ukti-esib 19/5 - how to access intnal. capital through london's public markets

FIT FOR

A NEW ERA Monday 19 May 2014 – British Embassy

HOW TO ACCESS INTERNATIONAL CAPITAL

THROUGH LONDON’S PUBLIC MARKETS

- An investment bank’s perspective -

Damián Rubianes Head of Capital Markets Spain

1. How to access international capital: an investment bank’s perspective

2. Case study: Telefónica

3. Case study: Mota-Engil Africa

Table of contents

FIT FOR

A NEW ERA

3

Table of contents




FIT FOR

A NEW ERA

Banco Espírito Santo / Espírito Santo Investment Bank

International presence: Where we are

Mumbai

Macao

Hong Kong

ShanghaiTripoliAlgiers

Cape Verde

Lisbon

Dublin

LondonWarsaw

Lausanne

ParisMilan

Cologne

MadridToronto New York

Newark

Miami

Nassau

Caracas

Rio de Janeiro

Sao Paulo

Maputo

Johannesburg

Luanda

Where we list our clients’ securities

4

NY London Hong Kong

Europe LatAm India Africa

Hubs

Local Platforms

Equity securities

Debt securities

Which market? (i/iii)

5

Standard factors to consider when choosing a financial market to list a security

Issuer’s characteristics

Regulatory requirements

• Nationality • Geographic footprint • Local market development/characteristics

• Information required/Operating history • Size (Market cap, income, revenue, profits, working

capital, etc.) • Accounting standards • Financial reporting requirements • Flexibility/Time line • Regulatory environment • Corporate governance • Working capital • Free float • Lock-up • Listing and annual fees

Which market? (ii/iii)

6

Spanish Indexes European Indexes International Indexes

Volatility Indexes Commodities Prices FX Rates

0%

10%

20%

30%

40%

50%

60%

Jan-10 Dec-11 Nov-13

VIX (CBOE Volatility): 14.08%

VSTOXX (DJ EuroStoxx Volatility): 16.74%

%

40

50

60

70

80

90

100

110

120

130


IBEX 35: 9,438 BPSIBEX Small Cap: 4,833 BPSIBEX Medium Cap: 13,089 BPS

BPS

40

55

70

85

100

115

130

145

160

175


EuroStoxx 50: 2,996 BPS FTSE 100: 6,523 BPSDAX: 9,114 BPS CAC 40: 4,091 BPSPSI 20: 6,474 BPS

BPS

0.70

0.75

0.80

0.85

0.90

0.95

1.00

1.10

1.20

1.30

1.40

1.50

1.60


€/£ €/$

€/$: 1.38€ €/£: 0.84€

0

20

40

60

80

100

120

140

1,000

1,200

1,400

1,600

1,800

2,000


Gold

Gold: 1,263 USD/t oz. Brent Crude Oil: 109 USD/bbl.

Brent Crude

60

75

90

105

120

135

150

165

180

195


S&P 500: 1,806 BPS DJ Ind. Avg.: 16,000 BPS

NASDAQ: 4,063 BPS NIKKEI 225: 15,611 BPS

HK Hang Seng: 23,744 BPS BOVESPA: 51,043 BPS

BPS

Markets momentum Liquidity

(Eur m) 1W 1M YTD 2013 (Eur m) 1W 1M YTD 2013 (Eur m) 1W 1M YTD 2013

Avg. Vol. 461 401 427 370 Avg. Vol. 578 501 547 479 Avg. Vol. 823 862 817 663

Change -3% 4% 3% 21% Change -3% 4% 3% 23% Change 0% 1% -3% 14%

IB EX 3 5 IN D EX SPA IN M A M A D R ID IN D EX FTSE 10 0 IN D EX


Avg. Vol. 581 555 590 556 Avg. Vol. 776 699 658 708 Avg. Vol. 6,061 6,133 5,859 5,934

Change -1% -1% -1% 30% Change -2% 4% 1% 18% Change -1% 0% -1% 24%

Ibex 35 Bolsa de Madrid FTSE 100

S&P 500 Euro Stoxx 50 MSCI World

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Shares (m) BPS

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

0

500

1,000

1,500

2,000

2,500

3,000


Shares (m) BPS

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

0

500

1,000

1,500

2,000

2,500


Millio

ns

Shares (m) BPS

0

500

1,000

1,500

2,000

2,500

3,000

3,500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000


Millio

ns

Shares (m) BPS

0

200

400

600

800

1,000

1,200

1,400

0

500

1,000

1,500

2,000

2,500


Shares (m) BPS

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000


Shares (m) BPS


Avg. Vol. 461 401 427 370 Avg. Vol. 578 501 547 479 Avg. Vol. 823 862 817 663

Change -3% 4% 3% 21% Change -3% 4% 3% 23% Change 0% 1% -3% 14%

IB EX 3 5 IN D EX SPA IN M A M A D R ID IN D EX FTSE 10 0 IN D EX


Avg. Vol. 581 555 590 556 Avg. Vol. 776 699 658 708 Avg. Vol. 6,061 6,133 5,859 5,934

