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NASDAQ OMX Armenia: Why and How
to Become a Listed Company
Presentation for AmCham Membership Meeting
Karen Zakaryan, November 25, 2010
NASDAQ OMX Armenia
Central Depository of Armenia
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
About NASDAQ OMX
NASDAQ OMX is the world’s largest
exchange company, formed by the merger of
US exchange operator NASDAQ and Nordic
exchange operator OMX in March 2008
NASDAQ OMX is present in 21 countries
Operates stock exchanges and securities
depositories in the US, Sweden, Finland,
Denmark, Iceland, Estonia, Latvia,
Lithuania and Armenia
Sells exchange technology, such as trading
systems, to more than 70 customers in 50
countries
More than 4,000 listed companies worldwide
Since Q3 2008 included in Standard and
Poor’s 500 index
In 2009 Journal "Fortune" included NASDAQ
OMX among 100 Fastest-Growing companies
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
NASDAQ OMX Armenia vision
Armenia – the leading capital market in the
region
To operate a trusted and liquid marketplace that provides
efficient services, meeting the needs of customers in
Armenia and beyond
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
Timeline
Armex
established
Feb-2001
Apr-1999
CDA
established
First
trading
session in
stocks on
Armex
Jul-2001
First trading
session in
corporate
bonds on
Armex
Dec-2005
Nov-2005
Foreign currency
trading launched on
Armex
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
Government
bonds
trading
launched on
Armex
Jan-2008
Jan-2008
Armex and
CDA join
under
NASDAQ
OMX brand
Mar-2008
NASDAQ
OMX
Armenia
acquired
CDA
Jun-2009
Credit
resources
trading
launched
Apr-2010
Feb-2008 Dec-2008 Jan-2009
OMX acquires
100% stake in
Armex and
CDA
Combination
between
NASDAQ and
OMX
completed
REPO
trading
launched
Armex
renamed
NASDAQ
OMX
Armenia
“One company, one mission”
NASDAQ OMX Armenia
(formerly Armex)
• The only stock exchange in
Armenia
• Exchange operator since 2001
• Efficient trading system, capable of
supporting trading in a range of
instruments
• Home to the best Armenian
companies
Armenia
• Leading global brand
• Industry standard services
• Transparency of operations
• Synergic performance
• A reputation of
Central Depository of
Armenia (CDA)
• Centralized registry keeping and
custodian services since 1999
• Maintaining registries of 1,573
companies
• Servicing more than 157,000
securities accounts
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
sustainability and success
• Growing variety of
exchange markets
Decision to advance
• There are many ways to foster the growth and development of
a company. One is to publicly list the company on the stock
exchange.
• Being listed is certainly not suitable for all companies, but the
fact that most large successful companies in the world are
public listed companies is a fact that speaks for itself
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
Road to NASDAQ OMX - Armenian market
IF YOU ARE:
• a successful operating or growing joint stock company
• economically and financially sound
• a company with ambitious strategic development plans and good
future prospects (contemplating the possibilities of an acquisition, a
merger with another company, or planning to expand to new
geographic markets, etc.)
• ready to be transparent and open to investors
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
Road to NASDAQ OMX - Armenian market (cont.)
AND YOU NEED/WANT:
• long-term financing sources to develop your business
• to build investor interest and confidence, and to attract new investments
• to determine the company’s value and enhance its share liquidity, as well as its
attractiveness to investors
• to develop a broad shareholder structure
• to give existing owners the possibility to exit by selling shares to other investors
• to become more competitive
• to utilize your company’s shares as a liquid currency to acquire other companies
• to implement employee incentive programs
• to enhance the transparency and publicity of your operations
• to increase the company’s visibility and strengthen its reputation
Then NASDAQ OMX Armenia is here to help you discover a wide variety of financial
market opportunities that meet your needs
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
Route to the stock exchange
Depending on your needs and readiness, you can choose your route to
the stock exchange from the following:
• share listing – a long-term decision
- to enter a stock exchange through an Initial Public Offering (IPO)
- listing of shares without a simultaneous public offering
• listing bonds – a flexible solution
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
Listing bonds
Listing debt securities is the most flexible way for companies to start
their journey on the capital market.
By issuing new bonds, a company can improve its financial structure
and extend the range of investors, especially when market conditions
are too poor to issue shares.
As bonds have predefined maturity dates, their listing is of a temporary
nature.
That makes it suitable for testing the status of a public company.
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
Share listing
- One of the traditional ways to enter a stock exchange is through an
Initial Public Offering (IPO)
An IPO enables a company to attract capital, publicly selling a substantial
holding to a wide range of investors.
-Listing of shares without a simultaneous public offering
If the company already has a wide shareholder base, it is possible to get
listed without arranging a public offering. In this case, the listing of shares
allows the company to raise its profile and provides the company with the
possibility to raise capital.
