IPOs in India, US and Europe A Report on IPOs (Investment Banking)

IBS-2011

IB-SEC B

Sajith Kumar-10BSPHH010669

Wilson Peter-10BSPHH010890

Vivek Sharma-10BSPHH010886

Saurabh Trivedi- 10BSPHH011076

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Table of Contents A. Regulatory and Disclosure Norms in India, US and Europe Related To IPOs ........... 2

1. Indian Norms ........................................................................................................... 2

2. United States Norms ................................................................................................ 3

3. European Norms ...................................................................................................... 4

B. The Due Diligence Process ......................................................................................... 5

1. Due Diligence in India ............................................................................................. 5

2. Due Diligence in the US .......................................................................................... 5

3. Due Diligence in Europe ......................................................................................... 6

C. PRICING METHODS FOLLOWED.......................................................................... 6

D. Issue Price and Supporting Valuation ......................................................................... 8

E. Post IPO Performance ................................................................................................. 9

1. Tesla Motors ............................................................................................................ 9

2. LINKEDIN .............................................................................................................. 9

3. Punjab & Sind Bank .............................................................................................. 10

4. JAYPEE INFRATECH ......................................................................................... 11

5. FRESNILLO .......................................................................................................... 12

6. FLYBE................................................................................................................... 13

F. Investment Banks and Their Roles and Responsibilities .......................................... 13

1. TESLA MOTORS ................................................................................................. 13

2. LINKEDIN ............................................................................................................ 14

3. JAYPEE INFRATECH ......................................................................................... 15

4. PUNJAB AND SIND BANK ................................................................................ 15

5. FRESNILLO .......................................................................................................... 16

6. FLYBE................................................................................................................... 16

G. ANNEXURES ........................................................................................................... 18

H. References ................................................................................................................. 24

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The most successful IPOs are launched by those businesses that operate as public

companies well in advance of the actual IPO. These businesses have a relatively smooth

process of going public, and they quickly transition to life as public companies.

-PWC

A. Regulatory and Disclosure Norms in India, US and Europe

Related To IPOs

1. Indian Norms

Regulations: The primary issuances are governed by SEBI in terms of SEBI (Disclosures

and Investor protection) guidelines. SEBI framed its DIP guidelines in 1992. Many

amendments have been carried out in the same in line with the market dynamics and

requirements. In 2000, SEBI issued “Securities and Exchange Board of India (Disclosure

and Investor Protection) Guidelines, 2000” which is compilation of all circulars organized

in chapter forms. These guidelines and amendments thereon are issued by SEBI India

under section 11 of the Securities and Exchange Board of India Act, 1992. SEBI

(Disclosure and investor protection) guidelines 2000 are in short called „DIP‟ guidelines.

It provides a comprehensive framework for issuances buy the companies.

As per IPO regulations are concerned, pursuant to Rule 19(2) (b) of the SCRR read with

Regulation 41(1) of the SEBI Regulations, at least 60% of the Net Issue shall be allotted

to QIBs. If at least 60% of the Net Issue cannot be allotted to QIBs, then the entire

application money will be refunded forthwith. In accordance with the SEBI Regulations,

QIBs bidding in the Net QIB Portion are not allowed to withdraw their Bids after the

Bid/Issue Closing Date. In addition, QIBs bidding in the Net QIB Portion are required to

pay Margin Amount of at least 10% upon submission of their Bid and allocation to QIBs

will be on a proportionate basis. Provided that QIBs that are Anchor Investors are

required to pay 25% of their Bid Amount at the time of submission of the Bid and the

balance amount within two days from Bid/Issue Closing Date and allocation to them shall

be on a discretionary basis.

In terms of the SEBI Regulations, QIBs bidding in the Net QIB Portion shall not be

allowed to withdraw their Bids after the Bid/Issue Closing Date and ASBA Bidders shall

not be allowed to revise their Bids.

Disclosures: Section 211 of the Companies Act, 1956 provides for disclosure of annual

financial information through a board‟s report prepared in accordance with section 217

and in a manner prescribed in Schedule VI. Regarding continuing financial disclosures,

Clauses 35, 41 and 49 provide for information to be provided quarterly. Clause 35

requires every listed company to provide quarterly, information regarding pattern of

shareholding at the end of each quarter. Clause 41 stipulates disclosure of quarterly un-

audited financial statements and clause 49 provides the corporate governance code.

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It is to be distinctly understood that submission of offer document to SEBI should not in

any way be deemed or construed that the same has been cleared or approved by SEBI.

The Lead manager certifies that the disclosures made in the offer document are generally

adequate and are in conformity with SEBI guidelines for disclosures and investor

protection in force for the time being. This requirement is to facilitate investors to take an

informed decision for making investment in the proposed issue.

2. United States Norms

The IPO process in the United States is driven by two primary federal securities laws that

govern the offer and sale of securities: the Securities Act of 1933 (1933 Act), which

governs the offer and sale of securities and the Securities Exchange Act of 1934

(Exchange Act), which imposes certain public reporting obligations on public companies

as well as their officers, directors and large shareholders. Companies contemplating an

IPO in the US should also consider the following norms laid down by the „Sarbanes-

Oxley Act’

Internal Controls: Sarbanes-Oxley requires a registrant‟s management (CEO and CFO)

to provide certain certifications in periodic filings with the SEC regarding the company‟s

evaluation of the effectiveness of its internal control over financial reporting (section

404). Furthermore, sections 302 and 906 of Sarbanes-Oxley are required in the first

periodic filing (Form 10-K and 10-Q) subsequent to the IPO. Section 302 and 906 require

that the CEO and the CFO of a public company certify that the company‟s financial

statements are accurate, comply with the requirements of the exchange acts, and

information reported is fairly presented.

