IPO As A Strategic Financing Option

FRANKFURT AM MAIN, 10TH NOVEMBER 2008
Oliver Diehl, Director
S T R I C T L Y
P R I V A T E
AN D
C O N F I D E N T I AL
THE IPO AS A STRATEGIC FINANCING OPTION
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T H E
I P O
A S
S T RA T E GI C
F I N A N C I N G
OP T I O N
exercise of their own judgement. Any opinions expressed in this material are subject to change without notice and may differ or be contrary to
DEUTSCHES EIGENKAPITALFORUM
Agenda
Page
Financing alternatives in a different environment
2
12
Overview of ECM markets and IPO environment
39
T H E
I P O
A S
S T RA T E GI C
F I N A N C I N G
OP T I O N
IPO structure and process
Germany postpones Deutsche

Bahn IPO. Given the extreme
uncertainty on the financial
markets...
Reuters, 09/10/2008
Schott Solar postpones public

offering... indefinitely.
dpa, 22/09/2008
Evonik says owners drop

Evonik IPO plans for now.
.Reuters, 01/04/2008
F I N A N C I N G
AL T E R N A T I V E S
I N
D I F F E R E N T
E N V I R O N M EN T
Current situation of German Prime Standard IPO market
The current market environment in Germany is moulded by uncertainty and

economic downturn
Equity
Debt
Shares
Convertible Debt
Mezzanine
Bank loan
Leasing
ABS
Factoring
Bond
Investment Grade
High Yield
Leveraged Debt
Commercial Paper
Private Placement
Promissory note
USPP
F I N A N C I N G
I N
D I F F E R E N T
Investors / diversified financing options
Proactive approach of finance department
Equity
COMMUNICATION
Liabilities
Short-term
Eigenkapital
assets
F I N A N C I N G
I N
D I F F E R E N T
Long-term
assets
Verbindlichkeiten
Possible
financing
triggers
CAPEX financing
financing
CAPEX
Investments
Debt
Debt +
+ equity
equity
measures
measures
Acquisitions
Debt
Debt repayments
repayments
and
and strengthening
strengthening
of
of liquidity
liquidity
Divestiture
Financing concepts should exist ahead of project
Euro High
Yield Bonds
Mezzanine
Euro Investment
Grade Bonds
Promissory Note
(Schuldschein)
Commercial Banks
US Private Placements
Leasing
closed
closed
On vacation
Early Christmas
vacation
Lunch break
Open 24/7
open
F I N A N C I N G
I N
D I F F E R E N T
Current availability of financing alternatives
Accessing new pools of liquidity has become more difficult
How to bypass a liquidity shortage?

Consider different options
250
Investment Grade (number)
Non-investment grade ( bn)
Non investment grade (number)
Not rated ( bn)
Not rated (number)
250
200
100.1
150
I N
100
50
F I N A N C I N G
Investment Grade ( bn)
200
D I F F E R E N T
1
Volume
Volume and
and number
number of
of German
German corporate
corporate loans
loans by
by rating
rating class
class1
150
6.4
105.4
141.1
100
61.7
40.9
34.3
23.9
0
2006
50
3.3
1H2007
2H2007
4.6
5.3
1H2008
8.4
3.6
2H2008
Source: Dealogic, October 2008

Excl. Financial institutions, insurance companies and utilities
Corporate bonds and US Private Placements (USPP)

bn
F I N A N C I N G
1,2
Volume
Volume and
and average
average price
price of
of USPPs
USPPs1,2
12
7.5
10
5.3
3.5
7.0
3.0
6.0
5.5
$ bn
8.0
5.0
200.0
2.0
5.4
2
1.0
0.7
0
2007
2008
0.0
200
150
137.8
136.3
121.9
3.2
109.0
3.0
2006
250
2.0
1.5
10.0
bps
2.5
4.0
I N
D I F F E R E N T
1
Volume
Volume and
and average
average coupon
coupon of
of bonds
bonds1
100
2.1
1.0
50
1.3
0.5
0.7
0.5
0.0
0
2004
2005
2006
2007
2008
Volume and conditions depend heavily on each other

Source: Cazenove analysis, Bloomberg
Excl. Financial institutions, insurance companies and utilities
Average of 10 year bullet
2008 not representative, only one transaction so far
Leasing
70
60
Business
Business cycle
cycle test
test for
for movables-leasing
movables-leasing
ifo business expectations
60
Volume mov ables-leasing
ifo business situation

ifo business climate
Volume property-leasing
50
40
50
30
40
30
44.3
44.9
50.3
56.3
20
10
F I N A N C I N G
2005
2006
2007
1H2008
Source: Annual report BDL 07/08

Expectation of BDL, press release
(20)
09 2008
7.1
05 2008
7.1
01 2008
7.5
09 2007
5.7
05 2007
(10)
01 2007
10
09 2006
05 2006
20
01 2006
I N
D I F F E R E N T
Development
Development of
of leasing
leasing volume
volume
Source: BDL, ifo Institut. August 2008
Leasing volume increased despite subdued business cycle expactations

Benefits
Benefits
Considerations
Considerations
Raise capital
Ongoing investor scrutiny and quarterly
Establish market value (IPO)

Provide liquidity or exit strategy for
investors
Increase financial and strategic flexibility
through access to capital markets
High level of focus on earnings
visibility, growth and margin expansion

potential
Disclosure of potentially competitive
information
Increased corporate governance
Management/employee incentive
Dilution; expensive form of capital
F I N A N C I N G
I N
reporting
Enhance public visibility and credibility
D I F F E R E N T
Why issue public equity?
10
F I N A N C I N G
I N
D I F F E R E N T
Objectives of an IPO
Selling shareholders
Company
Optimise
Optimiseproceeds
proceeds
Execute
Executeaasuccessful
successfuloffering
offering
Optimise
Optimisevalue
valueofofretained
retained
Raise
Raisecapital
capitalfor
forexpansion
expansionofof
the
thebusiness
business(if
(ifprimary)
primary)
ownership
ownership
Create
Createpositive
positivemarket
market
IPO
momentum
momentumfacilitating
facilitating
future
futureofferings
offerings
Establish
Establishattractive,
attractive,sustainable
sustainable
market
marketvaluation
valuation
Obtain
Obtainaabroad-based,
broad-based,
sophisticated
sophisticatedshareholder
shareholderbase
base
Broaden
Broadenshare
share
ownership/create
ownership/createliquidity
liquidity
for
forsubsequent
subsequentsales
sales
Raise
Raisecompany
companyprofile
profile
Investors
Secure good value
Establish sizeable holding
in company
Optimise share price
performance post IPO