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
Doing an IPO would mean
• The possibility to raise more capital, to enable faster growth of the business,
for example through investments in new systems or the opening of new
branches
• Lower cost of capital (share capital is generally cheaper than debt, it does not
expire or has to be refinanced like a bond or a bank loan)
• Giving the current owners the best possible price for the shares sold – by
enabling many investors to buy the shares instead of only one or a few
• Further increase the value of the shares by listing the company in a liquid
market, where investors know they can sell their shares immediately if they
want to (an investor in a non-listed company can not be sure to do this, which
reduces the value of his shares)
• Information about the real market value of the shares in the company, as
shown every day in the trading on the exchange
• Good PR, both from the publicity around the IPO and from the increased
attention in the media for a listed company with many shareholders (daily
information about the share price, media attention for financial reports and
press releases etc)
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
Reasons to do an IPO
NOW
• The Government of Armenia and institutions such as the CBA strongly support the
development of the Armenian capital market and are sure to support any company
that decides to do an IPO in Armenia
•
The RA Government approved the package of tax benefits for the companies
to be listed on the exchange
•
listed company can reduce the amount of tax payable by AMD 300 mln per
year
•
any VAT paid for services during listing process will be reimbursed upon
the company’s successful listing on the exchange
• The new, funded pension system planned by the Government of Armenia will
provide plenty of capital to be invested in companies listed on NASDAQ OMX
Armenia
• In general there is a large interest among foreign investors in new, emerging
markets. Doing the real IPO would mean that any foreign investor who wants to buy
listed shares in Armenia would be interested in buying shares of your company,
which will again increase the share price
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
Reasons to do an IPO at NASDAQ OMX Armenia
Once the decision is made to do an IPO, the question is where the shares should
be traded. We believe there are several reasons why listing shares on NASDAQ
OMX Armenia provides the most value for current owners:
• NASDAQ OMX, with its internationally recognized brand and exchange industry
expertise, is a mark of the quality of any IPO done on NASDAQ OMX Armenia
• We have high requirements to allow a listing, but thanks to these high requirements
investors know they can trust the information from the company, trust the trading
procedures on the exchange and trust the IPO process. This will mean they are prepared
to pay a higher price for shares in the IPO
• Compared to a listing on an exchange outside of Armenia the costs for listing and the
advisory services from investment banks or other advisors will be lower
• A local listing will increase the visibility of the company in Armenia and enable more local
investors to participate in the IPO. Having a strong local investor base will also increase
liquidity in the share trading
• By listing in the Armenian market the company will support the development of the local
Armenian capital market. The company will in its turn benefit from this positive
development of the market
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
How to prepare an IPO
• Make of company history and transfer of systems of the financial reporting on the
international standards
• Gathering of opinions of investors and investment analysts concerning criteria of an
estimation of the companies of the same type, the same branch, the same country on the
chosen type of a platform target investors
• Formation of a design team, choice of partners: the financial adviser, the legal adviser, the
auditor, the adviser on marketing for definition of information policy of the company,
organization IR and PR program, the auditor of corporate management for definition of a
position of a rating of corporate management
• Preparation of analytical reports about:
- Parameters of activity of the company
- Strategy of the company
- Management of the company
• Carrying out due-diligence
• Disclosing of the information on the company among the broad audience of investors and
definition of a range of the price of the share, and as the organization road - shows.
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
How NASDAQ OMX Armenia will support the
IPO/listing process
• Advise on how to structure the IPO
• Advise on selecting advisors, underwriters etc
• Assistance in every step of the listing application process, as well as assistance
in contact with other institutions such as the CBA
• Contacts with international investors, including NASDAQ OMX members in
London and other financial centers
• Assistance with presentation of the company to potential investors (such as
review of presentation material, advise on information to investors and
assistance in setting up a road-show to meet investors)
• Advice on how to set up an Investor Relations function within the company for
communicating with investors after the IPO
• Advice on how to handle reporting, audits and information about significant
events to comply with NASDAQ OMX Armenia listing rules and keep the trust of
investors
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
To Get Listed an Issuer Must Submit:
• Listing application
• Listing prospectus in the format
established by the Central Bank (CBA)
• Unique identification code (ISIN)
assigned by the Central Depository of
Armenia
• Financial statements with auditors’
conclusion
• A copy of the resolution by the
company’s authorized body on having
the securities listed
• Other relevant documents
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
What it Takes to Live as a Listed Company
Continuous obligations of listed
companies:
• Submit reports to the CBA and the stock
exchange, as required by capital markets
regulations
• Be transparent and abstain from shadow
practices
• Ensure disclosure of financial and other
information to public
• Maintain an Investor Relations unit
• Implement corporate governance standards
and practices
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
How to support the secondary market
• Have a market-maker for your shares at a stock exchange and regular work
with investors
• preparation and publications of the regular reporting
• support of the corporate website
• disclosing of essential facts from a life of the company
• release of analytical reports
• carrying out road – shows
• the organization conference - calls between top-management of the company
and investment analysts
• the organization of performances of top-management at the international
forums and conference
• the organization of meetings of top-managers with large investors or fundmanagers
• the organization of press-support of activity of the company.