Audit Committee: Sarbanes-Oxley requires public companies to have an independent

audit committee with at least one member qualified as a financial expert.

Board of Directors: Sarbanes-Oxley requires that a majority of the members of a board of

directors be from outside the company. At least one board member must have a financial

background either as a CPA or CFO.

Loans to Company Executives: Sarbanes-Oxley prohibits public companies from

extending or maintaining credit in the form of a personal loan to or for any director or

executive officer. Accordingly, appropriate actions should be taken to ensure these types

of arrangements can be extinguished prior to the initial public offering.

Apart from these regulations, SEC also focuses on the cheap stock based compensation.

Cheap stock continues to be a focus area for the SEC. Generally, the SEC challenges the

fair value of stock options granted in the period preceding the IPO, while a company is

private, with the presumption that the exercise prices were below the market value of the

stock at the time of the grant. The difference between the exercise price and the market

value Roadmap for an IPO.A guide to going public 29 must be considered when

computing stock-based compensation and the related expense should be amortized to

income over the vesting periods of the options.

Companies preparing for an IPO need to carefully review their „Option Pricing‟ history.

Where option exercise prices are significantly less than the price of any other equity

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instruments sold near the dates of option grants, there will be close scrutiny by the SEC,

and the closer the grant dates are to the IPO, the more intense the review.

3. European Norms

Financial Services Authority („FSA‟) acts as competent authority for listing, as competent

authority for the purposes of the European Prospectus and Transparency Directives, and

as competent authority for certain aspects of the Market Abuse Directive. These roles

have a statutory basis in Part VI of the Financial Services and Markets Act 2000

(„FSMA‟). Three sourcebooks in the FSA Handbook implement the relevant rules. These

are:

Listing Rules – these rules include the eligibility requirements for admission to the

Official List (or listing) and the continuing obligations that apply thereafter.

Prospectus Rules - these rules stem primarily from the enactment of the European

Prospectus Directive and detail the circumstances when a prospectus is required and

the disclosures a prospectus should include.

Disclosure and Transparency Rules („DTRs‟) - these rules govern the periodic and ad

hoc disclosure of information by listed companies. Periodic information includes

interim and annual accounts, and ad hoc disclosures, including major shareholding

notifications and details of significant developments that might affect the price of the

securities.

Some subtle differences

In India, the Initial Public Offerings (IPOs) coming to the market are compulsorily

graded on a scale of 1 to 5 by regulation with 1 signifying poor fundamentals and 5

signifying very strong fundamentals. The rating agencies in India claim that the grade is

not a recommendation on the “price” of the IPO or a buy, hold, sell recommendation. It is

typically to find out whether this unique concept of grading has added any value to the

issuers, investors and the regulators for book built IPOs.

Norms in Europe in general have certain requirements regarding the „draft prospectus‟:

If the securities are offered to the public, a prospectus should be prepared with the

listing sponsor (if Alternext) or banks (if Eurolist). In May 2005, Euronext launched

Alternext, a new exchange-regulated market, tailor-made for mid- and small-cap

companies, which offers them easier listing requirements while providing investors

with an appropriate level of transparency.

In case of a direct listing on Alternext after a private placement, an „offering circular‟

(i.e., prospectus not approved by the regulator) should be produced, which is prepared

under the responsibility of the company and its listing sponsor.

UK IPO markets in particular have an „Alternative Investment Market‟ which is

regulated by the London Stock Exchange.

In the US, a company deals directly with the regulatory authority (the SEC), supported by

its legal counsel, auditors and other advisors during the IPO process.

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B. The Due Diligence Process

1. Due Diligence in India

The practice of undertaking a formal due diligence investigation is of comparatively

recent origin in India relative to the US and Europe and was mainly imported as a

process by foreign investors/their legal and financial advisors after the economic

liberalization reforms of 1991.

The SEBI mandates certain parties to undertake a due diligence, in the context of issuance

of securities by a company. For instance:

The BRLMs are required to exercise due diligence and satisfy themselves about all

the aspects of the issue. The BRLM is also required to call upon the issuer, its

promoters or in case of an offer for sale, the selling shareholders, to fulfil their

obligations as disclosed by them in the offer document.

The BRLM need to submit post-issue reports to the SEBI. The BRLM is also required

to submit a due diligence certificate as per the format specified in Form G of Schedule

VI, along with the final post-issue report.

The BRLM, while seeking in principle approval for listing of the eligible securities

issued under the qualified institutions placement, is required to furnish to each stock

exchange on which the same class of equity shares of the issuer are listed, a due

diligence certificate stating that the eligible securities are being issued under qualified

issuers placement. Before the opening of the issue, the BRLM is required to submit a

Due diligence certificate along with the draft offer document to the SEBI.

SEBI has recently issued guidelines that IBs involved in IPOs are supposed to include

the track records of their previous IPO performances in the IPO prospectus issued to

the investors. Also they are supposed to maintain documents pertaining to the due

diligence they have carried out to date. In US, SEC already had rules that required

the IBs to produce the documents when demanded.