Change -1% -1% -1% 30% Change -2% 4% 1% 18% Change -1% 0% -1% 24%

Ibex 35 Bolsa de Madrid FTSE 100

S&P 500 Euro Stoxx 50 MSCI World

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800


Shares (m) BPS

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

0

500

1,000

1,500

2,000

2,500

3,000


Shares (m) BPS

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

0

500

1,000

1,500

2,000

2,500


Millio

ns

Shares (m) BPS

0

500

1,000

1,500

2,000

2,500

3,000

3,500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000


Millio

ns

Shares (m) BPS

0

200

400

600

800

1,000

1,200

1,400

0

500

1,000

1,500

2,000

2,500


Shares (m) BPS

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000


Shares (m) BPS

An investment bank’s perspective

International

indexes

Stocks

liquidity

Midswap IRS rate curve Markit iTraxx Europe Financial Sector 5YrCredit Default Swap Index

Sovereign Risk - 5 yrs CDSSovereign Debt Yields - 10 yrs BondsSovereign Spread over Bund

0

1

2

3

4

5

6

7

8

9


Germany: 1.8% United Kingdom: 2.9%Spain: 4.0% France: 2.4%Italy: 3.6%

%

0

100

200

300

400

500

600

700


Spain: 159.3 BPS United Kingdom: 26.9 BPS Germany: 23.2 BPS Italy: 176.0 BPS France: 53.1 BPS

BPS

US MS1yr0.27

US MS3yr0.70

US MS5yr1.53

US MS7yr2.22

US MS10yr2.85

US MS20yr3.58

US MS30yr3.73

EUR MS1yr0.40

EUR MS3yr0.67

EUR MS5yr1.15

EUR MS7yr1.58

EUR MS10yr2.07

EUR MS20yr2.66

EUR MS30yr2.68

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1yr 5yr 9yr 13yr 17yr 21yr 25yr 29yr

%%

0

150

300

450

600

750

900

1,050


iTraxx EUROPE (IG): 78 BPSiTraxx HIVOL (Non-Finl): 118 BPSiTraxx XOVER (HY): 317 BPS

BPS

80

85

90

95

100

105

0

100

200

300

400

500

600

700


iTraxx Financial Snr. : 96 BPS

iTraxx Financial Sub.: 143 BPS

iTraxx SovX : n.a. BPS

Finan. BPS Sovg. BPS

0

100

200

300

400

500

600

700


Spain: 219.6 BPS United Kingdom: 104.5 BPS

Italy: 222.4 BPS France: 59.1 BPS

BPS

Macro Market volatility Risk aversion

Spanish Indexes European Indexes International Indexes

Volatility Indexes Commodities Prices FX Rates

0%

10%

20%

30%

40%

50%

60%

Jan-11 Jan-12 Jan-13 Jan-14

VIX (CBOE Volatility): 16.70%

VSTOXX (DJ EuroStoxx Volatility): 18.50%

%

40

60

80

100

120

140

160


IBEX 35: 10,188 BPSIBEX Small Cap: 6,268 BPSIBEX Medium Cap: 14,386 BPS

BPS

40

55

70

85

100

115

130

145


EuroStoxx 50: 3,089 BPS FTSE 100: 6,584 BPSDAX: 9,339 BPS CAC 40: 4,385 BPSPSI 20: 7,311 BPS

BPS

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

0.90

0.92

1.00

1.10

1.20

1.30

1.40

1.50

1.60


€/£ €/$

€/$: 1.38€ €/£: 0.83€

0

20

40

60

80

100

120

140

1,000

1,200

1,400

1,600

1,800

2,000


Gold

Gold: 1,326 USD/t oz. Brent Crude Oil: 109 USD/bbl.

