2 Hans Kim
강의 목표와 계획
강의 목표
Corporate Finance
Communication with Equity Investor, including overseas investor
Cross border and cultural experience in finance industry
강의 계획
주제의 제시와 토론
평점방법 : 출석 40, 강의참여 20, 중간과제물 20, 기말 과제물 20
중간과제물 :
투자가 자금유치를 전제로 한 사업제안서 작성
기말과제물 :
중간과제물때 제안된 사업내용의 상장 및 인수합병 전략 - Valuation, 인수합병방안 및 대상회사선정 , 자금조달 방안 , 기관투자가를 위한 Exit 방안 , 등등 포함
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주제별 강의 계획
1. 기업금융과 IR
2. 기업금융과 IR
3. 기업의 국내외 상장
4. 초빙강사 1: 엔터테인먼트시장
5. Valuation 1
6. Valuation 2
7. 초빙강사 2: Due Diligence 실무
8. 중간 시험 - 과제물 제출
Note: 강의 내용과 순서가 바뀔 수도 있음
9. M&A 1
10. M&A 2
11. 적대적 M&A
12. Hedge Fund 의 한국금융기관 인수
13. 초빙강사 3 ( 또는 ) Investor-state claim
14. 지배구조펀드에 대한 이해
15. 전략적 제휴와 JV
16. 기말 시험 - 과제물 제출
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IPO
Why IPO ?
IPO 절차와 비용
해외시장 IPO
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IPO
Why IPO ?
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IPO_ Why IPO?_ Motives of IPO
The motives of IPO (Dr. Henry Servaes, 2001)
Company needs new financing
Current sources of financing have been exhausted (Bank Financing, Venture Capital)
Founders want to diversify and cash out partially
The increased liquidity in Company stock increases its value
The liquidity may also make it easier to do further acquisition; acquisition currency
Venture Capitalist wants cash out
In the western market, often Venture Capitalist does not sell out and makes distribution to partners after IPO
What about in Korean market? Golden Bridge 의 대우부품사례
Take advantage of overvaluation in market
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IPO_ Why IPO?_Case of IPO motives
글로비스 (086280)
Case of “acquisition currency” and “overvaluation” in the market after IPO
현대차 물류 전문업체
현대차 그룹의 경영권 상속을 위한 상장이라는 견해?
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IPO_ Why IPO? _Disadvantage of IPO
Why MNCs in Korea tend to go back to Private company after acquiring public company ?
Going public is a costly process
Cost of IPO
North America 7%
Europe 3.59% (931 IPOs 1992 – 1999)
Asia Pacific 3.09% (430 IPOs 1992 – 1999)
Korea ??
Under pricing 예컨대 , 시장시초거래가 117$ 공개가 100$ 증권사 비용 지불 이후 가격 93$ 기타 비용 지불 이후 가격 90$ = 회사가 실제 조달한 몫 = 결국 , 시초가 117$ 보다 27$ 이나 적은 가격
Cost of managing the status of public company
Cost of Human resources for IR activity
Management cost of maintaining the share price properly
Vulnerable to control contests
Increased disclosure
Diversified shareholder structure
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IPO
IPO 절차와 비용
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KOSPI Information
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Lead Manager’s role
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Major listing issues
Listing requirement & issues
Listing requirement and issues
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Listing Requirement & Issues
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Listing Requirement & Issues
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Listing Requirement & Issues
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Listing Requirement & Issues
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Listing Requirement & Issues
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Listing Requirement & Issues
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Listing Requirement & Issues
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무상증자의 의의
Listing Schedule & Cost
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코스닥 _ 주요 업무 일정도
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무상증자의 의의
Listing Schedule & Cost
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IPO_ 코스닥 상장 절차 _ 코스닥위원회 , 심의결정원칙 , 유형별 기준
코스닥 등록의 의의 증권업협회가 비상장법인중 일정한 요건을 구비한 회사에 대하여 증권회사의 신청에 의하여 협회중개시장의 매매 대상물로 승인하는 행위
코스닥 위원회 협회중개시장의 운영기준 , 협회등록 심의 & 취소 , 불성실 공시법인 제재등 심의 의결
1 인 상임위원 + 10 인 비상임 위원 ( 학계대표 등 전문가 5 + 협회임원 1+ 중소기업진흥공단임원 1+ 등록법인중 벤쳐기업대표 1 + 기관투자자 대표 1 + 중개회사임원 1)