Broaden investment
portfolio
Strong
Strongaftermarket
aftermarketperformance
performance
will
willfacilitate
facilitatefuture
futurefund
fund
raising
raisingand
andcorporate
corporateaction
action
Achieve
Achievebroad
broadresearch
research
sponsorship
sponsorship
Create
Createcapital
capitalstrength
strengthininthe
the
Company,
Company,benefiting
benefiting
commercial
commercialnegotiations
negotiationswith
with
customers
customersand
andsuppliers
suppliers
Create
Createvehicle
vehiclefor
formanagement
management
incentivisation
incentivisation
11
Agenda
Page
2
12
39
T H E
I P O
A S
S T RA T E GI C
F I N A N C I N G
OP T I O N
12
What is a successful IPO?

Determinants
Determinants
Right equity story
Intrinsic attractions
Positioning vs. peers
Right timing
Launch window / market conditions
Not too early / not too late: past accomplishment vs. remaining upside
Generate price tension, broad demand

Perception of scarcity value: must-own stock vs. show-me stock
I P O
S T R UC T UR E
AN D
P R O C E S S
Right valuation (for company/selling shareholders and for new investors)
13
What is an IPO process?

Process
Process
A 1-2 months of pre-IPO preparation, followed by
4-6 month exercise
Pricing date known from the first day moral commitment by all parties to stick to it
Large working group: discipline, accountability and information flows are key
Private/confidential phase followed by public phase
I P O
S T R UC T UR E
AN D
P R O C E S S
3-4 go/no go points
14
Internal organisation needs to be prepared for the IPO

Process
Process
An IPO is a demanding process
Senior management needs to find the right balance between the necessary running of
operations and the involvement in a critical event in the life of the company
Two steps can be taken to make the process smoother
1 Designate a project leader for the IPO is recommended

Buffer between bankers/lawyers/accountants and senior management
I P O
S T R UC T UR E
AN D
P R O C E S S
Consistency in action and messages all along the process
2 Hire/designate, early on, before the IPO process starts, an Investor Relations Officer
IPO preparation good training for life as a listed company
Typical profile: internal recruit with good vision of company and proficiency in English, or
external hire (e.g. experienced research analyst)
15
Project management and working groups for IPO
I P O
S T R UC T UR E
Key
Keyworkshops
workshops//tasks
tasks
AN D
P R O C E S S
Company and bookrunners

project team
Investment case
Offer structure/ listing
Documentation/ legal/
accounting
Marketing/ distribution
Capital structure
Offer structure
Legal, business and
Development of IR and
Corporate governance
Tax considerations
Valuation
Syndicate co-
Business plan/
ordination
Liaison with the
relevant regulatory
authorities
Lock-up
forecasts
Development of
investment case
Preparation of analyst
and roadshow
presentations
financial due diligence

Accounts
Preparation of
prospectus
Drafting of other
transaction documents
Shareholder
agreements
Opinions
Corporate approvals
Comfort letters
Publicity and research
guidelines
Corporate/legal
structure
PR strategy
Investor education
Roadshow and
bookbuilding
Announcement of
offering
Pricing and allocation
Aftermarket
greenshoe/
stabilisation
16
Pre-IPO steps
Financial/Accounting
Financial/Accounting
Consolidation
Consolidation
Review/update business plan
If any acquisitions are envisaged, ideally
Prepare 3 year consolidated audited IFRS
financial statements
Discuss IPO with auditors to identify any
issues early on
Consider need to present financial track-
they should be completed prior to IPO or, as

a minimum, parameters should be defined
and shareholder approvals obtained pre-IPO
Be aware of need to disclose and explain
process in IPO prospectus
Engage appropriate
appropriate individuals/advisors
individuals/advisors
Engage
P R O C E S S
Appoint working group / deal captain
Commence search for suitable non-executive
Review internal controls, treasury and
I P O
S T R UC T UR E
Establishing public
public company
company
Establishing
infrastructure/pre-IPO housekeeping
housekeeping
infrastructure/pre-IPO
AN D
record of business
Consider corporate governance, board
structure and composition, and committees

financial reporting functions,
Review any litigation, customer/supplier
directors
Identify Investor Relations Specialist to allow
familiarisation with company business before

IPO process commences
Identify general counsel
disputes and other contingencies and

consider whether/how to resolve pre-IPO
17
Key questions to be answered in preparing for an IPO
I P O
S T R UC T UR E
AN D
P R O C E S S
Offer
Offer size
size
Primary
Primary vs
vs secondary
secondary
Investment case
case
Investment
Timing
Timing
Valuation
Valuation
Funding
Funding
Use
Use of
of proceeds
proceeds
Shareholder
Shareholder
Strategy
Strategy
Leadership
Leadership positions
positions
Optimal
Optimal valuation
valuation
Business
Business cycle
cycle
requirements
requirements
Demand
Demand
Free
Free float/liquidity
float/liquidity
Greenshoe
Greenshoe
Index
Index impact
impact
intentions
intentions
Nature
Nature of
of sale/seller
sale/seller
Overhang
Overhang // Lock-ups
Lock-ups
Operational
Operational track
track
Company
Company objectives
objectives
Market
Market conditions
conditions
Valuation
Valuation
Demand
Demand pools
pools
Syndicate
Syndicate structure
structure
Comparables
Comparables
Relevant
Relevant multiples
multiples
Domestic
Domestic
International
International
Syndicate
Syndicate size
size
Quality
Quality of
of research
research
Single
Single or
or dual
dual listing
listing
Peer
Peer group
group
Cross
Cross check
check
Retail
Retail
Index
Index
Distribution
Distribution
Research
Research coverage
coverage
Investor
Investor access
access
fundamental
fundamental
valuation
valuation
Targeting
Targeting
Employees
Employees
record
record
Solid
Solid financials
financials
Board
Board &
&
Management
Management
Growth
Growth // Value
Value //
Dividend
Dividend
Investment
Investment risks
risks
capabilities
capabilities
Aftermarket
Aftermarket support
support
Fees
Fees
Investor
Investor sentiment
sentiment
Listing
Listing location
location
Corporate
Corporate
Governance
Governance
Disclosure
Disclosure standards
standards
Costs
Costs
Liquidity
Liquidity
18
Understanding investor criteria is critical for a potential

