ACE Manager Challenge Petteri Häjänen Berben Jordy Jorien van den Bergh
Why is an IPO the right thing for GTI? How does an IPO work? Advantages and disadvantages of an IPO Financial details Execution strategy: how to attract which investors? Conclusion
Why is this the right time?
• Cash injection of 40m aces needed for growth in the next three years • Impressive growth prospects will attract investors
• IPO activity is recovering after the financial crisis • Capital raised in Oct/Nov 2009 quarter was highest since 2004, and trend is expected to continue
• Tech companies have a recent history of successful IPO’s
How does an IPO work?
GTI Underwriter (BNP Paribas)
Capital access Free trade in shares: higher liquidity Incentive for good corporate governance Higher credibility
Lose part of ownership and control of the company Extensive reporting and regulation compliance Higher pressure on management Expense of IPO
Industry Apparel Computer software Biotechnology Internet software and services GTI Price to book value 2.28 3.91 3.9 4.27 Return on equity 4.16% 11.04% 5.05% 5.72% 16.83%
Book value GTI 59,906,336
Company value (x 3.91) 234,233,774
• Introduce 1,000,000 new shares • Based on company valuation, we need to sell 220,000
shares to raise 50m aces
Owner John Mackenzie Employees Investors
Number of shares 1,680,000 100,000 220,000
Ownership 84% 5% 11%
1 2 3
• Target institutional investors • Easier to reach • Interested and knowledgeable investors • Technology-related but not as risky
• Build confidence among investors • Assure commitment of CEO • Show elaborate business plan • Show proof of past results and expected future growth
• Building a final prospectus • ...