2. Due Diligence in the US During the due diligence phase, the company, its underwriters and their attorneys will

focus on the registration statement. The registration statement is an important priority for

the IBs. This phase require the company to thoroughly review its business and to

substantiate all claims in the registration statement. Besides inspecting the registration

statement, the underwriters and counsel for both parties will also question company

officers and key employees. The due diligence team will also speak with third parties,

such as customers, retailers and suppliers.

In US, the due diligence is typically carried out in three broad legs:

Business Overview

Industry Overview/Market Opportunity

Products/Services

Customers

Suppliers

Growth Strategy and Projections

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Acquisitions/Ventures

Legal

Human Resources

At the Business Unit Level

Business Unit Strategy

Major Business Unit Review

Detailed Financial Review

Budgeting/Forecasting Process

Personnel

Customer Review

3. Due Diligence in Europe The Due Diligence in Europe specifically include

Review of material documents relating to the issuer and its group (usually the issuer

will create a physical electronic data room for this purpose)

Actual text of the draft prospectus preparation of specialist reports, such as mineral

experts or property valuation reports, or a report of financial reporting procedures.

Representations and warranties from the company and selling shareholders.

Delivery of comfort letters from the accountants.

Delivery of legal opinions from counsel

Financial due diligence is geared toward confirming a company‟s historical financial

results and understanding its operational and financial prospects.

Legal due diligence is conducted by the solicitors and is the process of verifying a

company‟s legal records, material contracts and litigation.

C. PRICING METHODS FOLLOWED

INDIA UNITED STATES EUROPE

Jaypee

Infratech

Punjab &

Sind

Bank

Tesla

Motors

LinkedIn Flybe

Fresnillo

Book-

Building

Fixed Price

Book building

Book building is the process of price discovery. That means there is no fixed price for the

shares. Instead, the company issuing the shares comes up with a price band. The lowest price

is referred to as the floor and the highest, the cap. Bids are then invited for the shares. Each

investor states how many shares he wants and what he is willing to pay for those shares

(depending on the price band). The actual price is then discovered based on these bids.

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Fixed price issue

Price at which the securities are offered and would be allotted is made known in advance to

the investors. For the record, LinkedIn's IPO managers, Morgan Stanley and Bank of

America (Merrill Lynch division), fixed its offer price at $45 per share to sell 7.84 million

shares, raising $352.8 m for LinkedIn, and valuing the firm at $4.3 bn.

UK fixed price offerings advertise the number of offer price and number of shares by

prospectus 14 days prior to accepting applications from interested investors. Far from being

the exception, such historic practices have more nearly been the rule in international primary

equity markets.

India United States Europe Book is built Directly Underwriter takes the shares

onto his book first then allots

shares to investors

UK fixed price offerings

advertise the number of offer

price and number of shares

by prospectus 14 days prior

to accepting applications

from interested investors.

The fees charged by

underwriters for the U.S

IPOs are higher than Europe.

The fees charged by

European IPOs are lower

than those in US.

Book building is transparent Book building process is

confidential

Same as US

Book has to be kept open for

minimum of 5 days and this

period can be increased if

price band is revised

Book can be opened and

closed anytime

Rigid price band Soft Price band- investors

can bid at a price outside the

band

Only floor can be determined

by BRLM cap is

automatically set at 120% of

floor

Price band can be freely

determined by the BRLM

By contrast, in Germane

IPOs the price range is

typically set after book

building has started, with the

pricing typically occurring

seven trading days later. The

price range is frequently

more than 2 Euros, but once

set, IPOs never price above

the maximum

Institutional as well as Retail

investors are invited to

participate in the bidding

process

Only institutional investors

are invited to participate in

the bidding process.

Same as US

Retail investors have a choice

of the nature of the bids –

they can place either market

bids or limit bids while

Institutional investors can

place either market, limit or

step bids

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institutional investors have to

necessarily place limit orders

Bids placed by institutional

investors are binding

Institutional investors place

nonbinding bids that can be

revoked without attracting

any penalties.

Indian IPO markets did not use the bookbuilding method until 1999. Book- building

methods are now used in most large international equity offerings. It has been suggested

that the decline of fixed price offerings is related to the fact both Asia and Europe have

employed efforts to privatize the state owned firms and the fact that many of these firms were

simply too large to sell in a single market. As a result privatization authorities and non-US

investment banks were introduced to book-building methods when they engaged US

investment banks to gain access to foreign capital.

Unlike international markets, India has a large number of retail investors who actively

participate in IPO‟s. Internationally, the most active investors are the Mutual Funds and

Other Institutional Investors. So the entire issue is book built. But in India, 25 per cent of the

issue has to be offered to the general public. Here there are two options to the company.

According to the first option, 25 per cent of the issue has to be sold at a fixed price and 75 per

cent is through Book Building. The other option is to split the 25 per cent on offer to the

public (small investors) into a fixed price portion of 10 per cent and a reservation in the book

built portion amounting to 15 per cent of the issue size. The rest of the book built portion is

open to any investor.

