The role of advisers in an IPO

April 2010

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Integrated corporate finance advice across:

The Rothschild Group

Advisers of choice to corporates individuals & governments, often on a repeat basis. Applying

knowledge & insight to M&A and

strategic advice

Europe’s leading practice, advising on objectives, strategy, providers, products

& terms

Experienced teams close to the markets,

advising on valuation, tactics,

execution, implementation

Equity

Market leading adviser

to all Participants in restructuring

situations, drawing on M&A and Debt

Advisory expertise

Restructuring

Debt

M&A, PrivatizationsUS$bn No

1 Rothschild 117.2 1642 JP Morgan 156.6 1563 UBS 214.3 1474 Credit Suisse 271.3 1445 Morgan Stanley 291.1 1376 Goldman Sachs 255.5 1347 Lazard 204.3 1318 Deutsche Bank 221.2 1119 Citi 217.7 84

10 BoA/ML 93.6 75

European M&A

001 – Announced deals by number (1 Jan to 31 Dec 2009)Source Thomson Reuters 4 Jan 2010

Euromoney Awards for Excellence2009 Best Global Sovereign Advisory

2009, 2008 & 2007 Mid-market Adviser2009 Balkans Financial Adviser2008 & 2007 UK Financial Adviser 2008 Italy Financial Adviser 2008 Visegrad Financial Adviser

Most Innovative in Corporate Restructuring

2009 Best LBO Advisory Bank of the Year2009 Restructuring House of the Year

Restructuring Adviser of the yearGerman M&A Adviser of the YearDomestic M&A Deal of the Year- Volkswagen/Porsche

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Market leader in equity advisory

Introduction to Rothschild

Advised on 65 transactions since the start of 2009

– Raising €78 billion

– Fully in the flow of live deals and investor feedback

We are global

– 37 full-time Equity Advisory professionals in 7 different locations:

– Recent and current deal experience on a global basis

Hands-on experience of some of the world’s largest IPOs

– Active in IPO markets:

– Rusal (Russia)

– CFAO (France)

– Amadeus (Spain)

– 23 IPOs currently being worked on

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Rothschild’s CEE expertise

Rothschild’s activity in CEE region

Russia

RomaniaHungary

Bulgaria

CroatiaSlovenia

Albania

Serbia

Czech Republic

Poland

Ukraine

MoldovaSlovakia

Bosnia andHerzegovina

Latvia

Estonia

Macedonia

Belarus

Lithuania

Hungary

2006: £1.3bn acquisition of a 75% stake in Budapest Airport

2004: Acquisition of juice producer Olympus Top

2005: Acquisition of Ukrainian P&C

insurer Skide West

Ukraine

2007: Acquisition of Funni Corporation, the

4th largest Ukrainian dairy company

2009: combining

Telenor’s and Altimo’s holdings in OJSC

VimpelCom and Kyivstar

2008: US$750m disposal of Pravex

Bank to Intesa Sanpaolo SpA

2006: US$1.2bn acquisition of a majority

stake in Ukrsotsbank

2009:Restructuring

of Nadra bank debt with Export Credit Agencies

2010:Restructuring

of Kreditprombank debt

Croatia

2007: Acquisition of 91% of Dukat (EV of

€345m)

Government of Serbia2006: €1.51bn disposal

of Mobi 63

Serbia

Governmentof Serbia

2003: Advisory on the restructuring of NIS - oil

company

2005: Advisory to Banca Intesa on Delta Banka

acquisition

Albania

2006: US$40.8m disposal of a 80%

stake in Banca Italo Albanese

Slovenia

Government of Slovenia

2002: €435m privatisation of 34% in

Nova Banka to KBC

Bulgaria

2006: €157.7m acquisition of a 74.3%

stake in DZI Bank

2004: Acquisition of Queens Juices

Belarus

2009: fairness opinion on Sberbank’s

US$281m offer for a 93.27% stake in BPS

Bank

Romania

2007: Acquisition of a 93.32% stake in

Kandia-Excelent

2006: € 3.75bn acquisition of 62%

stake in Banca Comerciala Romana

2005: €430m merger with HVB

Bank Romania

2005: US$47.3m disposal of 78.5% of stake in Romportmet

2008: Advisory on disposal of Romanian second largest insurer

Lithuania

2004: Acquisition of Nord / LB insurance

operations

Czech Republic

2009: €2.3bn recommended cash offer

for Zentiva NV by Sanofi-Aventis S.A.

2006: €120m disposal of a 50% stake in Modra Pyramida

Stavebni Sporitelna

2004: Acquisition of food brands Sunar, Sunarek & Sunarka

from Heinz

2006: Acquisition of Transcentrum Bus s.r.o.

2006: €52m disposal of Skarbiec asset

mgmt holding

2007: €64m disposal of 60% stake in Agros

Nova

2007: Disposal of Dominet Bank by

Cacek Family and Merrill Lynch

2007: €122m disposal of PTE Skarbiec

Emerytura to Aegon

2006: €82.6m fairness opinion on public tender offer for 13.01% of Netia

2006: €123m offer for Broker Fm

Poland

2007: $5.4 bn combination with Gedeon Richter

2006: US$44.6m opinion on disposal of

asset mgmt operations

2007: Sale of 60% of Expander by GE Money to Innova

Capital

2005: €172m merger with Provimi Polska

2008: Acquisition of DISA from Procuritas

Capital Investors

2008: acquisition of 75% stake in CTL

Logistics S.A.

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Is an IPO right for you, right now?