심의 결정 원칙 외형요건 ( 협회중개시장 운영규정 제 4 조 1 항 1 호 및 15 호 ) 에 대한 심의결정기준
구분 : 승인 및 기각
질적 요건 ( 운영규정 제 4 조 1 항 16 호 ) 에 대한 심의 결정 기준
구분 : 승인 및 재심의 , 보류 , 기각
심의결정 유형별 기준 승인 협회중개시장 운영규정에서 정하는 협회등록 심사요건을 구비하고 있다고 판단되는 회사
재심의 협회등록 질적 심사요건 중 특정부분에 대한 추가적 검토 & 확인이 필요하다고 판단되는 회사
보류 질적 심사요건 중 미흡한 사유가 있다고 판단되나 단기간에 그 충족여부의 확인이 가능한 회사
기각 외형요건 미비 및 심사요건 중 결격사유 있다고 판단되나 단기간에 그 해소가 불가능한 회사
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IPO_ 코스닥상장 심사 요건
코스닥 등록 심사 요건 협회등의 홈페이지 참고 및 별도 참고 자료 검토
등록예비심사 미승인 사례 사업성검증미흡
매출규모 미미
주요제품의 매출 중단 직전 사업 년도 매출 50% 차지하는 사업부문의 매출 중단
주요매출처의 불확실성 직전 사업 년도 매출 77% 차지하는 수요처의 재무내용 부실
직전사업연도에만 매출급증 직전 사업 년도 매출급증 (300%) 이 단일 건에 52% 의지
신규사업에 대한 불확실성 신규사업이 매출의 80% 로 미래 불확실성 존재
수익성 검증 미흡 당해 1/4 분기 주력사업 매출 10 억에 분기손실 2 억 시현
관계회사 위험에 노출 직전 사업 년도 관계사 부채비율 2,600%
재무안정성 미흡 직전 사업 년도 유동비율이 동업계 평균 50% 미만
재무자료 신뢰성 미흡
매출채권 관련 위험 최근 3 년간 매출채권 및 재고자산의 지속적 증가 매출채권이 자기자본의 356%, 재고자산이 자기자본의 466%)
경영의 투명성 미흡 임원 부도 , CB 를 대주주에게 저가 매도 , 유증 대금 대주주에 대여
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IPO_ 코스닥상장 심사 요건 _ 통계자료
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IPO_ 유 / 무상 증자 해설
유 / 무상 증자 해설 유상증자
일반 공모 증자
제 3 자 배정 유상증자
무상증자
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IPO_ 유 / 무상 증자 해설
유상증자의 의의 유상증자란 주식회사 성립 이후에 자금조달의 목적으로 정관상 발행예정주식총수의
범위내에서 미 발행주식을 발행 하는 것
발행된 신주의 대가가 회사내로 납입됨으로써 회사재산이 증가하며 , 발행 신주가 제 3 자에게 인수되는 경우 회사의 구성원 ( 주주 ) 수도 증가
인수방법에 의한 유상증자의 분류 주주배정방식 신주 인수권을 구주주에게 부여 가장 일반적
주주우선 공모 방식 주주에게 우선 배정하고 실권된 주는 공모하는 방식
일반 공모 증자 방식 제 3 자 배정과 같이 기존주주배제하고 일반 불특정다수인을 대상으로 공개모집방식으로 유상증자실시 IPO 가 이에 해당
제 3 자 배정 정관 또는 주총 특별결의 사항 기존 주주 배제 하고 특정 제 3 자에게 배정방식 외자유치의 일반적 방식 경영권 및 기존주주에 영향
발행가에 의한 유상증자의 분류 액면가 유증 방식 정관에 정한 액면가 기준으로 하는 유상증자
시가발행 방식 증권시장에 형성된 주가에 연계하여 유상증자
액면미달 발행 방식 자본충실원칙 ( 상법 330 조 ) 에 따라 할인발행은 엄격히 금지 회사의 어려운 경영상태로 자금조달이 긴박한 경우에 한해 엄격한 요건아래 허용
유상증자
일반 공모 증자
제 3 자 배정 유상증자
무상증자
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일반 공모 의의 구주주의 신주 인수권을 배제하고 신주 전량을 일반투자자를 대상으로 공모하는 방식
발행가액 결정
할인율 100/30 이내
결정시점 청약일전 제 5 거래일을 기산일로 결정
계산식 발행가 = 기준주가 X (1- 할인율 )
기준주가 MAX {1 달 거래가중평균종가 , 1 주 거래가중평균종가 , 기산일 종가 }
제 3 자 배정 유상증자 의의 회사 정관에 따른 신주인수권 배제 별도 규정 또는 주총 특별결의 사항 회사 의
합작선등 특별관계에 있는 자에게 신주 인수권 부여 외자유치
경영권 분쟁시 우호세력 확보
발행가액 결정
할인율 100/10 이내
결정시점 유증 이사회 결의일을 기산일로 결정
계산식 발행가 = 기준주가 X (1 – 할인율 )
기준주가 MIN {(1 달 거래가중평균종가 + 1 주 거래가중평균종가 + 기산일 종가 ) /3, 최종일 종가 }
IPO_ 유 / 무상 증자 해설
유상증자
일반 공모 증자
제 3 자 배정 유상증자
무상증자
29 Hans Kim
무상증자의 의의
회사의 순자산에는 아무런 변화 없이 준비금의 일부 또는 전부를 자본금으로 변하는 대차대조표 상의 항목변경에 불과
자본금으로 변하는 준비금을 액면으로 나눈 수 만큼 신주 발행하는 증자
발행된 신주는 구 주주에게 소유 주식 비율로 비례해서 배분
무상증자의 목적
회사의 자본구성을 시정
사내 유보규모의 적정화
주주에 대한 이익의 환원
주식의 유동성 확보
자본금 증가를 통한 대외 신용도 제고
무상증자의 재원
법정준비금 이익준비금 , 자본준비금 , 재평가적립금 등
결의기관 이사회 결의로 가능 법정준비금이 아닌 임의 적립금을 이익준비금으로 항목 변경하여 무상 증자 할 때는 주총결의 필요
IPO_ 유 / 무상 증자 해설
유상증자
일반 공모 증자
제 3 자 배정 유상증자
무상증자
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IPO
해외시장 IPO
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1Overview
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Overview of Capital Markets
Direct Listing
Overseas
Listing
Domestic
ListingB Share
A Share
Small &
Medium Board
Singapore
Hong Kong
United States
GEM
Main Board Big H Share
Small H Share
Big Red Chip
Small Red Chip
United KingdomIndirect Listing
(Reverse Takeover)
Company
Private Equity
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Key considerations for selecting listing location
Listing requirements /
processing times
What’s the likelihood of a successful IPO? Can it be completed in a relatively short time horizon?
What’s the likelihood of a successful IPO? Can it be completed in a relatively short time horizon?
Valuation / PE / Fund
raised
Is the valuation fair (especially compared to other similarly listed companies)? Is the amount raised enough to fund corporate development needs?
Is the valuation fair (especially compared to other similarly listed companies)? Is the amount raised enough to fund corporate development needs?