D. Issue Price and Supporting Valuation1

Company Offer Price/Share FCFE Valuation Price*

Tesla Motors USD 14-16 USD 15.14

LinkedIn USD 45 USD 30.92

Jaypee Infratech Ltd. INR 102-117 INR 107.20

Punjab & Sind bank INR 113-120 INR 128.92

Fresnillo Plc. USD 10.87 USD 10.93

Flybe GBp 295 GBp 296.40

*FCFE Valuation for all the companies has been done in Excel Spreadsheet

1 See Annexures for details

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E. Post IPO Performance

1. Tesla Motors

Tesla IPO was "multiple times oversubscribed" at the retail and institutional levels, which

suggests the deal could be priced at the high end of the planned $14-to-$16-a-share range.

The company sold 13.3 million shares at US$17 each, enabling them to raise US$226

million. When the market closed Tesla's stock price was worth $23.89, up 40.53% from

the $17.00 it opened at this morning. Tesla's strong performance stood out in a day where

the American markets sunk across the board.

The lists of investors in Tesla include Germany's Daimler, the Abu Dhabi government,

Toyota and venture capitalists Elon Musk Steve Jurvetson. This has resulted in the good

performance of TESLA Motors. The share price has been almost always above the issue

price of 17 $.

Analysts at Morgan Stanley released a 50-page report on the automaker's prospects and

they have predicted that its share price will touch 70$. The folks at Morgan Stanley are

already calling Tesla "America's Fourth Automaker" and predicting great things for the

company, thanks to a soon-to-be-burgeoning market for electric vehicles and help from

giant Toyota.

2. LINKEDIN

LinkedIn was the first pure-play social networking site to go public and investors jumped

on it. LinkedIn's IPO price was initially planned to be between $32 and $35, but

the investment banks underwriting the deal (Morgan Stanley, Bank of America, JP

Morgan) discovered such strong institutional demand during the road shows that the price

was raised to $45. It turned out that the banks should have raised the IPO price much,

much higher. When the stock began trading yesterday, it opened at $83, rose as high as

$122.70 and closed at $94.25, up more than 109% on the day. Since 2001, LinkedIn‟s

first-day IPO performance is the fifth-best ever:

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The share price of LinkedIn has never touched 60$. This tells that market values for

LinkedIn were much higher than the 45$ which was quoted for IPO. Most people would

probably call LinkedIn‟s IPO a huge success but when you think about it, LinkedIn‟s

shareholders left a lot of money on the table. The corporation only received $45 per share.

The real winners of the IPO were the institutional buyers who bought the stock at the IPO

price of $45 and flipped it for $100.

3. Punjab & Sind Bank

The IPO price band of Punjab & Sind Bank was fixed at Rs 113 to Rs 120. The initial

public offering (IPO) of Punjab & Sind Bank has been subscribed 50.41 times. The issue

got total bids of 2.01bn shares as against 40mn shares on offer, as per the data available

with the National Stock Exchange. Thus the price was set at the upper end of the band at

120 for the IPO.

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Punjab & Sind Bank IPO finally subscribed 50.75 times on its closing day. Punjab & Sind

Bank IPO was open on Dec 13, 2010 and closed on Dec 16, 2010 for subscription. Punjab

& Sind Bank received bids for 2,02,98,86,650 shares as against issue size of 40,000,000

shares. The shares, which were allotted at Rs 120 through an Initial Public Offer, opened

nearly 22 per cent up at Rs 146.10 on the Bombay Stock Exchange. As the trading session

progressed, the scrip stabilized at around eight per cent gains over the allotment price,

closing at 127.15.

The performance of the IPO was good initially for a month and the price it was trading at

was above the issue price of 120 till 24 Jan 2011. Since that day the prices have come

down and even though they have regained each time it has gone low but the average price

is around 102 and the stock is yet to touch the initial price of 120 since 24 Jan 2011.

Oversubscription detail

Qualified Institutional Buyers (QIBs): 49.80 Times

Non Institutional Investors: 85.84 Times

Retail Individual Investors (RIIs): 44.45 Times

Employee: 1.61 Times

Total: 50.75 Times

4. JAYPEE INFRATECH

Jaypee Infratech Ltd IPO finally subscribed 1.24 times on its closing day. Jaypee

Infratech Ltd IPO was open on Apr 29, 2010 and closed on May 04, 2010 for

subscription. Jaypee Infratech Ltd received bids for 27,395,050 shares as against issue

size of 221,764,705 shares. The stock went down more than 10 per cent to Rs 91, below

its issue price of Rs 102.

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Oversubscription detail

Qualified Institutional Buyers (QIBs): 1.7710 Times

Non Institutional Investors: 1.1544 Times

Retail Individual Investors (RIIs): 0.6113 Times

Shareholder Reservation: 0.1006 Times

Total: 1.24 Times

5. FRESNILLO

Shares in Fresnillo Ltd fell as much as 10 percent after the world's biggest silver producer

raised 905 million pounds ($1.77 billion) in a London flotation that was priced at the

bottom of the expected range.

Analysts said the share fall reflected a recent retreat in precious metals prices and a lack

of appetite for new issues after Czech coal miner New World Resources raised 1.1 billion

pounds in its flotation on Tuesday. At 0915 GMT, shares in Mexico-focused Fresnillo

were trading at 524 pence, down 3.8 percent from their offer price of 555 pence, but off

an early low of 502 pence and giving a market value of about 3.8 billion pounds. Fresnillo

plc (the 'Company') announces that, in connection with the initial public offering of

ordinary shares in the Company (the 'Global Offer'), JPMorgan Cazenove Limited, as

stabilising manager, has today exercised the over-allotment arrangements in respect of

1,554,464 ordinary shares in the Company (the 'Over-allotment Shares'). None of the £8.6

million proceeds arising from the exercise of the over-allotment arrangements will be

received by the Company. Including the Over-allotment Shares, the total size of the

Global Offer is £913.3 million (164,564,968 ordinary shares). Following the exercise of

the over-allotment arrangements, Industrias Penoles S.A.B. de C.V. will own

approximately 77.1 per cent of the Company's ordinary shares.

