Globalize Your Outreach - BNY Mellon

BNY MellonDepositary Receipts – December 2012 Seminar

Who is BNY Mellon?

Global Expertise

US$ 27.1 trillion in assets under custody and administration

US$ 1.3 trillion in assets under management

US$ 1.4 trillion average payments processed daily

48.000+ professionals

Present in 36 countries over 100 markets

BNY Mellon is a leader in Investment Management and Investment Services

Elected the Safest Bank in the US

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Present in 36 countries over 100 markets

Americas

Asia Pacífico

Europe, Middle East

ans Africa

Data-base: June 2012

BNY Mellon

Asset Under Administration #8 EUA, #11 Global

Wealth Mgmt Top 10 EUA

Investment Services #1 Global

Corporate Trust #1 Global

Depositary Receipts #1 Global

Broker Dealer Services #1 EUA: + 60%share

Clearing Services #1 EUA, UK e Irlanda

Stock Transfer #1 EUA

Global Payments Top 5 Global

Cash Mgmt Top 5 EUA

Elected the Safest Bank in the US

Section I.

Depositary Receipt MarketDepositary Receipt Market

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A Depositary Receipt is a negotiable security issued by BNY Mellon that represents a security of a non-US company public traded in its local market.

� 3,500 DR issuers from 80 countries in all sectors of the economy.

� 175 billion DRs valued at USD 3.8 trillion were traded in 2011

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Source: BNY Mellon; www.adrbnymellon.com, December 2011

Pro

gram

Vis

ibil

ity/

Liq

uid

ity

Level II GDR and Medium

High

Level II ADR

Level III ADR

DR Program Levels & Trading Platforms

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Pro

gram

Vis

ibil

ity/

Liq

uid

ity

Disclosure Requirements

Level I GDR

Level I ADR

Level II GDR and Level III GDR

Low

Medium

Low Medium High

Generally, Increased Disclosure Results in Increased Visibility

ADRs Provide Access to Deep Capital Markets

- Brazilian Institutions

144A/RegS

- Qualified U.S. Institutional Buyers (QIBs – with over $100 MM in assets) and European

Level II & III DR

(SEC Registered & Listed)

- US and European Institutional Investors that prefer SEC-registered securities and familiar trading and settlement structures

BOVESPA

Level I DR (OTC)

- US and EuropeanInstitutions that don’t have clearing and settlement structures in Brazil but seek Brazilian equity opportunities - Mutual/Pension Funds that

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- Brazilian Retail

-US and European Institutions with presence in Brazil

-Some ETFs

and European investors with clearing and settlement structures in Brazil

equity opportunities

- Mutual/Pension Funds that are required to hold U.S. DTC securities

- Mutual/Pension Funds that are required to hold U.S.-registered securities

DRs will increase access to institutional and individual investors

- Managed Accounts

- Managed Accounts- Individual Investors

- ETFs / Index Funds

BNY Mellon Brazilian DR Partners:Private Placements

144A / Reg. S / Reg. DLevel I Level II & III

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Section II.

Why establish a Level I ADR Program?Why establish a Level I ADR Program?

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Why establish a Level I DR Program?

BNY Mellon is the leading depositary in the Level I ADR Universe

Level I SponsoredPrograms - GlobalMarket Share

• We manage more than 600 Level I programs in 50 countries• In Brazil, we manage 39 Level I Programs, representing 68% of

market share in the country

Others29%

Market Share

BNY Mellon71%

DR Brazil Team : 8 experienced Portuguese speakers professionals, 3 located in Brazil

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DR Benefits to Issuers

• Access deep international capital markets

• Potential for increase share valuation and liquidity, provide higher visibility

• Diversify and broaden shareholder base

• Express international commitment

• Simple to establish, little or no cost to the company

• No additional financial disclosure, existing local market disclosure requirements accepted

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• Invest in more than 3,300 DRs from 78 countries

• Get quotes and dividends in U.S. dollars

• Overcome foreign investment restrictions

• Access improved information flow in English

• Transaction and holding costs may be less than that assessed in local market

DR Benefits to Investors

Section III.

Debunking some Myths

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Debunking some Myths

Myth #1:

“The DR is no longer necessary, because all investors already buy and negotiate in the local

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investors already buy and negotiate in the local market”

DR traded figures for Brazilian Companies (US$)

The importance of ADRs continues to grow

In 2011, DRs represented 60% of overall trading for these companies, totaling more than U$ 670 bn in transactions

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Myth #2:

“DR Level I is only for small and unknown companies”

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companies”

Nestle Largest food company in the world

Volkswagen Largest automaker in Europe

Some of the largest companies in the world have a Level I DR program

Some of them are:

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BASF Greater chemical company in the world

Gazprom Greater natural gas company in the world

Usiminas Largest steel producer in Latin America

JBS World's largest meat company

Myth #3:

“A DR Level I will increase the visibility of my company in the foreign market ”

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company in the foreign market ”

There is a difference between "access" and "visibility"

Features of DR Investor Relations

Clearance via DTCTrading in U$Quotes in U$Real time quotesUse of online brokers

Conferences with brokersRoadshowsMedia RelationsInstitutional advertisingEvents for investors

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Use of online brokers Events for investors

ADRBrings

RIBrings

ACCESS VISIBILITY

Myth #4:

“DRs will divide the liquidity between the two markets"

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markets"

10

20

30

40

50

60

70

80

90

100

$ M

illi

on

Hypermarcas

AVG.: 8,2mm

AVG.: 30,16mm

May 26 ‘10 – DR Level I

50

100

150

200

250

$ M

illi

on

OGX Petróleo

AVG.: 27,9mm

AVG.: 122,5mm

May 08 ‘09 - DR Level I

Empiric evidence shows that a DR Level I program also increase liquidity in the local market

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$ Average Day Traded Value in BMFBovespa (U$ mm)

Before DR Level I After DR Level I Var.

OGX Petróleo 27,9 122,5 339%

Hypermarcas 8,2 30,16 268%

MRV Engenharia 7,9 21,6 173%

MPX Energia 2,3 6,2 170%

Marfrig 8,6 13,6 58%

Banco Do Brasil 44,7 67,7 51%

Equatorial 1,3 1,9 46%

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