making the most of your ipo - pwc

April 2011

Making the most of your IPO

Agenda

2

• Why? Where?

• The process

• The important bit: After

In a successful IPO, the underwriter/financial adviser ensures the professional execution

of a transaction and helps to align an issuer’s objectives with market expectations and

investor perceptions

Underwriter / Financial Adviser

Corporate Finance

Equity Capital Markets

Syndicate

Equity Sales and Trading

Equity Research

Other advisers:

Legal Counsel

Auditor

Technical Advisers

(engineers, geologists,

geophysicists etc)

Appraiser

PR Adviser

Share

offering

Why float? Why invest?

Business factors

Raise funds

Provide acquisition currency,

i.e. shares

Broaden shareholder base

Establish “market price”

Provide liquidity for existing

shareholders

Soft factors

Increase financial and strategic

flexibility

Enhance public profile and

credibility

Support management and

employee incentive schemes

Issuer Investor

Company

Convincing equity story

Competent and experienced

senior management

Transaction

Offer structure (size, ratio etc.)

Stock exchange

Peer performance

Industry attractiveness

Macro and geopolitical outlook

3

NASDAQ OMX

Number of listed companies:

2,773

Aggregate market cap:

US$4,072bn

.

NYSE Euronext (US)


2,318


US$14,460bn

Deutsche Borse*

Number of listed companies: 755

Aggregate market cap: US$1,519bn

NYSE Euronext (Europe)


1,133


US$3,189bn

MICEX


250


US$1,053bn

Hong Kong Stock Exchange


1,421


US$2,669bn

Singapore Exchange***


782


US$620bn

Tokyo Stock Exchange


2,289


US$4,020bn

RTS



US$1,070bn

NASDAQ OMX Nordic**



US$1,070bn

Number of listed companies: 1,174

Aggregate market cap: US$132bn

A variety of stock exchanges and markets

offer different advantages for issuers

Data as of April 2011

* Deutsche Borse: excluding the market segment “Freiverkehr” (unofficial regulated market )

** NASDAQ OMX Nordic Exchange: OMX includes Copenhagen, Helsinki, Iceland, Stockholm, Tallinn, Riga and Vilnius Stock Exchanges

*** Singapore Stock Exchange: Main Board & Sesdaq

AIM

Number of listed companies: 1,416


US$6,342bn

London Stock Exchange

KASE


109


US$62bn

4

5

David and Goliath –

The emergence of the local Kazakhstani capital market

Number of Companies KASE – 110 issuers Main Market – 1,416 issuers

AIM – 1,173 issuers

Market Capitalisation Total US$62.243 billion Main Market – US$6,342 billion

AIM – US$132 billion

Trading volume* US$29.8 million

Trading volume reached it’s historical daily record of US$2.6

billion on 25 November 2009

Main Market – US$154billion

AIM – US$7.3 billion

Level of concentration Top 10 companies:

market cap - US$53.829 billion, representing 87% of the KASE

total market cap

individual market capitalisations range from

US$173.9 million to 20.1 billion

Top 10 on Main Market:

total market cap – US$1,690 billion, representing

c.25% of the total market cap

Top 10 on AIM:

total market cap US$ 243 billion, representing about

35% of the total market cap

Investors*** US$15.3 billion invested by PFs

US$10.5 billion invested by second tier banks

US$1.6 billion invested by INS**

US$1.8 billion invested by Mutual funds

US$0.5 billion under the management of brokerage houses,

asset management companies and investment funds

US$2,544 billion under the management of pension

funds

US$2,808 billion managed by insurance funds

US$729 billion managed by mutual funds

KASE London Stock Exchange

Source: AFN, KASE and LSE

Exchange rates: 145.57 KZT/USD and 1.59 USD/GBP

*Shares trading volume for February 2011

**INS – insurance companies

***KASE: as of 1 Jan 2011; LSE: end 2009

Agenda

6

• Why? Where?

• The process

• The important bit: After

Initial public offering – key steps and management input

Phase IV:

Marketing, distribution

and allocation

Auction,

subscription,

bookbuilding,

pricing and

allocation

Investors

presented to by VC

research analysts,

followed by

management

roadshow

Participate in investor marketing

roadshow

Discuss equity story and address

potential investors’ concerns

Participate in pricing and

bookbuilding discussions with VC

following investor feedback on story

and valuation

Authorize issue of shares and

admission of shares to trading

Tasks

3 - 4 weeks*

* Time frames provided for guidance only. Timing of Phase IV subject to choice of market and listing process.