IPO candidate
What investors
investors look
look for
for
What
Large attractive
market /
Strong existing
market position
I P O
S T R UC T UR E
AN D
P R O C E S S
Cohesive strategy
and superior
management
Importance
Importance
Provides attractive base case growth outlook for company
Opportunity to drive growth in market through innovation
Superior product/service portfolio (as evidenced by leading
market share)
Effective relationships with industry players
Strong brand recognition
Management team that has delivered results in the past
Management has thorough understanding of macro and micro
economic trends affecting company

Ability to anticipate change
Management will be judged by recent performance
Superior revenue
growth / scalability
Better product portfolio

Strong relationships with customers
Superior marketing clout
Attractive
profitability profile /
Well-capitalized
balance sheet
Pricing leverage in marketplace

Superior business mix of value-added products or services
Cash generating power
Ability to pursue acquisitions and other strategic alternatives
19
IPO candidates are usually valued using Discounted Cash

Flow analysis and/or Market multiples
Methodology
A
Discounted cash flow
Comment
Net present value of forecasted cashflows
Allows to capture 100% of management forecasts
Highly sensitive to discount rate and terminal value
Absolute valuation independent from stock market prices
Multiple derived from ratio of each peer's valuation over selected
accounting figures; multiple then applied to IPO candidates

accounting figure to derive valuation
Market multiples
P R O C E S S
Utilised by all equity investors

Lack of exact comparables may be an issue
Focus on near future (08, 09)
Source: Cazenove
I P O
S T R UC T UR E
AN D
Simple and easy to calculate
20
Listing market considerations should not only take

company-specific factors into account
Parameters for the selection of the listing market
Company
specific factors
Key factors are headquarters, production locations, clients, equity story,
relevant investors, accounting standards and corporate governance

Existence of relevant quoted peers
Peer group
Sector familiarity to reduce mispricing risk (for IPO and aftermarket)

Investors with thorough understanding of the business
Target
investors
Access to the relevant investors is crucial, in particular to those who will
drive offer and demand

Key to capturing demand and investor attention
Index Impact
Increasing focus of passive fund managers on liquid stocks
P R O C E S S
Liquidity
I P O
S T R UC T UR E
Valuation
AN D
Growing attention to the worlds major benchmarks
Cost
Listing
market
Position the company for maximum market valuation

Broad and high-quality research coverage and comparable valuations
Sufficient free-float and liquid market with capacity to effect large
capital raisings
Costs of listing on markets vary; tax treatment for selling shareholders
The selection of the right listing market is of the up most importance for future capital raising
as well as effective investor access
21
The right market segment is as important as listing location

transparency levels are key for institutional investors
EU-Regulated Market
Regulated Unofficial Market
Official Market / Regulated Market
Open Market
Prime Standard
Perceived as the market for "blue
Less transparent than Prime
chip" stocks in Germany with

highest transparency standards
Characteristics
Accounting
Requirements
General Standard
IFRS (or adequate for Non-EU
issuers
(1)
Standard but still regulated

market
issuers
(1)
Entry Standard
Young and small companies

First step to capital market
Low cost and flexible access
Focus on institutional investors
National GAAP (for EU issuers)

issuers
(1)
Prospectus
Requirements
9
Audited annual report
Quarterly reporting to the formal
I P O
S T R UC T UR E
AN D
P R O C E S S
Non-public offering, i.e. private
Publication
Requirements
(1)
requirements of the Exchange

Rules
Financial calendar
At least one analyst conference
per year
Ad-hoc disclosure also in English
Directors dealings
placement: expos sufficient

Public offering: BaFin approval
needed, WpPG applies EU
passport

Semi-annual and interim report Semi-annual and interim report
Ad-hoc disclosure
No ad-hoc disclosure but
Directors dealings
publication of any material
development on the website
Company profile needs to be
updated once a year on the
website
US GAAP, Canadian GAAP or Japanese GAAP

22
Cazenove will add value at every stage of IPO execution process

Key
Key steps
steps
Preparation
Preparation
Analyst
Analyst
education
education
Investor
Investor
education
education
Roadshow/
Roadshow/
bookbuilding
bookbuilding
Pricing/
Pricing/
allocation
allocation
Aftermarket
Aftermarket
TT- xx weeks
weeks
T-7
T-7 weeks
weeks
T-4
T-4 weeks
weeks
T-2
T-2 weeks
weeks
TT
T+4
T+4 weeks
weeks
Management
Management
Preliminary
Preliminary
Price
Price range
range
Structuring
Structuring
Business
Business plan
plan
Capital
Capital
structure
structure
presentation
presentation
Research
Research
notes
notes
I P O
S T R UC T UR E
AN D
P R O C E S S
Flagship
Flagship
Management
Management
and
and board
board
Audited
Audited
accounts
accounts
Due
Due
diligence
diligence
Analyst
Analyst
presentation
presentation
investors
investors
prospectus
prospectus
Regulator
Regulator
sign-off
sign-off
Sales
Sales force
force
briefing
briefing
AnnounceAnnounce-
ment
ment
Analysts
Analysts visit
visit
Demand
Demand
Roadshow
Roadshow
BookBook-
building
building
Pricing
Pricing
scenarios
scenarios
Demand
Demand
review
review
Pricing
Pricing
decision
decision
Allocation
Allocation
Stabilization
Stabilization
Greenshoe
Greenshoe
On-going
On-going
research
research
Trading
Trading
support
support
Market
Market
making
making
Corporate
Corporate
relations
relations
profile
profile
Indicative
Indicative
price
price range
range
23
Investor education is led by equity research analysts