Brent Crude

60

75

90

105

120

135

150

165

180


S&P 500: 1,829 BPS DJ Ind. Avg.: 16,126 BPS

NASDAQ: 4,012 BPS NIKKEI 225: 13,910 BPS

HK Hang Seng: 23,039 BPS BOVESPA: 51,428 BPS

BPS

Midswap IRS rate curve Markit iTraxx Europe Financial Sector 5YrCredit Default Swap Index

Sovereign Risk - 5 yrs CDSSovereign Debt Yields - 10 yrs BondsSovereign Spread over Bund

0

1

2

3

4

5

6

7

8

9


Germany: 1.5% United Kingdom: 2.6%Spain: 3.1% France: 2.0%Italy: 2.6%

%

0

100

200

300

400

500

600

700


Spain: #N/A N/A BPS United Kingdom: #N/A N/A BPS Germany: #N/A N/A BPS

BPS

US MS1yr0.26

US MS3yr0.92

US MS5yr1.70

US MS7yr2.24

US MS10yr2.74

US MS20yr3.34

US MS30yr3.45

EUR MS1yr0.41

EUR MS3yr0.58

EUR MS5yr0.93

EUR MS7yr1.30

EUR MS10yr1.75

EUR MS20yr2.37

EUR MS30yr2.44

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1yr 5yr 9yr 13yr 17yr 21yr 25yr 29yr

%%

0

150

300

450

600

750

900

1,050


iTraxx EUROPE (IG): 72 BPS iTraxx HIVOL (Non-Finl): 140 BPSiTraxx XOVER (HY): 283 BPS

BPS

0

100

200

300

400

500

600

700


iTraxx Financial Snr. : 81 BPS

iTraxx Financial Sub.: 121 BPS

Finan. BPS Sovg. BPS

0

100

200

300

400

500

600

700


Spain: 161.2 BPS United Kingdom: 111.1 BPS

Italy: 164.7 BPS France: 48.8 BPS

BPS

Vix

Vstoxx Soverane

spread

yields

iTraxx

indexes

Indexes

volumes

Volume

Data: Bloomberg; Analysis: Espírito Santo Investment Bank, Capital Markets

Which market? (iii/iii)

7

Investors

Indexes Traders/Brokers

Research Peers

Associated Costs

An investment bank’s perspective

http://www.rangeresources.com.au/

http://www.obtalaresources.com/index.asp

London’s capital markets

8

• One of the world’s largest financial markets

• The world’s most international exchange

• LSE gives investors access to companies from almost every sector and size

• LSE gives companies access to a deep pool of international capital

• High standards give investors confidence and increase companies profile

• Broad scope of financial and trading services offering

• Broad range of securities

Espírito Santo Investment Bank is a Broker on the Main Market of

the London Stock Exchange, an approved Nominated Adviser

(NOMAD) and a Broker on AIM.

http://www.londonstockexchange.com/home/homepage.htm

9

Table of contents




FIT FOR

A NEW ERA

Telefónica’s business and capital markets profile

Spain 23%

Europe 24%

LatAm 51%

Other 2%

Equity Securities

48%

Debt Securities

38%

Other Financial Liabilities

15%

LONDON 54%

NEW YORK 24%

FRANKFURT 6%

AIAF 1%

RoW 15%

EUR 51%

USD 31%

GBP 10%

Other FX 7%

Geographical footprint Revenues breakdown

Financing capital breakdown Debt breakdown by Market and FX

10 Source: Company information, 2013

Telefónica’s credit and capital markets approach

Financial policy

Balanced approach to the credit markets Alternating capital markets access

• Organic growth

• M&A opportunities

• Short term needs

• Shareholder remuneration

• Solvency

• Flexibility

• Liquidity

• Debt maturity profile

Centered in cash-flow allocation: Limited and balanced by:

• Syndicated loans

• Bilateral loans

• Acquisition loans

• Undrawn credit lines

Banks support:

• €uro

• U$D

• £ Pound

Major currencies:


Equity Securities Primary Exchange Other Exchanges

Debt Securities Primary Exchange Other Exchanges

Bonds

Commercial paper

Telefónica’s financial markets approach


13

Table of contents




FIT FOR

A NEW ERA

Significant amount of African companies listed in LSE’s different markets

Overview of the business Mota-Engil Africa

• Mota-Engil Africa BV is a spin off with all African business of parent company

• It is headquartered in Holland

• Revenues over EUR 1bn in 2013

• Mota-Engil plans to list a minority stake of its subsidiary on the London Stock Exchange

• Civil construction and public works activities in South Africa, Angola, Cape Verde, Malawi, Mauritius, Mozambique, Zimbabwe and S. Tomé and Príncipe

• Actively pursuing new market opportunities in Uganda, Kenya, Tanzania, Rwanda, Cameroon and Namibia

• Mota-Engil is a listed Portuguese construction company

• Revenues of EUR 2.3bn in 2013

• International revenues stand at 74% of total

• Africa and America saw 35% growth in revenue


Significant number of African companies trading on LSE

Number of African companies listed in LSE Some African peers listed in LSE

• Some 20 African companies with equity listings on the Main Premium Market

• Some 10 African companies listed on the Main Standard Market

• Some 70 African companies quoted on AIM

15 Source: LSE, 2013

Why we recommended a listing on LSE

Key aspects Transaction rationale

• LSE is more reflective of M-E Africa’s international operations in 10+ countries and the company’s diversified revenue streams

