congreso international de gobierno corporativo bolsa de valores de colombia and inter american...
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Congreso International de Gobierno CorporativoCongreso International de Gobierno CorporativoBolsa de Valores de Colombia and Inter American Bolsa de Valores de Colombia and Inter American Development BankDevelopment Bank
Cartagena de Indias – Cartagena de Indias – ColombiaColombia
november/8/2005november/8/2005
Bovespa`s Corporate Bovespa`s Corporate Governance SegmentGovernance Segment
Claudio Avanian JacobClaudio Avanian JacobBOVESPA – Brazil´s Stock ExchangeBOVESPA – Brazil´s Stock Exchange
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BOVESPABOVESPAAn overviewAn overview
Self regulatory organization Under the supervision of the Brazilian Securities and
Exchange Commission (CVM)
Since 2000, Brazil’s only liquidity center for
equity trading
382 listed companies
Specialized and electronic trading systems for
equity and corporate bonds
68% of the trading in Latin American exchanges
Market Capitalization: US$ 458 billion (oct/2005)
Daily Average Trading Value: US$ 563 million
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Brazilian market realityBrazilian market realityFocus on different issuesFocus on different issues
Vast majority of public companies have a
defined controlling shareholder Usually this shareholder is a family or a family
group
The Brazilian law allows companies to issue
up to 2/3 of shares as non-voting
(misleadingly called “preferred” shares)
Many sales of control have resulted in large
premiums for the sellers (no tag along
rights)
Tender offers to delist companies can be
maid at unfair prices
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Result: Result: under pricingunder pricing
Companies´ Risk Value Misinformation underpricing
Unbalanced rights underpricing
Companie´s Value Adjusted
Source: Seminário Bradesco Templeton
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Primary Market ActivityPrimary Market Activity
2
0
1
0
1 1
0
1
0
1995 1996 1997 1998 1999 2000 2001 2002 2003
# of IPOS
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BOVESPA´s StrategyBOVESPA´s Strategy
Reduction of minority shareholder’s ownership risk
Offering “better quality products”
Increase the investors’ confidence and
willingness to acquire stocks and pay for them a
better price that suits the owner of the company
that is going public
Fostering companies to assure good practices of
corporate governance related to investor
protection
Disclosure/transparency
Minority shareholder rights
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Novo MercadoNovo MercadoCommitment with corporate Commitment with corporate governancegovernance Private sector initiative, based on an enforced
through a contract with BOVESPA
Joining is voluntary and market driven
Companies committed to the highest standards of corporate governance
Set of rules over and above Corporations Law reflecting market demands and requirements
Committed with market arbitration panel to resolve conflicts between shareholders, companies and their management, controlling shareholders and BOVESPA
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Novo MercadoNovo MercadoGroups of requirementsGroups of requirements
Rights for minoritary investors: Only voting
shares; Full tag along rights; Public tender offer
at “economic ” value; Board of directors with 1
year terms and a minimum of 5 members
Disclosure: additional requirements for quarterly
statements; financial statements in accordance
with international standards; cash flow
statements; contracts with related parties, etc.
Dispersion: 25% minimum free float and ensure
access for individuals in public offerings
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Bovespa`s listing segmentsBovespa`s listing segmentsNovo Mercado and Levels 1 and 2 Novo Mercado and Levels 1 and 2 of Corporate Governanceof Corporate Governance
Traditional Market
Novo Mercado
Level 1 Level 2
Law requirements
Disclosure requirements
Diclosure and governance
requirements non voting shares
are allowed
Only voting shares
How is the Brazilian How is the Brazilian capital market?capital market?
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A Market for IPOsA Market for IPOsThe success of the Novo MercadoThe success of the Novo Mercado
Better corporate governance contributed to
broaden investor interest
Increased confidence, specially from foreign
investors
More favorable pricing, stimulated new
IPOs
Offers occurred at multiples much higher
than the market average
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Primary Market ActivityPrimary Market Activity
# of IPOS
2
01
01 1
01
0
7 7
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
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What was the outcome?What was the outcome?
