2009 us ipo watch

Transaction Services

2009US IPO watchAnalysis and trends

i

After a dismal performance in 2008, coinciding with the worst financial crisis the world has faced since the Great Depression, the US initial public offering (IPO) market began to rebound in 2009. IPO activity bottomed out in the first quarter at the height of the credit market turmoil, when only two deals were completed. IPO activity picked up in the second quarter as markets began to stabilize, and the pace continued to accelerate through the rest of the year.

Although 2009 was by no means a banner year for US IPOs, clear signs have arisen that an increasing number of companies across a variety of industries, both domes-tically and internationally, are planning to tap the public equity markets for capital during 2010.

Factors impacting IPO activity in 2009:

Financial sponsor-backed transactions surge

If 2008 was notable for the lack of financial sponsor-backed IPOs, late 2009 saw a surge of these deals. Financial sponsor-backed transactions nearly tripled in volume and almost quadrupled in value in 2009 compared with 2008. They also comprised more than half of all deals in 2009.

Non-US issuers contribute

Proceeds raised by non-US issuers also increased consid-erably, representing 36.7% of total proceeds in 2009 compared to only 6.3% the previous year. Two of the top 10 US IPOs in 2009 were from non-US issuers, including the largest IPO in 2009—Banco Santander (Brasil) S.A.

Global IPO activity rebounds

IPO markets around the world generally witnessed an increase in both volume and value in 2009. The Greater China market proved to be the largest IPO market in the world in 2009, where 208 IPOs raised a total of $59.7 billion.

2010 outlookIPO activity has picked up significantly since the “frozen” state of early 2009, riding the tide of improving equity markets. During the fourth quarter, fifty-four companies registered for an IPO in the US, including several non-US issuers.

Although a recovery of the US IPO market has taken hold, some companies pursuing IPOs are encountering chal-lenges. A few planned offerings were withdrawn in the fourth quarter of 2009, and five out of the seven IPOs in December 2009 priced below expectations. Further, companies completing successful IPOs that did not meet post-IPO earnings expectations were punished severely. These facts highlight some of the risks associated with going public.

Companies planning IPOs in 2010 will need to estab-lish realistic expectations of their value and ensure they have the ability to meet near-term market expectations. Anticipating business risks and developing programs for managing such risks is a theme we are seeing resident earlier in the IPO planning process… and rightfully so.

Where do we go from here?

We are optimistic that the US IPO market will continue to build on the positive trend of activity witnessed during the later part of 2009. While January and February are often quiet, we expect substantial IPO activity prior to the dog days of summer and robust deal flow throughout the autumn. We foresee a continuing contribution of deals from financial sponsors as private equity firms look to harvest investments made during the “heyday” of lever-aged M&A activity that preceded the credit crisis.

We expect IPOs from the technology sectors, including biotech, as well as financial services, healthcare and retail and consumer deals. Green energy/technology deals may 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

Foreword

Top 10 IPOs

ii

A quote or synthesis of section if needed

Contents

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

Top 10 IPOs

1


Overview

After the slowest year for IPOs since the 1970s, the US IPO market began to show signs of life again in 2009. IPO volume increased moderately in 2009 to 69 IPOs, compared with 57 IPOs in 2008. Proceeds of $25.2 billion were raised in 2009, compared with $29.4 billion in 2008. However, total IPO proceeds during 2009 and 2008 were skewed by single, large deals—Banco Santander (Brasil) S.A. (Banco Santander Brazil), which raised $7.0 billion in 2009 and Visa, Inc., which raised $17.9 billion in 2008. Excluding these two large deals, IPO proceeds in 2009 and 2008 would have totalled $18.2 billion and $11.5 billion, respectively.

During the fourth quarter of 2008 and through the first quarter of 2009, IPO activity came to a near halt, with only five IPOs over this six month period. However, as the equity markets began to gain ground, IPO activity picked up in each quarter of 2009. The fourth quarter witnessed 35 IPOs, a clear rebound from the first-quarter trough, although still not significant by historical standards.