Increased profile and global awareness of the company?

Creates currency (stock) to pursue further acquisitions?

Increased attention from lenders and institutions - access to growth capital?

Platform for employee incentivisation?

Monetisation for current shareholders at IPO, liquidity thereafter?

Most significant corporate event in a company’s. Clear objectives of the IPO should be determined upfront

Benchmark of value?

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Is an IPO right for you, right now?

Are prospects for growth sufficiently assured and visible??

Is a 3 year financial track record available and does it “sell” the business??

Is the Board settled? Are the CEO and CFO experienced? Independent directors? ?

Customer concentration, competition, macro-economic issues??

Is the business model / strategy suitable for the public markets? Restructuring needed??

Are financial and legal contracts (IP patents, mining rights,…) in place??

The devil is in the detail

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Be sure you understand what is meant by term “equity story”

– “Roadshow test”

– Simple, easily intelligible story

– 25 minutes

– Summary in prospectus, analyst and roadshow presentations

Offering shares on the stock market is like any market with buyers and sellers

Consider the “buyer’s” vantage point

Your Equity StoryKey part of the IPO planning process

A clear, well thought-out equity story will substantially increase the likelihood of success

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Pre-IPO preparation

An adviser will advise on structure and positioning; select, negotiate and manage Bookrunners and other third parties; spot pitfalls and manage the whole process

IPO preparation / executionPre - IPO preparation

Due diligence Documentation

Restructuring

Financial statements

Business plan

Target valuation

Equity story / positioning

Appointments

Marketing and

pricing

Structure and

logistics

Marketing

preparation

Key to efficient and rapid progress – there are no short-cuts

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Typical “post-preparation” timetableFollowing a period of preparation the execution takes c.5 months

Month 1 Month 2 Month 3 Month 4 Month 5

Offer structure & marketing

Organisation

Due diligence, financials & documentation

Appoint legal advisers

Appoint BookrunnersKick off meeting

Business plan, valuation, capital structure and corporate governance

Review corporate governance and appoint INEDs

Business plan

Equity story and valuation

Carry out legal and financial DD and establish dataroom

Prepare audited accounts and accounting reports

Draft prospectus

Liaise with listing authority

Define offer structure

Analyst presentation Research reports published

Investor education

Roadshow and bookbuild

Pricing

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Valuing companies before an IPO

Closing the valuation gap

Market valuation may differ from management / shareholders’ approach to value

An independent adviser will ensure there is a meeting of minds on value throughout the process

Route to “price discovery”

-25%-20%-15%-10%-5%0%5%

10%15%

Pitch valuationrange by

Bookrunner

Valuation rangeby Syndicate

research (t-30)

Bookbuildingprice range

(t-15)

Pricing (t)

Valu

atio

n/Pr

ice

rang

e

The “Valuation Vacuum” risk

A period of time, which may be several months, between the pitch and pricing where valuation is

not discussed

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Choosing your teamA financial adviser will guide you in the appointment of all third parties

Role

Sell stock broadly

Achieve your target price

Support after market effectively

Bookrunners Lawyers Accountants

Role

Explain laws, regulations and market practice and ensure compliance

Run legal workstream

Provide formal legal opinions

Role

Audit

Transaction services

Financials for prospectus

Financial due diligence reports

Financial controls review / implementation

Working capital report

Others

Financial PR Junior syndicate members Printers

What you are looking for

Strength of Partner and their team

ECM experience in your:

– Country

– Sector

Ability to solve problems

Fees

What you are looking for

Strength of team

Ideally one of Big 4

Familiarity with Company

Familiarity with country of domicile

Fees

What you are looking for

ECM experience in your:

– Sector

– Region

Analyst credibility / expertise

Understanding of equity story and valuation

Strength of execution team

Investor relationships

Fees

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Bookrunners have other “clients”

Bookrunners

Company / Shareholders Investors / Internal issues

Important to note:

Bookrunners’ equity

research team have

explicitly one client

– the buyers

Bookrunners’ have 3 “clients”Company’s and Bookrunner’s objectives are not always aligned

1. Company / Shareholders

Pay the IPO commission

Potential for future business

(M&A, equity)

League table credit

Credential / publicity

2. Investors

Material recurring

commissions for equity sales

IPO pricing conflicts can arise

here as the bank “looks after”

investors

3. Internal “clients” within every

Bookrunner

Commitment committee

Valuation committee

Sustainability committee

Internal legal department

Internal compliance

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Independent financial adviserProblem resolution is a key role of the independent financial adviser

Every deal has its own unique problems; unbiased, clear advice will help avoid or solve the difficult issues

Sensitivedisclosure

Increase price, upsize or accelerate

Valuation disagreement

Dual trackor single track

Decrease price, downsize or

postpone

Delay to allow an infill

acquisition

Add aGlobal Co-ordinator

Fire a Global Co-ordinator

Capital commitments/ stabilisation

issues

Delay to allow private bidder

time to prepare

Need for unbiased

clear advice

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Contacts

Fax: +33 1 40 74 98 02

giovanni.salvetti@rothschild.com

Tel: +33 1 40 74 71 89

Managing Director

Giovanni Salvetti

Tel: +33 1 40 74 40 74

75008 Paris, France

23, Avenue de Messine,

Fax: +33 1 40 74 98 02

oleksandr.demenchuk@rothschild.com

Tel: +33 1 40 74 49 14

Executive

Oleksandr Demenchuk

Tel: +33 1 40 74 40 74

75008 Paris, France

23, Avenue de Messine,