2009 US IPO Watch

Transaction Services

2009 US IPO watch
Analysis and trends

Foreword

After a dismal performance in 2008, coinciding with the 2010 outlook
worst financial crisis the world has faced since the Great IPO activity has picked up significantly since the “frozen”
Depression, the US initial public offering (IPO) market state of early 2009, riding the tide of improving equity
began to rebound in 2009. IPO activity bottomed out in markets. During the fourth quarter, fifty-four companies
the first quarter at the height of the credit market turmoil, registered for an IPO in the US, including several non-US
when only two deals were completed. IPO activity picked issuers.
up in the second quarter as markets began to stabilize,
and the pace continued to accelerate through the rest of Although a recovery of the US IPO market has taken hold,
the year. some companies pursuing IPOs are encountering chal-
lenges. A few planned offerings were withdrawn in the
Although 2009 was by no means a banner year for US fourth quarter of 2009, and five out of the seven IPOs
IPOs, clear signs have arisen that an increasing number in December 2009 priced below expectations. Further,
of companies across a variety of industries, both domes- companies completing successful IPOs that did not meet
tically and internationally, are planning to tap the public post-IPO earnings expectations were punished severely.
equity markets for capital during 2010. These facts highlight some of the risks associated with
going public.
Factors impacting IPO activity in 2009:
Financial sponsor-backed transactions surge Companies planning IPOs in 2010 will need to estab-
lish realistic expectations of their value and ensure they
If 2008 was notable for the lack of financial sponsor-
have the ability to meet near-term market expectations.
backed IPOs, late 2009 saw a surge of these deals.
Anticipating business risks and developing programs for
Financial sponsor-backed transactions nearly tripled in
managing such risks is a theme we are seeing resident
volume and almost quadrupled in value in 2009 compared
earlier in the IPO planning process… and rightfully so.
with 2008. They also comprised more than half of all deals
in 2009.
Where do we go from here?
Non-US issuers contribute We are optimistic that the US IPO market will continue
to build on the positive trend of activity witnessed during
Proceeds raised by non-US issuers also increased consid-
the later part of 2009. While January and February are
erably, representing 36.7% of total proceeds in 2009
often quiet, we expect substantial IPO activity prior to the
compared to only 6.3% the previous year. Two of the top
dog days of summer and robust deal flow throughout the
10 US IPOs in 2009 were from non-US issuers, including
autumn. We foresee a continuing contribution of deals
the largest IPO in 2009—Banco Santander (Brasil) S.A.
from financial sponsors as private equity firms look to
harvest investments made during the “heyday” of lever-
Global IPO activity rebounds
aged M&A activity that preceded the credit crisis.
IPO markets around the world generally witnessed an
increase in both volume and value in 2009. The Greater We expect IPOs from the technology sectors, including
China market proved to be the largest IPO market in biotech, as well as financial services, healthcare and retail
the world in 2009, where 208 IPOs raised a total of and consumer deals. Green energy/technology deals may
$59.7 billion. be the “wild card” for 2010, depending upon how policy-
makers elect to support a low-carbon economy.

Sincerely,

Scott J. Gehsmann Henri Leveque
Transaction Services Transaction Services
PricewaterhouseCoopers LLP

i

Contents
Top 10 IPOs
A quote or synthesis of
section if needed

Overview 1

Top 10 IPOs 2

Quarterly analysis 4

Industry analysis 6

Financial sponsor-backed IPOs 8

Non-US issuers 10

Stock exchanges 11

Europe 12

Greater China 14

Latin America 16

Comparing the US, Europe,
Greater China, and Latin America 18

Developments in capital markets 20

About PwC’s
Transaction Services 22

ii

Overview
Top 10 IPOs
IPO activity makes a comeback
section if needed

After the slowest year for IPOs since the 1970s, the US The financial services industry was the leader in terms
IPO market began to show signs of life again in 2009. of both IPO volume and value in 2009. The largest IPO
IPO volume increased moderately in 2009 to 69 IPOs, of the year came from the banking sector, with Banco
compared with 57 IPOs in 2008. Proceeds of $25.2 billion Santander Brazil raising $7.0 billion. Business services
were raised in 2009, compared with $29.4 billion and technology IPOs also boasted strong showings
in 2008. However, total IPO proceeds during 2009 in 2009 with 11 IPOs each, raising $3.5 billion and
and 2008 were skewed by single, large deals—Banco $2.8 billion, respectively.
Santander (Brasil) S.A. (Banco Santander Brazil), which
raised $7.0 billion in 2009 and Visa, Inc., which raised Financial sponsor-backed deals rebounded strongly
$17.9 billion in 2008. Excluding these two large deals, in 2009, after coming to a standstill in 2008. For the year,
IPO proceeds in 2009 and 2008 would have totalled 44 IPOs totaling $9.9 billion were backed by financial
$18.2 billion and $11.5 billion, respectively. sponsors. In 2008, there were only 14 such IPOs, which
raised $2.3 billion.
During the fourth quarter of 2008 and through the first
quarter of 2009, IPO activity came to a near halt, with An analysis of 2009 IPO activity based on capital raised
only five IPOs over this six month period. However, as the reveals an increase in the number of deals in the $500
equity markets began to gain ground, IPO activity picked million to $999 million range and the $50 million to $149
up in each quarter of 2009. The fourth quarter witnessed million range. IPOs raising more than $500 million more
35 IPOs, a clear rebound from the first-quarter trough, than doubled in 2009 to 11, from five in 2008. IPOs of less
although still not significant by historical standards. than $50 million declined from 11 in 2008 to seven in 2009.