The financial services industry was the leader in terms of both IPO volume and value in 2009. The largest IPO of the year came from the banking sector, with Banco Santander Brazil raising $7.0 billion. Business services and technology IPOs also boasted strong showings in 2009 with 11 IPOs each, raising $3.5 billion and $2.8 billion, respectively.

Financial sponsor-backed deals rebounded strongly in 2009, after coming to a standstill in 2008. For the year, 44 IPOs totaling $9.9 billion were backed by financial sponsors. In 2008, there were only 14 such IPOs, which raised $2.3 billion.

An analysis of 2009 IPO activity based on capital raised reveals an increase in the number of deals in the $500 million to $999 million range and the $50 million to $149 million range. IPOs raising more than $500 million more than doubled in 2009 to 11, from five in 2008. IPOs of less than $50 million declined from 11 in 2008 to seven in 2009.

$1 billion +

Volume of IPOs by range of offering values

Offering value & number of IPOs by year

Offering value (US$ billions)

Number of IPOs

$500–$999 million

$150–$499 million

$50–$149 million

Less than $50 million2005

$39.1$49.9

$65.1

$29.4$25.2

2006 2007 2008 2009

2005 2006 2007 2008 2009

6957

296

236221

16 15 15

2 8 7 2

3

68 61 109 22

88 105 129 19

47 47 36 11

3

8

23

28

7

IPO activity makes a comeback

Top 10 IPOs

2


Top 10 IPOs

Proceeds raised from the top 10 US IPOs totaled $15.6 billion, versus $23.7 billion in 2008—although absent the Visa IPO, proceeds in 2008 would have been only $5.9 billion (see table on following page). The top 10 IPOs comprised 61.9% of the total value of 2009 IPOs.

Average deal size of the top 10 IPOs was $1.6 billion, compared with $0.7 billion in 2008 (excluding the Visa IPO). In 2009, one IPO dwarfed the remaining top 10: the offering from Banco Santander Brazil, which raised $7.0 billion. All deals in the top 10 raised more than $500 million in proceeds compared to only five in 2008.

US-based companies accounted for eight of the top 10 IPOs but only 48.2% of the total deal value, or $7.5 billion. The largest IPO from a US-based issuer was

Verisk Analytics Inc., a New Jersey-based risk manage-ment software company, which raised $1.9 billion in proceeds. Non-US based companies accounted for two of the top 10 IPOs and 51.8% of the top ten deal value, or $8.1 billion—$7.0 billion was raised by Banco Santander Brazil, while the remaining $1.1 billion was raised by Chinese gaming software company Shanda Games Ltd.

Financial services continued to be the leading sector in 2009, with three of the top 10 IPOs.

Four of the top 10 deals in 2009 were backed by financial sponsors compared to only one in 2008.

Seven of the top 10 IPOs were NYSE-listed transactions, and the remaining three were NASDAQ-listed deals.

“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

Larger deals return to fuel proceeds

PricewaterhouseCoopers • 2009 US IPO watch 3

Top 10 IPOs 2009 (proceeds in US$ millions)

Banco Santander (Brasil) S.A.2 $7,035.0 Financial services

Verisk Analytics, Inc. 1,875.6 Technology

Shanda Games Ltd. 2 1,043.7 Technology

Talecris Biotherapeutics Holdings Corp.1 950.0 Healthcare

Hyatt Hotels Corp. 950.0 Leisure

Cobalt International Energy, Inc.1 850.5 Energy

Starwood Property Trust, Inc.1 810.0 Financial services

Mead Johnson Nutrition Co. 720.0 Healthcare

Dollar General Corp.1 716.1 Consumer

Artio Global Investors Inc. 650.0 Financial services

Total $15,600.9

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

Top 10 IPOs 2008 (proceeds in US$ millions)