Investor education
Roadshow/bookbuilding
Pricing/allocation
Aftermarket
The investor education process, the first contact of company with the market, will
Objectives
of investor
education
be undertaken by our research analysts and specialist sales and enable both the
management and underwriters to gather preliminary market feedback on the
offering
1. Research report
2. First contact with the market
Bank in charge of investor education
Banks specialists will present
Bank will publish research report

Research report is only marketing
I P O
S T R UC T UR E
AN D
P R O C E S S
instrument during investor education

Execution
company to institutional investors

Banks specialists act as interface
between company and institutional

investors
3. Investor education itinerary
4. Price range
Banks specialists provide investor
After investor education and before
feedback to company's management

after meetings
Complete feedback report presented
to company and shareholders before

offering
bookbuilding, company decide on price

range
Preliminary prospectuses are
distributed to investors and book of

demand is open
24
Effective roadshow organization is key to investor

targeting and ability to maximize demand
Investor education
Pricing/allocation
Aftermarket
Roadshow is the official marketing phase management meets institutional investors
Objectives
of the
roadshow
and performance of management team will be a critical factor for success of IPO
Banks specialists continue to host investor education meetings during roadshow
period
Banks role during the roadshow
Organise a number of 1-on-1 meetings
-o
and group presentations (assuming two

weeks)
I P O
S T R UC T UR E
AN D
P R O C E S S
Banks roadshow and IR departments will
be responsible for organisation of

roadshow
Execution
Banks salesforce ensures that interest by
inst. investors is translated into orders

for the shares
Company and its shareholders will have
full visibility and access to the book of

demand
The companys roadshow

One roadshow team:
CEO + CFO + the company senior or
operational manager(s)
- Boston
- New York
2 days
- Middle East: 2-3 days
- London: 2-3 days
- Edinburgh
- Paris
- Frankfurt
- Stockholm
5-6 days
- Netherlands
- Switzerland
25
Exampleevolution of an order book during an IPO

Demand
Demand (m
(m shares)
shares)
1.769
Institutional tranche = 235.2m shares
incl. greenshoe
Bank communicates to
the market that books
are covered
1.135
459
I P O
S T R UC T UR E
AN D
P R O C E S S
336
Day:
Coverage:
98
121
140
143
10
0.0x
0.0x
0.4x
0.5x
0.6x
0.6x
1.4x
2.0x
4.8x
7.5x
26
Price discovery is key to achieving a sustainable valuation

Investor education
Pricing/allocation
Aftermarket
Bank
Bank would
would manage
manage a
a price
price discovery
discovery process
process in
in order
order to
to achieve
achieve the
the most
most favourable
favourable
results
results
Syndicate Valuation
Analyst Valuation
Price Range
Pricing
Valuation/
price range
15%
Roadshow
&
bookbuilding
I P O
S T R UC T UR E
AN D
P R O C E S S
10%
5%
0%
(5)%
Analyst presentation
Investor education
Pricing
10-20%
Marketing momentum
(10)%
(15)%
(20)%
(25)%
Time T
Preliminary valuation
range by Bookrunners
T + 3 weeks
Valuation range by
Syndicate research
T + 5 weeks
Bookbuilding price
range
T + 7 weeks
Pricing
27
In order to enhance shareholder visibility on valuation, company could

use pilot fishing
Investor education
Pricing/allocation
Aftermarket
Pilot
Pilot fishing
fishing
Description
Preliminary meetings organised by the Bookrunners with selected lead investors to gather
feedback on company equity story and valuation

Meetings organised early in the IPO process (before or around analyst presentation subject to
companys preparedness)
Meetings organised in a discrete manner, no market publicity
Target key accounts with superior understanding of the sector and company comparables
I P O
S T R UC T UR E
AN D
P R O C E S S
Process used in recent IPOs
Objectives
9 Test company positioning with investors and their potential interest/appetite for the story
9 Test valuation methodologies/trading multiples that will be used by investors to value company
9 Provide additional insight to company and its shareholders on feasibility of IPO
Risks
8 Partial investor feedback only, likely to evolve throughout the process
28
IPO performance in the aftermarket also depends on effective

allocation process by the Bookrunners
Investor education
Objectives
of pricing
and
allocations
Pricing/allocation
Communicate a positive message to market to price in the upper half of range

Encourage orders and attempt to limit selling pressure on the companys shares
Foster stock liquidity
Suggested allocation criteria
Allocation strategy
Quality/sophisticated investors
Outstanding knowledge of the
Tier I
company, the country and the sector
S T R UC T UR E
Favour high quality
institutional investors
70% of
demand
Likely to become l-t shareholder
Execution
Tier II
AN D
P R O C E S S
Buyers in the secondary market
I P O
Aftermarket
Tier III
Tier IV
Quality investors
Limited holdings in the sector
Followers rather than leaders
Uncertain holding period
Smaller inst. funds or local brokers
20% of
demand
8% of
demand
Limit the allocation
of shares to Tier 2
and Tier 3 accounts
Avoid allocating
shares to Tier 4
accounts, apart from
key investors
2% of
demand
29
IPO performance in the aftermarket also depends on

effective allocation process by the Bookrunners
Investor education
Pricing/allocation
Aftermarket
Example of order book and price sensitivity

Demand
Allocation
Retail
7%
Hedge
funds
39%
54%
Retail
Long
only
27%
46%
Long
only
27%
Hedge
funds
Shares (bn)
1.8
Offer price:
5.40
I P O
Tier 1 investor
price sensitivity
1.4
1.2
1.0
0.8
0.6
Inst.
Tranche:
253.2m shrs
0.4
0.2
6.00
5.95
5.90
5.85
5.80
5.75
5.70
5.65
5.60
5.55
5.50
5.45
5.40
5.35
5.30
5.25
5.20
5.15
5.10
5.05
5.00
4.95
4.90
4.85
4.80
0.0
4.75
S T R UC T UR E
AN D
P R O C E S S
1.6
30
IPO pricing considerations (1/3) : discount to fair value