450460470480490500510520530540550560

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6. FLYBE

Flybe Group plc (the “Company”) announced that, in connection with its initial public

offering of ordinary shares (the “Global Offer”), Merrill Lynch International, as

stabilising manager, on 14 December 2010 exercised the over-allotment option in respect

of 2,033,898 ordinary shares in the Company (the “Over-allotment Shares”).

The Over-allotment Shares were issued at the offer price of 295 pence per Over-allotment

Share (the “Offer Price”), raising additional gross proceeds for the Company of £6

million.

Including the exercise of the over-allotment option, the total size of the Global Offer was

£66 million (22,372,881 ordinary shares, in total representing approximately 30 per cent.

of the 74,872,881 issued ordinary shares of the Company at Admission).

F. Investment Banks and Their Roles and Responsibilities

1. TESLA MOTORS

The Lead Managers for the IPO were Goldman Sachs, Morgan Stanley, JP Morgan and

Deutsche Bank.

Underwriters

Number of

Shares

Goldman, Sachs & Co. 4,655,000

Morgan Stanley & Co.

Incorporated 4,655,000

J.P. Morgan Securities Inc. 2,660,000

Deutsche Bank Securities Inc. 1,330,000

Total 13,300,000

295300305310315320325330335340345

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2. LINKEDIN

The IPO was underwritten by Morgan Stanley, Bank of America, Merrill Lynch, JP Morgan,

ALLEN & COMPANY LLC and UBS INVESTMENT BANK.

All the directors and executive officers and the holders of substantially all of the securities

sign lock-up agreements under which they agree not to sell, transfer or dispose of, directly or

indirectly, any shares of the common stock or any securities convertible into or exercisable or

exchangeable for shares of the firm‟s common stock without the prior written consent of the

lead manager, incorporated for a period of 180 days, subject to possible extension under

certain circumstances, after the date of the S1 prospectus. These agreements are described

below under “Underwriting.”

The following table summarizes the specific roles of IBs in US:

WEEK STAGES IN THE IPO CALENDAR

1 Conduct Organizational Meeting

2-5 Conduct Due Diligence

Draft Registration Statement and Prospectus

Continue to prepare issuer to become a public

company

6-8 Finish drafting registration statement

Select Financial printer

File registration statement with the SEC

9-12 Assemble a syndicate

Receive initial approval from the SEC on

confidential review approximately two to

three weeks after filing, and confidentially

submit stock exchange listing application

13-18 Receive SEC approval of the registration statement

Prepare, revise and print the

preliminary prospectus

Pre-marketing

Road show

Book-building

19-20 Pricing and finalizing offering size

Prepare and print the final prospectus

Allocation and closing

Beyond the listing

15 | P a g e

3. JAYPEE INFRATECH The Book Running lead managers for the IPO Were Morgan Stanley India Company

Private Limited, DSP Merrill Lynch Limited, Axis Bank Limited, Enam Securities

Private Limited, ICICI Securities Limited, IDFC – SSKI Limited, JM Financial

Consultants Private Limited, Kotak Mahindra Capital Company Limited, SBI Capital

Markets Limited.

4. PUNJAB AND SIND BANK The book running lead managers to the Issue, in this case were SBI Capital Market

Limited, Enam Securities Private Limited and ICICI Securities Limited and LINK

INTIME INDIA PRIVATE LIMITED.

The following table summarizes the specific roles of IBs in India:

S. No. Activity

1 Capital Structuring with relative components and formalities such as type

of instruments.

2 Due diligence of the Bank‟s operations/management/business plans/legal

etc. Drafting and design of Red Herring Prospectus including

memorandum containing salient features of the Prospectus. The BRLMs

shall ensure compliance with stipulated requirements and completion of

prescribed formalities with the Stock Exchanges and SEBI.

3 Drafting and approval of all statutory advertisements and all publicity

material.

4 Co-ordination for Issue Agreement and Underwriting Agreement

5 Appointment of Registrars, Financial Printers and Advertising Agencies.

8 Appointment of Bankers to the Issue and coordination for Escrow

Agreement

9 Co-ordination with IPO Grading Agency

10 Co-ordination for Syndicate Agreement

11 Preparation of Road show presentation and FAQs

12 International Institutional Marketing strategy.

13 Domestic institutions/banks/mutual funds marketing strategy

14 Non-Institutional and Retail marketing of the Issue, which will cover,

among other things,

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* Formulating marketing strategies, preparation of publicity budget

* Finalise Media and PR strategy

* Finalising centers for holding conferences for press and brokers

* Follow-up on distribution of publicity and Issuer material including

form, prospectus and deciding on the quantum of the Issue material

* Finalisation of bidding centres

* Branch Training including identification of branches/centres, branch

training material

15 Co-ordination with Stock Exchanges for Book Building Software, bidding

terminals and mock trading.