Visa Inc. $17,864.0 Business services

American Water Works Company, Inc. 1,247.0 Utilities

Intrepid Potash, Inc. 960.0 Industrial

Trian Acquisition I Corp. 800.0 Financial services

Sapphire Industrials Corp. 800.0 Financial services

GT Solar International, Inc. 500.0 Energy

Maiden Holdings, Ltd.1, 2 460.6 Financial services

GHL Acquisition Corp. 400.0 Financial services

BPW Acquisition Corp. 350.0 Financial services

Colfax Corp. 337.5 Industrial

Total $23,719.1

1 Financial sponsors $460.6 % Financial sponsors 1.9%2 Non-US issuers $460.6% Non-US issuers 1.9%

2009

2008

2007

2006

2005

Top 10 Other IPOs

$8,601

$16,104

$13,546

$23,719

$15,601 $9,607

$5,632

$49,045

$36,396

$30,510

All IPOs Top 10 Other

$365.3 $1,560.1 $162.8

$514.9 $2,371.9 $119.8

$220.1 $1,610.3 $171.5

$211.6 $1,354.6 $161.0

$177.0 $860.1 $144.6

Average IPO proceeds(US$ millions)

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

$418

$30,002

$8,668 $16,524

$27,024

$35,147

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

Top 10 IPOs

4


Quarterly analysis

The IPO market rebounded in the second quarter of 2009 after hitting bottom in the first quarter, which saw only two IPOs. The number of IPOs rose consistently thereafter,

with fourth-quarter IPO activity reaching new levels and generating the highest quarterly proceeds since the first quarter of 2008.

Offering value & volume of IPOs by quarter

Volume of IPOs

Offering value in US$ billions

3 211 12

18 202535

101

48

7968

89

37

56545767

5443

$0.2 $0.7 $1.6$5.8

$17.1

$1.5$5.1

$22.6$20.4

$11.9

$21.1

$11.7

$19.7

$7.7

$10.9$11.6$9.2$9.8$9.3

$10.8

2005 2006 2007 2008 2009

The fourth quarter of 2009 resumed the historical trend of robust Q4 IPO activity, after a slow final quarter in 2008. The fourth quarter of 2009 delivered 35 IPOs that raised proceeds of $17.1 billion. This compares with only three IPOs in the fourth quarter of 2008 that raised a meager $0.2 billion. When compared with the fourth quarter of 2007, Q4 of 2009 was not particularly remarkable in terms of the volume of IPOs. However, proceeds raised of $17.1 billion in the fourth quarter of 2009 were only 16.1% short of the $20.4 billion raised during the market peak in Q4 2007.

Q4 comparison: Number and value of IPOs

Number of IPOs


353

10189

57

89

56

2737

55

$17.1

$0.2

$20.4$19.7

$9.2

$16.4

$10.4

$4.5

$10.4$11.7

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Strong fourth quarter trend re-emerges

Q4 comparison: Number and value of IPOs

Number of IPOs


353

10189

57

89

56

2737

55

$17.1

$0.2

$20.4$19.7

$9.2

$16.4

$10.4

$4.5

$10.4$11.7

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Industry analysis

6

Financial services again proved to be the most active industry sector, constituting 18.8% of 2009 IPO volume, or 13 IPOs. The technology and business services sectors followed with 11 IPOs each.

In terms of the value of offerings, financial services was again the leader, largely because of the $7.0 billion Banco Santander Brazil deal. Financial services as a whole raised $10.5 billion, comprising 41.5% of the overall proceeds. Business services was second in terms of deal value, raising $3.5 billion, or 13.9% of the proceeds. Technology 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.

The industry mix of the leading 2009 IPOs stands in contrast to that of the 2008 leaders. While financial services was also one of the leaders in 2008, the clear 2008 leader in deal value was business services because of the Visa IPO. Other leading sectors in 2008 were energy/utilities and industrial. While 2008 witnessed clean tech companies braving the IPO waters, 2009 was a slower year for “green” investment given the financial crisis. Interest in renewable energy may resume in 2010, depending largely upon oil prices and continued govern-ment support for the sector.