Cost of listing Cost of raising equity (underwriting fee, listing fees, lawyers, auditors, evaluation, PR, printing costs), and cost of maintaining a listing, including internal controls, financial reporting and satisfying local regulations
Cost of raising equity (underwriting fee, listing fees, lawyers, auditors, evaluation, PR, printing costs), and cost of maintaining a listing, including internal controls, financial reporting and satisfying local regulations
Follow on offerings
Growth strategy /
reputation
In selecting a listing location, companies should consider corporate strategy and how the listing location would impact corporate image
In selecting a listing location, companies should consider corporate strategy and how the listing location would impact corporate image
How easy is it to access the capital markets through a follow-on offering and the usual amount of a follow-on offering
How easy is it to access the capital markets through a follow-on offering and the usual amount of a follow-on offering
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International markets comparison
Source: PwC, BDA researchData as of December 2005
AIM HK Main Board GEMSingapore Stock
ExchangeNASDAQ
Financial requirements None High Low Medium High
Operational requirements None High High Medium High
Time required to list
3mth – 6mth 6mth – 9mth 6mth – 9mth 6mth 12mth
Listing cost (ex-commission)
US$0.45m (GBP0.25m)
US$1.2m (HK$10m) US$1.2m (HK$10m) US$0.75m (S$1.25m) US$0.6m
Monthly liquidity (Turnover / market
capitalization) in 20047% 77% 3% 14% 24%
Minimum market capitalization
None US$24m (HK$200m)
(8 IPOs, 7 reverse takeovers)
Number of Chinese companies listed
173 45 88
US$5.9m US$8m free float
24
None
15
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2Hong Kong Listing
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Hong Kong listing (Main Board) – listing requirements
Financial capability Candidate must fulfill one of the three tests in order to satisfy the financial attributes requirement:
Ownership and management continuity Maintain a trading record period of not less than 3 financial years; AND Demonstrate management continuity during the 3-financial-year trading record; AND Demonstrate ownership continuity and control for at least the most recent financial year of the trading record
* Listing applicant under the market capitalization / revenue test (above 2nd one) is not subject to the management and ownership continuity requirement
Maintenance requirements
Minimum market capitalization of: US$24m (HK$200m)
Minimum public float: 15% - for market capitalization between US$513m (HK$4bn) and US$1.3bn (HK$10bn)
25% or US$12.8m (HK$50m), whichever higher - for market capitalization below US$513m (HK$4bn)
Minimum number of shareholders: 300; 1,000 – for applicant under market capitalization / revenue test (above 2nd one)
Profit test
Market
capitalization /
revenue test
Market
capitalization /
revenue / cash flow
test
Profit: Not less than US$2.6m (HK$20m) for the most recent year; AND Profit: Not less than US$3.8m (HK$30m) in aggregate for the 2 preceding years
Market cap: Not less than US$513m (HK$4bn) at the time of listing; AND Revenue: Not less than US$64m (HK$500m) revenue from principal activities for the most recent financial
year; AND
Market cap: Not less than US$256m (HK$2bn) at the time of listing; AND Revenue: Not less than US$64m (HK$500m) revenue from principal activities for the most recent financial
year; AND Cash flow: Not less than US$13m (HK$100m) inflow from operating activities in aggregate for the 3
preceding financial years
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Hong Kong listing (Main Board) – pros and cons
Geographical proximity, common language and common culture
Traditional fund raising platform for China
Since Qingdao Brewery listed in Hong Kong tock Exchange in 1993, Hong Kong Stock Market has become the most important offshore listing platform for Chinese companies. There are now over 170 Chinese companies (H share and red chip) listed in Hong Kong
Chinese companies are now a major part of the Hong Kong Main board. In 2005, Chinese companies contributed 30% of market capitalization and 40% of market turnover respectively
Experience and market size attracts good broker coverage. Concentration of institutional investors and fund houses also ease fund raising
Good liquidity and strong post IPO fund raising capability
Market liquidity makes secondary listings possible and reduces the need for dual listings
In 2004, turnover / market capitalization ratio was 77%, compared with 7% for AIM and 9% for SESDAQ (Singapore Stock Exchange)
Between 2001 and 2005, over 54% of fund raised by red chips was from secondary offerings
Geographical proximity, common language and common culture
Traditional fund raising platform for China
Since Qingdao Brewery listed in Hong Kong tock Exchange in 1993, Hong Kong Stock Market has become the most important offshore listing platform for Chinese companies. There are now over 170 Chinese companies (H share and red chip) listed in Hong Kong
Chinese companies are now a major part of the Hong Kong Main board. In 2005, Chinese companies contributed 30% of market capitalization and 40% of market turnover respectively
Experience and market size attracts good broker coverage. Concentration of institutional investors and fund houses also ease fund raising
Good liquidity and strong post IPO fund raising capability
Market liquidity makes secondary listings possible and reduces the need for dual listings
In 2004, turnover / market capitalization ratio was 77%, compared with 7% for AIM and 9% for SESDAQ (Singapore Stock Exchange)
Between 2001 and 2005, over 54% of fund raised by red chips was from secondary offerings
Pros
High listing cost
The average IPO cost (ex-commission) is about US$1.2m (HK$10m). It is expensive relative to other stock exchange, such as US$750,000 for Singapore Stock Exchange and US$450,000 for AIM
Buying exiting listed company is another way of listing. Average “shell” price is approximately US$6m (HK$50m), which is also expensive relative to other markets
Relatively high entry barrier
Listing on the Main Board requires fulfillment of certain financial thresholds not required in other stock listings
Relatively long listing procedures
In light of the recent corporate scandals, Hong Kong Stock Exchange has toughened the approval process for IPOs
Listing procedures now takes about 6-9 months to complete, compared to 3-6 months for AIM
High listing cost
The average IPO cost (ex-commission) is about US$1.2m (HK$10m). It is expensive relative to other stock exchange, such as US$750,000 for Singapore Stock Exchange and US$450,000 for AIM
Buying exiting listed company is another way of listing. Average “shell” price is approximately US$6m (HK$50m), which is also expensive relative to other markets
Relatively high entry barrier
Listing on the Main Board requires fulfillment of certain financial thresholds not required in other stock listings