Fair trading multiple is obtained and reflected in valuations
At execution, institutional investors seek to purchase shares at discount to projected trading
value
7%
Size of additional IPO discount required to attract investors into a transaction is subject to
several factors and can vary significantly from deal to deal. Key variables are:
Gauging range of IPO discount is possible by calculating difference between offer price and
valuation (through DCF or other)

Historically, the IPO discount has been in the 5-15% range to the benchmark fair, trading
value
phases commence, i.e. when the valuation is tested with investors for the first time
I P O
S T R UC T UR E
AN D
P R O C E S S
Impossible to accurately determine the IPO discount until pre-marketing and bookbuilding
31
IPO pricing considerations (2/3) determining the range

Investors will require an IPO discount to the fully distributed valuation range:
Width of IPO pricing range is usually around 15%
Guidelines on setting IPO pricing range:
Set the bottom of the range in order to
Engage the bulk of investors in the process

Act as a catalyst for deal momentum to move investors up the price range
Accommodate the possibility of market volatility during the roadshow period
Set the top of the range in order to
I P O
S T R UC T UR E
AN D
P R O C E S S
Reflect estimated maximum pricing level
32
IPO pricing considerations (3/3) determining pricing
7%
High
Low
Just right
Investor enthusiasm/
Could signal weak deal
Investors believe they
If offering pops money
have helped price the

deal
Risks
support is strained
No tolerance for
execution mistakes
I P O
S T R UC T UR E
AN D
Positives
P R O C E S S
Narrows investor pool
Communicates hot
deal
left of the table

If pop is 40-100%,
investors may flip
Allows for multiple
expansion
Investors have bought-
Investors understand
milestones and metrics

and support multiple
expansion
70% of top 10 allocated
accounts hold stock for

30+ days and increase
positions
in to value
Final Pricing
9 Create solid, experienced investor base with l-t commitment to company
9 Ensure steady and reasonable aftermarket share price progression to maintain
investor confidence and satisfaction
33
The Bookrunners equity trading and distribution platform would

support company stock price performance in the aftermarket
Investor education
Pricing/allocation
Aftermarket
Stabilisation and exercise of the greenshoe option
Objectives of
aftermarket
phase
Provide excellent visibility to investors through continuous news flow

Establish a liquid and buoyant secondary market for the shares
Management of aftermarket phase

End of research black-out period
Stabilisation period
I P O
S T R UC T UR E
AN D
P R O C E S S
Listing
Market maker
Bookrunners become traders

IR/PR communication
Execution
Publication of research notes

End of the black-out Initiation of research
period coverage
40 calendar days after pricing
Bookrunners to initiate research
coverage following end of

blackout period
Maintain active dialogue with
investors when investor interest

weakens or focuses on certain
aspects of the story
Continue to channel investor
feedback and questions to the

companys management
Continuous and coherent communication will be necessary to ensure company

visibility and strong performance in the aftermarket
34
After an IPO, publicly traded companies often sell

additional equity
Why
Why complete
complete a
a follow-on
follow-on offering?
offering?
Market demand/timing
Initial public
offering
Take advantage of broad market and sector trends

Capital needs
Return to equity markets to support expansions in
business plan
I P O
S T R UC T UR E
AN D
P R O C E S S
Equity
Offerings
Fully marketed
offering,
Capital increase
Provide currency for significant M&A or CAPEX activity

Ownership structure
Broaden investor base
Allow key investors to increase ownership stake
Accelerated
bookbuildings
and block trades
Liquidity
Exit strategy for insiders and/or VC investors
Increase market float, reduce volatility
Equity-linked or
convertible
offerings
Marketing
Broaden research coverage
Opportunity to further educate investors on companys
story
35
Comparison of alternatives
Execution
timing
Description
Agency sale
Advantages
Considerations
P R O C E S S
AN D
S T R UC T UR E
Rights issue
Accelerated
bookbuild
Block trade
Bank sells shares on behalf
Bank places shares with Bank places shares
Bank places shares
Bank purchases shares
Depends on the liquidity of
Offering period:
Offering period:
Fast track execution:
Rapid execution:
No regulatory or disclosure
Narrower discount
Opportunity to market
Guarantee of proceeds Potentially narrower
equity story through

management roadshow
Allows for maximum
size vis--vis AGT and
block trade
Potential to raise
The Company faces market
Not fully underwritten
Typically, is the most
Timing of complete sale
Increased market risk
of the Company on open

market at specific price
limit or at the market
stock; Target 20% of ADTV
issues
I P O
Fully marketed
Increased likelihood of
disposal of entire stake at

average market price
Flexibility
Could be combined with
block trade to achieve
complete sale (o. vice-versa)
targeted investors
through extended
marketing and
bookbuilding process
2 weeks
Preparation time:
68 weeks
with existing investors
2 weeks
Preparation time:
6-8 weeks
with targeted
investors via
accelerated
bookbuilding process
13 days (sometimes
within hours)
underwritten offer
discount vis--vis
block trade
bigger % of company
No need to file
Preferential treatment prospectus
to existing
Allows for larger size
shareholders
vis--vis block trade
Opportunity to market
equity story
as in case of block trade
typically short time

frame of 24 hours
Certainty of disposal
No need to file
prospectus
No involvement of the
Companys
management required
Little or no market
risk during execution
Not fully underwritten Wider discount
as in case of block
deeply discounted
trade
offering
uncertain
vis--vis block trade and Long preparation time Size is an issue
Potentially negative signal
AGT
Limited ability to tap Increased market risk
vis--vis block trade
Requires management
to market resulting in
new investor base
Wider discount
downward pressure on share support
relative to fully
price
Longer preparation time
marketed offering
risk during the sale period
from the Company at

pre-determined price
and then places shares
with investors in
secondary market
relative to
accelerated offering
Size and feasibility of
transaction greatly
influenced by liquidity
of the stock and
market conditions
36
Typical usage of IPO funds

