Underwriting, Placements and the Art of Investor Relations

Sherilyn Foong Director / Head of Equity Capital Markets Alliance Investment Bank Berhad 11 June 2008

Underwriting & Placements

2

documentations. Roadshows. Foreign Investment Committee. Listing. Bursa Securities. Post Completion Follow-up on any conditions that may be imposed by the relevant authorities. i. Research & marketing. Pricing. Investor Relations strategy. Coordinate efforts of all advisers. due diligence. submissions. 3 .e. placement & distribution.Stages Of An IPO Coordination Approval Process Status Review Monitor progress periodically. Liaise with the relevant authorities such as the Securities Commission. Ministry of International Trade & Industry. Despatch of Prospectus. Completion Process Underwriting.

4 . Risk undertaken involve subscribing for the underwritten shares in the event of undersubscription. Sourcing of new IPOs & Private Placements for the Bank.  Underwriter of IPOs   Ensuring that the required equity funding for the Company is available in the event of an IPO undersubscription.Role Of An ECM Unit Within An Investment Bank  Facilitator of equity & equity-linked transactions    Interface between non-retail buyers and sellers of equity & equitylinked instruments.  Placement Agent  Sourcing for new investors that would be interested to acquire new / existing Private Placement shares being offered by the company / existing shareholder(s) and facilitating the resultant primary / secondary market transaction. Advising corporate clients on equity market conditions and the suitability to undertake equity or equity-linked transactions.

Only the shares offered to the public and employees (pink forms) are typically underwritten in an IPO. there is an underwriting commission.Underwriting  Underwriting .where an Investment Bank / Universal Broker agrees to subscribe for any unsubscribed shares that has been issued / offered by an Issuer. In return for the risks undertaken.ensuring that the required equity funding that a Company needs is available in the event of an undersubscription. a Managing Underwriter may be appointed to manage the Co-Underwriters. 5      . Underwriting Agreement is the primary legal document. For large issues. Objective .

price discovery mechanism to determine “market price” of an IPO which normally conducted for well known larger issues. Objective . usually the same as the Adviser.   6 . Book-building .Placement Agent.Placements  Placement . will place out shares reserved under Private Placement portion to qualified investors.to look for quality shareholders and to those who can bring value to the company.

7 . Advantages  Roadshows will generate publicity and awareness for the IPO. Provides an indication of the market valuation of the IPO shares to retail investors. Establishes a larger institutional shareholder base and greater stability in aftermarket. indicating demand and price sensitivity. Investors pay at a single price determined after book-building to solicit indications of demand by the company and underwriters.Placements Via Book-Building Book-Building  Book-building is an exercise where investors submit bids throughout the offer period. usually lower than the highest bid to create an oversubscription and stable aftermarket. Leads to a more favourable pricing of the retail tranche.

… Reaching Out To The Investment Community 8 . Pacific Mutual.Placements . Prudential. Great Eastern. Lembaga Tabung Haji.Targeted Investors Statutory Bodies Insurance Funds Asset Management Funds Unit Trust Funds Hedge Funds Corporates High Net Worth Individuals Others EPF. PNB. … AIG. HwangDBS. … Alliance Investment. … Public Mutual.

we also give clients the widest “footprint” in terms of investors to place-out the shares to. we generate the strongest possible demand & interest in the shares prior to listing. ECM will work with specialists in investor relations and the investment community comprising of fund managers and investment analysts to maximise market acceptance of the equity story. Our placement to quality placees will in turn increase the likelihood of a strong after-market share price performance. By doing so.Investor Roadshow  Whilst promoting the underlying equity “story”.    9 .

IPO Institutional Placement .Live Case Study Typical Placement Allocation Of A Main Board Company Local Statutory Bodies 6% Corporates 3% High Net Worth Individuals 45% Local & Foreign Institutional Funds 46% 10 .

IPO Institutional Placement .Live Case Study Book Building Demand Local & Foreign Insurance Funds 17% Local Statutory Bodies 6% Local & Foreign Insurance Funds 20% Allocation Local Statutory Bodies 17% Local & Foreign Institutional Funds 77% Local & Foreign Institutional Funds 63% 11 .

