Going Public in CanadaAccessing North American Capital MarketsGoing Public Abroad Conference – June 28, 2010
Jeffrey Singer David Wismer Raymond KingStikeman Elliott LLP BMO Capital Markets TMX Group Inc.
Agenda1. Introductions
2. A Capital Opportunity for Israeli Growth Companies
3. Going Public in Canada
4. The IPO Process and Regulatory Regime
Introductions
SLIDE 4
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
8th largest exchange groupBy domestic market cap1
1st in North America
2nd
globally By number of issuers1
4
TMX Group - Global Leader in Equities
6th largest exchange group By equity capital raised2
1Issuers on TSX and TSXV (WFE, Dec 2009)2(WFE and Capital IQ, Dec 2009)
SLIDE 5
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
BMO Financial Group
Note: BMO financials as at January 31st, 2010; Market capitalization as at June 15th, 2010
Market Cap US$35 billion
Total Assets US$372 billion
2009 Revenue US$8.1 billion
Employees 36,200
Key Operating
Data
Organization
Canada's first bank established in 1817 Offers broad range of retail banking, wealth
management and investment banking services One of the largest diversified financial services
providers in North America
Tier 1 Capital Ratio 12.5%
BMO Capital Markets’ Capabilities
Global Banking Operations
ADVISORY SERVICES Mergers &
Acquisitions Strategic Advisory Fairness Opinions Takeover Defense Share Buybacks Valuation Analysis
TREASURY SERVICES Cash Management Risk Management Asset Management Foreign Exchange Trade Finance
DISTRIBUTION & TRADING
Institutional Sales Trading Equity Research Fixed Income Research Investor Marketing Investor Conferences Account Sponsorship Retail Distribution
CORPORATE FINANCE Initial Public Offerings Follow-on Offerings Convertible Securities Mezzanine Lending High-Yield Debt Investment-Grade Debt Corporate Lending Securitization Private Placements
AUSTRALIAMELBOURNE
ASIABEIJING | GUANGZHOU | HONG KONG | MUMBAI | SHANGHAI | TAIPEI
NORTH AMERICAATLANTA | BOSTON | CALGARY | CHICAGO | DALLAS | DENVER | HOUSTON |
LOS ANGELES | MEXICO CITY | MONTREALNEW YORK | SAN FRANCISCO | TORONTO | VANCOUVER
SOUTH AMERICARIO DE JANEIRO
EUROPE
DUBLIN | LONDON | ZURICH | PARIS
HIGHLIGHTS
209 equity transactions totalling over $40 billion in 2009
62 M&A transactions totalling over $15 billion in 2009
BMO Financial Group and BMO Capital Markets
SLIDE 6
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Stikeman Elliott
Number of Lawyers: Over 500Offices: 8 Founded: 1952
Major Practice Areas:M&A • Securities/Corporate Finance • Tax • Banking Insolvency/Restructuring • Structured Finance • Energy Corporate/Commercial • Real Estate • Project Finance Infrastructure • Mining • Competition/Antitrust Intellectual Property • Insurance • Employment Technology/Outsourcing • Business Litigation
Involved in 9 of the Top 10 Corporate Deals in Canada for 2009, more than any other firm (selected by Lexpert)
#1 in Bloomberg’s league tables for Canadian equity offerings (2005-2009), debt offerings and global bond offerings (2009)
#1 in the Financial Post’s league tables for Canadian equity offerings and debt offerings (2009)
Top-ranked firm in corporate finance, capital markets and M&A practice in International Financial Law Review, Chambers Global and PLC Which Lawyer?
A Capital Opportunity for Israeli Growth CompaniesRaymond D. King, MBA
Senior Manager, Global Diversified IndustrialsListings Business Development
TMX Group Inc.