“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

Technology expectations high


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

Transport,1.6%

Other,4.2%

Consumer,7.6%

Energy/Utilities,6.8%

Healthcare,10.8%

Technology,11.3%

Financialservices,41.5%

Industrials,2.3%

Businessservices,13.9%

Other,0.6%

Transport,1.1%

Business services,63.9%


Industrials,5.6%

Technology,0.9%

Healthcare,0.8%


(Consumer,0.0%)

Other,1.0%

Transport,3.8%

Businessservices,9.6%


Consumer,4.5%

Industrials,6.1%

Technology,13.8%

Healthcare,5.9%


IPO proceeds across industry sectors

2009 2008 2007

8


Financial sponsor-backed IPOs

After a relative absence in 2008, financial sponsor-backed IPOs returned in 2009. Of the 69 IPOs completed in 2009, 44 were backed by financial sponsors. These IPOs raised $9.9 billion. This contrasts with 14 deals raising $2.3 billion in 2008.

The largest financial sponsor-backed IPO in 2009 raised $950.0 million, compared with 2008, when the largest financial sponsor-backed deal raised only $460.6 million. Four of the top 10 deals in 2009 were financial sponsor-backed, compared to only one in 2008.

Financial sponsor-backed IPOs were the most active in the business services, technology, healthcare and industrial sectors. During 2010, we expect a continuing wave of IPOs to be brought to market by financial sponsors, with an early focus on the portfolio companies that were not acquired in “club deals.” Potential issuers who were acquired by a “club” of financial sponsors generally are tasked with the challenge of building consensus among the entire club to support the valuation and timing of an initial public offering.

Mean and median values of financial sponsor-backed IPOs (US$ millions)

2009 2008 2007

Mean Median Mean Median Mean Median

Financial sponsors $224.5 $135.5 $166.2 $159.0 $184.1 $111.7

Other $613.2 $200.0 $628.5 $130.0 $264.3 $150.0

2009

2008

2007

Financial sponsors Others

$418

$580

$480

$XXX

$1,061

$30,002

$2,327

$9,878 $15,330

$27,024

$35,147

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

Value of financial sponsor-backed IPOs(US$ millions)

Pushing the IPO window open


2009

2008

2007


$418

$580

$480

$XXX

$1,061

$30,002

$2,327

$9,878 $15,330

$27,024

$35,147

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

Value of financial sponsor-backed IPOs(US$ millions)

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

Financial services

Healthcare

Technology

Industrials

Consumer

Energy/utilities

Business services

Transport

Other


$1,299

$1,231

$950

$1,353

$410

$497

$1,360 $9,099

$1,624 $1,221

$88

$619

$481

$2,151

$111

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

$1,993 $720

2009

2008

2007


$418

$580

$480

$XXX

$1,061

163

14

44 25

43

133

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

Volume of financial sponsor-backed IPOs vs. other IPOs

10

Non-US issuers

2009

2008

2007

US Non-US

$418

$580

$480

$XXX

$1,061

240

40

51 18

17

56

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

Volume of IPOs by US and non-US companies

2009

2008

2007

US Non-US

$418

$580

$480

$XXX

$1,061

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

$48,463

$27,498

$15,966 $9,242

$1,855

$16,686

Value of IPOs by US and non-US companies(US$ millions)

In 2009, non-US issuers completed 18 IPOs in the US IPO market, raising $9.2 billion. This represented 26.1% of overall volume compared with 29.8% in 2008, and 36.7% of the total proceeds in 2009 compared with 6.3% the previous year.

The most active country of origin for non-US issuers was China, with 15 IPOs that raised $2.0 billion. Brazil had one IPO that listed in the US, Banco Santander Brazil, while Canada, the only other country of origin for non-US issuers in 2009, had two companies raising a total of $0.2 billion in the US.

The majority of foreign registrants chose the NASDAQ to list their shares. Non-US issuers raised $1.7 billion from eleven IPOs listed on this exchange. Although fewer non-US issuers elected to list their shares on the NYSE (7 IPOs), their total proceeds were greater, largely the result of the $7.0 billion Banco Santander Brazil IPO.

“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

Proceeds increase fourfold

11

Stock exchanges

In 2009, IPOs were split almost evenly between the NYSE1 and the NASDAQ, with the NYSE claiming 36 IPOs and the NASDAQ claiming 33. The NYSE was the leader in proceeds raised with $17.5 billion, representing 69.6% of the total. The NASDAQ, in contrast, listed IPOs that raised $7.7 billion, representing 30.4% of the total.