SMA Solar
Solar (Renewables)
(Renewables)
SMA
GK
GK Software
Software (Software)
(Software)
MeVis
MeVis (Technology)
(Technology)
361.9m
361.9m
8.7m
8.7m
37.4m
37.4m
Primary
Primary
Secondary
Secondary
27 Jun
Jun 2008
2008
27
126.9m
126.9m
235.0m
235.0m
Strengthening of equity
Primary
Primary
Secondary
Secondary
P R O C E S S
8.7m
8.7m
--
Expansion of core market
basis
Germany
Internationalisation
International expansion
Expansion of development
Expansion of product
capacities
portfolio and safeguarding

of technology leadership
16 Nov
Nov 2007
2007
16
Primary
Primary
Secondary
Secondary
28.6m
28.6m
8.8m
8.8m
Expansion of business
activity
basis
Expansion of R&D
department
Source: Company offering prospect, Deutsche Brse
I P O
S T R UC T UR E
AN D
19 Jun
Jun 2008
2008
19
37
Typical usage of IPO funds (contd)

Franconowest (Real
(Real Estate)
Estate)
Franconowest
Hamburger
Hamburger Hafen
Hafen (Logistics)
(Logistics)
Centrotherm
Centrotherm (Renewables)
(Renewables)
9.0m
9.0m
1,166m
1,166m
02
02 Nov
Nov 2007
2007
185.1m
185.1m
Primary
Primary
Secondary
Secondary
123.2m
123.2m
1,042.8m
1,042.8m
Primary
Primary
Secondary
Secondary
13 Nov
Nov 2007
2007
13
Primary
Primary
Secondary
Secondary
9.0m
9.0m
--
Expansion of business
operations
Modernisation
Expansion of infrastructure
Increased financial
flexibility
of port
138.0m
138.0m
47.1m
47.1m
Strategic investments in
other companies
basis
Expansion of R&D
department
Source: Company offering prospect, Deutsche Brse
I P O
S T R UC T UR E
AN D
P R O C E S S
basis
Maintenance
12 Oct
Oct 2007
2007
12
38
Agenda
Page
2
12
39
T H E
I P O
A S
S T RA T E GI C
F I N A N C I N G
OP T I O N
39
Chronology of the financial crisis

Timeline
Timeline of
of events
events
Date
2007
Event
July
2 Bear Stearns hedge funds lose $1.6bn on subprime CDOs

Merrill Lynch and Citi CEOs fired
E N V I R ON M E N T
HSBC unwinds its subprime lending business
Oct/Nov
January
Countrywide acquired by Bank of America
March
Bear Stearns acquired by JPMorgan Chase
April
Sachsen LB merges with LBBW
August
KfW sells IKB to LoneStar
I P O
March
September
Treasury takes control of Fannie Mae & Freddie Mac
2008
A N D
Lehman Brothers files for Chapter 11

Merrill Lynch & Bank of America agree to merge
SEC issues emergency order temporarily banning short selling in the shares of c. 800 financial institutions
Morgan Stanley and Goldman Sachs convert to bank holding companies
Warren Buffett investments in Goldman Sachs and GE
JPMorgan Chase acquires WaMu after FDIC seizure
October
O V E R V I E W
Wells Fargo acquires Wachovia

House passes $700bn TARP plan on second try
O F
E C M
MA R K E T S
$85Bn bailout of AIG by the Federal government
Kaupthing Bank files for bankruptcy and is taken over by the government
November
West LB, Commerzbank and HSH Nordbank claim German bail-out fund
Source: Factset, press

40
Equity markets are likely to remain volatile, but medium term risk
reward is supportive as a deep recession is likely priced in
Key
Key market
market indicators
indicators (2007
(2007
2008
2008 YTD)
YTD)
Comments
Comments
Key
Key benchmark
benchmark indices
indices
Rapid deterioration in economic data and
DJ Stoxx 600 P/E
O V E R V I E W
O F
E C M
MA R K E T S
A N D
I P O
15
11
7
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08
EUR/USD
1.6
1.5
1.4
1.3
1.2
Crude oil ($/bbl)

150
continued stress in funding markets threaten

to transform a mild global recession to a
deep one
Equity funds continued to see large outflows
across all regions except in Western Europe

Earnings estimates are likely to be revised
downwards
On the positive side, the medium term
inflation trends are improving

The long term risk-reward outlook for stocks
is supportive
Significant steps have been taken to support
and restore confidence in banks
100
50
Source: Bloomberg
41
Markets are seeing a sustained period of equity volatility

10-year
10-year performance
performance of
of selected
selected indices
indices and
and volatility
volatility
Equity indices rebased to 100
Equity index
FTSE 100
S&P 500
700
A N D
MA R K E T S
DAX
3 months 2008 YTD
500
400
5 years
10 years
(20.4%)
(23.6%)
(25.0%)
(29.2%)
(36.3%)
(37.2%)
(37.2%)
(40.2%)
(3.6%)
(12.2%)
(21.6%)
(15.2%)
(25.5%)
(30.9%)
(44.0%)
(42.4%)
29.2%
1.5%
9/11
attack
Russian
and Asian
crises
LTM
US
accounting
scandals
80%
70%
60%
Current
crisis
50%
Dot-com
bubble burst
40%
Spring 2006
correction
(growth fears)
300
30%
200
20%
100
10%
O V E R V I E W
O F
E C M
1 month
600
I P O
800
VDAX volatility index
0%
0
Oct-98
Dec-99
Jan-01
Feb-02
Apr-03
May-04
Jun-05
Aug-06
Sep-07
Oct-08
Source: Bloomberg
42
anticipating the global economy heading for its most

challenging period in decades
Real
Real GDP
GDP forecasts
forecasts
3Q08
4Q08
1Q09
Comments
Comments
2Q09
3Q09
Germany
(0.8)
(1.8)
(1.0)
0.5
1.0
Euro area
(1.0)
(2.0)
(1.0)
0.5
1.0
U.S.
(0.5)
(4.0)
(2.0)
0.0
2.5
UK
(2.0)
(3.0)
(2.5)
(1.5)
0.0
The global economy is sliding
into recession, the first

simultaneous recession since
the 1970s. Developed
economies are likely to
contract for three consecutive
quarters, and by more than in
2001
Emerging markets growth is
set to slow sharply, but

modestly better than in 2001
Expect central banks to
Japan
(0.7)
(1.0)
(0.5)
0.0
0.8
aggressively lower interest

rates
Source: J.P. Morgan Economic Research
O V E R V I E W
O F
E C M
MA R K E T S
A N D
I P O
% q/q
Weaker growth
growth
Weaker
43
European equity markets update