Offering value & number
of IPOs by year

Offering value (US$ billions) Volume of IPOs by range of offering values

$65.1 2005 2006 2007 2008 2009

$1 billion + 2 8 7 2 3

$49.9
$39.1
$29.4 $500–$999 million 16 15 15 3 8
$25.2

Number of IPOs
$150–$499 million 68 61 109 22 23
296

221 236
$50–$149 million 88 105 129 19 28

57 69
Less than $50 million 47 47 36 11 7
2005 2006 2007 2008 2009

1

Top 10 IPOs
Larger deals A quote or synthesis of
return to fuel proceeds
section if needed

“We expect the 2010 market for initial public offerings to be the strongest since 2007. A significant
reduction in valuation volatility, year-over-year positive financial comparisons, and a stable overall
business environment, are all factors that companies and investors look for in an IPO window. We
have seen over 60 filings on the NYSE since the third quarter for over $20 billion in capital to be
raised. Companies of all sizes and from a broad range of sectors will enter the market. However, it
is not an IPO free-for-all, as investors are still valuation sensitive, and recent transactions that may
have pressed the valuation envelope have seen poor performance. Execution will be key.”
Scott R. Cutler, executive vice president and head of listings—Americas, NYSE Euronext

Proceeds raised from the top 10 US IPOs totaled Verisk Analytics Inc., a New Jersey-based risk manage-
$15.6 billion, versus $23.7 billion in 2008—although absent ment software company, which raised $1.9 billion in
the Visa IPO, proceeds in 2008 would have been only proceeds. Non-US based companies accounted for two of
$5.9 billion (see table on following page). The top 10 IPOs the top 10 IPOs and 51.8% of the top ten deal value, or
comprised 61.9% of the total value of 2009 IPOs. $8.1 billion—$7.0 billion was raised by Banco Santander
Brazil, while the remaining $1.1 billion was raised by
Average deal size of the top 10 IPOs was $1.6 billion, Chinese gaming software company Shanda Games Ltd.
compared with $0.7 billion in 2008 (excluding the Visa
IPO). In 2009, one IPO dwarfed the remaining top 10: Financial services continued to be the leading sector in
the offering from Banco Santander Brazil, which raised 2009, with three of the top 10 IPOs.
$7.0 billion. All deals in the top 10 raised more than
$500 million in proceeds compared to only five in 2008. Four of the top 10 deals in 2009 were backed by financial
sponsors compared to only one in 2008.
US-based companies accounted for eight of the
top 10 IPOs but only 48.2% of the total deal value, or Seven of the top 10 IPOs were NYSE-listed transactions,
$7.5 billion. The largest IPO from a US-based issuer was and the remaining three were NASDAQ-listed deals.

2

PricewaterhouseCoopers • 2009 US IPO watch 3

Top 10 IPOs 2009 (proceeds in US$ millions) Top 10 IPOs 2008 (proceeds in US$ millions)
Banco Santander (Brasil) S.A.2 $7,035.0 Financial services Visa Inc. $17,864.0 Business services

Verisk Analytics, Inc. 1,875.6 Technology American Water Works Company, Inc. 1,247.0 Utilities

Shanda Games Ltd. 2 1,043.7 Technology Intrepid Potash, Inc. 960.0 Industrial

Talecris Biotherapeutics Holdings Corp.1 950.0 Healthcare Trian Acquisition I Corp. 800.0 Financial services

Hyatt Hotels Corp. 950.0 Leisure Sapphire Industrials Corp. 800.0 Financial services

Cobalt International Energy, Inc. 1
850.5 Energy GT Solar International, Inc. 500.0 Energy

Starwood Property Trust, Inc. 1
810.0 Financial services Maiden Holdings, Ltd. 1, 2
460.6 Financial services

Mead Johnson Nutrition Co. 720.0 Healthcare GHL Acquisition Corp. 400.0 Financial services

Dollar General Corp. 1
716.1 Consumer BPW Acquisition Corp. 350.0 Financial services

Artio Global Investors Inc. 650.0 Financial services Colfax Corp. 337.5 Industrial

Total $15,600.9 Total $23,719.1

1
Financial sponsors $3,326.6 1
Financial sponsors $460.6
% Financial sponsors 21.3% % Financial sponsors 1.9%
2
Non-US issuers $8,078.7 2
Non-US issuers $460.6
%Non-US issuers 51.8% % Non-US issuers 1.9%

Value and contribution of top 10 vs. other IPOs Average IPO proceeds
(US$ millions) (US$ millions)

Top 10 Other IPOs All IPOs Top 10 Other

2009 $15,601 $9,607 $365.3 $1,560.1 $162.8

2008 $23,719 $5,632 $514.9 $2,371.9 $119.8

2007 $16,104 $49,045 $220.1 $1,610.3 $171.5

2006 $13,546 $36,396 $211.6 $1,354.6 $161.0

2005 $8,601 $30,510 $177.0 $860.1 $144.6

0% 20% 40% 60% 80% 100%

Quarterly analysis
Top 10 IPOs
Strong fourth quarter trendsynthesis of
A quote or re-emerges
section if needed

The IPO market rebounded in the second quarter of 2009 with fourth-quarter IPO activity reaching new levels and
after hitting bottom in the first quarter, which saw only two generating the highest quarterly proceeds since the first
IPOs. The number of IPOs rose consistently thereafter, quarter of 2008.

