime
client or a new one, an innovator with one great idea, or a global corporation with many. We pride ourselves on getting close to our
clients, and understanding the commercial and industry issues critical to the legal advice we provide.
At K&L Gates,we believe that to practice law effectively, we must first understand our clients. We actively recruit professionals
whose business and life experiences reflect the diversity of our clients and the communities in which we work and live. As a firm
whose own people represent the people we serve, we are better equipped to approach capably our clients' issues and needs.
For more information about our AIM practice group please contact
“This firm enjoys a reputation for commerciality, strength,
depth and commitment… the team also maintains a track
record in AIM-related work.”
Chambers 2004 – Corporate Finance
Owen Waft
email: [email protected]
tel: +44 (0)20 7360 8132
Jeremy Landau
email: [email protected]
tel: +44 (0)20 7360 8114
Martin Lane
email: [email protected]
tel: +44 (0)20 7360 8117
K&L Gates comprises approximately 1,400 lawyers in 22 offices located in North America, Europe and Asia, and represents capital markets participants,entrepreneurs, growth and middle market companies, leading FORTUNE 100 and FTSE 100 global corporations and public sector entities. For moreinformation, please visit www.klgates.com.
K&L Gates comprises multiple affiliated partnerships: a limited liability partnership with the full name Kirkpatrick & Lockhart Preston Gates Ellis LLPqualified in Delaware and maintaining offices throughout the U.S., in Berlin, and in Beijing (Kirkpatrick & Lockhart Preston Gates Ellis LLP BeijingRepresentative Office); a limited liability partnership (also named Kirkpatrick & Lockhart Preston Gates Ellis LLP) incorporated in England and maintainingour London office; a Taiwan general partnership (Kirkpatrick & Lockhart Preston Gates Ellis) which practices from our Taipei office; and a Hong Konggeneral partnership (Kirkpatrick & Lockhart Preston Gates Ellis, Solicitors) which practices from our Hong Kong office. K&L Gates maintains appropriateregistrations in the jurisdictions in which its offices are located. A list of the partners in each entity is available for inspection at any K&L Gates office.
This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or reliedupon in regard to any particular facts or circumstances without first consulting a lawyer.
Data Protection Act 1998 - We may contact you from time to time with information on Kirkpatrick & Lockhart Preston Gates Ellis LLP seminars and withour regular newsletters, which may be of interest to you. We will not provide your details to any third parties. Please e-mail [email protected] if youwould prefer not to receive this information.
©1996-2007 Kirkpatrick & Lockhart Preston Gates Ellis LLP. All Rights Reserved. www.klgates.com
We know the playersWhether you are a company coming to the
market for the first time, a Nominated
Adviser or a Broker, you will need a team
of lawyers who know the players and the
financial markets in which they operate.
Your legal advisers should have a wealth
of experience on AIM in order to guide
you through and facilitate the flotation
process. The AIM Team at K&L Gates
has such experience. We do not create
obstacles or re-invent the wheel and we
are pro-active in overcoming difficulties.
Having acted for a number of Brokers on
their own admissions to AIM and by
regularly acting for Nominated Advisors
and Brokers generally, our AIM Team can
boast that K&L Gates is a law firm of
choice for Nomads and Brokers.
Whether you are a company looking for
institutional funding, a management team
looking to build a future exit, or a venture
capitalist wanting to make your exit now,
we have the right experience to help.
We have great experience of successfully
bringing to AIM not only UK based
companies but US and other international
companies. We have the experience to
identify and understand the issues that
US and international companies may face
in coming to AIM. Our 22 offices across
the US, Europe and Asia enable us to
provide a seamless service.
We are a wholehearted supporter of the
Quoted Companies Alliance (QCA), the
only organisation dedicated to promoting
and pursuing the interests and concerns of
smaller quoted companies. Our AIM
Team is represented on the QCA Board
of Directors and on the QCA Share
Schemes Committee.
We understand the processVerification? Placing? Open Offer? Due
diligence? Responsibility Statements?
PIPES? RTOs? SPACs? Our AIM Team
will help you cut through the jargon and
manage the flotation so that you can keep
your eye on the most important issue -
running your business. From inception
through to the time when the proceeds of
the fundraising are received and beyond,
we will identify issues in advance, help
you avoid pitfalls, keep costs down and
make the whole process as straightforward
as possible.
Onwards and upwardsWhen a company's shares are admitted to
AIM it has a new currency to make
acquisitions and the flexibility to return to
the market to raise more money. We have
acted for many AIM companies on
mergers and acquisitions funded by
further issues of shares. Our AIM Team
has vast experience in the merger and
acquisition market that will help your
company grow to meet the expectations of
your new shareholders and the challenges
set by your company's management. The
company also has much greater flexibility
to utilise its share capital to incentivise
employees in a tax effective way.