SLIDE 8
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
OTC - Pink Sheets
OTCBB
NASDAQ
NYSE
•Minimal/No listing standards
•Senior listing standards
• Disclosure rules• Junior listing
standards
CNQ
Understanding the North American Stock Markets Continuum
SLIDE 9
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
TSX TSX
VentureTSX and TSXV AIM Nasdaq
Number of Issuers Listed 1462 2178 3640 1293 2852
Quoted Market Value (C$ Billions) $1,771.9 $35.8 $1,807.7 $100.8 $3,699.4
Going Public Activity 100 202* 302 36 131
Equity Capital Raised (C$ Billions) $60.0 $4.8 $64.9 $9.8 $121.0
Volume Traded (Billions of Shares) 118.5 46.2 164.7 205.7 N/ A
Value Traded (C$ Billions) $1,398.4 $16.0 $1,414.4 $59.9 $33,061.8
Number of Trades (Millions) 191.3 5.3 196.6 4.0 3996.4
Market Comparison: TMX Group, AIM, NASDAQ
Market Data for 2009 (C$)
As at December 31, 2009Source: TSX/TSXV Market Intelligence Group, AIM and Nasdaq Websites, WFE, Capital IQ
SLIDE 10
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
32% 33%
93%
6%1%
35%
<$50 Million $50 - $250 Million >$250 Million
% of TSX Issuers
% of TSXV Issuers
TMX Group Serves Companies at all Stages of Growth
Market capitalization Toronto Stock Exchange and TSX Venture
ExchangeAs at December 31, 2009Unique feeder system
451 graduates
+ 73 M&A*
*From January 1, 2000 – December 31, 2009
512
Issuers
478
Issuers472
Issuers
Toronto Stock Exchange issuer base: 1,462 issuers, ~$1.8 trillion market capTSX Venture Exchange issuer base (excludes NEX): 2,178 issuers, ~$35.8 billion market cap
2036
Issuers
127
15 Issuers
SLIDE 11
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
International Investment Community Tradeson Toronto Stock Exchange
220.9 242.7 255.6326.9 382.1 435.2 473.2
2003 2004 2005 2006 2007 2008 2009
25 International Brokers including Barclays Capital Citigroup CSFB Deutsche Bank Goldman Sachs HSBC JP Morgan Macquarie Capital Markets Merrill Lynch Morgan Stanley Raymond James Thomas Weisel State Street UBS
80 Canadian Brokers including: BMO Nesbitt Burns Canaccord CIBC World Markets GMP Securities RBC DS Scotia Capital Markets TD Securities National Bank Financial
~35% of TSX daily trading originates from International brokers for their
institutional and retail clients
TSX Average Daily Volume (Millions of Shares Traded)
25.9
15.519.2
23.120.9
25.829.1 28.4
46.2
41.8
47.6
35.3
60.0
1.1 1.4
32.5
2.44.8
7.911.1
5.56.14.1
2.4
64.9
40.8
58.849.7
52.2
25.9
15.519.2
25.522.0
27.331.5
0
10
20
30
40
50
60
70
1997 1998 1999* 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Toronto Stock Exchange TSX Venture Exchange
Access to Capital: All time record year for financing on TSX despite global market challenges
Equity Financing on Toronto Stock Exchange and TSX Venture Exchange 1997 to 2009
($ Billions)
*TSX Venture Exchange commenced operations on November 29 1999
SLIDE 13
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
94 9680
145
187
158165
199 208
31
63
197
233
81
2003 2004 2005 2006 2007 2008 2009
Canada USA
Canadian equity marketplace ideal for small to mid-cap IPOs
Average amount raised during IPO (2009)
U.S. markets: US$396.8 million
TSX: US$69.5 million
TSX Venture: US$4.0 million
Source: Hoovers IPO Central
Total IPOs in Canada and U.S.
SLIDE 14
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
64.2
82.0
96.1
109.2118.5
2005 2006 2007 2008 2009
TSX and TSX Venture Exchange have shown consistent growth in liquidity
Billions of Shares
21.1
37.1
52.6
43.646.2
2005 2006 2007 2008 2009
Toronto Stock ExchangeVolume of Shares Traded
Toronto Stock ExchangeVolume of Shares Traded
Billions of Shares
TSX Venture ExchangeVolume of Shares Traded
TSX Venture ExchangeVolume of Shares Traded
SLIDE 15
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
TMX Group Global Leadership Strengths
All data is as of or YTD Dec. 31, 2009. All amounts are in Canadian dollars.