Relatively long listing procedures
In light of the recent corporate scandals, Hong Kong Stock Exchange has toughened the approval process for IPOs
Listing procedures now takes about 6-9 months to complete, compared to 3-6 months for AIM
Cons
38 Hans Kim
Hong Kong listing (GEM) – listing requirements
Length of business operation Candidate must fulfill either period of active business operations:
Exemptions may be granted for mining companies and newly formed project companies, such as major infrastructure projects, which can have shorter trade records
Ownership and management continuity Must be under substantially the same management and ownership over the period of active business operations
Maintenance requirements
Minimum of market capitalization: US$5.9m
Minimum public float: 20% or US$128m (HK$1bn), whichever higher - for market capitalization exceeding US$513m (HK$4bn)
25% or US$3.8m (HK$30m), whichever higher - for market capitalization less than US$513m (HK$4bn)
Minimum number of shareholders 300 – for market capitalization exceeding US$513m (HK$4bn)
100 – for market capitalization less than US$513m (HK$4bn)
Financial reporting Quarterly
24 months
12 months
No minimum financial requirement
Revenue: Not less than US$64m (HK$500m) in the last 12 months; OR Assets: Not Less than US$64m (HK$500m) in the last financial period; OR Market cap: Not less than US$64m (HK$500m) with not less than US$19m (HK$150m) held by the public
39 Hans Kim
Hong Kong listing (GEM) – pros and cons
Geographical proximity, common language and culture
Relatively low entry barrier
GEM does not have specific financial requirement for listing candidates; the same is true for other growth markets such as AIM and SESDAQ
Stepping stone to Hong Kong Main Board
Good GEM listed companies usually swap to Main Board after accumulating 3-year profit record post GEM listing
The first, second and sixth largest GEM listed companies swapped to the Main Board. Altogether there are over 10 GEM listed companies that have swapped to the Main Board
Geographical proximity, common language and culture
Relatively low entry barrier
GEM does not have specific financial requirement for listing candidates; the same is true for other growth markets such as AIM and SESDAQ
Stepping stone to Hong Kong Main Board
Good GEM listed companies usually swap to Main Board after accumulating 3-year profit record post GEM listing
The first, second and sixth largest GEM listed companies swapped to the Main Board. Altogether there are over 10 GEM listed companies that have swapped to the Main Board
Pros
High listing cost
Similar to Hong Kong Main Board, listing expense is relatively expensive, approximately US$1.2m in total
As market capitalization of GEM listed companies are relatively small, listing cost can comprise up to 20% of total fund raised
Poor liquidity
Liquidity of GEM is very poor, and deteriorating. Turnover / market capitalization ratio dropped from 6% in 2002 to 3% in 2004 compared to 7% for AIM and 9% for SESDAQ
Poor liquidity results in difficulty of post IPO fund raising. Since 1999, post IPO only raised US$129m for Chinese companies
Relatively long listing procedures
In light of the recent corporate scandals, Hong Kong Stock Exchange has toughened the approval process for IPOs
Listing procedures now takes about 6-9 months to complete, compared to 3-6 months for AIM
High listing cost
Similar to Hong Kong Main Board, listing expense is relatively expensive, approximately US$1.2m in total
As market capitalization of GEM listed companies are relatively small, listing cost can comprise up to 20% of total fund raised
Poor liquidity
Liquidity of GEM is very poor, and deteriorating. Turnover / market capitalization ratio dropped from 6% in 2002 to 3% in 2004 compared to 7% for AIM and 9% for SESDAQ
Poor liquidity results in difficulty of post IPO fund raising. Since 1999, post IPO only raised US$129m for Chinese companies
Relatively long listing procedures
In light of the recent corporate scandals, Hong Kong Stock Exchange has toughened the approval process for IPOs
Listing procedures now takes about 6-9 months to complete, compared to 3-6 months for AIM
Cons
40 Hans Kim
3Other listing options
41 Hans Kim
Singapore listing – listing requirements
Financial capability
Candidate must fulfill one of the three tests in order to satisfy the financial attributes requirement:
Trading moratorium
Promoters’ entire shareholding at the point of listing for first 6 months after listing (above 1st and 2nd options)
Promoters’ entire shareholding at point of listing for first 6 months after listing; and at least 50% for the next 6 moths (above 3rd option)
Other listing requirements
Minimum public float: 12% - for market capitalization larger than US$595m (S$1bn)
15% - for market capitalization between US$238m (S$400m) and US$595m (S1bn0
20% - for market capitalization between US$178m ($S300m) and 238m (S$400m)
25% - for market capitalization less than US$178m (S$300m)
Minimum number of shareholders: 1,000 - primary listing
2,000 - secondary listing
Financial position No shortfall in working capital
All debts owing by directors, substantial shareholders and companies controlled by directors and substantial shareholders must be settled
Profit test (1)
Market
capitalization test
Profit: Cumulative pre-tax profit of at least US$4.5m (S$7.5m) for the last 3 years; AND Profit: Pre-tax profit not less than US$0.6m (S$1m) in each of these 3 years
Profit: Cumulative pre-tax profit of at least US$6m (S$10m) for the latest 1 or 2 years
Market cap: At least US$48m (S$80m) at the time of the IPO, based on the issue price and post invitation issued share price
Profit test (2)
42 Hans Kim
Singapore listing – pros and cons
Geographical proximity, common language and culture
Relatively low entry barrier compared with HK Main Board
Singapore requires lower profit or market capitalization for listing
Popular with companies that don’t want to list on growth markets like AIM or GEM, but are barred from Hong Kong Main Board due to its high financial requirements
Ease of secondary offering procedures
Secondary offerings are usually completed in 2-4 weeks
Geographical proximity, common language and culture
Relatively low entry barrier compared with HK Main Board
Singapore requires lower profit or market capitalization for listing
Popular with companies that don’t want to list on growth markets like AIM or GEM, but are barred from Hong Kong Main Board due to its high financial requirements
Ease of secondary offering procedures
Secondary offerings are usually completed in 2-4 weeks
Pros
Deteriorating market reputation
While Hong Kong and NASDAQ have increased scrutiny of IPOs following corporate scandals, Singapore has become more lax to attract Chinese companies leading to increased corporate scandals and loss of market confidence
A notorious example is China Aviation Oil, which went bankrupt due to crude oil future speculation. It was once held up by SESDEQ as a model of corporate governance.