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
Exchange Traded Instruments
Corporate
Bonds
Equities
- Main List (A)
- Main List (Abond)
- Secondary List (B) - Secondary List (Bbond)
- Free Market (C)
Government
& CBA Bonds
- Traded but
not listed
- Free Market (Cbond)
REPOs
- REPO and reverse
REPO agreements
Currency
- USD and EUR
Investment companies and banks participate
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
Credit
Market
- Overnight
credit resources
Only banks
participate
List Structure & Requirements / Equities
• Shares Main A List
• Shares B List
• Shares Free Market (C)
Requirements:
Requirements:
Requirements:
- Equity Capital min.
AMD 1 bln
- Equity Capital min.
AMD 500 mln
- No requirements
- Issuer operating for no
less than 3 years
- Financial statements
for last 3 years audited
by independent auditor
- Net financial result for
last 3 years – profit
- At least 100 registered
shareholders
- Free float min. 15%
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
- Issuer operating for
no less than 3 years
- Financial statements
for last 3 years
audited by
independent auditor
- Free float min. 10%
- Opportunity to disclose
information on the
issuer to investors
- Companies that are
under liquidation,
including for the reason
of bankruptcy, can not
be admitted
List Structure & Requirements / Bonds
• Bonds Main A List
(Abond)
• Bonds B List
(Bbond)
Requirements:
Requirements:
- Issuer operating for
no less than 3 years
- Issuer operating for
no less than 2 years
- Issuer carried out its
core activities for at
least the last 2 years
- Size of the given
issue min. AMD 250
million
- Size of the given issue
min. AMD 500 mln
- Financial statements
for the last year
audited by
independent auditor
- Financial statements
for last 2 years
audited by
independent auditor
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
• Bonds Free Market
(Cbond)
Requirements:
- Size of the given
issue min. AMD
100 million
- Any bonds with
maturity up to one
year are included in
the Free Market
- Companies that are
under liquidation,
including for the
reason of
bankruptcy, can
not be admitted
Securities Listed/Admitted to Trading
(as of 25-Nov-10)
Equities (A-Z)
Bonds (A-Z)
• Armenian Economy Development
Bank (B List)
• ArmRusGasprom (Abond list)
• Artsakh HEK (B list)
• Almast
• Araratbank
• Arax
• Arpa Sevan
• Armenian Development Bank (2
issues)
• Pure Iron Plant
• Yerevan Factory of Champagne Wines
• Yerevan Jewellery Factory
• Yerevan Jewellery Factory -1
(Gnomon)
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
• Araratbank (Bbond list)
• Converse Bank (Bbond list)
• Shen Concern (Bbond list)
• Valletta (Bbond list)
NASDAQ OMX Armenia Membership
• Capital adequacy:
on Jan 1, 2009, the
requirement was raised
from AMD 60 million to
AMD 100 million, and
from Apr 1, 2011 it will
be increased to
AMD 300 million
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
• Membership in NASDAQ
OMX Armenia is open to all
companies who provide
investment services and
comply with CBA and
NASDAQ OMX Armenia
requirements
NASDAQ OMX Armenia Members (in alphabetical order)
(as of 25 November 2010)
•
ACBA-CREDIT AGRICOLE BANK CJSC
•
BTA BANK JSC
•
AMERIABANK CJSC
•
CAPITAL ASSET MANAGEMENT CJSC
•
ANELIK BANK CJSC
•
CASCADE INVESTMENTS CJSC
•
ARARATBANK JSC
•
CONVERSE BANK JSC
•
AREXIMBANK CJSC
•
FUTURE CAPITAL MARKET LLC
•
ARDSHININVESTBANK CJSC
•
HSBC BANK ARMENIA CJSC
•
ARMBUSINESSBANK CJSC
•
INECOBANK CJSC
•
ARMENBROK CJSC
•
PROCREDITBANK CJSC
•
ARMENIAN DEVELOPMENT BANK JSC
•
PROMETEY BANK LLC
•
ARMENIAN ECONOMY DEVELOPMENT
•
RENESA CJSC
BANK JSC
•
TONTON INVESTMENT CJSC
•
ARMSWISSBANK CJSC
•
UNIBANK CJSC
•
ARTSAKHBANK CJSC
•
VTB BANK ARMENIA CJSC
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
Trading, Clearing & Settlement
• Trading System:
- Armex Plaza (based on RTS Plaza 7.7)
• Trading Mechanism:
- continuous trading, manual trades
• Trading Hours:
- daily 11:00-15:00
• Members:
- 25 member firms (banks and investment
companies) have remote access to
Trading System
• Settlement:
- T+0, full DVP
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
What are my options of getting information
about the Armenian capital market?
• Via NASDAQ OMX Armenia official website: www.nasdaqomx.am
• By contacting NASDAQ OMX Armenia member
investment/broker companies and;
• Via Bloomberg agency that has contract with NASDAQ OMX
Armenia;
Or by contacting us directly:
Address: 5b Mher Mkrtchyan str., 0010 Yerevan, Armenia
Tel.: +374 10 543 321 ext. 115
Fax: +374 10 543 324
E-mail: [email protected]
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.
Thank you!
© Copyright 2008, The NASDAQ OMX Group, Inc. All rights reserved.