THE CAPITAL MARKET An engine for economic booming: Will South Eastern follow" Financing through IPOs

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THE CAPITAL MARKETAn engine for economic
booming Will South Eastern follow?" Financing
through IPOs

• The Greek experience

Dr Panayiotis Diamandis President SSIF IEBA TRUST
SA
4TH SOUTHEASTERN EUROPEAN FINANCIAL
FORUM Bucharest, 14th 18th May 2007
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• SECTION A

GENERAL PRESENTATION OF THE PROCESS OF LISTING
4TH SOUTHEASTERN EUROPEAN FINANCIAL
FORUM Bucharest, 14th 18th May 2007
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INTRODUCTION

• The purpose of the current presentation is to
  explore the impact of IPOs on emerging markets,
  and how the capital markets, as finance tools
  drive the economic growth of these countries.
• As an alternative method of financing, the
  capital markets provide with funds the companies
  and promote their economic growth, as well as the
  entire economy.
• It is quite interesting to examine the IPOs
  impact on markets that are considered to be
  emerging, such as the Southeastern European
  transition economies.

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WHY TO GO PUBLIC

• The basic reasons for a company to go public can
  be summarized to the following
• To raise capital to finance current and future
  investments (and overcome possible borrowing
  constraints by the credit institutions)
• To obtain publicity by disclosing information to
  a wide number of investors, and promote its
  investment plans
• To guarantee liquidity for the small shareholders
• Moreover
• Public companies can apply larger supply of
  external finance
• The process of listing brings recognition by the
  investors, thus enlarging the set of potential
  investors.
• But the listed companies have to deal with high
  costs of being and maintained listed

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IMPORTANT PARAMETERS

• MARKET OF LISTING
• The companies normally choose to use the host
  capital market in order to be listed. However,
  given the globalization of the capital markets,
  currently the companies examine alternative
  capital markets, based on the targets of listing
  and the markets environment
• PRICING
• The pricing of an IPO is quite important,
  because the initial price of the company reflects
  the future perspectives and the fair value of the
  company.
• AFTER LISTING EVOLUTION
• In order to take into account inefficiencies in
  the market, it is quite important the after IPO
  evolution of the price of the share, although
  usually it is monitored under-pricing when a
  listing takes place.

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IMPORTANCE OF THE IPOs

• The capital markets offer the opportunity to the
  companies to be listed and raise capital. The
  development of the capital markets on average
  coincide with the economic growth of the
  respective countries, as the increase of the GDP
  is reflected also to the growth of the capital
  markets.
• Moreover, the overreaction of the prices of the
  shares, when a listing takes place (due to an
  expected under- pricing) offers additional
  motivation for both institutional and individual
  investors, to invest on the future of such
  companies, through the materialization of their
  business plan.

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• SECTION B

THE GREEK EXPERIENCE Period 1994 - 2002
4TH SOUTHEASTERN EUROPEAN FINANCIAL
FORUM Bucharest, 14th 18th May 2007
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INTRODUCTION

• The market we choose to examine is the Greek
  Capital Market, for a period that was considered
  an emerging one by the international financial
  institutions (on 31st May 2001, Morgan Stanley
  Capital International announced that the MSCI
  Greek Index shall be classified as a developed
  market index). For that reason, the sample is
  restricted up to 2002. For the selected period,
  we compare various fundamental parameters and
  their evolution.

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IPOs STATISTICS - Europe
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IPOs STATISTICS - Greece
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IPOs STATISTICS - Greece
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IPOs STATISTICS - Greece
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IPOs vs GDP GROWTH - Greece
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IPOs vs INFLATION - Greece
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IPOs vs SHORT TERM T-BILLS
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IPOs vs LONG TERM BONDS
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IPOs vs BANK DEPOSIT RATES
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IPOs STATISTICS - Greece
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IPOs STATISTICS - Greece
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AND A ROMANIAN CASE!

• Alumil Rom Industry IPO is the last listing that
  took place on the Romanian Capital Market. The
  significant statistics achieved, such as the
  oversubscription of more than 16 during the
  subscription period, as well as the performance
  during the fist trading day (95), offered a
  strong indication that the newcomers on the
  Romanian Capital Market can you important
  financing tools, for their expansion of
  operations, while the investors make investments
  with higher that risk free returns.

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IPO HISTORY IN ROMANIA
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FINAL CONSIDERATIONS

• Shall the companies use the Romanian Capital
  Market in order to finance their activities, and
  run into the increased competition in a European
  environment?
• Shall the companies that take the decision to be
  listed, use efficiently the recourses and
  financing by the capital market, so as to improve
  their market position?
• Shall the authorities keep the efficient control
  and monitor the market in a way that the
  investors are protected?
• Finally, the capital market shall be an important
  economic factor for future development and growth
  as a whole, for all countries in the Southeastern
  Region?

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PANEL DISCUSSION