Company Date SegmentConsolidated net revenues¹, US$
million
Value of public offering, US$
million
Natura 05/ 26/ 2004 Novo Mercado 460 243
Gol 06/ 24/ 2004 Nível 2 485 283
ALL 06/ 25/ 2004 Nível 2 263 189
CPFL Energia 09/ 29/ 2004 Novo Mercado 2.096 287
Grendene 10/ 29/ 2004 Novo Mercado 367 216
DASA 11/ 19/ 2004 Novo Mercado 126 158
Porto Seguro 11/ 22/ 2004 Novo Mercado 781 136
Renar Maçãs 02/ 28/ 2005 Novo Mercado 18 6
Submarino 03/ 30/ 2005 Novo Mercado 104 176
Localiza 05/ 20/ 2005 Novo Mercado 232 116
TAM 06/ 14/ 2005 Nível 2 1.703 226
EDP 07/ 13/ 2005 Novo Mercado 1.395 505
OHL 07/ 15/ 2005 Novo Mercado 101 212
Nossa Caixa 10/ 28/ 2005 Novo Mercado 364
1. In the previous year
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IPO’s performanceIPO’s performance
BOOK 10/ 31/ 2005 STOCK IBOVESPA IGC IBRx50CCR 01/ 02/ 02 16,24 59,50 266% 139% 221% 205%Natura Cosméticos 26/ 05/ 04 34,50 89,12 158% 58% 91% 77%CPFL Energia ON 29/ 09/ 04 16,29 23,50 44% 30% 55% 43%Grendene 29/ 10/ 04 30,05 17,71 -41% 31% 49% 41%DASA 19/ 11/ 04 20,00 36,50 83% 26% 45% 38%Porto Seguro 22/ 11/ 04 18,01 22,40 24% 24% 45% 37%Renar Maçãs 28/ 02/ 05 1,60 0,68 -58% 7% 15% 12%Submarino 30/ 03/ 05 21,62 30,80 42% 14% 24% 20%Localiza 23/ 05/ 05 11,33 19,30 70% 25% 33% 31%EDP 13/ 07/ 05 18,00 22,40 24% 17% 24% 20%OHL 15/ 07/ 05 18,00 21,00 17% 20% 26% 23%Banco Nossa Caixa 28/ 10/ 05 31,00 37,30 20% 4% 5% 4%Gol PN 24/ 06/ 04 26,32 39,21 49% 46% 85% 68%ALL PN 25/ 06/ 04 9,20 16,50 79% 46% 83% 67%TAM PN 14/ 06/ 05 19,50 28,50 46% 17% 26% 23%
Level 2
COMPARISON BETWEEN STOCKS OFFERED IN IPOS AND BOVESPA'S INDEX
SEGMENT COMPANYDATE OF THE ADHESION
PRICE
Novo Mercado
VARIATION
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IGC x IBOVESPA x IBRX 50IGC x IBOVESPA x IBRX 50Compared performanceCompared performance
500
1.000
1.500
2.000
2.500
3.000IGC
IBOVESPA
IBRX 50
aug/2005 2005 since 06/26/01IGC 9,74% 14,26% 191%
IBOVESPA 7,69% 7,05% 93%IBRX50 10,28% 15,80% 155%
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Listed CompaniesListed CompaniesNovo Mercado and Level 2Novo Mercado and Level 2
Novo Mercado – 16 companies CCR
SABESP
Natura
CPFL Energia
Grendene
DASA
Porto Seguro
Renar Maçãs
Submarino
Localiza
Lojas Renner
Energias do Brasil
OHL Brasil
Light
Cyrela
Nossa Caixa
Level 2 – 9 companies Net
Celesc
Marcopolo
Gol
ALL
Eletropaulo
Eternit
Suzano Pet.
TAM
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Listed companiesListed companiesLevel 1 – 35 adhesionsLevel 1 – 35 adhesions
Alpargatas
Aracruz
Bradesco
Bradespar
Brasil Telecom
BT Participações
Braskem
Cedro e Cachoeira
Cemig
Cia Hering
Confab
Duratex
Sadia
Suzano Papel e Celulose
Transmissão Paulista
Unibanco
Unibanco Holdings
Unipar
Vale do Rio Doce
VCP
Vigor
Weg
Ultrapar
Fras-le
Gerdau
Itaú
Itaúsa
Klabin
Mangels
Metalúrgica Gerdau
Pão de Açúcar
Perdigão
Randon
Ripasa
Rossi Residencial
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Next AdhesionsNext Adhesions
Tractebel Novo Mercado Secondary
Cosan Novo Mercado Primary
Novo Mercado
Levels of Corporate Governance
Eletrobrás Level 1
Iochpe Maxion
Level 1
UOL Level 2 Primary and Secondary
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Novo MercadoNovo MercadoBOVESPA’s perceptionBOVESPA’s perception
The standard is set
The only model for new listing that is being
accepted by the market is the Novo
Mercado
Only very specific IPO cases will come to
Level 2
The special listings segments represent
around 45% of trading and market cap of
Bovespa
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A step furtherA step further
Creating an alternative for a greater
number of companies, especially SMEs
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BOVESPA MAIS BOVESPA MAIS PillarsPillars
Companies committed to
CG requirements
BOVESPA programs to support companies
Greater flexibility in
trading
Investor with medium-term perspectives
Companies committed to their development in
stock market
BOVESPAMAIS
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Thank youThank you
Claudio Avanian Jacob
Listing and business development
Phone: 55 11 3233 2004
E-mail: [email protected]
Website: www.bovespa.com.br