Offering value & volume of IPOs by quarter
Offering value in US$ billions $22.6
$21.1 $20.4
$19.7
$17.1
$11.6 $10.9
$9.3 $9.8 $9.2
$10.8 $11.7 $11.9
$7.7 $1.5 $1.6
$5.1 $0.2 $0.7 $5.8

101
Volume of IPOs 89
79
67 68
54 57 54 56
43 48
37 35
25 11 12 20
18 3 2

2005 2006 2007 2008 2009

The fourth quarter of 2009 resumed the historical trend of Q4 comparison: Number and value of IPOs
robust Q4 IPO activity, after a slow final quarter in 2008. Offering value in US$ billions $20.4
$19.7
The fourth quarter of 2009 delivered 35 IPOs that raised $16.4 $17.1
proceeds of $17.1 billion. This compares with only three $11.7 $10.4 $10.4 $9.2
IPOs in the fourth quarter of 2008 that raised a meager $4.5 $0.2
$0.2 billion. When compared with the fourth quarter of
2007, Q4 of 2009 was not particularly remarkable in terms
Number of IPOs
of the volume of IPOs. However, proceeds raised of
101
$17.1 billion in the fourth quarter of 2009 were only 89 89
16.1% short of the $20.4 billion raised during the market
peak in Q4 2007. 55 56 57
37 35
27 3

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

4

Industry analysis
Technology expectations high

“We continue to see a healthy pipeline of IPO applications from viable companies
in the healthcare, technology, social media, and education sectors. 2010 is shaping up
to be a better year than 2009, and we will benefit from a stronger first half—
in 2009, we didn’t see any real momentum until April. NASDAQ OMX saw nine IPOs
from China last year, and this will be a critical market in 2010 as Chinese companies
continue to see the benefits of accessing US-based investors. While we are in what is being
called a ‘jobless recovery,’ we will also see more venture capital-backed and
private equity-backed IPOs, which will result in job generation.”
Robert McCooey, senior vice president, NASDAQ OMX Group

Financial services again proved to be the most active The industry mix of the leading 2009 IPOs stands in
industry sector, constituting 18.8% of 2009 IPO volume, contrast to that of the 2008 leaders. While financial
or 13 IPOs. The technology and business services sectors services was also one of the leaders in 2008, the clear
followed with 11 IPOs each. 2008 leader in deal value was business services because
of the Visa IPO. Other leading sectors in 2008 were
In terms of the value of offerings, financial services was energy/utilities and industrial. While 2008 witnessed
again the leader, largely because of the $7.0 billion Banco clean tech companies braving the IPO waters, 2009 was
Santander Brazil deal. Financial services as a whole raised a slower year for “green” investment given the financial
$10.5 billion, comprising 41.5% of the overall proceeds. crisis. Interest in renewable energy may resume in 2010,
Business services was second in terms of deal value, depending largely upon oil prices and continued govern-
raising $3.5 billion, or 13.9% of the proceeds. Technology ment support for the sector.
and healthcare sector IPOs also had a strong showing in
2009, raising $2.8 billion and $2.7 billion, respectively, or
11.3% and 10.8% of the proceeds, respectively.

6


IPO proceeds across industry sectors

Transport, Other, Financial Transport, Other,
1.6% 0.6% services, 3.8% 1.0%
16.6%
Other, Transport,
Business 4.2% 1.1% Healthcare, Business
services, 0.8% services,
13.9% 9.6%
Technology,
Energy/ 0.9% Energy/
Utilities, Utilities, Financial
6.8% Financial 12.2%
2009 services, 2008 Industrials, 2007 services,
43.1%
Consumer, 41.5% 5.6% Consumer,
7.6% 4.5%
(Consumer,
Industrials, 0.0%) Industrials,
2.3% 6.1%
Business Energy/
Technology, Healthcare, services, Utilities, Technology, Healthcare,
11.3% 10.8% 63.9% 10.5% 13.8% 5.9%

Value and volume of IPOs by industry sector
Volume Value (US$ millions)
2009 2008 2007 2009 2008 2007
Financial services 13 22 97 $10,459.2 $4,885.3 $28,076.3
Business services 11 8 27 3,504.8 18,740.5 6,233.9
Technology 11 3 55 2,845.1 257.7 8,980.2
Healthcare 10 4 43 2,713.2 221.0 3,871.1
Consumer 8 1 13 1,918.4 2.9 2,908.6
Energy/Utilities 5 9 34 1,711.6 3,084.1 7,942.2
Other 2 1 2 1,061.1 189.0 682.3
Industrials 7 6 12 584.8 1,646.9 3,986.1
Transport 2 3 13 409.8 323.7 2,468.0
Total 69 57 296 $25,208.0 $29,351.1 $65,148.7

Financial sponsor-
backed IPOs Pushing the IPO window open
section if needed

After a relative absence in 2008, Value of financial sponsor-backed IPOs
financial sponsor-backed IPOs (US$ millions)
returned in 2009. Of the 69 IPOs
Financial sponsors Others
completed in 2009, 44 were backed
by financial sponsors. These IPOs
raised $9.9 billion. This contrasts with 2009 $9,878 $15,330
14 deals raising $2.3 billion in 2008.
$2,327

The largest financial sponsor-backed 2008 $27,024
IPO in 2009 raised $950.0 million,
compared with 2008, when the
largest financial sponsor-backed deal 2007 $30,002 $35,147
raised only $460.6 million. Four of the
top 10 deals in 2009 were financial 0% 20% 40% 60% 80% 100%
sponsor-backed, compared to only $418
one in 2008.