Phase I:

Instigation of IPO process

Confirm

decisions on

headline IPO

details

Appointment of

Visor Capital

and other

advisors

Mandate Visor Capital (VC)

Select and appoint other advisors

following discussions with VC

Review timetable for IPO

Company preference

Market windows

Confirm offer type and size

Public, domestic offering on

KASE; or international market

Base transaction size covering

capital increase and placement of

“existing shares”

Over-allotment allocation

Set-up steering and operating

committees to guide company

through IPO process

Tasks

Develop equity story in conjunction

with VC

Draft presentation to VC analyst

Meet with research analyst prior to

drafting of research report

Draft presentation to potential

investors

Assist in drafting of prospectus

Develop PR strategy in conjunction

with PR agency for investors, wider

public and employees, as appropriate

Management incentive schemes put

in place

Negotiate underwriting agreement

Confirm marketing focus in

conjunction with choice of market

Domestic/international investors

Tasks

Phase II:

Company preparation

Completion of audits,

tax reviews and

establishment of

corporate

governance practices

Finalise

business plan,

company and

capital structure

and management

team

Phase III:

Due diligence and

documentation

Carry out legal and

financial due diligence,

prepare documentation

and research report

Prepare IPO

strategy, update

valuation and

finalise marketing

structure

Establish communication guidelines

with VC and lawyers

Complete working capital model and

business plan

Complete all capital and corporate

restructuring required prior to IPO

Complete audit of previous years

accounts to required standards

Review tax implications of IPO

Put in place infrastructure in line with

best-practice corporate governance

guidelines

Financial controls and checks

Structure of board and

independent directors

Ensure briefing of Board by lawyers

as to duties, responsibilities and

liabilities of directors of public

company

Tasks

6 - 8 weeks*8-24 weeks*1 - 2 weeks*

7

Agenda

8

Why? Where?

The process

The important bit: After

Why commit to investor relations?

9

Achieving efficient, cost-effective access to capital means - entering into a dialogue and developing relationships

with the investment community over time so that its participants become cognisant with the company and its

investment proposition

Access to Capital

Profiling and explaining a company to the investment community on a continual basis can assist the company in

attracting pools of buyers and sellers and the potential for higher frequency in the trading of its sharesLiquidity

Communicating to and with the investment community will enable a company to detail its own record of its

performance and its strategy using disclosed information. This will help the company to understand how it is being

evaluated and whether or not the market’s expectations towards the company are in line with its own

Fair Valuation

Availability of low cost capital on an

ongoing basis

10

Institutional investors are key stakeholders

The most important category of investors, owing to the total weight of assets they

manage and the degree to which they can invest

Investment horizon is mostly long-term

Diversity in size and depth of funds, areas of focus, and investment strategies

What they want? Want to understand the dynamics of the business, in which the

Company operates, potential growth rates, track record, defensibility of the Company’s

market, valuation, etc.

Institutional

investors

Have short-term aspirations

Their interest is driven by changing sentiment towards industry sectors, perceived value

opportunities, attractive yield, tax-efficiency

Create additional liquidity for the Company’s share, as they tend to buy and sell smaller

parcels of shares quickly

Private

investors

Analysts play a pivotal role in in the relationships between a company and its investors

Their main objective is to forecast company’s performance, which is vital in setting

market expectations on Company’s profitability and future growth

Their research notes are targeted mainly at institutional fund managers

What they want? Want to have a deep understanding of the Company, its key drivers,

macro influences, etc.