The loss of reputation has directly impacted the liquidity of the market. Its liquidity is only about one-fifth of the Hong Kong Main Board
Deteriorating market reputation
While Hong Kong and NASDAQ have increased scrutiny of IPOs following corporate scandals, Singapore has become more lax to attract Chinese companies leading to increased corporate scandals and loss of market confidence
A notorious example is China Aviation Oil, which went bankrupt due to crude oil future speculation. It was once held up by SESDEQ as a model of corporate governance.
The loss of reputation has directly impacted the liquidity of the market. Its liquidity is only about one-fifth of the Hong Kong Main Board
Cons
43 Hans Kim
NASDAQ Listing – listing requirements
Financial capability
Candidate must fulfill one of the three tests in order to satisfy the financial attributes requirement:
Ownership and management continuity
2 years operating history is required for listing by fulfilling Marketplace Rule 4420(b)
1 year operating history is required for listing on the NASDAQ Small Cap Market. It can be waived if the market cap is greater than US$50m
Maintenance requirements
Continuing listing requirements: Equity > US$10m + publicly held share value > US$5m + min US1 share price;
OR
Market cap/assets/revenue > US$50m + publicly held share value > US15m + min US$1 share price
Market maker: 3 market makers are required
Marketplace Rule 4420(c): 4 market makers are required
Minimum number of shareholders: 400 each holding 100 or more shares
NASDAQ Small Cap Market: 300 each holding 100 or more share
Sarbanes-Oxley Act: Substantial requirements for corporate governance
Marketplace Rule
4420(a)
Marketplace Rule
4420(c)
Market cap: At least US$8m for public shares; AND Equity: At least US$15m; AND Profit: At least US$1m pre-tax income
Market cap: At least US$18m for public shares; AND Equity: At least US$30m
Market cap: At least US$20m for public shares; AND Assets: At least US$75m; OR Revenue: At least US$75m; OR Market cap: At least US$75m
Marketplace Rule
4420(b)
Market cap: At least US$5m for public share; AND
Equity: At least US$5m; OR Market cap: At least US$50m; OR Profit: At least US$750,000 from
continuing operations, in last fiscal year or 2 of the last 3 fiscal years
Alternative – NASDAQ Small
Cap Market
44 Hans Kim
NASDAQ Listing – pros and cons
The largest growth market with good liquidity
NASDAQ is the largest growth market in the world. Its capitalization reached US$3,153bn in 2004, which is 70x AIM and 346x GEM
In 2004, monthly turnover / market capitalization ratio was 24%, compared to 7% for AIM and 9% for SESDAQ
These market characteristics favor large scale fund-raising
Friendly to high-tech concept stocks
Of the 23 Chinese listed NASDAQ companies, many are tech-concept stocks, including: Baidu, Netease, Sohu, Sina, Asia Info, UT Starcom, China.com and Kongzhong.com
While Asian stock markets are less keen on tech concept stocks, NASDAQ provides a platform and relatively higher PE for these companies
The largest growth market with good liquidity
NASDAQ is the largest growth market in the world. Its capitalization reached US$3,153bn in 2004, which is 70x AIM and 346x GEM
In 2004, monthly turnover / market capitalization ratio was 24%, compared to 7% for AIM and 9% for SESDAQ
These market characteristics favor large scale fund-raising
Friendly to high-tech concept stocks
Of the 23 Chinese listed NASDAQ companies, many are tech-concept stocks, including: Baidu, Netease, Sohu, Sina, Asia Info, UT Starcom, China.com and Kongzhong.com
While Asian stock markets are less keen on tech concept stocks, NASDAQ provides a platform and relatively higher PE for these companies
Pros
Heavy compliance cost
Sarbanes Oxley (SOX) has placed a heavy burden on US listed companies
According to research by AeA, for a company with revenue less than US$100m, SOX compliance can cost more than 2.5% of revenues
High litigation risk
Out of 23 Chinese listed companies, 7 have been sued
Litigation costs and compensation/fine can pose a severe threat to the financials of the listing company
Relatively high continuing listing requirement
The continuing listing requirement is clearly far stricter than other growth markets, especially the minimum market cap and share price
The number of companies listed on NASDAQ have decreased due to strict continuing listing requirements
From 1995 to 2002 there were 5,143 NASDAQ delistings compared to 1,497 NYSE delistings and 712 AMEX delistings
Long listing procedures
Listing on NASDAQ normally takes 1 year to complete, which is more than twice the time required for AIM listings
Heavy compliance cost
Sarbanes Oxley (SOX) has placed a heavy burden on US listed companies
According to research by AeA, for a company with revenue less than US$100m, SOX compliance can cost more than 2.5% of revenues
High litigation risk
Out of 23 Chinese listed companies, 7 have been sued
Litigation costs and compensation/fine can pose a severe threat to the financials of the listing company
Relatively high continuing listing requirement
The continuing listing requirement is clearly far stricter than other growth markets, especially the minimum market cap and share price
The number of companies listed on NASDAQ have decreased due to strict continuing listing requirements
From 1995 to 2002 there were 5,143 NASDAQ delistings compared to 1,497 NYSE delistings and 712 AMEX delistings
Long listing procedures
Listing on NASDAQ normally takes 1 year to complete, which is more than twice the time required for AIM listings
Cons
45 Hans Kim
AIM – listing requirements
AIM has neither financial nor operational requirements for listing candidates
Advisors required to list on AIM
NOMAD (Nominated advisor)
NOMAD warrants to the Exchange that the candidate is appropriate for joining AIM
NOMAD has to be retained throughout the company’s life in the market
Broker
A securities house and member of the LSE