Financial sponsor-backed IPOs $580
Mean and median values of financial sponsor-backed IPOs (US$ millions)
were the most active in the business
services, technology, healthcare and 2009 2008 2007
industrial sectors. During 2010, we Mean Median Mean Median Mean
$480
Median
expect a continuing wave of IPOs
Financial sponsors $224.5 $135.5 $166.2 $159.0 $184.1 $111.7
to be brought to market by financial
sponsors, with an early focus on the Other $613.2 $200.0 $628.5 $130.0 $264.3 $150.0
portfolio companies that were not
acquired in “club deals.” Potential
issuers who were acquired by a “club” $XXX
of financial sponsors generally are
tasked with the challenge of building
consensus among the entire club to $1,061
support the valuation and timing of an
initial public offering.

8


Volume of financial sponsor-backed IPOs vs. other IPOs

2009 44 25

2008 14 43

2007 163 133

0% 20% 40% 60% 80% 100%
$418

2009 proceeds from financial sponsor-backed IPOs by Industry $580
(US$ millions)

$480

Financial services $1,360 $9,099

Business services $1,353 $2,151

$XXX

Technology $1,624 $1,221

$1,061

Healthcare $1,993 $720

Consumer $1,299 $619

Energy/utilities $1,231 $481

Other $111 $950

Industrials $497 $88

Transport $410

0% 20% 40% 60% 80% 100%

Non-US issuers
Proceeds increase fourfold

“After a 2009 that challenged the resilience of many business models and investment strategies,
we are cautiously optimistic that the IPO and secondary markets will continue to be open
for depositary receipt issuers during 2010. We anticipate capital will be available for both
recapitalization and restructuring of sound businesses and investment in companies
with sustainable competitive advantages. Emerging markets should continue to outperform
in attracting depositary receipts investors.”
Michael Cole-Fontayn, chief executive officer, The Bank of New York Mellon Depositary Receipts

In 2009, non-US issuers completed Volume of IPOs by US and non-US companies
18 IPOs in the US IPO market, raising
US Non-US
$9.2 billion. This represented 26.1%
of overall volume compared with
2009 51 18
29.8% in 2008, and 36.7% of the total
proceeds in 2009 compared with
6.3% the previous year.
2008 40 17
The most active country of origin
for non-US issuers was China, with
15 IPOs that raised $2.0 billion. 2007 240 56
Brazil had one IPO that listed in the
US, Banco Santander Brazil, while 0% 20% 40% 60% 80% 100%
Canada, the only other country of $418
origin for non-US issuers in 2009,
Value of IPOs by US and non-US companies
had two companies raising a total (US$ millions)
of $0.2 billion in the US. $580
US Non-US
The majority of foreign registrants
chose the NASDAQ to list their 2009 $15,966 $480
$9,242
shares. Non-US issuers raised
$1.7 billion from eleven IPOs listed
on this exchange. Although fewer 2008 $27,498
non-US issuers elected to list their $1,855
shares on the NYSE (7 IPOs), their
total proceeds were greater, largely 2007 $48,463 $XXX
$16,686
the result of the $7.0 billion Banco
Santander Brazil IPO. 0% 20% 40% 60% 80% 100%
$1,061
$418

10
$580

Stock exchanges
US market shares the wealth

In 2009, IPOs were split almost evenly Trends in median IPO value by exchange
between the NYSE1 and the NASDAQ, (US$ millions)
with the NYSE claiming 36 IPOs and
NYSE
the NASDAQ claiming 33. The NYSE $210 $202 $200 $199 $200
was the leader in proceeds raised
with $17.5 billion, representing 69.6% $93 $100
of the total. The NASDAQ, in contrast, NASDAQ $90
$75 $70
listed IPOs that raised $7.7 billion,
representing 30.4% of the total. 2005 2006 2007 2008 2009

Listings on the NYSE were dominated
Value by exchange
by financial services companies,
(US$ millions)
which comprised 11 of the 36 IPOs.
Industrials and consumer were tied NYSE NASDAQ
for second on the NYSE with five IPOs
each. Technology listings topped the 2009 $17,555 $7,653
list of NASDAQ issuers, with nine
IPOs, while the business services
sector contributed seven listings. 2008 $26,388 $2,963

Seven of the 2009 top 10 IPOs
were NYSE-listed transactions, 2007 $44,685 $20,464
while the remaining three were
NASDAQ-listed transactions.
0% 20% 40% 60% 80% 100%

Median deal size on the NYSE
remained stable at $200 million. Volume by exchange
On the NASDAQ, median deal size
154
increased by 42.9% to $100 million 142
from $70 million.

36 33 31 26

2009 2008 2007

1 On October 1, 2008, NYSE Euronext NYSE NASDAQ
acquired the American Stock Exchange
(AMEX), rebranding it as NYSE Amex Equi-
ties. AMEX IPOs have now been reclassified
and included as NYSE data for each year in
this report.