A clear understanding of AIM, its players and your objectives
“Leading City lawyers who know and understand the UK
markets - Official List, AIM and OFEX” CBI
We know your businessTo ensure the success of your AIM float
and your business, your legal team must
know more than just their way around the
markets and the applicable rules and
regulations - they will need to understand
your business, how admission to AIM will
affect your business and the commercial
drivers that make AIM the right market
for your company.
n Natural Resources
n Pharmaceuticals & Biotechnology
n Telecommunications, Media and
Technology
n Real Estate
n Asset Management and Financial
Services
n Real Estate & Construction
n Manufacturing & Engineering
n Support Services
Our lawyers have specialised in these
industry sectors for many years and bring
with them considerable know-how,
industry connections and working
experience. We provide a value added
service and have up to date specialist
knowledge.
members of :
Companies� SSppaacceellaabbss HHeeaalltthhccaarree IInncc::
£15m placing and admission to
AIM - the first ever spin out of a
set of businesses from NASDAQ
onto the AIM market (U.S.)
� xxGG TTeecchhnnoollooggyy,, IInncc..::
$544m admission to AIM - the first
ever US company to use the LSE's
SIS electronic trading system.
� GGaallaahhaadd CCaappiittaall ppllcc::
£107m reverse takeover of
Shambhala Gold and re-admission
to AIM (Africa)
� CCaalleeddoonn RReessoouurrcceess::
re-admission of AIM listed
company, capital reorganisation,
acquisition, placing and open offer
(China)
� SShhaarriiaahh CCaappiittaall IInncc..::
Placing and admission to AIM of
this Shariah compliant financial
services company.
� NNaattiioonnwwiiddee AAcccciiddeenntt RReeppaaiirr
SSeerrvviicceess PPllcc::
£17.5m placing and admission to
AIM.
� NNiippssoonn DDiiggiittaall PPrriinnttiinngg SSoolluuttiioonnss
ppllcc
£10m placing and admission;
£12.5m vendor placing and
secondary offering (Israel/France)
� MMuullttii GGrroouupp ppllcc::
reverse takeover of Berry
Recruitment Holdings Limited
and readmission to AIM and
reverse takeover of Global Medics
Limited and readmission to AIM
� AAffrreenn ppllcc::
£10m placing and admission to
AIM (Africa)
� TTeelliitt CCoommmmuunniiccaattiioonnss ppllcc::
£23m placing and admission to
AIM (Israel/Italy)
� CCiittyy ooff LLoonnddoonn IInnvveessttmmeenntt GGrroouupp
ppllcc::
placing and admission to AIM of
£2.7 billion fund management
business
� VVeellttii PPllcc
£10M placing and admission to
AIM - the first ever Greek based
company to list on AIM (Greece)
� IInnoovvaa HHoollddiinngg ppllcc
£10m placing and admission to
AIM - (Germany/Austria)
� HHAACCAASS GGrroouupp PPllcc::
£45m recommended offer by
Tribal Group Plc
� SSeeccuurree DDeessiiggnn KKKK::
advised Secure Design KK, the
first ever Japanese company to be
admitted onto AIM
� IIBB DDaaiiwwaa CCoorrppoorraattiioonn::
acting on its £109m recommended
takeover of Lodore Resources Inc
the first time a JASDAQ listed
company has extended an all-share
offer to acquire a company listed
on AIM (Japan)
� SSoouutthh AAffrriiccaann PPrrooppeerrttyy
OOppppoorrttuunniittiieess ppllcc::
£30m placing and admission to
AIM - the first ever publicly
quoted fund specialising in South
African real estate assets
Nomads and Brokers � WWHH IIrreellaanndd::
acting on numerous transactions
including placing and admission of
Palladex plc (Kyrgygstan); placing
and admission of River Diamonds
(Brazil) and reverse takeover and
re-admission of Eleksen Group
� SSeeyymmoouurr PPiieerrccee::
acting on numerous transactions
including the placing and
admission to AIM of Et-china.com
Holdings Ltd
� BBrreewwiinn DDoollpphhiinn SSeeccuurriittiieess::
Placing and AIM admission of
Sabien Technology Group.
� NNaabbaarrrroo WWeellllss && CCoo::
Reverse takeover by Irvine Energy
plc of Halcyon Investment Co Pry
Ltd and Wattle Energy
Corporation and re-admission to
AIM.
� TTeeaatthheerr && GGrreeeennwwoooodd::
Placing and admission to AIM of
Net Dimensions Ltd.