16 Finalisation of Pricing, in consultation with the Bank

17 The post issue activities including management of escrow accounts, co-

ordination of non-institutional allocation, intimation of allocation and

dispatch of refunds to bidders. The post Offer activities for the Offer

involve essential follow up steps, which include the finalisation of trading

and dealing of instruments and demat of delivery of shares, with the

various agencies connected with the work such as the registrar‟s to the

Issue and Bankers to the Issue and the bank handling refund business. The

merchant banker shall be responsible for ensuring that these agencies

fulfil their functions and enable it to discharge this responsibility through

suitable agreements with the Bank.

5. FRESNILLO

JPMorgan Cazenove is acting as sole sponsor and financial adviser to Fresnillo and sole

global co-ordinator, bookrunner and broker in relation to the Global Offer. Canaccord Adams

Limited, Citigroup Global Markets U.K. Equity Limited, J.P. Morgan Securities Ltd. and

UBS Limited are acting as co-lead managers

6. FLYBE

Bank of America Merrill Lynch acted as Sponsor, Global Co-ordinator and Bookrunner,

Investec acted as Joint Lead Manager and Execution Noble acted as Co-Lead Manager to the

IPO. College Hill acted as PR advisers to the IPO.

17 | P a g e

The following table summarizes the specific roles of IBs in Europe:

S.No Activities

1. Processes

Execution kick-off meeting

Weekly meeting/conference calls

Due diligence

Long form report

Preparation of audited numbers

2. Valuation and capital structure

Forecasts finalised

Working capital report

Valuation discussion

Capital structure discussions

Agree offer size

3. Documentation

Draft prospectus

Prospectus filed with UKLA

UKLA review prospectus

Publish pathfinder prospectus

Publish final prospectus

Preparation of placing agreement

Auditors‟ comfort letters

4. Marketing and roadshows

Week

PR process

Analysts prepare and deliver presentation

Research prepared and reviewed

Prepare and rehearse roadshow

Announce intention to float

Publish research

Pre-marketing

Price range set

Road show

Bookbuilding

Pricing/allocation

Settlement and closing

Stabilisation

18 | P a g e

G. ANNEXURES 1. LINKEDIN VALUATION

Present

--------------------------------------- ---------- --------- -------- ---------- --------- ---------

Year 2010 2011 2012 2013 2014 2015

--------------------------------------- ---------- --------- -------- ---------- --------- ---------

A. Net Revenues 243.10 386.24 613.65 974.97 1549.04 2461.11

B. Total OperatingCost&Expenses (203.97) (308.99) (490.92) (779.98) (1239.23) (1968.89)

C. Other Income(Expense) (0.61) (0.61) (1.22) (1.83) (2.44) (3.05)

D. EBDIT 38.52 76.64 121.51 193.16 307.37 489.17

E. Depreciation & Amortization 19.55 31.06 49.34 78.39 124.55 197.89

F. EBIT 18.97 45.58 72.17 114.77 182.81 291.28

G. NOPLAT 15.36 36.92 58.46 92.96 148.08 235.94

H. Property & Equipment 56.74 90.15 143.23 227.56 361.55 574.42

I. Depreciation & Amortization 19.55 31.06 49.34 78.39 124.55 197.89

J. Δ NWC (5.15) (5.15) (5.15) (5.15) (5.15) (5.15)

K. CaPEX (31.01) (33.40) (53.08) (84.33) (133.99) (212.88)

L. Free Cash Flows (1.25) 29.42 49.57 81.88 133.49 215.80

Continueing value 3441.81 Long-Term Growth Rate: 2015

Cash and Cash Equivalents 92.95 NOPAT 235.9

The value of equity 2551.09 2798.15 Invested Capital 574.4

Outstanding Shares 90.50 ROC 41.1%

Value/Share($) 28.19 30.92

Net Reinvestment 20.1

Tax Rate 19.00% NOPAT 235.9

Growth Assumption( for the 1st 5 yrs) 58.88% Reinvestment Rate 8.5%

Other Income(Expense) 0.25%

Depreciation 34.45% Est. Terminal Growth Rate 3.51%

Property & Equipment (% of Net Revenues) 23.34%

Terminal Growth 3.51%

WACC 10.00%

LINKEDIN VALUATION

FINANCIAL PROJECTIONS (values in million$ except no. of shares)

Projected

19 | P a g e

2. TESLA MOTORS

RELATIVE VALUATION

------------------------------------ -------------- ------------ ------------- ----------- -------------- ------------

Year 2010 2011 2012 2013 2014 2015

------------------------------------ -------------- ------------ ------------- ----------- -------------- ------------