11

Europe
Top 10 IPOs
A quote and value slow
Volume or synthesis of
section if needed

In the European stock markets, IPO volume declined The Polish stock exchange, WSE4, was the largest
57.3% and value declined 51.3% (in US$) from 2008 to exchange in terms of volume with 38 IPOs and the third
2009. In local currency, the decline in value was 49.0%. largest in terms of value, raising $2.4 billion (€1.6 billion).
The European exchanges raised $10.4 billion (€7.1 billion) The majority of the proceeds raised were attributable
from 126 IPOs during 2009 compared with $21.3 billion to the IPO of PGE Polska Grupa Energetyczna, a Polish
(€14.0 billion) from 295 IPOs during 2008. utilities company, which was the largest IPO in Europe
in 2009, raising $2.1 billion (€1.4 billion). The WSE
As far as individual European markets are concerned, represented 30.2% of the region’s IPO volume and 22.8%
the NYSE Euronext2 was the largest exchange in terms of the region’s IPO proceeds.
of proceeds ($2.8 billion[€1.9 billion]) and delivered the
fifth-largest volume (nine IPOs) in 2009. The majority of The slowdown in the European IPO market has been felt
the proceeds raised was attributable to Delta Lloyd NV, a across the majority of industries, as the number of IPOs in
Dutch life insurance company, which completed an IPO of all sectors declined in 2009 compared with 2008. The top
$1.5 billion (€1.0 billion). The NYSE Euronext represented three industry sectors in 2008, namely industrial goods
7.1% of the region’s IPO volume and 27.1% of the region’s and services, investment companies, and technology,
IPO proceeds. continued to lead the way in terms of number of IPOs
in 2009.
The total proceeds raised by initial public offerings on the
London markets3 fell by 82.5% to $2.4 billion (€1.7 billion), The European exchanges attracted 39 international IPOs
while the number of IPOs tumbled 74.7% to 25 in 2009. in 2009. Those offerings raised $3.1 billion (€2.2 billion),
The results made the London markets the second-largest a decrease in both the volume and value compared with
exchange in terms of volume and proceeds. The London 2008 which saw 77 IPOs by international companies
markets represented 19.8% of the region’s IPO volume raising $9.3 billion (€6.0 billion). In value terms,
and 23.0% of the region’s IPO proceeds. international IPO proceeds represented 35.7% of total
European IPO proceeds in 2009. By comparison, US stock
exchanges saw a total of 18 IPOs by non-US companies
raising $9.2 billion (€6.3 billion), representing 36.7% of
total IPO value.

2 NYSE Euronext includes the Euronext and Alternext markets and covers Belgium, France, the Netherlands and Portugal.
3 London includes the Official List, AIM, Professional Securities Market and the Specialised Fund Market.
4 WSE includes the Main Market and the New Connect market of the Warsaw Stock Exchange.

12


Ten largest European IPOs in 2009 (proceeds in millions)
Company € raised $ raised (a) Market Sector
PGE Polska Grupa Energetyczna €1,407 $2,098 WSE Utilities
Delta Lloyd NV 1,016 1,515 NYSE Euronext Insurance
CFAO 806 1,174 NYSE Euronext Industrial goods and services
Gartmore Group Ltd 378 551 London Investment company
Tata Steel 355 500 London Construction and materials
Shin Kong Financial Co. Ltd 266 375 Luxembourg Insurance
Tata Motors 253 375 Luxembourg Automobiles and parts
Max Property Group Plc 226 309 London Real estate
Epistar Corporation 210 306 Luxembourg Technology
KGI Securities Co. Ltd 201 287 Luxembourg Financial services
Total Top 10 €5,118 $7,490

(a) US dollar amount computed using the monthly average foreign currency exchange rate for the month the IPO was priced.

Volume and value by market (proceeds in millions)
2009 2008

# IPOs €m US$ # IPOs €m US$

NYSE Euronext 9 €1,907 $2,813 23 €2,497 $3,840

London 25 1,660 2,387 99 8,884 13,649 (a), (b)

WSE 38 1,594 2,363 91 2,502 3,735 (a)

Luxembourg (Main Market and Euro MTF) 22 1,575 2,273 19 285 430 (b)

Borsa Italiana (Main Market and AIM Italia) 6 137 198 6 129 192

Oslo Bors and Axess 2 91 133 14 65 99

NASDAQ OMX5 11 66 95 26 208 326

Deutsche Börse (Main Market and Entry Standard) 5 53 78 12 330 513

BME6 3 19 27 1 292 460

Athens 1 10 14 - - -

SIX Swiss Exchange 4 - - 6 169 261 (c)

ISE (Ireland) - - - 1 - - (c)

Total European exchanges 126 €7,112 $10,381 295 €13,953 $21,315

EU regulated 41 €4,340 $6,401 115 €11,736 $17,941

Exchange regulated 85 €2,772 $3,980 180 €2,217 $3,374

Note: IPOs by market are shown gross of multiple listings; however, listings on multiple exchanges are netted in the total.
(a) 1 triple listing on London, WSE, and Prague, raised €1,390 million ($2,162 million).
(b) 1 dual listing on London and Luxembourg raise €18 million ($28 million).
(c) 1 dual listing on SIX Swiss Exchange and ISE, not raising any funds.