Analysts

For all publicly listed companies, which have a duty to engage with their shareholders –

effective communication with the financial press is more important that ever

Far cheaper way of building a company’s reputation than advertising

Media

Companies need to display

openness and to maintain a

constructive dialogue with

all key stakeholders,

including media, particularly

in difficult times

Building the Investor Relations Programme

11

• Critical analysis of the strengths and weaknesses of the Company

• What category of investors the Company needs to attract

• Analysis of the Company’s aspects and flexibility around paying dividends

• Management should clarify their views on rates of growth of revenue and earnings

Formulating the investment proposition

• Face to face

• Cornerstone meetings: institutional investors, sell-side analysts, press

• Other meetings: general meetings, site visits, conferences, round-table debatesMeetings

• Transparency

• What, when and how to announceCompany

announcements

• Production of the annual report is the key activity in any company’s investor relations programme

• The report should give readers an in-depth understanding of the company, its performance and future prospects

• Design and distribution

Annual reports

• Companies should treat their website as a key communication platform and recognize its importance to investors and other stakeholders

• Content, Context, Usability, Functionality and ongoing managementInvestor Relations

Websites

Effective

Investor

Relations

Programme

12

Investor Relations – A Senior Management Responsibility

Senior management must be involved because investors gauge the prospects of the company on

their evaluation of the management’s ability to communicate and execute a credible strategy

IR department has to have good access to senior management so that they can clearly explain the

company’s strategy and business plan, and how management is reacting to their market and

industry conditions

IR is an investment of financial resources and management time. It is an investment that has to be

consistent.

It is an investment with a return.

IR actions Regularly mandated Key to investor objectives

Press releases

Annual / Quarterly reports

Website

Group presentations / Fields trips

1-on-1 meetings - IR

1-on-1 meetings – CEO / CFO

1-on-1 meetings - Division Management

Visor Capital Profile

14

Speaker profile

Michael Carter

CEO

Michael joined Visor Capital in January 2007 to manage the creation of what is now the leading Research

team covering Central Asia. He joined from ING Bank, where he was Head of Equity and Head of

Research in Italy. He became CEO of Visor Capital in October 2008. He has over 20 years experience in

Capital Markets, Private Equity and Management Consulting.

He was part of top-ranked Research teams at UBS from 1995-2001, both in London and Milan. His

research experience has been in the oil, oil service, transportation and industrial sectors. He has been

involved on the brokerage side in a number of privatizations in Europe in the Oil (ENI, Saipem) and

Transportations sectors (SAPRR, SANEF, SAT), as well as in a number of other IPOs.

He was a management consultant at Bain & Company in Italy where he managed strategic consulting

projects in the oil, oil service, telecom and media sectors. Previously he was an associate at the Energy

Recovery Fund, an oil & gas and oil service focused private equity fund in the USA. Michael holds a BA

with Honors from U.C. Berkeley and an MBA from Georgetown University. He is member of the Board of

Directors of the American Chamber of Commerce in Kazakhstan.

Visor Capital snapshot

The leading Kazakhstani investment bank providing international best-practice execution expertise

and in-depth knowledge of the domestic environment

Unrivalled understanding of the local business environment, and excellent relationships with relevant

regulators and authorities

Dedicated team combining local knowledge with international experience

The only investment bank combining an FSA-authorised UK subsidiary and a leading brokerage operation in

Kazakhstan

Visor Capital regularly consults state-owned companies on their strategic development options and has

extensive knowledge of the business, legal and regulatory framework in Kazakhstan and across

the CIS

Visor Capital acts as adviser to multinational companies in Europe, Asia and the US, as well as

leading domestic and regional companies in Kazakhstan and across the CIS, on M&A and capital

market transactions. Visor Capital roles and transactions include:

Domestic Lead Manager of the USD 2.3bn IPO of KazMunaiGas EP, placing approximately USD1.6bn with

international and domestic investors in Kazakhstan

Exclusive financial adviser to Kookmin Bank, Korea’s largest bank, on the acquisition of a 50.1% stake in

Bank CenterCredit for approximately USD 1.27bn

Exclusive financial adviser and underwriter for leading Kazakh bank’s KZT15bn domestic bond due 2011

Financial adviser to a private equity group on the sale of a 51% stake in its Asian telecom business to

TeliaSonera for approximately USD 470m

CEE & CIS Banking

Awards 2009 and 2010

“Best Investment Bank in

Kazakhstan”

Thomson Extel Survey

2009 and 2010

“Best Research for

Kazakhstan”

“Best Equity House

Kazakhstan”

15

Research

Communications, Utilities and Retail;

Oil & Gas;

Metals & Mining;

Financial Institutions, and

Construction & Development

16

Visor Capital is a leading independent investment bank that combines local

knowledge across the CIS with international expertise

Visor Group offices

• Regional client and partner relations

• Representative functions

• Offices in:

Moscow, Russia

Bishkek, Kyrgyzstan

Tashkent, Uzbekistan

Visor Capital partners

London, UK

• European market coverage

• Offering brokerage services

Almaty Headquarters

• CIS and Central Asia market coverage

• Offering corporate finance advisory,

brokerage and research services

Beijing, China

• Representative office (under formation)

• Asian market coverage

Dubai, UAE (under formation)

• Middle Eastern market coverage

• Offering corporate finance advisory

services

Visor Capital offices

Visor Capital offers the full range of professional investment banking services

Investment Banking

Mergers & Acquisitions;

Buy-side, Sell-side

Equity Capital Markets;

IPOs, secondary offerings

Private placement

Debt Capital Markets;

Structured Finance; and

Corporate restructuring and privatization

Brokerage

Equity sales and trading;

Fixed Income sales and trading;

Trade execution of equity, debt andderivatives;

Settlements

Visor Capital office

Visor Group office

Market/investor coverage

Auerbach Grayson

• Global agency broker

• Direct access to US emerging markets

investors

Somon Capital

• Investment Banking JV in Tajikistan

• Offering corporate finance advisory

services

Our investment banking team has advised on and executed

successful transactions across Central Asia and beyond

Visor Capital has strong relationships with the emerging market investment community, domestic and

international clients, and all major international investment banks

Jose Luiz Gaviao: 16 years experience in debt capital markets (DCM) across emerging markets

Sanzhar Kozybayev: 12 years experience in M&A transactions across CIS and Europe

Indira Kaliaskarova: 9 years advisory experience in M&A and capital market transactions

Adilet Karabayev: 6 years experience in M&A across various industry sectors

We regularly coordinate complex international transactions and understand the needs of both

domestic and international investors. Our current mandates include:

Financial Adviser on the acquisition of 50% stake in MangistauMunaiGas, one of the largest hydrocarbon field in Kazakhstan

Exclusive Financial Adviser on sale of large oil & gas producing field in Western Kazakhstan

Exclusive Financial Adviser and Broker for the listing and buyback programme of KMG EP’s preferred shares on the Kazakhstan Stock Exchange (KASE)

Underwriter of KZT100bn zero-coupon local bond issue of NC KazMunaiGas due in 2017

Exclusive Financial Adviser to a leading commercial bank in Kazakhstan on the issuance, listing and placement of bonds

17

CEE & CIS Banking

Awards 2009 and 2010

“Best Investment Bank

in Kazakhstan”

“Best corporate finance

and M&A team”

Visor Capital can offer a range of

advisory services and professional transaction support

18

ResearchM&A Execution

Advise on optimal transaction structure and execution

Financial modeling and provision of fairness opinion, as

appropriate

Assistance in the internal decision making process,

including preparation of background information and

formal documents for both management and Board

Preparation of and assistance in deal negotiations, Q&A

sessions and the DD process

Design and coordination of a commercially desirable and

tax-efficient closing mechanism

“Best Corporate Finance and M&A team”

(EMEA Finance Magazine)

Oil&gas sector research led by Dominic Lewenz, an

experienced ex-Wood Mackenzie sector analyst

First Kazakh and Russian research coverage for

KMG EP

Daily market research / Bonds weekly research /

Company (equity) / Sector / Macroeconomic research

“Best research for Kazakhstan 2009”(Thomson Extel Survey)

“Best Research for Kazakhstan and Kyrgyzstan

2010”

(Thomson Extel Survey)

Oil & Gas Expertise

Team members with in-depth knowledge and

extensive experience in both individual oil&gas

transactions and major national projects such as

Kashagan

Excellent understanding of relevant Production

Sharing Agreements

Thorough understanding of the relevant fiscal regime

for the oil&gas industry, including Kazakh Tax Code,

Subsurface Use and Petroleum Laws

Track record of advising large local and multinational

companies including TNK-BP, Gaz de France and

Shell

Capital Market Support

Thorough understanding of the capital market dynamics

and regulatory frameworks both in Kazakhstan and the UK

Leading regional broker in Kazakhstan with extensive

network to domestic and international investors

Track record of designing closing mechanisms for complex

M&A transactions to achieve tax exemptions and reduce

transaction costs

Solid working relationship with KASE / RFCA management

Track record of debt and structured finance advisory

services for large corporate clients and national projects

including Kashagan

Local Expertise

Excellent understanding of investor universe and dynamics

to help facilitate communication process

Close working relationship with relevant governmental

authorities and regulators, including Samruk-Kazyna,

MEMR and Anti-Monopoly Committee, to achieve efficient

communication and smooth execution

Excellent understanding of both local and international

business environments and mentalities supports balanced

assessment of deal opportunities

Independent Advisory

Leading independent investment bank across Central

Asia

The only regional investment bank with an FSA license

in the UK, and leading brokerage house in Kazakhstan

Track record of successful advisory work for a number

of multinational companies listed in Asia, Europe and

the U.S.