• Majority of M-E Africa’s potential shareholders are international

• Avoid jeopardizing with parent company

Listing location reflective of M-E Africa international profile

Unlocking M-E Africa future potential

Improve liquidity and access to capital markets

16

• LSE is largest and most liquid equity market in Europe

• LSE has largest number of international listed companies

• Most comprehensive set of listed African companies provides valuation benchmark for M-E Africa

• Transaction improves the M-E Africa’s access to the international equity and debt capital markets

• LSE listing increases flexibility in raising new funds at competitive terms to support future growth

• LSE will provide better liquidity on the stock due to enhanced investor and analysts’ following

• Potential inclusion in indexes may attract significant amount of passive tracking demand

Disclaimer

This presentation has been written by Banco Espírito Santo de Investimento, S.A. Sucursal en España (“Espírito Santo Investment Bank”) exclusively for the conference/seminar named on the cover page. The presentation is proprietary to Espírito Santo Investment Bank and may not be disclosed to or referred to by any third party or distributed, reproduced or used for any other purpose without the prior written consent of Espírito Santo Investment Bank. Espírito Santo Investment Bank is not and shall not be obliged to update or correct any information set out in this presentation or to provide any additional information. It does not constitute an offer or invitation for the sale, purchase, exchange or transfer of any securities or any recommendation to enter into the Transaction, and is not intended to form the basis of any investment decision.

The content of this presentation reflects prevailing conditions and our views as at this date. It represents our initial views and we reserve the right (but shall not be obliged) to revise, update or replace. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us.

We accept no responsibility or liability for (and no representation, warranty or assurance of any kind, express or implied, is or will be made as to or in relation to) the accuracy or completeness of such information. In addition, our analyses are not and do not purport to be an appraisal assets or businesses of any company. In addition, this presentation and our analyses set out herein are not and do not purport to be an appraisal or valuation of any of the securities, assets, stock or business of any company.

For any queries regarding this presentation, please contact: DAMIÁN RUBIANES Executive Director, Head of Capital Markets Spain: [email protected]; +34914005437 Bio: • Damián Rubianes is Head of Equity Capital Markets and Debt Capital Markets at Espírito Santo Investment Bank since 2010. Before, he was Director of Corporate Finance & Capital

Markets at BNP Paribas. Previously, he worked as a senior consultant at Ernst & Young and as a financial analyst at JP Morgan. • He is MBA Cum Laude by IE Business School (Madrid), CEFA/CIIA Foundation certified by EFFAS and has a certification in Fixed Income by IEB (Madrid). He holds a degree in Economics and

Business Administration by Universidad Complutense de Madrid and the University of Westminster (London), as well as a degree in Humanities (Hons) by Universitat Oberta de Catalunya (Barcelona).

• He is currently an Associate Professor in the financial area at IE Business School and CIFF (Universidad de Alcalá).

mailto:[email protected]



SAO PAULO

Av. Brigadeiro Faria Lima

3279 - 6º Andar

Itaim Bibi, CEP 04538-905

Sao Paulo

Brazil

T +55 11 3074 7444

F +55 11 3074 7462

MUMBAI

1203ª, fl. 12ª, Tower 2A

One Indiabulls Center

Elphinstone Road

Mumbai 400 013

India

T +91 22 2570 1152

F +91 22 2570 1154

HONG KONG

15th fl. St. John's Building

33 Garden Road

Central Hong Kong (SAR)

T +852 3181 4000

T US Toll-free +1 866 485

3932

LONDON

10 Paternoster Square

London

EC4M 7AL

United Kingdom

T +44 20 7456 9191

F +44 20 7456 9189

LISBON

Edifício Quartzo (Sede)

Rua Alexandre Herculano 38

1269 -161 Lisboa

Portugal

T +351 213 196 900

F +351 213 309 500

EDINBURGH

76 George Street

Edinburgh

EH2 3BU

United Kingdom

T +44 131 225 9677

F +44 131 225 5831

DUBLIN

4th fl. Spencer House 71-73

Talbot Street

Dublin 1

Ireland

T +353 1856 0699

F +353 1813 4366

MADRID

Calle Serrano 88

28006 Madrid

Spain

T +34 914 005 000

F +34 914 352 283

WARSAW

59th Zlota Street,

floor V 00-120

Warsaw

Poland

T +48 223 474 000

F +48 223 476 098

NEW YORK

340 Madison Avenue,12th fl.

New York

NY-10173

United States of America

T +1 212 351 6000

F +1 212 351 6099

ukti-esib 19/5 - how to access intnal. capital through london's public markets

Economy & Finance

eur ms

d ex eur

bund us ms

change ib ex

change ibex

vo change

markets momentum liquidity

international capital