Listings on the NYSE were dominated by financial services companies, which comprised 11 of the 36 IPOs. Industrials and consumer were tied for second on the NYSE with five IPOs each. Technology listings topped the list of NASDAQ issuers, with nine IPOs, while the business services sector contributed seven listings.

Seven of the 2009 top 10 IPOs were NYSE-listed transactions, while the remaining three were NASDAQ-listed transactions.

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

20092008200720062005

Trends in median IPO value by exchange (US$ millions)

NYSE

NASDAQ

$210 $202 $200 $200$199

$75

$93

$90$70

$100

2009

2008

2007

NYSE NASDAQ

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

$44,685

$26,388

$17,555 $7,653

$2,963

$20,464

Value by exchange(US$ millions)

Volume by exchange

2008 20072009

154142

26313336

NASDAQNYSE1 On October 1, 2008, NYSE Euronext 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.

US market shares the wealth

Top 10 IPOs

12


Europe

In the European stock markets, IPO volume declined 57.3% and value declined 51.3% (in US$) from 2008 to 2009. In local currency, the decline in value was 49.0%. The European exchanges raised $10.4 billion (€7.1 billion) from 126 IPOs during 2009 compared with $21.3 billion (€14.0 billion) from 295 IPOs during 2008.

As far as individual European markets are concerned, the NYSE Euronext2 was the largest exchange in terms of proceeds ($2.8 billion[€1.9 billion]) and delivered the fifth-largest volume (nine IPOs) in 2009. The majority of the proceeds raised was attributable to Delta Lloyd NV, a Dutch life insurance company, which completed an IPO of $1.5 billion (€1.0 billion). The NYSE Euronext represented 7.1% of the region’s IPO volume and 27.1% of the region’s IPO proceeds.

The total proceeds raised by initial public offerings on the London markets3 fell by 82.5% to $2.4 billion (€1.7 billion), while the number of IPOs tumbled 74.7% to 25 in 2009. The results made the London markets the second-largest exchange in terms of volume and proceeds. The London markets represented 19.8% of the region’s IPO volume and 23.0% of the region’s IPO proceeds.

The Polish stock exchange, WSE4, was the largest exchange in terms of volume with 38 IPOs and the third largest in terms of value, raising $2.4 billion (€1.6 billion). The majority of the proceeds raised were attributable to the IPO of PGE Polska Grupa Energetyczna, a Polish utilities company, which was the largest IPO in Europe in 2009, raising $2.1 billion (€1.4 billion). The WSE represented 30.2% of the region’s IPO volume and 22.8% of the region’s IPO proceeds.

The slowdown in the European IPO market has been felt across the majority of industries, as the number of IPOs in all sectors declined in 2009 compared with 2008. The top three industry sectors in 2008, namely industrial goods and services, investment companies, and technology, continued to lead the way in terms of number of IPOs in 2009.

The European exchanges attracted 39 international IPOs in 2009. Those offerings raised $3.1 billion (€2.2 billion), a decrease in both the volume and value compared with 2008 which saw 77 IPOs by international companies raising $9.3 billion (€6.0 billion). In value terms, 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.

Volume and value slow


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.

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.

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.

Top 10 IPOs

14


Greater China

After a decline in 2008, the Greater China IPO markets rebounded in 2009, playing a leading role in the recovery of the global IPO market. The volume of IPOs in the Greater China markets increased 32.5% from 157 IPOs in 2008 to 208 IPOs in 2009. The average deal size in Greater China in 2009 was $287.2 million. The proceeds raised from IPOs in 2009 were $59.7 billion, considerably greater than 2008 when the total proceeds were $23.9 billion.

All of the Greater China markets experienced considerable growth in 2009. Hong Kong recaptured the top spot in

proceeds, raising $32.0 billion from 73 IPOs, an astounding increase of 276.0% over total 2008 proceeds. Hong Kong accounted for more than half of total Greater China proceeds and took over the leading position from Shanghai, which also had an impressive year with $18.3 billion raised from only 9 IPOs. Shanghai has become a favored market for large mainland deals, exhibited by its $2.0 billion average deal size. Shenzhen has proved to be a solid counterpart by courting the smaller deals. Shenzhen led the Greater China market in volume with 90 IPOs raising $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.

