Upload
leah-mahoney
View
215
Download
1
Tags:
Embed Size (px)
Citation preview
SEC Hot Topics Seminar
State of the Capital MarketsSeptember 14, 2010
2
Economic outlook
April 2010
November 2009
April 2010
November 2009
Downturn to end within 12 months
Confidence in local economy
Downturn in industries to end within 12 months
40%Of companies believe the global downturn will end within the next 12 months compared with 30% in 2009
64%Of companies feel more confident about the prospects for their local economy than six months ago, the most optimistic being Australia61%Of respondents expect the downturn in their own industries to end within 12 months, compared to just 49% six months ago
*Data presented in slides 2-10 is based on an April 2010 survey of 817 executives by Ernst & Young LLP.
3
Capital-related issues are top-of-mind in boardrooms and C-suites
Operational efficiencies/cost reduction
Customer segmentation and profitability
Performance monitoring of subsidiary businesses
Supply chain risks/performance
Balance between fixed and variable costs
Integrating previously acquired business
4
Priorities for investing capital
5
Preserving capitalCompanies are operationally restructuring to focus on performance improvement
Wave of refinancing expected
When restructuring what will be your priority? How soon are you likely to refinance loans or other debt obligations?
11%
26%
35%
28%
0 5 10 15 20 25 30 35 40
3-4 years
1-2 years
6 - 12 months
Within 6 months
November 2009
Other20%
Liquidity and working capital
management30%
Performance improvement
50%
Operational restructuring
24%
Performance improvement
42%
Capital/debt structure
14%
Other7%
Liquidity and working capital management
13%
April 2010
6
Raising capital
Those with access to funding will be well placed to take advantage of opportunities
As a result of the downturn, deal processes continue to evolve
For companies that need access to funding for capital projects, when do you think this will become available?
How likely is your company to execute divestments in the following time periods?
1-2 years6 -12 months0-6 months
25%
37%
30%
6%
1%1%
Within 6 months
6 –12 months
1 –2 years
3 –5 years
Not in the foreseeable future
More than 5 years
7
Capital markets
26% of all respondents stated that access to funding is not a problem for their company
Wave of refinancing is expected with 58% of companies needing to refinance loans or other debt within the next four years
Driving operational fitness and working capital management remains critical – 35% still need to restructure core business
62% expect financing to fund major projects available in the next 12 months
61%Of companies say that credit and capital conditions have improved in the last six months
8
Focusing on growth
April 2010
76%Of companies are focusing on growth, up 56% compared to six months ago
9
Optimistic deal market
6-12 months 0-6 months
Likelihood of acquisitions
57%Expect to make an acquisition in the next 12 months, up from 33%
47%Expect to do so in the next 6 months, up from 25%
10
IPO Market Overview
Summary Annual U.S. IPO Market Statistics
• After almost disappearing entirely at the end of 2008 and early 2009, the IPO market has begun to return over the past several quarters
• There is significant investor interest around IPO’s showing strong growth profiles, clear differentiation, compelling customer value propositions and experienced management teams
• In the first eight months of 2010, IPO volume totaled $65.9 billion across 210 deals compared to $15.9 billion and 46 deals over the same period last year
Quarterly U.S. IPO Market Statistics
$ 841 $ 3,002
$ 6,672
$ 12,892
$ 5,067 $ 5,030 $ 3,276
3
15
20
32
31
38
23
1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q TD
Dollars Raised ($ millions) Number of IPOs
$ 43,212
$ 48,073
$ 26,215 $ 28,379
$ 13,373
195216
37
7092
2006 2007 2008 2009 2010 YTD
Dollars Raised ($ millions)Number of IPOs
11
Follow-On Market Overview
Summary Annual U.S. Follow-On Market Statistics
• Although the markets are open for business, investors are highly selective with the companies they chose to invest