236 issuers
2nd in the world by number of companies
8 new listings in 2009
$0.698 B equity raised
$46.9 B value traded
123 issuers
11 new listings in 2009
$1.8 B equity raised
$6.5 B value traded
3640 issuers
302 new listings in 2009
$64.9 B equity raised
Average Financing:
TSX $73.7 M
TSXV $2.2 M
136 issuers
7 new listings in 2009
$0.367 B equity raised
$6.6 B value traded
Technology
Life Sciences
Clean Technology
SLIDE 16
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Diversified Industries Sector includesa broad range of companies
1038 issuers
$940 B Market Cap
81 new listings in 2009
$27.5 B equity raised
Forest Products, 24, 2%
Comm. & Media, 51, 5%
Utilities & Pipelines, 32, 3%
Real Estate, 78, 8%
Financial Services, 122,
12%
Cons. & Ind. Products &
Services, 513, 49%
CPC, 218, 21%
Number of Companies by Diversified Industries Sector
SLIDE 17
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Advantages of Listing on TSX and TSX Venture
Canada is the market of choice for SME companies– Diverse cross-section of listed companies in a variety of sectors
Sustained access to capital – steady growth of capital investment over past 5 years
Access to US capital without the higher cost of regulatory compliance Ease of access to US market with Multijurisdictional program Companies have recognized the benefits of listing or interlisting on TSX
such as analyst coverage, access to institutional and retail investors, liquidity and an active secondary financing market
Strong trading liquidity – value traded has more than doubled over the past 5 years
Lower trading impact costs on TSX Strong equity culture – 50% of Canadians hold equities Analyst coverage typically seen at an earlier stage Canadian regulatory commissions and exchanges are customer-focused Standards-based exchanges that promote integrity for public SMEs
– Access to specialized products for TSX/TSXV listing (eg. Capital Pool Company Program)
TSX provides listed companies unparalleled product and service support
Going Public in Canada David Wismer
Managing Director & Head of Technology Investment and Corporate Banking
BMO Capital Markets
SLIDE 19
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Market Analysis
TSX has outperformed major global indices over past 5 years;IPO activity focused on Mining and Energy sectors
50
60
70
80
90
100
110
120
130
140
150
160
170
Jun-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10
Rel
ativ
e R
etu
rn (
%)
S&P/TSX Index S&P 500 MSCI World Index MSCI EAFE Index
20.5%
(9.6%)
(6.4%)
(7.5%)
Mining24%
Other40%
Energy30%
Technology6%
Mining17%
Other52%
Energy27%
Technology4%
Source: Bloomberg Source: BMO Capital Markets
By Value
5 Year Index PerformanceComposition of Canadian IPO’s – Last 5
Years
By Number
SLIDE 20
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
TSX Equity Issuance Breakdown
Marketed36%
Bought64%
Source: BMO Capital MarketsNote: Transactions from 2005-Present1. Excludes structured products
IPO vs. Follow-on Offerings ($ Value) (1)
Bought vs. Marketed ($ Value) (1) Type of Security ($ Value)
1. Includes Flow-Through Shares.
3,310 transactions in past 5 years raising over $226 billion
– 3,639 transactions including structured products raising over $248 billion
223 IPOs completed in past 5 years raising over $21 billion (excluding structured products) 1. Excludes structured products.
