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... activities are performed by JPMorgan Chase Bank, N.A. JPMorgan deal team members ... ADR Bank's core services. Issue and cancel ADRs ... – PowerPoint PPT presentation

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Title: Pitchbook-US.pot


1
M A Y   2 0 ,   2 0 0 5
H O W   T O   F A C T O R   A D R S   I N T O 
 A   P O R T F O L I O   C O M P A N Y ' S 
 E X I T   S T R A T E G Y
S T R I C T L Y   P R I V A T E   A N D 
 C O N F I D E N T I A L
2
This presentation was prepared exclusively for
the benefit and internal use of the JPMorgan
client to whom it is directly addressed and
delivered (including such clients subsidiaries,
the Company) in order to assist the Company in
evaluating, on a preliminary basis, the
feasibility of a possible transaction or
transactions and does not carry any right of
publication or disclosure, in whole or in part,
to any other party. This presentation is for
discussion purposes only and is incomplete
without reference to, and should be viewed solely
in conjunction with, the oral briefing provided
by JPMorgan. Neither this presentation nor any
of its contents may be disclosed or used for any
other purpose without the prior written consent
of JPMorgan. JPMorgans policies prohibit
employees from offering, directly or indirectly,
a favorable research rating or specific price
target, or offering to change a rating or price
target, to a subject company as consideration or
inducement for the receipt of business or for
compensation. JPMorgan also prohibits its
research analysts from being compensated for
involvement in investment banking transactions
except to the extent that such participation is
intended to benefit investors. JPMorgan is a
marketing name for investment banking businesses
of JPMorgan Chase Co. and its subsidiaries
worldwide. Securities, syndicated loan arranging,
financial advisory and other investment banking
activities are performed by a combination of
J.P. Morgan Securities Inc., J.P. Morgan plc,
J.P. Morgan Securities Ltd. and the appropriately
licensed subsidiaries of JPMorgan Chase Co. in
Asia-Pacific, and lending, derivatives and other
commercial banking activities are performed by
JPMorgan Chase Bank, N.A. JPMorgan deal team
members may be employees of any of the foregoing
entities. This presentation does not constitute a
commitment by any JPMorgan entity to underwrite,
subscribe for or place any securities or to
extend or arrange credit or to provide any other
services.
H O W   T O   F A C T O R   A D R S   I N T O 
 A   P O R T F O L I O   C O M P A N Y ' S 
 E X I T   S T R A T E G Y
3
Global capital raising on the rise
US capital raising events 2005 thru Mar (bn)
Non-US capital raising events 2005 thru Mar (bn)
473
209
192
367
173
157
154
151
274
133
129
127
234
233
230
99
179
153
H O W   T O   F A C T O R   A D R S   I N T O 
 A   P O R T F O L I O   C O M P A N Y ' S 
 E X I T   S T R A T E G Y
142
117
35
8
22
Source JPMorgan, Thomson Financial, March 2005
1
4
ADR capital raising recovering momentum
ADR capital raising (bn)
2004YTD 2005 ADR capital raising by region (bn)
2004YTD 2005 ADR capital raising by market and
type (bn)
H O W   T O   F A C T O R   A D R S   I N T O 
 A   P O R T F O L I O   C O M P A N Y ' S 
 E X I T   S T R A T E G Y
Source ADR banks, March 2005
Notes Inclusive of all ADR and GDR capital
raising events arranged secondary block trades
have been omitted.
2
5
ADR ownership, liquidity and foreign investment
are at record highs
ADR trading liquidity
Levels of US investment in foreign equities
Foreign portfolio
Market value, foreign holdings (bn)
ADR trading value (bn)
ADR share trading volume (bn)
3 mos. 05
3 mos.05
1997
1998
1999
2000
2001
2002
2003
2004
Source U.S. Federal Reserve, March 2005


Source adr.com (share volume), Bloomberg (
volume), March 2005
ADR institutional ownership
Purchases of foreign equities by U.S. investors
(bn)
H O W   T O   F A C T O R   A D R S   I N T O 
 A   P O R T F O L I O   C O M P A N Y ' S 
 E X I T   S T R A T E G Y
1,875
Source 13F filings, March 2005
Source U.S. Treasury, February 2005 Foreign
equities consist of both ADRs and local shares
3
6
Benefits of an ADR program
Benefits
  • Broaden and diversify a companys U.S. investor
    base
  • Enhance a companys visibility, status, and
    profile in the U.S. and internationally among
    investors, consumer and customers
  • Establish/increase U.S. liquidity (and
    potentially total global issuer liquidity) by
    attracting new investors
  • Develop and/or increase research coverage in the
    U.S.
  • Offer a new avenue for raising equity capital
  • Facilitate U.S. MA activity by creating a
    desirable stock-swap acquisition currency
  • Enhance communications with shareholders in the
    U.S.
  • Facilitate the creation of incentives for U.S.
    employees (stock purchase and option plans)
  • Ensure a continual stream of retail investment
    into an issuers program through direct purchase
    and dividend reinvestment plans

H O W   T O   F A C T O R   A D R S   I N T O 
 A   P O R T F O L I O   C O M P A N Y ' S 
 E X I T   S T R A T E G Y
4
7
The American Depositary Receipt (ADR)
What is an ADR?
  • U.S. dollar-denominated negotiable certificate,
    that represents ownership of shares in a non-U.S.
    company. ADRs enable U.S. and other global
    investors to conveniently invest in non-U.S.
    companies
  • ADRs pay USD dividends, as well as being traded
    and quoted in USD
  • ADR structures
  • Level I OTC
  • Level II NYSE/NASDAQ/AMEX
  • Level III NYSE/NASDAQ/AMEX offering of shares
  • Private Placements 144A
  • 20-F reporting requirements for Level II III
    programs

A D R   M A R K E T   O V E R V I E W
1
8
How does the ADR bank bridge the two markets?
For illustration purposes, the flow is of an ADR
issuance only
A D R   M A R K E T   O V E R V I E W
2
9
ADR Banks core services
Core services
  • Issue and cancel ADRs
  • Dividend and proxy administration and
    distribution
  • Advise and execute corporate actions
  • Distribute issuer corporate material
  • Stock transfer and registration
  • Shareholder Services call center for registered
    ADR holders
  • Tax withholding services

A D R   M A R K E T   O V E R V I E W
3
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