OOtthheerr NNoommaaddss//BBrrookkeerrss wwee aacctt ffoorr
iinncclluuddee::
Nomura Code Securities
Kaupthing Singer & Friedlander
Oriel Securities
Investec
Fox-Pitt Kelton
Fairfax I.S. plc
Blue Oar Securities
Grant Thornton Corporate Finance
Shore Capital
Daniel Stewart; and
Lewis Charles Securities
Areas of Experience
GeneralOur AIM Team has advised on a wide range of AIM transactions advising companies, Nomads and
Brokers. Some recent examples of our AIM Team's experience includes:
"a cost effective, responsive and commercial legal service driven by the needs of its clients…"
Legal 500
"…a user friendly, solid operation with strength in the core areas of Mergers & Acquisitions,
AIM, Private Equity…" Chambers
K&L Gates comprises approximately 1,400 lawyers in 22 offices located in North America, Europe and Asia, and represents capital markets participants,entrepreneurs, growth and middle market companies, leading FORTUNE 100 and FTSE 100 global corporations and public sector entities. For moreinformation, please visit www.klgates.com.
K&L Gates comprises multiple affiliated partnerships: a limited liability partnership with the full name Kirkpatrick & Lockhart Preston Gates Ellis LLP qualified inDelaware and maintaining offices throughout the U.S., in Berlin, and in Beijing (Kirkpatrick & Lockhart Preston Gates Ellis LLP Beijing Representative Office); alimited liability partnership (also named Kirkpatrick & Lockhart Preston Gates Ellis LLP) incorporated in England and maintaining our London office; a Taiwangeneral partnership (Kirkpatrick & Lockhart Preston Gates Ellis) which practices from our Taipei office; and a Hong Kong general partnership (Kirkpatrick &Lockhart Preston Gates Ellis, Solicitors) which practices from our Hong Kong office. K&L Gates maintains appropriate registrations in the jurisdictions in whichits offices are located. A list of the partners in each entity is available for inspection at any K&L Gates office.
This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or reliedupon in regard to any particular facts or circumstances without first consulting a lawyer.
Data Protection Act 1998 - We may contact you from time to time with information on Kirkpatrick & Lockhart Preston Gates Ellis LLP seminars and with ourregular newsletters, which may be of interest to you. We will not provide your details to any third parties. Please e-mail [email protected] if you wouldprefer not to receive this information.
©1996-2007 Kirkpatrick & Lockhart Preston Gates Ellis LLP. All Rights Reserved.
Clients FirstWe believe in the power of partnership. In whatever area of law you seek advice, we will partner with you to evaluate risk and
recommend a course of action based on your business priorities. We want to hear what you have to say, whether you're a
longtime client or a new one, an innovator with one great idea, or a global corporation with many. We pride ourselves on getting
close to our clients, and understanding the commercial and industry issues critical to the legal advice we provide.
At K&L Gates, we believe that to practise law effectively, we must first understand our clients. We actively recruit professionals
whose business and life experiences reflect the diversity of our clients and the communities in which we work and live. As a firm
whose own people represent the people we serve, we are better equipped to approach our clients' issues and needs.
For more information about our AIM practice group please contact
Owen Waft
email: [email protected]
tel: +44 (0)20 7360 8132
Jeremy Landau
email: [email protected]
tel: +44 (0)20 7360 8114
Martin Lane
email: [email protected]
tel: +44 (0)20 7360 8117
“This firm enjoys a reputation for commerciality, strength,
depth and commitment… the team also maintains a track
record in AIM-related work.”
Chambers – Corporate Finance
www.klgates.com
Comparison between AIM
and Nasdaq Markets
AIM Nasdaq
Market Size Over 1,650 companies - average company size of $80-90m (largest market cap company on AIM: over $2.5bn)
3,200 companies - average company over $100m market cap
Industry Areas All industry areas All industry areas
Regulation Exchange-regulated market AIM Regulations administered by LSE - low regulation, giving a more flexible regulatory environment.