Moves to number one position


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

16


Latin America

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

In Latin America, the number of IPOs was roughly the same in 2009 as in 2008. In 2009, nine IPOs raised a total of $13.3 billion, whereas 8 IPOs raised $5.2 billion in 2008. The average deal size of $1.5 billion in 2009 was signifi-cantly affected by the Banco Santander Brazil offering, which dual-listed in Brazil and in the United States. Absent the Banco Santander Brazil deal, average deal size in 2009 would have been $0.7 billion, still 10% greater than the corresponding 2008 amount.

The Brazilian equity market (the Brazilian Stock, Mercan-tile and Futures Exchange) once again led the Latin American IPO market. Of the $13.3 billion raised in 2009 in Latin America, nearly $13.2 billion was raised by Brazilian companies. Two companies in particular domi-nated the IPO landscape, Banco Santander Brazil, raising $7.6 billion and VisaNet Brasil, which raised $4.3 billion, both including greenshoe proceeds. Chile was the only other Latin American country to have an IPO in 2009, with three companies raising a total of $110.1 million.

Brazil and Chile hold steady


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

Top 10 IPOs

18


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

Comparison of average IPO proceeds (US$ millions)

2009 2008 2007

IPOs Average 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

A comparison of IPO activity in the United States, Europe, Greater China, and Latin America reveals that the US share of global IPO proceeds declined in 2009 to 23%, in comparison with 37% in 2008. The decrease is largely attributable to Greater China capturing a significantly larger share of global IPO activity. Also, the Banco Santander (dual listing in Brazil and the United States) and VisaNet offerings in Brazil contributed to a strong showing from Latin America in 2009. Europe experienced the most

dramatic decline in IPO activity, capturing only 10% of global deal value versus 27% in 2008.

Europe also lagged in average deal size. The average deal in Europe raised $82.4 million, in sharp contrast to the average deal size of $365.3 million in the US and $287.2 million in Greater China. The average deal size in Latin America was heavily influenced by the low volume of deals with high value.

US$29.4, 37%

Greater China$23.9, 30%

Europe$21.3, 27%


US$65.1, 21%

Europe$111.2, 35%

Latin America$35.4, 11%


US$25.2, 23%


Europe$10.4, 10%


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

200720082009

Brazil and Chile hold steady

Greater China pushes global recovery

20

Developments in capital markets

Corporate governance In an effort to enhance the disclosures provided to share-holders of public companies regarding compensation and corporate governance matters, in December 2009 the Securities and Exchange Commission (SEC) approved final rules adopting amendments to the proxy disclosure rules. The amendments will require companies to make new or revised disclosures about: The link between risk and compensation policies and practices; stock and option awards of executives and directors; director quali-fications and experience; board leadership structure; the board’s role in risk oversight; and potential conflicts of interest of compensation consultants that advise compa-nies and their boards of directors.

Compensation policies and risks

Companies must include a discussion of compensation policies and practices for all employees, including non-executive officers, if those compensation policies and practices are reasonably likely to have a material adverse effect on the company. The final rules provide a non-exclusive list of examples of situations that may potentially trigger the need for such disclosure. The final rules also provide a non-exclusive list of examples of issues compa-nies may need to address should the company determine that disclosure is required.

Equity award reporting

Companies must now disclose the aggregate grant date fair value of stock awards and option awards granted during the fiscal year (regardless of the service period). Under the old rules, companies were required to disclose the dollar amount recognized for financial statement reporting purposes for the fiscal year. Performance-based equity awards will be computed based on the probable outcome of the performance conditions as of the grant date.

Director qualifications

To provide investors with more meaningful information to support the voting decision, companies must provide

shareholders with the specific experience, qualifications, attributes or skills that were the basis for the Board of Directors’ determination that each director or nominee for director should serve on the company’s board of directors. The additional disclosure regarding director qualifications will be required for all directors, not just those seeking re-election.