Revenues 116697.50 145871.88 583487.50 1166975.00 2333950.00 3267530.00

YOY Growth % 0.25 0.25 3.00 1.00 1.00 0.40

Gross Margin % 0.10 0.15 0.20 0.20 0.25 0.35

Gross Profit 11669.75 21880.78 116697.50 233395.00 583487.50 1143635.50

R&D expense % 0.50 0.50 0.20 0.20 0.20 0.10

R&D expense 58348.75 72935.94 116697.50 233395.00 466790.00 326753.00

SG&A expense % 0.30 0.30 0.40 0.15 0.12 0.12

SG&A expense 35009.25 43761.56 233395.00 175046.25 280074.00 392103.60

EBIT (81688.25) (94816.72) (233395.00) (175046.25) (163376.50) 424778.90

NOPLAT (57181.78) (66371.70) (163376.50) (122532.38) (114363.55) 297345.23

Property and Equipment 24808.60 31606.16 40266.25 51299.20 65355.18 83262.50

Depreciation & Amortization 5296.02 6747.12 8595.84 10951.10 13951.70 17774.46

GCF (51885.76) (59624.58) (154780.66) (111581.28) (100411.85) 315119.69

CAPEX 105335.60 6797.56 8660.09 11032.95 14055.98 17907.32

Current Assets 171535.00 222995.50 289894.15 376862.40 489921.11 636897.45

Current Liabilities 73198.80 87838.56 105406.27 126487.53 151785.03 182142.04

NWC 98336.20 135156.94 184487.88 250374.87 338136.08 454755.41

Δ NWC 27385.20 36820.74 49330.94 65886.99 87761.21 116619.33

Free Cash Flows (184606.56) (103242.88) (212771.69) (188501.22) (202229.05) 180593.05

WACC 12.40%

Terminal Growth Rate 4.00%

Continuing Value 2235913.89

Enterprise Value 709241.70

Debt 6337.00

Cash & Cash EQ 106547.00

Equity Value 809451.70

No of shares 53454.00

Share price 15.14

Tax Rate 30.00%

Shares already issued 4235400.00

TESLA MOTORS VALUATION

FINANCIAL PROJECTIONS (values in thousand$ except no. of shares)

A123 systems

P/E -2.64

P/BV 1.45

TESLA Motors

Earnings -31500000

No Of Shares 42354000

EPS -0.7437314

P 1.96345091(assuming P/E of A123 systems can be used for TESLA motors)

Book Value 44179000

BV/Share 1.0430892

P 1.51247934(assuming P/BV of A123 systems can be used for TESLA motors)

20 | P a g e

3. JAYPEE INFRATECH

Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

1 2 3 4 5 6 7 8

Sales 0.00 554.54 640.65 832.85 1082.70 1407.51 1829.76 2378.69 3092.30 4019.98 5225.98

Expenses 3.59 238.68 48.55 83.28 108.27 140.75 182.98 237.87 309.23 402.00 522.60

Expense as % of Sales 43.04% 7.58%

EBIDTA -2.82 317.57 604.30 749.56 974.43 1266.76 1646.78 2140.82 2783.07 3617.99 4703.38

Depreciation 8.47 13.97 16.19 8.63 10.36 12.43 14.91 17.90 21.47 25.77 30.92

EBIT -11.29 303.60 588.11 740.93 964.07 1254.33 1631.87 2122.92 2761.59 3592.22 4672.46

Interest Paid 0.00 0.00 0.76

Secured Loan 199.99 1867.54 5721.00

Tax 0% 12.049% 16.980%

NOPAT -11.29 267.020 488.250 503.83 655.57 852.94 1109.67 1443.59 1877.88 2442.71 3177.27

Net Working Capital 131.79 541.29 2473.5

Change in WC(FCF) 409.50 438.17 468.84 501.66 536.77 574.34 614.55 657.57 703.60 752.85

Capital Expenditure 620.14 887.08 975.79 1073.37 1180.70 1298.77 1428.65 1571.52 1728.67 1901.53 Terminal Value

Free Cash Flow -748.65 -820.81 -932.16 -909.10 -852.10 -748.53 -581.72 -329.73 36.21 553.81 16933.85

Present Value of FCF 6371.39 -867.92 -788.12 -687.80 -562.57 -407.07 -214.83 21.97 312.81 9564.91

FCFF 6371.39

Net Debt 3938.03

FCFE(in Crores) INR 2,433.36

Total Share Issued(in crore) 22.70

Share Price INR 107.20

PROJECTEDHistorical

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4. PUNJAB AND SIND BANK

--------------------------------------- ---------- ---------- --------- ---------------- --------- ---------

Year 2010 2011 2012 2013 2014 2015

--------------------------------------- ---------- ---------- --------- ---------------- --------- ---------