Nasdaq is subject to SEC regulation SOX compliance added regulatory burden
Tax Benefits CGT and VCT tax benefits make for easier exit routes for private equity houses and venture capitalists Tax benefits applying to qualifying unquoted companies Corporate Venturing Schemes
N/A
International Dimension
Many international companies on AIM as well as international investors, in particular US investors 330 international companies listed (value of £36.6bn ($73.5bn)) (Note: international companies listed as UK TopCo are counted in LSE statistics as domestic) Over 70 US companies now listed on AIM (value of £2.9bn ($5.8bn)) More companies now list on AIM each year than Nasdaq
Many international companies on Nasdaq 452 international companies (market value: $7.1tr)
Company Requirements and Listing Process
No minimum market value No minimum assets or revenue No minimum amount of tradable shares No minimum offering price No minimum amount of shares to be held in public hands No minimum number of market makers No trading record requirement In most cases, no prior shareholder approval required for transactions
Minimum market cap of $75m Minimum assets and revenue of $75m Minimum 1.1m shares available for trading with minimum value of $20m Minimum offering price of $5m Public shares must be held by 400 shareholders Minimum of 4 market makers In business for minimum of 1 year or market value of $7m and complete governance board SEC must review prospectus - Registration
Summer 2007
UK Listing Authority does not review admission document where document offered to less than 100 people Nominated Adviser confirms admission document complies with AIM Rules
Statement including preliminary prospectus ("Red Herring") made to SEC Completed registration statement is filed with the SEC, appropriate state securities agencies (Blue Sky reviewers) and the National Association of Securities Dealers, Inc. (NASD).
Fees £4,340 ($8,980) listing fee £4,340 ($8,980) annual fee
$100,000-$150,000 listing fee $21,225-$60,000 annual fee
Post Listing Annual Accounts and half yearly reports pursuant to UK GAAP, US GAAP or IFRS.
Annual Accounts and Reports pursuant to US GAAP or IFRS Ongoing costs to comply with SOX
Typical Annual Cost: D&O Insurance Directors Fees & Expenses Annual Audit Accounting Fees 404 Compliance Legal Fees Internal Costs for SEC & Exchange Compliance SEC Filing Expenses & Listing Fees Nomad Expenses Other (Investor Relations, Mailing, Printing, Trvl, etc) Total Aprx Cost
$100,000 $150,000 $150,000 N/A $10,000 N/A N/A $60,000 $100,000 $570,000
$500,000 $150,000 $300,000 $500,000 $300,000 $300,000 $35,000 N/A $250,000 $2,335,000
Typical Cost to Execute a $50m Placing and IPO: Registration Fee Filing Fee Listing Fee Printing Expenses Legal Fees Accounting Fees Blue Sky Fees Transfer Agent & Registrar Fees Corporate Finance Retainer Underwriting Discount/Step-up Miscellaneous Total Aprx Cost
N/A N/A $8,980 $30,000 $450,000 $400,000 N/A $14,000 $150,000 $2,500,000 $50,000 $3,602,000
$9,000 $9,000 $100,000 $220,000 $750,000 $490,000 $10,000 $10,000 N/A $3,500,000 $75,000 $5,173,000
Other Still no credible alternative small company markets; other secondary exchanges are still at a fledgling stage If a US incorporated AIM company has no more than 500 registered shareholders it is possible to bypass both SEC registration and periodic filing requirements, significantly reducing the time and costs involved in an IPO and maintenance of a listing. Sarbanes-Oxley accounting and certification requirements will also not apply, avoiding both costs and the risk of personal liability for directors and officers.
SOX legislation has made listing in US prohibitively expensive for many growth companies
For more information Jeremy Landau Owen Waft Martin Lane Email: [email protected] Email: [email protected] Email: [email protected] Tel: +44(0)20 7360 8114 Tel: +44(0)20 7360 8132 Tel: +44(0)20 7360 8117
K&L Gates comprises approximately 1,400 lawyers in 22 offices located in North America, Europe and Asia, and represents capital markets participants, entrepreneurs, growth and middle market companies, leading FORTUNE 100 and FTSE 100 global corporations and public sector entities. For more information, please visit www.klgates.com. K&L Gates comprises multiple affiliated partnerships: a limited liability partnership with the full name Kirkpatrick & Lockhart Preston Gates Ellis LLP qualified in Delaware and maintaining offices throughout the U.S., in Berlin, and in Beijing (Kirkpatrick & Lockhart Preston Gates Ellis LLP Beijing Representative Office); a limited liability partnership (also named Kirkpatrick & Lockhart Preston Gates Ellis LLP) incorporated in England and maintaining our London office; a Taiwan general partnership (Kirkpatrick & Lockhart Preston Gates Ellis) which practices from our Taipei office; and a Hong Kong general partnership (Kirkpatrick & Lockhart Preston Gates Ellis, Solicitors) which practices from our Hong Kong office. K&L Gates maintains appropriate registrations in the jurisdictions in which its offices are located. A list of the partners in each entity is available for inspection at any K&L Gates office. This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. Data Protection Act 1998—We may contact you from time to time with information on Kirkpatrick & Lockhart Preston Gates Ellis LLP seminars and with our regular newsletters, which may be of interest to you. We will not provide your details to any third parties. Please e-mail [email protected] if you would prefer not to receive this information. ©1996-2007 Kirkpatrick & Lockhart Preston Gates Ellis LLP. All Rights Reserved.