“Best Local Investment Bank 2009 and 2010”

(EMEA Finance Magazine)

Exclusive financial adviser on acquisition of

50.1% stake in Bank

CenterCredit

Kazakhstan 2008

BankingUSD 1.2 billion

Sole adviser on sale of 49.99% stake in JSC

Khabar Agency

Kazakhstan 2008

Media

KZT 12.1 billion

Adviser on acquisition of interest in Kyrgyz mining

company

Kyrgyzstan 2007

Mining

Sole adviser on

acquisition of 100% of the

cement plant

Kyrgyzstan 2007

Technolin

Construction

materials

assets of a Kyrgyz

Sole adviser on acquisition of 100% stake in Cambodian

cellular provider

Cambodia 2007

Telecom

Sole adviser on acquisition of 100% stake

in Cambodian bank

Cambodia 2007

Banking

Kazakhstan 2008

Adviser on sale of 51% equity stake in telecomsIn Nepal and Cambodia

Kazakhstan Private Equity

Group

Telecom

USD 496 million

Adviser on acquisition of 50% stake in KazGerMunai

Kazakhstan 2006

Oil & Gas

USD 1.0 billion

Sole adviser on acquisition of 100%

stake in Kazakh retail

business

Kazakhstan 2006

Retail

Valuation adviser on sale of 50% stake in

KazGerMunai

Kazakhstan 2007

Oil & GasUSD 970 million

Sole adviser on acquisition of 100% stake in Uzbekistan

bank

Uzbekistan 2007

Banking

Joint financial adviser onacquisition of 50% stake

In MangistauMunaiGas

dual listing

Ongoing

Oil & Gas

USD 1.7 billion

Exclusive financial

adviser on sale of a

Kazakhstani oil field

dual listing

Ongoing

Oil & Gas

Kazakhstan Private Equity

Group

Exclusive financial

adviser on private

placement

dual listing

Ongoing

Entertainment

Theme

park operator

in CIS region

Ongoing

Agriculture

Exclusive financial adviser

on debt restructuring and M&A

Large agriculture

company

in Kazakhstan

Selected Visor Capital M&A and capital market transactions

DCM transactionsECM transactionsM&A transactions

Kazakhstan 2009

Closing of acquisition of 100% stake in

Mangistaumunaigas

Oil & Gas

KZT 388 billion

MangistauInvestments BV

Kazakhstan 2009

Closing of acquisition of 100% stake in Kazakhstan Petrochemical Industries

Oil & Gas

KZT 4.8 billion

Kazakhstan Client

Kazakhstan 2008/2009

Ongoing

Sole adviser on listing of

preferred shares and execution of buyback

programme

Oil & Gas

USD 514 million

Kazakhstan 2009

Mandatory tender offer to buy preferred shares of

Mangistaumunaigas

Oil & Gas

MangistauInvestments BV

Domestic Lead Manager for the Initial

Public Offering , dual listing

Kazakhstan 2006

Oil & Gas

USD 2.3 billion

Adviser on common share buyback

programme

Oil & Gas

USD 350 million

Kazakhstan 2009 Kazakhstan 2007

Financial adviser on

refinancing alternatives for

Kashagan project development

Oil & Gas

USD 1.5 billion

KMG Kashagan BV

Lead manager of domestic bond issue

Kazakhstan 2009

Banking

KZT 15 billion

Lead Manager of domestic bond issue

Kazakhstan 2009

Telecom

KZT 46 billion

Kazakhstan Client

Placement agent for a private placement bond

Kazakhstan 2006

Oil & Gas

USD 800 million

Kazakhstan 2010

acquisition ofNC KMG Bonds

Oil & Gas

KZT220 billion

Financial adviser on

Kazakhstan arranger

and dealer of

GMTN programme

Kazakhstan 2010

Oil & Gas

USD 1.25 billion

Underwriter of

zero-coupon local

bond issue

Oil & Gas

KZT 100 billion

19

Kazakhstan 2010

Joint adviser Fairness Opinion onacquisition of 50%

Stake in the block

Fedorovskiy

Ongoing

Oil & Gas

USD 149 million

Our Sales & Trading team focuses on delivering superior investment ideas,

exceptional market intelligence, and outstanding execution

As a registered broker / dealer in Kazakhstan, we provide a client-driven service covering both debt and

equity capital markets for Central Asian and international stocks

Access to international markets through our UK subsidiary, Visor Capital (UK) Limited, a member of the