16 10.560.99 Second 8.701. .16 7.83 MESDAQ 10.29 12 * Completed IPOs between the months of Jan-Apr 2008.600 Main Board 81% RM1.930 Number Of Listings Excluding REITs Main 2007 2008* 12 2 Second 8 4 MESDAQ 3 5 Total 23 11 Average Forward PE Main 2007 2008* 9.IPO Statistics Funds Raised In 2007 (excluding REITs) Second Board 17% RM357.263 MESDAQ Market 2% RM47.039.11 9.544.

The Art of Investor Relations (IR) 13 .

IR . Not a substitute for a Company’s fundamentals.when doing the job. its IR strategy needs to be carefully thought out & planned. 14 .  To ensure many “happy returns”.   Process of crafting & delivering your Company’s story to the investment community.once in lifetime event.What It Is  IPOs is like a 1st marriage . and convincingly executed.    Amplifies your Company’s success in executing its business strategy by providing greater recognition and acceptance. Not just about promotion. demonstrating its strengths and investment worthiness. let’s do it right.  IR is the continuous dialogue between your Company and investors and / or the channel medium that feeds the info to be conveyed to investors. IR a fight for space in the media for the hearts & minds of investors. Consider hiring an IR professional .

Elements of an IR Programme Converting Investors to Buy  Fund manager’s briefing  Analyst briefing  News releases  Profiling  Media briefing Investible Position Focus on: Industry niche & business  Highlight management’s track record & experience Investor Awareness & Preference  Emphasize financial track record & performance 15 .

you need to:      identify your Company’s key business drivers. implement and continuously implement the IR programme over the next 18 months. create & prepare key themes & concise corporate messages. recognise your Company’s strengths & weaknesses. Therefore. develop a pro-active IR communication plan.How To Start  Basic scope of work for an IR programme. and once all the above is ready. 16 .

of 20 words). the KISS (i. Create & establish an “IR Tool Kit”.     17 .simplifying your Company’s complex story to basic. Consistency of messages & its communication is key. Each IR material should contain no more than 3 or 4 key messages. Stupid) principle works best (max. Keep It Simple. When formulating key messages.e.Nuts & Bolts of IR  Objective . positive messages to be conveyed ultimately translating the shares of your Company to be an attractive investment destination.

edit and update the IR Tool Kit to ensure information timeliness & relevancy. 18 . Recent press and media clippings / announcements. and Contact details on the key IR person(s) in your Company. biodata of directors and key management personnel and website address. profile. ensure layout & format of IR Tool Kit is user friendly. Recent quarterly financial statements (relevant post-IPO) and the most recent annual report.Essentials  At the minimum.     Don’t forget to:     tailor the IR Tool Kit to convey the key messages to be brought across. an IR Tool Kit should at least contain:  Fact sheet(s) containing company history. and constantly review.IR Tool Kit . use clear & unambiguous language.

Newsworthy Key Messages  Examples of positive key messages might include:        growing PAT. new contracts clinched. diversification related to existing core competencies. 19 . responsible and accountable for decisions / actions. dividend payout increase.    Emphasis that your Company’s business strategies and expansion plans are sound. sector / industry growth and your Company’s positioning within it. expansion of margins. entry into a new market. capability and trustworthiness of senior management to meet expectations. Being transparent. The experienced. appointment of high profile individual into the senior management team whom is able to further value-add. realistic & achievable.

 Steps to deal with wrong reporting or misquotes:    First. having more than 1 spokesperson. 20 . Last. then send letter to the editor. Second.Building Positive Media Relations  Always be:     accessible and available to the media. responding fast to queries. double-check report to ascertain the mistake / misquote. determine seriousness of error on Company / self. even after office hours. fast tracking media calls. If serious:    call the journalist. request for a retraction / clarification of error soonest.

say “off the record”.  “Sometimes you say it best. disclose too much about yourself / your Company. lie or make-up stories. 21 . say anything which casts your Company in a bad light. request to check and comment on the media piece before release / publication. when you say nothing at all…”   overanswer. or badmouthing your competitors. DO NOT:      say “no comments”.“No-Nos” When Dealing With The Media  When engaging with the media.