Follow -on90%
IPO10%
REIT / Trust Units19%
Structured Products9%
Preferred Shares11%
Convertible Debentures
9%
Common Shares (1)
51%
TSX provides issuers with access to various types of capital post-IPO;Follow-on bought deals provide issuers with pricing and execution
certainty
SLIDE 21
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Bank-Owned Dealers Global Dealers Independents
BMO Capital Markets ABG Sundal Collier Canaccord FinancialCIBC Bank of America Merrill Lynch Cormark SecuritiesNational Bank Financial Citi Dundee SecuritiesRBC Capital Markets Credit Suisse FirstEnergy CapitalScotia Capital Deutsche Bank Genuity Capital MarketsTD Securities Goldman Sachs GMP Securities
HSBC Bank Hayw ood SecuritiesJefferies Group Jennings CapitalJP Morgan Paradigm CapitalMacquarie Group Peters & CoMorgan Stanley Raymond James & AssociatesThomas Weisel Partners Roth Capital PartnersUBS Wellington West Capital Markets
59%
20% 21%
Canadian bank-owned dealers have significant market share
Overview of Market Participants in Canadian Equity Capital Markets
2009 Market Share (based on $ volume, new equity and equity-linked issuances)
SLIDE 22
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Key IPO Considerations
Success of offering dependent on a balance of several factors
Valu
ati
on M
ark
et
En
viro
nm
en
tS
tru
ctu
reIn
vesto
r Base
DEMAND
Investment Thesis Comparables Price IPO Discount
Offering size Use of proceeds Treasury vs. secondary Governance Capitalization Lock-ups
Market tone generally Flow of funds Perception of sector IPO activity and after-
market performance
U.S. and / or Canada SEC-registered vs.
144A Listing venue(s) Distribution strategy Syndicate structure
SLIDE 23
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
IPO Sizing Considerations
Appropriate IPO sizing required to successfully launch offering
--
20%
40%
60%
80%
100%
IPO Size as Percentage of Market Capitalization – TSX Issuers (1)
Source: Dealogic1. IPOs with market capitalization between $50MM – 1.0Bln, from 2005 - Present
IPO - Size of Offerings – TSX Issuers (1)
$-
$100
$200
$300
$400
$500
$600
$700
Issuers requires sufficient public float to:
– provide appropriate share trading liquidity
– maximize demand on the offering by appealing to largest group of investors
– attract research analyst coverage
– optimize valuation Treasury versus
secondary components to consider
Average IPO size on TSX over past 5 years is ~$95 million while median is ~$60 million(1)
Most IPOs sell approximately 25% to 50% of their market capitalization
SLIDE 24
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Listing Considerations
Choice of listing will depend on numerous variables and considerations
Dual-ListedCross-Border
Offering
Considerations Issues
Optimizes North American demand Maximizes research coverage Expenses: ~US$2.5 - 3.0MM
(excluding underwriting fees)
Cumbersome and lengthy SEC regulatory process (approximately 12-14 weeks once filed)
SOX compliance Cost of managing and
coordinating two listings
Incremental benefits of dual listing but with additional costs and uncertain timetable
Issuer has to be sufficiently large to justify dual listing
Conclusion
Short and defined regulatory review process (~3 months)
Access to U.S. investors via private placements with qualified institutional buyers (governed by SEC Rule 144A)
Qualified issuers can use Multijurisdictional Disclosure System for future offerings; allows Canadian issuers to avoid SEC filings by using existing Canadian public disclosure documents to issue securities to the public in the U.S.
Quick on-going access to capital via bought deals
Expenses: ~US$1.0 - 2.0MM (excluding underwriting fees)
TSX Listing
Limited access to U.S. investor base due to SEC Rule 144A
Greater exposure and coverage following IPO for small and mid-cap issuers
A viable alternative given timing, cost and size considerations
SLIDE 25
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Indicative Distribution Strategy
TSX IPO’s are marketed internationally, shares allocated seamlessly based on quality of demand
Distribution Strategy Allocation
Marketed to all major investors in North America, and key European investors
Allocation of shares based on quality of orders Generate maximum institutional and retail
demand through focused, comprehensive marketing schedule
– Comprehensive coverage through coordinated marketing by bookrunners
Position IPO’s as a compelling investment opportunity and differentiate from comparable public companies
Build deal tension to maximize demand
Institutional Investors: Approximately 80%-90% of offering Institutions form the foundation of demand and will drive
pricing North American geographic concentration
Retail Investors: Approximately 10%-20% of offering Generate secondary market trading and liquidity, creating
positive pricing tension
4 - 5 days
4 - 5 days 3 - 4 days (if desired)
SLIDE 26
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Note: Canadian technology companies includes 20-20 Technologies, Aastra Technologies, Absolute Software, Axia NetMedia, Ballard Power Systems, Bridgewater Systems, CAE, CalianTechnologies, Celestica, CGI, COM DEV, Computer Modelling Group, Constellation Software, Cortex Business Solutions, Descartes Systems Group, DragonWave, Dynex Power, Electrovaya, Enghouse Systems, Evertz Technologies, EXFO, Fluid Music, Gennum, GuestLogix, Intermap Technologies, Macdonald Dettwiler & Associates, March Networks, Mediagrif Interactive Technologies, Miranda Technologies, MKS, MOSAID Technologies, Open Text, Peer 1 Network Enterprises, PNI Digital Media, Pure Technologies, Redknee Solutions, Research In Motion, RuggedCom, Sandvine, SENSIO Technologies, Sierra Wireless, SXC Health Solutions, Tranzeo Wireless Technologies, Vecima Networks, Webtech Wireless, Wi-LAN and Zarlink SemiconductorSource: Thomson, Capital IQ
Current Mar-09 Change
Top 30 Institutions Value# of Shares Held (mm)
HoldingsAvg.