LSE and authorised by the FSA

In addition to offering execution and trading of KASE-listed stocks, we are active players in the

international stocks of Kazakh companies. We also facilitate bond trading, treasury bills and REPO

transactions

We have access to an extensive client base in Kazakhstan, including pension funds, investment funds,

and other market participants

Our Sales and Trading team is comprised of seasoned local and Western specialists, based in Almaty,

London and Beijing, with in-depth knowledge of capital markets activity and particular expertise in

emerging markets and the CIS countries, offering full coverage of Kazakhstan-related stocks:

Almaty

Ainur Kaishibayeva – over 6 years of sales experience

Daniyar Aristambayev– over 4 years of trading experience

London:

Michael Costello – over 4 years of trading experience

Stefano Resegotti – over 10 years of sales experience

Beijing:

Gustaf Ramel – over 12 years sales experience across Europe and Asia

“Best Equity House

Kazakhstan”

20

Led by Jean-Christophe Lermusiaux, a leading technology analyst with over 11 years of professional experience

First bank to publish international-standard research in Kazakhstan

The team covers a growing range of industry sectors through industry specific analysts, including:

Oil & Gas;

Metals & Mining;

Financial Institutions;

Construction & Development; and

Telecommunications, Utilities and Retail

In addition to the industry reports, Visor Capital Research analyses the trends and characteristics that help to shape the sectors, offering specialized and bespoke reports to investors:

Daily updates on Central Asian investment news;

Macroeconomic reports;

Bonds weekly and Pension Funds Quarterly

Commodities weekly

Weekly summary of financial ratios for all companies under research coverage

Central Asian country research coverage

Focused standalone reports

Global distribution of research to qualified institutions with focus on the UK, Russia and Asia. US distribution through Auerbach Grayson, a leading broker specializing in non-US equities

Our research team provides comprehensive and independent insight into the

Kazakhstani market from a local and global perspective

21

Thomson Extel Survey

2009 and 2010

“Best Research for

Kazakhstan”

Visor Capital equity research: а fast growing universe of coverage

We also have developed an expertise on a much broader universe of companies, including:

Small Kazakh companies;

International companies that have significant assets in Kazakhstan;

Companies operating in Central Asia, including Turkmenistan, Uzbekistan, Tajikistan, and Mongolia

As of January 2011, Visor Capital covers 42 companies:

Oil &Gas Financial Institutions Metals & Mining Others

22

http://www.kazakhstankagazy.com/en

23

© 2011 JSC “VISOR Capital”. All rights reserved.

JSC “VISOR Capital” holds a license to conduct broker-dealer activities in the securities market with a right to maintain clients accounts as nominal holder, license No.

0401201181 dated 10 March 2006 issued by the Agency of the Republic of Kazakhstan on Supervision and Regulation of Financial Market and Financial Organisations

Visor Capital (UK) Limited is authorised and regulated by the Financial Services Authority

JSC “VISOR Capital”

Esentai Tower

12th floor

77/7 Al-Farabi Avenue

Almaty 050040

Kazakhstan

Telephone: (+7) 727 356 0777

Fax: (+7) 727 356 0778

Visor Capital (UK) Ltd.

125 Old Broad Street

London EC2N 1AR

United Kingdom

Telephone: (+44) 20 3 192 5632

Fax: (+44) 203 192 5631

Beijing representative office

(under formation)

Temporary address:

Tower W1

Oriental Plaza

Beijing 100738

China

Telephone: (+86) 1 343 997 4541

making the most of your ipo - pwc

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