fund management & financial media communities to rectify unrealistic earnings forecasts & manage expectations.  Plays a large influence & shaping investor perception.  Provides support to the IR programme via creation and maintaining awareness of your Company to existing / potential investors.  increase the number of new shareholders .  build a broker network to maximise liquidity and trading opportunities.  establish and widen analyst / financial media coverage. Therefore.both retail & institutional.Continuity Is Key  IR is an on-going process. in good times and bad.  Maintaining close contact with the analyst. 22 .  Management pro-activeness is paramount. Coming clean is essential in order to build & gain trust with investors. your Company needs to:  continuously get on & continue be on investors’ radar screens.  1 on 1 meetings with buy-side / institutional investors works best.

Final Word Of Warning  When talking to the media about your Company. under the SC and Bursa Malaysia’s guidelines / listing rules. be mindful of what is being disclosed / revealed. 23 . as certain information could be price sensitive and/or be subject to verification by an independent 3rd party before public release.

THANK YOU Sherilyn Foong Director / Head of Equity Capital Markets M.my 24 . Ismail Associate Director Equity Capital Markets Jason Lee Senior Manager Equity Capital Markets Tel: 03-2717 6680 (Direct) E-mail: sherilyn@allianceinvestment.my Tel: 03-2717 6681 (Direct) E-mail: jason@allianceinvestment.com. Irtiza Azmel M.com.my Tel: 03-2717 6682 (Direct) E-mail: miazmel@allianceinvestment.com.

contained in or derived from or any omission from the presentation. and may as a result earn brokerage. operation. condition. the satisfactory outcome of due diligence (including legal and financial) of the client.  Alliance and/or its affiliates may act as principal or agent in any transaction(s) contemplated by this paper. on a preliminary basis. should not treat such contents as advice or recommendation by Alliance and its officers.  The information in this presentation is based upon management representations and reflects prevailing conditions and our preliminary views as of this date. 25 . or should be construed as an offer by Alliance and its officers. which are accordingly subject to changes. commission or other income. or any other transactions connected with such transaction(s). Such persons must make their own independent assessment of the contents of this paper. such persons are deemed to rely on their own information and assessment as they deem necessary in order to make any investment decision with respect to the securities in this presentation and their own assessment of the merits and risks of any investment in the securities in this presentation. except liability under statute that cannot be excluded. Alliance and its officers. The terms and structure of the possible transaction(s) in this presentation are preliminary only and implementation is subject to. agents or employees to buy or sell. the accuracy and completeness of all information provided by management.Disclaimer  This presentation was prepared by Alliance Investment Bank Berhad (“Alliance”) exclusively for the benefit and internal use of our client to indicate. condition. or invitation to subscribe for. accounting or taxation matters and should consult their own advisers. any securities. without independent verification. In preparing this presentation. business and prospects of the client nor shall we or any such person be liable for any information or omission in the information pertaining to the financial position.  Alliance is not acting as an adviser or agent to any person to whom this presentation is directed. Alliance and its officers. information or matter (express or implied) arising out of.  This presentation is proprietary to Alliance and may not be disclosed to any third party or used for any other purpose without the prior written consent of Alliance.  Neither Alliance nor any of its directors. Accordingly. the terms and structure of the possible transaction(s) and their implementation may be subject to material changes. with respect to the information pertaining to the financial position. business and prospects of the client. agents or employees do not give any representation or warranty. opinion. Accordingly. after receipt of relevant regulatory approvals and shareholders’ approval and closer to the launch of the possible transaction(s) after taking into consideration the prevailing capital market conditions. Accordingly. employees or representatives are to have any liability (including liability to any person by reason of negligence or negligent misstatement) from any statement.  Nothing in this paper is intended to be. agents or employees on investment matters. In this respect. the feasibility of a possible transaction(s).  All pricing of securities and the possible transaction(s) shown in this presentation are for illustrative purposes and are subject to changes as the actual pricing shall only be determined at a later date. we have relied upon and assumed. inter alia. legal. express or implied. agents or employees shall not accept any responsibility and shall not be liable for the economic risk or any consequences sustained by such persons arising from any investment in the client and/or the securities in this presentation. economic conditions and industry specific conditions at that time. operation.

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