Holding SizeValue
# of Shares Held (mm)
HoldingsAvg.
Holding Size# of Shares Held (mm)
Holdings
Fidelity $2,935 122.9 22 $133 $2,152 97.2 23 $94 25.7 (1)BlackRock $2,096 64.3 18 $116 $1,422 50.2 19 $75 14.2 (1)TD $1,755 39.5 18 $98 $2,185 63.9 13 $168 (24.4) 5Janus Capital Management $1,583 25.5 3 $528 $1,919 36.4 3 $640 (10.9) --Invesco $1,254 46.0 19 $66 $889 32.5 15 $59 13.5 4Greystone Managed Investments $1,184 52.7 6 $197 $15 0.9 12 $1 51.8 (6)RBC $1,117 28.9 12 $93 $684 19.7 12 $57 9.2 --Jarislowsky Fraser $990 47.2 4 $248 $476 42.6 15 $32 4.6 (11)Mackenzie Financial $932 78.3 17 $55 $481 55.3 16 $30 23.0 1McLean Budden $915 21.9 4 $229 $653 21.7 4 $163 0.1 --Caisse de Depot et Placement du Quebec $697 26.6 7 $100 $494 28.4 8 $62 (1.8) (1)BMO $630 19.8 13 $48 $441 17.5 11 $40 2.3 2BCIMC $626 23.4 23 $27 $467 23.4 23 $20 -- --PRIMECAP Management Company $569 13.1 2 $285 $466 13.2 2 $233 (0.1) --Wellington Management Company $565 17.2 8 $71 $197 5.9 8 $25 11.3 --Orbis Investment Management $495 7.2 1 $495 -- -- -- na 7.2 1I. G. International Management $490 21.2 15 $33 $332 16.3 13 $26 4.9 2Connor, Clark & Lunn $459 23.5 18 $25 $386 26.1 17 $23 (2.7) 1Gilder Gagnon Howe & Co. $453 8.7 2 $227 $429 7.6 2 $215 1.1 --Marsico Capital Management $448 6.5 2 $224 -- -- -- na 6.5 2CIBC $423 18.1 15 $28 $222 17.7 16 $14 0.4 (1)Edgewood Management $418 6.1 1 $418 $301 5.3 1 $301 0.8 --Montag & Caldwell $415 6.1 1 $415 $344 6.0 1 $344 0.0 --Columbia Management Advisors $380 11.3 8 $47 $269 12.8 9 $30 (1.5) (1)Jones Heward $377 17.5 16 $24 $211 17.6 13 $16 (0.1) 3OppenheimerFunds $373 6.2 4 $93 $483 8.6 2 $242 (2.4) 2GWL Investment Management $371 9.6 16 $23 $330 14.8 15 $22 (5.2) 1AllianceBernstein $365 5.3 3 $122 $117 2.2 4 $29 3.2 (1)UBS $354 14.8 17 $21 $277 17.7 16 $17 (3.0) 1Goodman & Company $353 15.3 12 $29 $208 8.7 9 $23 6.6 3Total / Average $24,022 804.6 307 $151 $16,851 670.2 302 $107 134.5 5
A global investor base, led by U.S. institutions
Key Investors in Canadian Technology Companies
SLIDE 27
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Accessing Nasdaq Subsequent to a TSX IPO
Several successful companies have gone public on the TSX and subsequently listed on Nasdaq
Select Share Price Performance – 5-Years Post Listing
165% 154%120%
712%
6%
718%
104%
(12%)
TSX Nasdaq
Apr-2007Listing Date Oct-2009 Oct-1997 Feb-1999 May-1999 Sep-1999 Nov-1989 Oct-1992
(1)
(1)