It is the broker’s responsibility to gauge the level of interest in the company’s shares and advise on pricing, and place them with investors
Accountant
Review and audit the candidate’s finances
Corporate lawyer
Draw up all agreements surrounding the flotation. They are also responsible for the due diligence process – verifying statements in the prospectus and other documents
Financial PR company
Responsible for promoting the company, helping creating the analyst presentation, afterwards advising on investor relations strategy
Documents required to list on AIM
Prospectus
Due diligence report
Analyst presentation
10 day announcement – the form is completed by the NOMAD and sent to the AIM, at least 10 clear business days prior to admission of the new company. AIM then disseminates this over the Regulatory News Services, the LSE’s official news outlet, and checks for any material objection for the listing
Declaration by NOMAD
Application form signed by the company
46 Hans Kim
AIM – pros and cons
Very low entry barrier
AIM has no financial or operational requirements for listing
Simple listing procedures and short listing process
LSE relies on the NOMAD to warrant the listing company, thus simplifying the listing procedures. Admission documents are only pre-vetted by the NOMAD
After appointment of the NOMAD, it normally takes only 3-6 months to get listed on AIM
Low listing cost
Listing costs on AIM is about US$450,000 (GBP0.25m, ex-listing commission), compared to (US$1.2m) listing in Hong Kong and (US$750,000) in Singapore
Relatively strong liquidity among growing markets
Monthly turnover / market capitalization ratio for AIM was 7% in 2004, improving from 3% in 2002. AIM index was up by 20.4% in 2004
It is far more attractive than 3% of GEM and approaching 9% of SESDAQ
Flexible trading
No minimum public shareholdings
In most cases, no prior shareholder approval is required for transactions
Very low entry barrier
AIM has no financial or operational requirements for listing
Simple listing procedures and short listing process
LSE relies on the NOMAD to warrant the listing company, thus simplifying the listing procedures. Admission documents are only pre-vetted by the NOMAD
After appointment of the NOMAD, it normally takes only 3-6 months to get listed on AIM
Low listing cost
Listing costs on AIM is about US$450,000 (GBP0.25m, ex-listing commission), compared to (US$1.2m) listing in Hong Kong and (US$750,000) in Singapore
Relatively strong liquidity among growing markets
Monthly turnover / market capitalization ratio for AIM was 7% in 2004, improving from 3% in 2002. AIM index was up by 20.4% in 2004
It is far more attractive than 3% of GEM and approaching 9% of SESDAQ
Flexible trading
No minimum public shareholdings
In most cases, no prior shareholder approval is required for transactions
Pros
Geographical disadvantage
London is geographically far from China. Culture unfamiliarity may affect popularity of shares
NOMAD are mostly western corporate finance companies. Language and cultural differences may lead to difficulty, and result in the need for additional advisors
Lack of popularity in Greater China area
AIM was set up in 1995, but there are now only 17 Chinese companies listed there; Chinese listings only started in October 2004
Lack of popularity in China has reduced some of the advantages of being listed, such as reputation enhancement, however this is improving as AIM hosts road shows etc to raise its profile
Geographical disadvantage
London is geographically far from China. Culture unfamiliarity may affect popularity of shares
NOMAD are mostly western corporate finance companies. Language and cultural differences may lead to difficulty, and result in the need for additional advisors
Lack of popularity in Greater China area
AIM was set up in 1995, but there are now only 17 Chinese companies listed there; Chinese listings only started in October 2004
Lack of popularity in China has reduced some of the advantages of being listed, such as reputation enhancement, however this is improving as AIM hosts road shows etc to raise its profile
Cons
AIM is a new market for Chinese companies with the first listing in October 2004, but is rising in popularity
47 Hans Kim
Chinese enterprises listed on AIM
Name Ticker Sector Listing dateCurrent market cap
(GBP in m)Listing market cap
(GBP in m)Listing method
Sinosoft Technology SFT Software 06 March 2006 58.8 NA IPO
Bodisen Biotech BODI Agricultural Biotech 06 February 2006 158.9 NA IPO
China Shoto PLC CHNS Batteries/Battery Sys 06 December 2005 38.0 26.0 IPO
Mandarin Merchant Capital PLC 620534Z Investment Companies 16 September 2005 NA NA IPO
EBT Mobile China EBT Cellular Telecom 08 September 2005 51.8 26.5 RTO
Asian Citrus Holdings Limited ACHL Agricultural Operations 03 August 2005 141.7 68.0 IPO
Jarlway Holdings PLC JWY Machinery-Constr&Mining 18 July 2005 3.8 6.0 IPO
South China Resources PLC SCR Metal-Diversified 18 April 2005 38.5 4.0 IPO
Sweet China PLC SWC Capital Pools 31 March 2005 NA NA RTO
Central China Goldfields PLC GGG Gold Mining 30 March 2005 12.5 NA RTO
Ming Resources PLC MTA Investment Companies 29 March 2005 2.3 NA RTO
SovGEM Limited SOV Investment Companies 23 November 2004 4.3 11.4 IPO
China Wonder Limited CWO Diversified Operations 01 October 2004 3.8 2.5 IPO
GruppeM Investments PLC GRP Investment Companies 18 February 2004 NA NA RTO
Hemisphere Properties PLC HPE Real Estate Oper/Develop 05 August 2003 0.8 2.5 RTO
CYC Holdings PLC CYC Investment Companies 08 April 2003 2.8 NA RTO
Churchill China CHN Consumer Products-Misc 26 October 1994 NA NA IPO
Source: Bloomberg, BDA researchData as of 10h May 2006
48 Hans Kim
Key Advantage of LSE AIM
- Normally 3 year trading record required
- Minimum 25% shares in public hands
- Prior shareholder approval required for substantial acquisitions and disposals
- Minimum market capitalization
- No trading record requirement
- No minimum market cap.