MSCI
MSCI world
world sector
sector performance
performance LTM
LTM
Healthcare
I P O
Telecom
IT
(50.9)%
Consumer
discretionary
(51.3)%
O V E R V I E W
O F
E C M
MA R K E T S
Consumer staple
A N D
(18.4)%
(27.4)%
Energy
(34.1)%
Utilities
(35.3)%
(39.0)%
Materials
(54.3)%
Industrial
(54.6)%
Financials
Global
Global equity
equity markets
markets update
update and
and outlook
outlook for
for
4Q
2008
4Q 2008
The credit spreads are at 2-3x recession
peak levels, and equities have fallen by half

the average recession penalty
A significant and prolonged equity market
rebound is not likely in the short term

In the secondary market, investors are
currently favouring stock with the following

characteristics
Current consensus seems to be for economic
rebound around summer 2009 (in the US)

A rebound in equity markets could take
place a couple of months before (end Q2

2009) but this is subject to a prior resolution
of the financial crisis and macroeconomic
developments
(57.3)%
MSCI World: (47.5%)
Source: Bloomberg
44
The profile of equity issuance has changed dramatically, reflecting

the current crisis
Comments
Comments
EMEA
EMEA ECM
ECM issuance
issuance split
split by
by deal
deal type
type
Stoxx 600
Issuance, bn
IPOs
Follow on
Convertibles
300
275
30
A N D
250
20
225
10
200
O V E R V I E W
O F
E C M
MA R K E T S
325
40
I P O
50
The equity issuance market has
experienced considerable
disruptions (e.g. only two
Equity-linked transactions were
placed in EMEA since beginning
of August)
2008YTD ECM volume has been
driven by large rights issues,

particularly by financial
institutions in order to
strengthen the capital base
Considerable investor liquidity
shifted to defensive asset

classes and heavy redemptions
is underway
IPO market not likely to re-open
07 08
Jun
07 08
Jul
07 08
Aug
07 08
Sep
175
07 08
Oct
before the end of H1 and for

solid equity stories only
Source: Dealogic
45
The profile of equity issuance has changed dramatically, reflecting

the current crisis
O V E R V I E W
O F
E C M
MA R K E T S
A N D
I P O
By
By deal
deal type
type
By
By sector
sector
2003-2007
Fully marketed:
6%
Convert:
13%
ABB:
33%
Rights:
21%
IPO: 27%
2008YTD
Fully marketed:
3% ABB/other:
Convert:
18%
10%
IPO:
13%
Rights: 56%
2003-2007
2008YTD
Other:
Food & 22%
FIG: 31%
Other
40%
Oil & Gas: 5%

Real Estate: 7%
FIG: 59%
Bev.: 4%
Utility:
Telecom: 4%
10%
Utility: 7%
Telecom: 7%
Consumer Goods: 4%
1
EMEA
EMEA ECM
ECM issuance
issuance H2
H2 2008
20081
Date
07-Oct-08
25-Sep-08
22-Sep-08
22-Sep-08
19-Sep-08
18-Sep-08
08-Sep-08
22-Aug-08
24-Jul-08
21-Jul-08
18-Jul-08
14-Jul-08
07-Jul-08
01-Jul-08
Issuer
Sampo Oyj
Natixis
Mobile Telecom
Deutsche Bank
Lloyds TSB
Barclays
Commerzbank
IKB
Abu D. N. Energy
HBOS
Barclays
Ma'aden
AngloGold
Credit Agricole
1
Country
Finland
France
Kuwait
Germany
UK
UK
Germany
Germany
UAE
UK
UK
Saudi A.
S. Africa
France
Industry
Finance
Finance
Telecom
Finance
Finance
Finance
Finance
Finance
Utility
Finance
Finance
Mining
Mining
Finance
2 No proceeds for the issuer

Deals > 650mm
Source: Dealogic as of October 29, 2008
Type
ABB
Rights
Rights
ABB
ABB
ABB
ABB
Rights
Conv
Rights
FM
IPO
Rights
Rights
Size (mm)
1,314
3,727
3,133
2,200
972
884
1,112
679
717
5,202
5,011
1,547
1,108
5,900
Purpose
Secondary shares2
Strengthen cap.
General
Growth
Growth
Growth
Growth
Strengthen cap.
General
Strengthen cap.
Strengthen cap.
Secondary shares2
General
Strengthen cap.
46
Overview of German equity capital markets

Development
Development of
of German
German indices
indices since
since July
July 2007
2007
%
DAX 30 (34.7%)
MDAX (45.2%)
SDAX (54.7%)
TecDAX (38.2%)
110
70
50
30
Jul-07
Sep-07
Nov-07
Jan-08
Jun-08
Aug-08
Oct-08
German
German equity
equity issuance
issuance since
since 2003
2003 in
in
bn
bn
29.8
MA R K E T S
29.7
IPO
21.7
86%
E C M
O F
100%
10%
14%
2004
2005
2003
Other1
26.5
20.9
90%
O V E R V I E W
Mar-08
Source: Bloomberg
A N D
I P O
90
69%
16.7
66%
93%
31%
34%
2006
2007
7%
2008
Inclucdes everything except IPOs