5 NASDAQ OMX covers both the Main Market and the First North Market and include the Copenhagen, Helsinki, Stockholm, Iceland, Tallinn, Riga
and Vilnius exchanges.
6 BME includes the Main Market and the MAB (Alternative) Market of the Spanish exchanges. The BME includes Madrid, Barcelona, Bilbao and
Valencia exchanges, MF Mercados Financieros, Iberclear and BME Consulting.

Greater China
Top 10 IPOs
Moves to quote or one position
A number synthesis of
section if needed

After a decline in 2008, the Greater China IPO markets proceeds, raising $32.0 billion from 73 IPOs, an astounding
rebounded in 2009, playing a leading role in the recovery increase of 276.0% over total 2008 proceeds. Hong Kong
of the global IPO market. The volume of IPOs in the accounted for more than half of total Greater China
Greater China markets increased 32.5% from 157 IPOs in proceeds and took over the leading position from Shanghai,
2008 to 208 IPOs in 2009. The average deal size in Greater which also had an impressive year with $18.3 billion raised
China in 2009 was $287.2 million. The proceeds raised from only 9 IPOs. Shanghai has become a favored market
from IPOs in 2009 were $59.7 billion, considerably greater for large mainland deals, exhibited by its $2.0 billion
than 2008 when the total proceeds were $23.9 billion. average deal size. Shenzhen has proved to be a solid
counterpart by courting the smaller deals. Shenzhen led
All of the Greater China markets experienced considerable the Greater China market in volume with 90 IPOs raising
growth in 2009. Hong Kong recaptured the top spot in $9.2 billion, a 26.8% increase in volume over 2008.

Greater China IPOs: volume and value by market (proceeds in millions)
2009 2008
Stock exchange # IPOs Local currency US$ (a) # IPOs Local currency US$ (a)
Hong Kong 73 248,227.1 $32,011.5 49 65,976.4 $8,513.7
Shanghai 9 125,124.7 18,327.7 6 73,354.0 10,747.1
Shenzhen 90 62,773.0 9,194.7 71 30,084.0 4,407.6
Taiwan 36 6,630.2 207.3 31 7,667.0 233.6
208 $59,741.2 157 $23,902.0

Note: Greater China IPO values include “greenshoe proceeds”
(a) converted at the foreign exchange rate as of December 31 for the year noted.

14


Ten largest greater China IPOs in 2009 (proceeds in US$ millions)
Company Funds raised (US$m) Market Sector
China State Construction Engineering Corporation Ltd. $7,347.2 Shanghai Heavy construction
China Minsheng Banking Corp., Ltd. 4,027.3 Hong Kong Banks
China Pacific Insurance (Group) Co., Ltd. 3,574.8 Hong Kong Life insurance
Metallurgical Corporation of China Ltd. - (A-share) 2,778.6 Shanghai Heavy construction
China Longyuan Power Group Corporation Ltd. 2,593.2 Hong Kong Renewable energy equipment
Sands China Ltd. 2,503.2 Hong Kong Gaming
Metallurgical Corporation of China Ltd. - (H-share) 2,351.1 Hong Kong Heavy construction
China Shipbuilding Industry Co Ltd. 2,156.6 Shanghai Commercial vehicles & trucks
China CNR Corporation Ltd. 2,036.0 Shanghai Commercial vehicles & trucks
Wynn Macau, Ltd. 1,868.6 Hong Kong Gaming
Total Top 10 $31,236.6

Note: Companies from Greater China often list different classes of shares on the different Greater China stock exchanges. In such cases, the data
above includes the value of shares listed on each exchange and the different exchange listings as separate IPOs.

Top 10 IPOs
Latin America
Brazil and Chile synthesis of
A quote or hold steady
section if needed

In Latin America, the number of IPOs was roughly the The Brazilian equity market (the Brazilian Stock, Mercan-
same in 2009 as in 2008. In 2009, nine IPOs raised a total tile and Futures Exchange) once again led the Latin
of $13.3 billion, whereas 8 IPOs raised $5.2 billion in 2008. American IPO market. Of the $13.3 billion raised in
The average deal size of $1.5 billion in 2009 was signifi- 2009 in Latin America, nearly $13.2 billion was raised by
cantly affected by the Banco Santander Brazil offering, Brazilian companies. Two companies in particular domi-
which dual-listed in Brazil and in the United States. Absent nated the IPO landscape, Banco Santander Brazil, raising
the Banco Santander Brazil deal, average deal size in $7.6 billion and VisaNet Brasil, which raised $4.3 billion,
2009 would have been $0.7 billion, still 10% greater than both including greenshoe proceeds. Chile was the only
the corresponding 2008 amount. other Latin American country to have an IPO in 2009, with
three companies raising a total of $110.1 million.