• The number of follow-on’s has remained stable but the amount of dollars invested has come off the highs of the latter quarters of 2009 which exhibit the pent up demand of investors
• In the first eight months of 2010, FO volume totaled $129.6 billion across 595 deals compared to $252.0 billion and 613 deals over the same period last year
Quarterly U.S. Follow-On Market Statistics
$ 11,157
$ 115,708
$ 49,350
$ 72,884
$ 27,047 $ 29,765 $ 12,949
63
247262
217
177 172
64
1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q TD
Dollars Raised ($ millions) Number of FOs
$ 105,229 $ 114,853
$ 176,032
$ 249,098
$ 69,786
559526
336
789
412
2006 2007 2008 2009 2010 YTD
Dollars Raised ($ millions)Number of FOs
12
Current IPO Backlog
Industry # Current Value ($M) Avg ($M)Computers & Electronics 23 $ 4,909.3 $ 213.4
Finance 20 3,757.7 187.9
Healthcare 17 6,274.6 369.1
Real Estate/Property 15 4,057.8 270.5
Transportation 6 1,360.0 226.7
Professional Services 6 733.3 122.2
Chemicals 5 675.0 135.0
Retail 3 1,231.3 410.4
Construction/Building 3 943.8 314.6
Auto/Truck 3 530.0 176.7
Dinning & Lodging 3 472.5 157.5
Mining 3 139.9 46.6
Food & Beverage 3 100.0 33.3
Telecommunications 2 200.0 100.0
Consumer Products 2 185.0 92.5
Machinery 1 400.0 400.0
Metal & Steel 1 150.0 150.0
Insurance 1 100.0 100.0
Aerospace 1 75.0 75.0
Textile 1 25.0 25.0
Forestry & Paper 1 23.0 23.0
Leisure & Recreation 1 15.6 15.6
Agribusiness 1 0.0 0.0
Total 122 $ 26,358.6 $ 216.1
13
Current Follow-On Backlog
Industry # Current Value ($M) Avg ($M)Computers & Electronics 6 $ 612.4 $ 102.1
Finance 6 444.0 74.0
Utility & Energy 4 602.0 150.5
Real Estate/Property 3 615.5 205.2
Professional Services 3 602.2 200.7
Oil & Gas 3 398.7 132.9
Telecommunications 2 3,052.3 1,526.1
Chemicals 2 230.0 115.0
Transportation 2 191.5 95.8
Healthcare 2 48.0 24.0
Construction/Building 2 45.9 23.0
Consumer Products 2 45.0 22.5
Retail 2 42.0 21.0
Forestry & Paper 1 60.0 60.0
Leaisure & Recreation 1 10.7 10.7
Dining & Lodging 1 2.7 2.7
Total 42 $ 7,002.8 $ 166.7
14
IPO and Follow-On Post Deal Performance
IPOs Above/In Range/Below Deals % Change Offer / 1 Day Deals % Change Offer / 1 Day
Above 10 21.21% 7 25.76%In Range 40 4.40 14 7.74 Below 46 1.90 2 2.36 Total 96 5.27 23 13.33
2010 2009
FOs Above/In Range/Below Deals % Change Offer / 1 Day Deals % Change Offer / 1 Day
Above 30 0.29% 15 6.67%In Range 1 2.57 4 3.33 Below 337 2.27 373 3.82 Total 368 2.15 392 3.95
2010 2009
15
Re-IPO Case Study
Share Price Performance vs. S&P 500
0
1,000
2,000
3,000
4,000
5,000
6,000
0
2
4
6
8
10
12
14
16
Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10
Th
ous
ands
KITD Share Volume KITD Share Price
16
Follow-On Case Study• Kid Brands Inc., formerly known as Russ Berrie and Company, is a designer, importer,
marketer and distributor of infant and juvenile consumer products, with a complete platform offering of 5,300 products for customers Toy “R” Us, Target, Walmart and others
• D. E. Shaw Laminar Portfolios decided to divest their interest in Kid Brands after having held the position since 2006
• Through a collaborative marketing strategy involving Kid Brands, Roth was able to place D.E Shaw’s position to 51 institutional investors at a 6.9% discount to the previous days closing price, broadening the company’s shareholder base and improving liquidity of its common shares
• On June 10, Kid Brands announced that D.E. Shaw had priced an underwritten secondary offering of approximately 4.4 million shares, or 20.4 % of common stock outstanding, for $7.25 per share, through a confidentially-marketed follow-on transaction managed solely by Roth
Share Price Performance vs. S&P 500
Kid Brands Subsidiaries
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0.00
2.00
4.00
6.00
8.00
10.00
12.00
Dec-09 Feb-10 Apr-10 Jun-10 Aug-10
Th
ous
ands
KID Share Volume KID Share Pricing
17
Confidence returning to the markets
Funding becoming more available
Heightened uncertainty continues
Investor focus on capital allocation
Pent-up demand/supply in M&A markets
Industries bifurcating: consolidators and consolidatees
Deal processes continue to evolve
In conclusion