Source: Dealogic
47
Recent development of German equity capital markets

Quarterly
Quarterly German
German IPO
IPO Volumina,
Volumina, 2004
2004 -- 2008
2008
2.0m
8.3m
4.2m
0.1m
7.4m
4.9
3.3
2.0
Q1
1.5
Q2
0.0
0.0
Q3
Q4
1.6
0.8
Q2
0.3
Q3
Q4
Q1
1.5
1.2
1.0
0.6
0.4
Q2
2005
Q3
Q4
Q1
2006
Q2
Q3
2008
2008 (Q1-Q3)
(Q1-Q3)
Sector
Sector
Convertibles
7.4m
2008: 16.7m
Source: Dealogic
0.1
Q1
Q2
Q3
Size
Size
Other1
16.3%
Capital
increase
8.3m
0.0
2008
German
German IPOs
IPOs by
by sector
sector &
& size
size since
since 2007
2007
IPO
1.1m
Q4
2007
German
German equity
equity issuance
issuance
O F
O V E R V I E W
Q1
2004
E C M
MA R K E T S
A N D
I P O
2.8
Transportation
18.6%
TMT
9.2% Real
Estate 7.5%
Automotive
28.6%
> 1,000m
3.9%
Consumerproducts
11.3%
5001,000m
3.9%
250-500m
7.8%
< 250m
84.3%
Machinery
8.5%
Other includes: Computer, Construction, Healthcare, Services, Finance, Food, Metal, Energy
48
Overview of German IPOs in Prime Standard since March 2007

Volume
Original price span
20.00
Development since IPO
Kromi Logistic
26.1
23.00
21-Mar-07
POLIS Immobilien
78.6
13.75
27-Mar-07
VITA 34 International
9.0
14.50
02-Apr-07
ESTAVIS
80.0
28.00
28.00
03-Apr-07
alstria office REIT
406.4
16.00
11-Apr-07
SMT Scharf
15.2
9.50
27-Apr-07
Versatel
720.7
29.00
16.00
9.50
29.00
15-May-07
Wacker Construction
352.0
18.00
24-May-07
DF Deutsche Forfait
13.5
7.00
11-Jun-07
Gerresheimer
880.0
37.00
18-Jun-07
InVision Software
30.0
32.00
28-Jun-07
VTG Aktiengesellschaft
174.0
16.00
02-Jul-07
Tognum
1,800.0
22.00
06-Jul-07
ZhongDe Waste
94.6
23.00
12-Jul-07
EnviTec Biogas
210.9
42.00
13-Jul-07
Homag Group
185.9
29.00
12-Oct-07
centrotherm photovoltaics
161.2
26.50
34.50 34.50
02-Nov-07
HHLA
1,017.6
43.00
53.00 53.00
13-Nov-07
FranconoWest
9.0
1.80
16-Nov-07
Asian Bamboo
82.6
13.50
16-Nov-07
MeVis Medical Solutions
37.4
55.00
55.00
65.00
19-Jun-08
GK Software AG
8.7
21.00
21.00
23.00
27-Jun-08
SMA Solar Technology AG
361.9
40.00
O V E R V I E W
O F
E C M
MA R K E T S
08-Mar-07
I P O
Company
A N D
Date
Source: Deutsche Brse, Bloomberg
27.00
14.50
(71.6)%
(34.8)%
16.75
(69.9)%
35.00 (90.9)%
17.50
(67.9)%
15.00
17.50
(29.0)%
11.50
36.00
22.00 22.00
7.50 7.50
40.00
(65.4)%
(76.6)%
(22.7)%
(34.0)%
45.00
38.00
(71.9)%
18.00
20.00
24.00
26.00
(40.9)%
(54.3)%
(62.4)%
(69.3)%
(68.0)%
(17.1)%
(41.0)%
(35.0)%
(57.3)%
(53.6)%
(38.0)%
(4.3)%
32.00
26.00 26.00
47.00
31.00
52.00
35.00
1.80
2.20
17.00 17.00
47.00
52.00
Price span decreases or price at end of bookbuilding span

49
O V E R V I E W
O F
E C M
MA R K E T S
A N D
I P O
There is always light at the end of the tunnel...
50

IPO As A Strategic Financing Option

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IPO As A Strategic Financing Option

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FRANKFURT AM MAIN, 10TH NOVEMBER 2008

Oliver Diehl, Director

THE IPO AS A STRATEGIC FINANCING OPTION

Financing alternatives in a different environment

Overview of ECM markets and IPO environment

IPO structure and process

Germany postpones Deutsche

Schott Solar postpones public

Evonik says owners drop

Current situation of German Prime Standard IPO market

The current market environment in Germany is moulded by uncertainty and

Investors / diversified financing options

Proactive approach of finance department

Financing concepts should exist ahead of project

Current availability of financing alternatives

Accessing new pools of liquidity has become more difficult

How to bypass a liquidity shortage?

Investment Grade (number)

Non-investment grade ( bn)

Non investment grade (number)

Not rated ( bn)

Not rated (number)

Investment Grade ( bn)

Source: Dealogic, October 2008

Corporate bonds and US Private Placements (USPP)

Volume and conditions depend heavily on each other

Volume mov ables-leasing

ifo business situation

Source: Annual report BDL 07/08

Source: BDL, ifo Institut. August 2008

Leasing volume increased despite subdued business cycle expactations

Ongoing investor scrutiny and quarterly

Establish market value (IPO)

through access to capital markets

High level of focus on earnings

visibility, growth and margin expansion

Dilution; expensive form of capital

Enhance public visibility and credibility

Why issue public equity?

performance post IPO

Financing alternatives in a different environment

Overview of ECM markets and IPO environment

IPO structure and process

What is a successful IPO?

Generate price tension, broad demand

Right valuation (for company/selling shareholders and for new investors)

What is an IPO process?

3-4 go/no go points

Internal organisation needs to be prepared for the IPO

Two steps can be taken to make the process smoother

1 Designate a project leader for the IPO is recommended

Consistency in action and messages all along the process

external hire (e.g. experienced research analyst)

Project management and working groups for IPO

Company and bookrunners

Offer structure/ listing

Legal, business and

financial due diligence

Review/update business plan

If any acquisitions are envisaged, ideally

Prepare 3 year consolidated audited IFRS

they should be completed prior to IPO or, as

process in IPO prospectus