Latin America IPOs: volume and value by market (proceeds in millions)
2009 2008

Country Stock exchange # of IPOs Local currency US$ (a) # of IPOs Local currency US$ (a)

Argentina Buenos Aires Stock Exchange - - - 1 338.8 $107.5

Brazil The Brazilian Stock, Mercantile and Futures Exchange 6 23,831.5 $13,152.1 4 7,494.9 4,609.3

Chile Santiago Stock Exchange 3 56,965.0 110.1 1 7,350.0 11.7

Mexico Mexican Stock Exchange - - - 2 4,554.9 440.9

Total 9 $13,262.2 8 $5,169.4

Note: Latin America values include “greenshoe proceeds”

16


Ten largest Latin America IPOs during 2008 and 2009 (proceeds in millions)
Company US$ (a) Local currency Year Market Sector

Banco Santander (Brasil) S.A. $7,583.1 13,182.5 2009 Brazil Financial services

Companhia Brasileira de Meios de Pagamento—VisaNet Brasil 4,289.8 8,397.2 2009 Brazil Financial services

OGX Petróleo e Gás Participações S.A. 4,145.8 6,711.7 2008 Brazil Energy

CETIP S.A.—Balcão Organizado de Ativos e Derivativos 444.7 773.0 2009 Brazil Financial services

Bolsa Mexicana de Valores, S.A.B. de C.V. 387.2 4,000.0 2008 Mexico Financial services

Hypermarcas S.A. 362.6 612.4 2008 Brazil Consumer

Fleury S.A. 360.1 630.2 2009 Brazil Healthcare

Tivit Terceirização de Processos, Serviços e Tecnologia S.A. 315.7 574.6 2009 Brazil Business services

Direcional Engenharia S.A. 158.7 274.0 2009 Brazil Real estate

Consultatio S.A. 107.5 338.8 2008 Argentina Real estate

Total Top 10 $18,155.2

Note: Latin America values include “greenshoe proceeds”

Top 10 IPOsthe US,
Comparing
Europe, Greater China, A quote or synthesis of

and Latin America section if needed

Greater China pushes global recovery

Brazil and Chile hold steady
A comparison of IPO activity in the United States, Europe, dramatic decline in IPO activity, capturing only 10% of
Greater China, and Latin America reveals that the US global deal value versus 27% in 2008.
share of global IPO proceeds declined in 2009 to 23%,
in comparison with 37% in 2008. The decrease is largely Europe also lagged in average deal size. The average
attributable to Greater China capturing a significantly deal in Europe raised $82.4 million, in sharp contrast
larger share of global IPO activity. Also, the Banco to the average deal size of $365.3 million in the US and
Santander (dual listing in Brazil and the United States) and $287.2 million in Greater China. The average deal size
VisaNet offerings in Brazil contributed to a strong showing in Latin America was heavily influenced by the low
from Latin America in 2009. Europe experienced the most volume of deals with high value.

Share of IPO proceeds: US, Europe, Greater China, and Latin America
(US$ billions)

Latin America US Latin America Latin America US
$13.3, 12% $25.2, 23% $5.2, 6% $35.4, 11% $65.1, 21%

Greater China US
$23.9, 30% $29.4, 37%
2009 Europe 2008 2007
$10.4, 10% Greater China
$104.0, 33%

Greater China Europe Europe
$59.7, 55% $21.3, 27% $111.2, 35%

Comparison of average IPO proceeds (US$ millions)
2009 2008 2007

IPOs Average IPOs Average IPOs Average
proceeds proceeds proceeds

US 69 $365.3 57 $514.9 296 $220.1

Europe 126 $82.4 295 $72.3 771 $144.3

Greater China 208 $287.2 157 $152.2 242 $429.8

Latin America 9 $1,473.6 8 $646.2 81 $436.8

18

Developments in capital
markets SEC focuses on corporate governance

Corporate governance shareholders with the specific experience, qualifications,
attributes or skills that were the basis for the Board of
In an effort to enhance the disclosures provided to share-
Directors’ determination that each director or nominee for
holders of public companies regarding compensation and
director should serve on the company’s board of directors.
corporate governance matters, in December 2009 the
The additional disclosure regarding director qualifications
Securities and Exchange Commission (SEC) approved
will be required for all directors, not just those seeking
final rules adopting amendments to the proxy disclosure
re-election.
rules. The amendments will require companies to make
new or revised disclosures about: The link between risk
Board leadership structure and role in risk oversight
and compensation policies and practices; stock and
option awards of executives and directors; director quali- Companies now will have to disclose the reasons for
fications and experience; board leadership structure; the their chosen board leadership structure. The SEC says
board’s role in risk oversight; and potential conflicts of that in requiring this disclosure, it is not trying to influ-
interest of compensation consultants that advise compa- ence a company’s decision about whether to separate
nies and their boards of directors. the roles of board chair and CEO; rather, it is seeking a
clear picture of how the board operates. Companies must
Compensation policies and risks now also disclose how the board oversees risk. This may
include disclosing the particular committee within the
Companies must include a discussion of compensation board charged with the oversight of the risk process, and
policies and practices for all employees, including non- it may involve the disclosure of any reporting relationships
executive officers, if those compensation policies and between those managing risk and the board.
practices are reasonably likely to have a material adverse
effect on the company. The final rules provide a non- Director diversity
exclusive list of examples of situations that may potentially
trigger the need for such disclosure. The final rules also This rule requires companies to disclose whether, and if
provide a non-exclusive list of examples of issues compa- so, how, a nominating committee or the board considers
nies may need to address should the company determine diversity in identifying nominees for director. To the
that disclosure is required. extent a company has a policy that requires the board or
committee to take diversity into account in the nomina-
tion process, the company must disclose how the policy
Equity award reporting
is effectuated and how the effectiveness of the policy
Companies must now disclose the aggregate grant date fair is measured.
value of stock awards and option awards granted during
the fiscal year (regardless of the service period). Under Compensation consultants
the old rules, companies were required to disclose the Companies may be required to disclose additional
dollar amount recognized for financial statement reporting information regarding the compensation consultants that
purposes for the fiscal year. Performance-based equity it engages, depending on the fees paid to the consultant
awards will be computed based on the probable outcome (or an affiliate) for non-executive compensation consulting
of the performance conditions as of the grant date. services. Disclosure of fees paid to other compensation
consultants retained by the company is not required
Director qualifications if the board or the compensation committee has
To provide investors with more meaningful information retained its own consultant that reports directly to
to support the voting decision, companies must provide the compensation committee.
20