Board leadership structure and role in risk oversight

Companies now will have to disclose the reasons for their chosen board leadership structure. The SEC says that in requiring this disclosure, it is not trying to influ-ence a company’s decision about whether to separate the roles of board chair and CEO; rather, it is seeking a clear picture of how the board operates. Companies must now also disclose how the board oversees risk. This may include disclosing the particular committee within the board charged with the oversight of the risk process, and it may involve the disclosure of any reporting relationships between those managing risk and the board.

Director diversity

This rule requires companies to disclose whether, and if so, how, a nominating committee or the board considers diversity in identifying nominees for director. To the 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 is effectuated and how the effectiveness of the policy is measured.

Compensation consultants

Companies may be required to disclose additional information regarding the compensation consultants that it engages, depending on the fees paid to the consultant (or an affiliate) for non-executive compensation consulting services. Disclosure of fees paid to other compensation consultants retained by the company is not required if the board or the compensation committee has retained its own consultant that reports directly to the compensation committee.

SEC focuses on corporate governance


IFRSAlthough the Securities and Exchange Commission (SEC) in November 2008 issued a proposed roadmap that targeted mandatory adoption of IFRS in the United States beginning in 2014, there is a degree of uncertainty around the final timetable. This uncertainty can largely be attrib-uted to more immediate issues related to the financial crisis that the SEC needs to address. Nevertheless, the SEC continues to articulate that moving to a single set of robust, transparent, global accounting standards is in the best interest of investors globally, and it is expected that the SEC will ultimately propose a revised roadmap.

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.

Stock exchange market shareAs trading in the United States has increasingly become electronic, established stock exchanges have seen competition intensify. Electronic exchanges like Direct Edge and Bats have proved to be formidable competitors to the NYSE and Nasdaq. Together, these two exchanges have captured over 20% of trading volume in the US.

While the trading landscape is certainly more competitive now than it has ever been, for the time being, there seems to be room for both the established players and the upstarts.

22

The PricewaterhouseCoopers Transaction Services prac-tice provides due diligence for M&A transactions, along with advice on M&A strategy and integration, divesti-tures and separation, valuations, accounting, financial reporting, and capital raising. With approximately 1,000 deal professionals in 16 cities in the United States, and a global network of more than 6,000 deal professionals in 90 countries, PwC deploys experienced teams that have deep industry and local market knowledge, and technical experience tailored to each client’s situation. The Trans-action Services team can be involved from strategy to integration and employ an integrated business approach to uncover the realities of a deal. The field-proven, globally consistent, controlled deal process helps clients minimize their risks, progress with the right deals, and capture value both at the deal table and after the deal closes. For more information, visit www.pwc.com/ustransactionservices.

IPO Watch is a series of global PwC-issued reports released quarterly and annually that track and analyze IPO activity in the United States, Europe and Greater China. All editions of IPO Watch and additional publications about the IPO process, including The IPO Roadmap and Guide to Going Public, are available at www.pwc.com/ustransactionservices.

Acknowledgments

We would like to thank the following organizations and individuals for their contributions to this report: The Bank of New York Mellon, NASDAQ OMX, NYSE Euronext, John Verlander, Manoj Mahtani, Lisa Monvignier, Sachin Latawa, and Santhosh Daniel.

About PwC’s Transaction Services

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

North AmericaHenri Leveque[1] 678 419 [email protected]

Scott J. Gehsmann[1] 646 471 [email protected]

Mike Dillon[1] 415 498 [email protected]

George Starr[1] 973 236 [email protected]

Neil Dhar[1] 312 298 [email protected]

Howard Friedman[1] 646 471 [email protected]

CanadaGeoff Leverton [1] 416 815 [email protected]

Latin America†

Ivan Clark[55] 11 3674 [email protected]

Tino Montero[1] 305 375 [email protected]

Armando Martinez[52] 555 263 [email protected]

† Includes Mexico, Central America, and South America.

EuropeTom Troubridge[44] 20 7804 [email protected]

Richard Weaver[44] 20 7804 [email protected]

AsiaKennedy Liu[852] 2289 [email protected]

Richard Nurmi[852] 2289 [email protected]

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