A. Net Revenues 43.26 57.34 76.00 100.73 133.51 176.95

B. Total OperatingCost&Expenses (34.61) (45.87) (60.80) (80.58) (106.81) (141.56)

D. EBDIT 8.65 11.47 15.20 20.15 26.70 35.39

E. Depreciation & Amortization 0.06 0.50 0.66 0.83 1.02 1.23

F. EBIT 8.59 10.97 14.54 19.32 25.69 34.16

G. NOPLAT 5.76 7.35 9.74 12.94 17.21 22.89

I. Depreciation & Amortization 0.06 0.50 0.66 0.83 1.02 1.23

J. Δ NWC (5.82) (12.94) (15.20) (17.54) (19.76) (21.54)

K. CaPEX (0.93) (1.10) (1.29) (1.51) (1.77) (2.08)

L. Free Cash Flows (0.94) (6.19) (6.08) (5.28) (3.31) 0.50

A. Fixed Assets 5.39 6.32 7.42 8.71 10.22 11.99 14.07

B. Capital expenditure 0.93 1.10 1.29 1.51 1.77 2.08

C. Acc. depreciation 4.86 4.92 5.42 6.08 6.91 7.92

D. Net block 1.46 2.50 3.28 4.14 5.08 6.14

E. Depreciation 0.06 0.50 0.66 0.83 1.02 1.23

F. Current Assets 560.46 742.78 984.40 1304.63 1729.03 2291.48

G. Current Liabilities 502.91 672.29 898.72 1201.41 1606.04 2146.95

H. NWC 57.55 70.49 85.69 103.22 122.99 144.52

Cost of equity

Cost of capital Long-Term Growth Rate: 2015

Continueing value 10.94 NOPAT 22.9

Long Term Debt 14.70 Invested Capital 523.0

Cash and Cash Equivalents 47.55 ROC 4.3763%

The value of equity 23.61 38.41

Outstanding Shares 0.18 Net Reinvestment 22.1

Value/Share 128.92 NOPAT 22.9

Reinvestment Rate 96.3%

Tax Rate 33.00%

Growth Assumption( for the 1st 5 yrs) 32.54% Est. Terminal Growth 4.22%

Expenditure(% of net revenues) 80.00%

Depreciation (% of Net Block) 20.00%

Fixed Assets 17.34%

Terminal Growth 4.20%

WACC 8.96%

PUNJAB AND SIND BANK VALUATION

FINANCIAL PROJECTIONS (values in billion(Rs) except no. of shares)

22 | P a g e

5. FRESNILLO Plc

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1 2 3 4 5 6 7 8

Sales 417.072 555.39 647.94 777.53 933.03 1119.64 1343.57 1612.28 1934.74 2321.69 2786.02

Expense 283.82 358.61 430.31 529.28 651.02 800.75 984.92 1211.45 1490.09 1832.81 2254.36

EBITDA 199.24 325.00 269.87 314.07 365.52 425.39 495.07 576.16 670.54 780.37 908.20

Depreciation 34.5 41.41 49.87 59.84 71.81 86.18 103.41 124.09 148.91 178.69 214.43

EBIT 164.74 283.47 220.00 254.23 293.71 339.22 391.66 452.07 521.63 601.68 693.77

Interest Paid 14.89 15.70

Secured Loan

Tax 35.43 87.63 74.68

NOPAT 195.84 145.32 172.88 199.72 230.67 266.33 307.41 354.71 409.14 471.76

Net Working Capital 114.45 171.58 235.00

Change in WC 57.13 63.42 69.76 76.74 84.41 92.85 102.14 112.35 123.59 135.95

Capital Expenditure 78.77 103.45 113.80 125.17 137.69 151.46 166.61 183.27 201.59 221.75 Terminal Value

Free Cash Flow 101.35 28.32 49.16 69.62 94.74 125.43 162.76 208.00 262.65 328.49 2007.17

Present Value 905.68 40.62 47.54 53.45 58.47 62.70 66.21 69.08 71.39 436.22

FCFF

Net Debt 0.00

FCFE 905.68

Total Share Issued(in million) 82.89

Share Price($) 10.93

FRESNILLO PLC

ProjectedHistorical

Year ended 31 December

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6. FLYBE

Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16

Note:in ₤'million 1 2 3 4 5 6

Sales 367.474£ 535.864£ 572.389£ 570.500£ 656.075£ 754.486£ 867.659£ 997.808£ 1,147.479£ 1,319.601£

Depreciation 11.585£ £ 16.226 £ 23.189 £ 29.000 32.770£ 37.030£ 41.844£ 47.284£ 53.431£ 60.377£

EBIT 13.881-£ £ 33.223 £ 7.906 £ 27.600 33.120£ 39.744£ 47.693£ 57.231£ 68.678£ 82.413£

EBIT Margin 6% 1% 5% 5.05% 5.27% 5.50% 5.74% 5.99% 6.25%

Interest Paid 3.461£ 8.772£ 9.591£ 3.200£

Secured Loan 153.516£ 103.814£ 89.681£ 83.400£

Tax 22% 28% 30% 28%

NOPAT 10.827-£ 23.921£ 5.534£ 19.872£ 21.528£ 25.834£ 31.000£ 37.200£ 44.640£ 53.569£

Net Working Capital £ 29.300 £ 24.000 £ 12.240 £ 8.900

Change in WC -£ 5.300-£ 11.760-£ 3.340-£ 3.607-£ 3.896-£ 4.207-£ 4.544-£ 4.908-£ 5.300-£

Capital Expenditure 41.255£ 4.019-£ 11.928-£ 10.800£ 52.486£ 60.359£ 69.413£ 79.825£ 91.798£ 105.568£ Terminal Value

Free Cash Flow 40.497-£ 49.466£ 52.411£ 41.412£ 5.419£ 6.401£ 7.639£ 9.204£ 11.180£ 13.677£ 135.09

Present Value of FCF 97.708£ 4.790£ 5.002£ 5.277£ 5.620£ 6.035£ 6.526£ 64.46

FCFF 97.71£

Net Debt 37.30

FCFE(in millions)) 60.41£

Total Share Issued(in millions) 20.380

Share Price 2.964£

Historical PROJECTED

24 | P a g e

H. References www.capitaline.com

http://www.sebi.gov.in/

www.sec.gov

www.nse-india.com

www.fresnillo.com

www.teslamotors.com

www.linkedin.com

www.flybe.com

www.jaypeeinfratech.com

www.londonstockexchange.com

www.psbindia.com

www.uk.finance.yahoo.com

www.in.finance.yahoo.com

www.bloomberg.com

www.uk.reuters.com

www.moneycontrol.com

www.bse-india.com

www.fsa.gov.uk