IFRS Stock exchange market share
Although the Securities and Exchange Commission (SEC) As trading in the United States has increasingly become
in November 2008 issued a proposed roadmap that electronic, established stock exchanges have seen
targeted mandatory adoption of IFRS in the United States competition intensify. Electronic exchanges like Direct
beginning in 2014, there is a degree of uncertainty around Edge and Bats have proved to be formidable competitors
the final timetable. This uncertainty can largely be attrib- to the NYSE and Nasdaq. Together, these two exchanges
uted to more immediate issues related to the financial have captured over 20% of trading volume in the US.
crisis that the SEC needs to address. Nevertheless, the
SEC continues to articulate that moving to a single set of While the trading landscape is certainly more competitive
robust, transparent, global accounting standards is in the now than it has ever been, for the time being, there
best interest of investors globally, and it is expected that seems to be room for both the established players and
the SEC will ultimately propose a revised roadmap. the upstarts.

Absent an agreed-upon roadmap for transition, US
companies will still see an impact from IFRS. The US
Financial Accounting Standards Board (FASB) and the
International Accounting Standards Board (IASB) have
in place a Memorandum of Understanding that seeks
to improve both US GAAP and IFRS in 11 major topical
areas. As a result, many US accounting standard-setting
projects will be influenced by the IASB. We expect
continued convergence between US GAAP and IFRS in
the near term, despite the absence of an established date
for US IFRS adoption.

Today, on the stock exchanges in the United States,
domestic companies must follow US GAAP while non-US
companies may use IFRS or US GAAP.

About PwC’s
Transaction Services

The PricewaterhouseCoopers Transaction Services prac- IPO Watch is a series of global PwC-issued reports
tice provides due diligence for M&A transactions, along released quarterly and annually that track and analyze
with advice on M&A strategy and integration, divesti- IPO activity in the United States, Europe and Greater
tures and separation, valuations, accounting, financial China. All editions of IPO Watch and additional
reporting, and capital raising. With approximately 1,000 publications about the IPO process, including The IPO
deal professionals in 16 cities in the United States, and a Roadmap and Guide to Going Public, are available at
global network of more than 6,000 deal professionals in www.pwc.com/ustransactionservices.
90 countries, PwC deploys experienced teams that have
deep industry and local market knowledge, and technical Acknowledgments
experience tailored to each client’s situation. The Trans-
action Services team can be involved from strategy to We would like to thank the following organizations and
integration and employ an integrated business approach individuals for their contributions to this report: The Bank
to uncover the realities of a deal. The field-proven, globally of New York Mellon, NASDAQ OMX, NYSE Euronext,
consistent, controlled deal process helps clients minimize John Verlander, Manoj Mahtani, Lisa Monvignier,
their risks, progress with the right deals, and capture value Sachin Latawa, and Santhosh Daniel.
both at the deal table and after the deal closes. For more
information, visit www.pwc.com/ustransactionservices.

22

pwc.com

To have a deeper conversation
about how this subject might affect your
business, please contact:

North America Latin America†
Henri Leveque Ivan Clark
[1] 678 419 3100 [55] 11 3674 3926
h.a.leveque@us.pwc.com ivan.clark@br.pwc.com

Scott J. Gehsmann Tino Montero
[1] 646 471 8310 [1] 305 375 7301
scott.j.gehsmann@us.pwc.com faustino.montero@us.pwc.com

Mike Dillon Armando Martinez
[1] 415 498 8234 [52] 555 263 5749
mike.dillon@us.pwc.com martinez.armando@mx.pwc.com

George Starr †
Includes Mexico, Central America,
[1] 973 236 4100 and South America.
george.e.starr@us.pwc.com

Neil Dhar Europe
[1] 312 298 2711 Tom Troubridge
neil.dhar@us.pwc.com [44] 20 7804 2723
tom.troubridge@uk.pwc.com
Howard Friedman
[1] 646 471 5853 Richard Weaver
howard.m.friedman@us.pwc.com [44] 20 7804 3791
richard.weaver@uk.pwc.com
Canada
Geoff Leverton Asia
[1] 416 815 5053 Kennedy Liu
geoff.m.leverton@ca.pwc.com [852] 2289 1881
kennedy.liu@hk.pwc.com

Richard Nurmi
[852] 2289 2922
richard.a.nurmi@hk.pwc.com

© 2010 PricewaterhouseCoopers LLP. All rights reserved. “PricewaterhouseCoopers” refers to PricewaterhouseCoopers LLP (a Delaware limited liability partnership) or, as the context
requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity. NY-10-0503

2009 US IPO Watch

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