- No minimum shares to be in public hands
- No prior shareholder approval for transactions
- Nominated adviser required at all times
- SME Business 에 적합
49 Hans Kim
Key Advantage of LSE AIM
-KOSDAQ 이나 NASDAQ 에 비해 상대적으로 등록 Regulation 이 중소기업에 유리한 조건을 가지고 있어 , 상장조건이 수월하며 매년 상장되는 기업의 수가 많다 . (UK 외 International 기업의 상장기회가 많다 .)
- 등록 및 유지 비용이 NASDAQ 보다 훨씬 저렴하고 , KOSDAQ 보다는 다소 비싸다 .
- Pound화의 변동추이가 원화보다 작다 .
- KOSDAQ 에 비해 PER 가 높다 . -> 회사가치 대비 보다 정확하고 효율적인 Valuation 이 가능하다 .
- Open-end Fund Raising 이 활발하고 , 1 차보다 2 차의 Raising 규모가 크다 . -> 회사의 지속적인 성장이 가능하다 .
- 유럽에서 기업의 Name Value 가 높아져 시장 진출이 용이하다 .
- Market 에서 지정한 전문적인 Underwriter 들 (Nomad) 이 있다 . 어드미션이나 IPO 후 , 회사의 가치를부양해주며 , 경영에 도움을 줄 수 있다 .
- IPO 시 대주주의 지분이 Dilution 되는 정도를 조절할 수 있다 . : 보통 코스닥 상장시 대주주 지분이 40% 정도 Dilution 되는 것이 일반적이지만 , AIM 은 5% 정도로 조절하는것이 가능하며 , Equity 뿐 아니라 싼 이 자의 Debt 로도 Funding 을 받을 수 있다 .
- M&A 고려시 코스닥보다 AIM 에 상장되어 있는것이 여러측면에서 유리하다 .
- AIM 시장은 기관투자가들이 메인이 되는 시장으로 , Fluctuation 이 심하지 않고 , 지속적으로 꾸준한 성장 이 가능하다 .
50 Hans Kim
KOSDAQ & AIM – 상장조건 비교
구분 Kosdaq ( 벤처기업 기준 ) AIM
자기자본 15 억원이상 규정 없음
자기자본이익률 (ROE) * 5% or 순이익 10 억이상 규정 없음
주식의 분산요건소액주주 500 인 이상 ,
발생주식총수의 30% 이상규정 없음
소유주 비율 변동 청구일전 1 년 이내 변동 없어야 함 규정 없음
심사자 Kosdaq 위원회 Nominated Advisor
등록 주관주체 증권회사 Nominated Advisor & Broker
51 Hans Kim
AIM, NASDAQ, KOSDAQ – 상장및 유지 비용
증권거래소 IPO Broker 시 비용 주식거래비용 기타
수수료 $8,000 연간 수수료 $8,000
Nomad/ / 회계 법률등 비용 $900,000 Nomad/ 회계등 연간비용 $145,000
총계 $908,000 총계 $153,000
수수료 $125,000 연간 수수료 $34,500
/ 회계 법률등 비용 $2,000,000 / 회계 법률등 연간비용 $1,000,000
총계 $2,125,000 총계 $1,034,500
수수료 $10,000 연간 수수료 $500
/ 회계 법률등 비용 $100,000 / 회계 법률등 연간비용 $50,000
총계 $110,000 총계 $50,500
: 0.3%거래세: 0.05~0.2%수수료
40M share기준
자문비용추정치사용
(Sarbanes- Oxley 법)고려
40M share기준
: 0.5%거래세:$7~$100수수료
+ 소득세
:수수료$6~$15/trade
+ 소득세
KOSDAQ
공모규모의3%~6%
공모규모의~7%
공모규모의2.5% ~ 4%
등록비 등록 유지비
LSE AIM
NASDAQ
52 Hans Kim
Market 비교
증권거래소 등록 기업수( )누적
Market Cap( )누적 거래규모 Total IPO 금액 Second Raising Ave. Fund Raising 신규등록기업수
LSE AIM 1399 (1179/220) $113B $84B $13B $5B $34.7M 519 (399/120)
NASDAQ 3164 $3603B $10000B $12.2B NA $87.8M 139
KOSDAQ 918 $70B $437B $3.7B $2.2B $53.6M 69
2005 년 기준
증권거래소 등록 기업수( )누적
Market Cap( )누적 거래규모 Total IPO 금액 Second Raising Ave. Fund Raising 신규등록기업수
LSE AIM 1590 (1307/208) $150B $88B $12.6B $8B $62.4M 330 (244/86)
NASDAQ 3206 $3,670 $8777B 42
KOSDAQ 954 $68B $351B 37
2006 년 10월 25 일 기준
53 Hans Kim
AIM _ New Touch Guideline for AIM Nomads_Feb 19, 2007
From The Times
February 19, 2007
LSE draws up new tough guideline for AIM nomads
Elizabeth Colman
The London Stock Exchange is expected to publish strict guide-lines this week for advisers bringing companies to AIM, the junior London market.
In an attempt to make the industry more accountable, the first tangible rulebook for nominated advisers, or nomads, will demand that more thorough due diligence be carried out on AIM applicants.