Time Gap 30 months 16 months 4 months 35 months
1. Share price performance is from time of listing to June 15, 2010.
SLIDE 28
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Research Analyst Coverage on the TSX
TSX-listed companies enjoy strong research coverage, irrespective of company size
10
7
6
5
43
$50 - $100 $100 - $200 $200 - $300 $300 - $400 $400 - $500 $500+
Market Capitalization (US$MM)
91 124 5183 33 294Number of Companies
Average Number of Analysts - TSX
Source: Bloomberg
The IPO Process and Regulatory Regime Jeff Singer
Partner
Stikeman Elliott
SLIDE 30
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
The Decision To Go Public
Typically common equity capital at more attractive multiples than private equity
Liquidity for existing shareholders Improved opportunities for future equity financings Equity represents liquid acquisition currency Broader opportunities for management equity incentive
arrangements Enhanced public profile
SLIDE 31
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Methods for Going Public on Toronto Stock Exchange or TSX Venture Exchange
SLIDE 32
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Securities Regulation in Canada
Regulation matter of provincial and territorial jurisdiction, although highly harmonized – Securities Acts & Regulations
– National Policies
– National Instruments
– Multilateral Policies & Instruments Ability for Israeli company to choose "principal regulator"
– Passport System Offerings in Quebec may be subject to certain additional
requirements, most notably French translation of offering documents
SLIDE 33
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Steps Involved
Preparing the Story Select advisors & underwriters
Extensive discussions with management and shareholders to understand the company’s unique attributes and objectives Selection of independent directors
Prospectus drafting, crafting management presentation and marketing materials, develop marketing plan, review of existing contracts & incentive plans
Structuring the Offering Determine optimal issue size as well as pricing range and valuation Consideration of reporting & control systems and modifications to corporate / tax structure
Set timetable and marketing schedule
Syndicate Selection Syndicate developed to promote/ reward research, institutional and retail distribution
Institutional Investor Targeting
Comprehensive targeting effort to identify potential buyers identify investment criteria for each investor target sophisticated investors who have an understanding of the sector
Pre-Marketing Educate salesforce on the company’s key selling points Determine potential investor interest to help schedule one-on-one meetings
internal sales documents and conference calls, dry-run roadshow presentation
“Kick-Off” Roadshow “kick-off” with institutional sales forces of underwriting syndicate Address investor issues for roadshow discussion Maintain momentum of offering and increase awareness of offering
Roadshow Large majority of demand generated will come from one-on-one meetings with portfolio managers at targeted institutions
Group functions will enable lower priority investors to learn about the company and ask questions directly to management
Feedback and Communication
Timely follow-up with investor base to determine investor concerns and assess demand Daily feedback with management to update on status of offering and refine roadshow presentation On-going calls to co-managers to share information
Pricing and Allocation Develop detailed knowledge of book of demand to optimize pricing decision Allocate shares based on expressed interest in transaction, one-on-one meetings, past buying, after market demand,
pricing parameters and the company’s strategic objectives Retail allocations to syndicate to create a balanced offering
After Market Sponsorship
Active trading presence, on-going research coverage, investment banking advisory Provide advice regarding investor relations program
Offering Process
SLIDE 34
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
Process can be as fast as 12 – 13 weeksLargely depends on level of preparedness of issuer
Week 0 Week 6 Week 10 Week 12
MarketingPreparation ClosingPublic
Company
• Roadshow• Prepare underwriting