Proposed rules include the demand for strict background checks on all directors and site visits to the headquarters of nonUK companies. Failure to comply with the rules could lead to a nomad being banned from AIM. The crackdown follows a string of profit warnings involving AIM-listed companies and criticism from the US about so-called lax standards.
Under the present AIM structure, nomads are not subject to hard-and-fast rules. “This is an attempt to show the world that the AIM is taking a tougher approach,” one nomad said.
However, many larger nomads said they already complied with the “best practice” standard set out in the rulebook. The rules are expected to weed out smaller nomads which “rubber-stamp” applicants’ admission documents and neglect to stay in touch with the company after listing.
The wording of a key declaration to be published on the front page of admission documents, assigning to nomads the responsibility for the “appropriateness” of AIM applicants, is expected to be tempered.
Richard Baty, a nominated adviser and assistant director of corporate finance at Hanson Westhouse, said: “We don’t expect the new rules to be too prescriptive. The whole point of AIM is that it is regulated by the nomads. The spirit of the rulebook is that the nomad uses their judgment.”
Although AIM applicants are required at present to show legal and accounting diligence, the rulebook will require nomads to prove to AIM regulators a knowledge of the company and its directors. This will present a particular challenge in emerging markets such as China and India, and the crackdown is expected to provide a boon to business intelligence services.
Russ Corn, a consultant at Diligence, an intelligence gathering and risk management firm, has noticed an increase in business. He said: “There is a feeling among the nomads and the brokers that they will be required to look at every single director that they’re bringing to market and that they validate and check the directors’ declarations and the essential information that they’re given. Up until now the nomad could get away with taking it at face value. Now they’re going to have to do reputation and integrity profiling.”
Several nomads welcome the rules, saying they will provide an impetus to tell clients that they must do background checks, in circumstances where it may have caused offence. Previously, many nomads carried out such checks without the applicants’ knowledge.
54 Hans Kim
4Private placement
55 Hans Kim
Private placement – overview
Overview
Private placement is a broad term that refers to any type of equity investment in an asset in which the equity is not freely tradable on a public stock market
There are two types of private placement investors; financial and strategic
Financial investors, including venture capital, are an important source of funding, especially for younger companies that do not have access to the public financial markets
Strategic investors provide management and technology know-how and capital
Private placement
Financial investors (private equity) Strategic investors (strategic stake)
Venture capital
Buyout funds
Funds of funds, etc.
Good financial returns on their equity investment and typically exit around 5 years
Strategic partners (foreign or domestic)
Upstream, downstream or otherwise related companies
Companies looking to diversify
Gain access to new markets
Ensure steady supply or off-take or other benefits from equity ownership
Diversify earnings, participate in other industries
Who they are
What they want
56 Hans Kim
Financial investors – overview
Three stages of private equity
Seed/initial stage: Investors investing in companies during this stage are investing in
an idea. A company at this stage usually has a concept or a prototype or has just
started operating, but operating practices and company structure have not been
determined. Investing in companies at this stage is relatively risky and is usually
funded by venture capital. Typical investment amount range from US$1m to US$5m.
Growth stage: A company in this stage has usually operated for a period of time, has
a basic sales team, production capabilities and has in place a basic company
structure. A company in this stage needs capital to expand operations and grow
market share. Typical investment amount range from US$5m to US$40m
Mature/mezzanine stage: A company in this phase is mature and is getting ready for
a public offering in 9-12 months time. Finding a strong and reputable private equity
investor in this stage will add credibility to the public offering. Investment at this range
widely, anywhere from US$40m to US$300m
Buyout – LBO/MBO: There are many different circumstances or events that may
facilitate the initiation of a management buyout (MBO), a form of leveraged buyout
(LBO), including: divestitures of corporate divisions, public-to-private transactions,
SOE restructurings, and other means of transferring ownership of a company. MBO
transactions usually rely on debt instruments to finance a significant portion of the
purchase price, consequently, the majority of these types of deals occur in stable,
mature companies that have an established track record of generating strong and
sustainable cash flows.
These categories are not absolute, but are a useful guide in helping to target the
appropriate kind of investor
Source: Almeida Capital, BDA
Sources of private equity (by number of funds)
Sources of private equity (by amount)
Source: Almeida Capital, BDA
Venture Capital32.4%
Buyout44.7%
Secondary market4.5%
Mezzanine6.5%
Fund of Fund6.8%
Others5.2%
Venture Capital37.3%
Buyout36.4%
Secondary market5.1%
Mezzanine6.4%
Fund of Fund9.5%
Others5.3%
57 Hans Kim
Private equity – pros and cons
Management should carefully review all its options and considerations before committing to raising capital through private placement
Pros Cons
Financial Investors
Strategic Investors
“Smart money”: Private equity can often bring better management practices and connections within the industry to improve the business
Lots of new PE funds looking at China
Flexible fundraising channel: compared to a public offering, the private placement process is less time consuming and more flexible. It also avoids the registration, regulation and control process and offers more confidentiality against competitors
Eliminates marketing and road show costs
Private placement is more accessible than the public markets with a higher likelihood of success
Legitimacy: Investment by a reputable private equity fund or company can often provide encouragement to would-be future investors as it implies that the company’s financials and its business model have passed rigorous evaluation by highly qualified people. It can also raise the profile of a company waiting to list publicly and increase its valuation and enhance its performance in the secondary markets
Strategic partners can use capital support to solidify the business partnership
Strategic investors can bring technology, market access and best business practices to the Company
The public market will often give a more generous valuation than a private placement investor
Loss of control: Contract stipulations, board member requirements, and other issues that arise out of the investment process could lead to loss of control by management
Unlike a listed company, shares owned by employees can’t be freely traded
It is harder for a private company to use un-issued shares in an acquisition given the unconfirmed value of the shares
Financial investors will typically want to exit their investment in 3-5 years
Working with another company will require careful relationship management to align expectations and have a fruitful relationship
58 Hans Kim
IPO
End of Week 3