agreement• Settle comments with
Securities Commissions• TSX conditional listing
• Sign underwriting agreement• Finalize legal documents• Transfer of funds
• Prepare prospectus• Due diligence• Tax/structuring• Financial statement
preparation and analysis• Capital structure• Prepare marketing materials• Syndication
CompanyPreparation
The IPO Process
Pricing & FileFinal Prospectus
Deliver FundsFile Preliminary
Prospectus
InvestmentDealer
Engagement
SLIDE 35
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
The Prospectus
Principal disclosure document Must contain all material information concerning the
business and securities offered Financial information
– Audited financial statements 2 years of balance sheets 3 years of income statements, statements of retained
earnings and statements of changes in financial position
– Stub period unaudited interim financial statements
– Management's Discussion & Analysis
– Significant Acquisition Disclosure
SLIDE 36
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
On-going Disclosure Obligations
Financial Reporting – Annual audited financial statements (90 days TSX / 120 days
TSXV) – Interim unaudited financial statements (45 days TSX / 60 days
TSXV) – Management's discussion and analysis (MD&A) – CEO / CFO certification – Audit committee disclosure
Annual Information Forms Annual Meetings, Management Proxy Circulars & Corporate
Governance Disclosure Material Change Reports Business Acquisition Reports Documents Affecting Rights of Securityholders Material Contracts TSX Filings
QUESTIONS & ANSWERS
Jeffrey Singer, Partner
Stikeman Elliott LLP
Tel: +1 416 869 5656 [email protected]
David Wismer, Managing Director
BMO Capital Markets Corp.
Tel: +1 416 359 8088 [email protected]
Raymond King, Senior Manager
TMX Group Inc.
Tel: +1 416 947 4675 [email protected]
Appendix
SLIDE 39
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
TSX Original Listing Requirements
Minimum Listing Requirements
TSX Non-Exempt Issuers
Forecasting Profitability
TSX Non-Exempt Issuers
Profitable Issuers
TSX Exempt Issuers
Industrial Companies
Earnings or Revenue
Evidence of pre-tax earnings from on-going operations for the current or next fiscal year of at least $200,000
Pre-tax earnings from on-going operations of at least $200,000 in the last fiscal year
Pre-tax earnings from on-going operations of at least $300,000 in the last fiscal year
Cash Flow
Evidence of pre-tax cash flow from on-going operations for the current or next fiscal year of at least $500,000
Pre-tax cash flow of $500,000 in the last fiscal year
Pre-tax cash flow of $700,000 in the last fiscal year, and an average of $500,000 for the past 2 fiscal years
Net Tangible Assets $7,500,000 $2,000,000 $7,500,000
Adequate Working Capital and Capital
StructureWorking capital to carry on the business, and an appropriate capital structure
Management and Board of Directors
Management, including the board of directors, should have adequate experience and technical expertise relevant to the company’s business and industry as well as adequate public company experience. Companies are required to have at least two independent directors
Public Distribution and Market Capitalization
1,000,000 free trading public shares
$4,000,000 held by public shareholders
300 public shareholders each holding a board lot
Sponsorship Generally required Not required
Source: Stikeman Elliot LLP, “Going Public in Canada: Issues and Considerations Associated with an Initial Public Offering,” June 2009
SLIDE 40
BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.
IPO Treasury vs. Secondary Mix
Select US IPOs – Treasury/SecondarySelect Canadian Technology IPOs –
Treasury/Secondary
0% 20% 40% 60% 80% 100%
Bridgewater
Redline
TeraGo
RuggedCom
Dragonwave
Hostopia
Sandvine
JumpTV
Evertz
Corel
Constellation
Miranda
Vcom
Ascalade
March Networks
Treasury Secondary
Treasury Average: 74.7%
0% 20% 40% 60% 80% 100%
Archipelago Learning
Fortinet Inc
Ancestry.com
Shanda Games
Avago Technologies
CDC Software
LogMeIn
OpenTable
SolarWinds
DigitalGlobe
Rosetta Stone
Bridgepoint Education
Changyou.com
Treasury Secondary
Treasury Average: 49.0%
Meaningful amount of secondary offering possible to increase float / liquidity for investors