05-Dec-14

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Lance Chen, Partner - Head of US Securities, Baker & McKenzie (Chair)

Yilong Du, executive director, Goldman Sachs

Yulanda Tang, Senior Manager, PwC

Jonathan Barkey, Senior Vice President and Counsel, Citi

© 2014 Baker & McKenzie 1

Tapping into the US market

Tapping into the US market

4 December, 2014

Lance Chen

Principal, Shanghai

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Cross-Border Listings 2012 and 2014

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We commissioned

mergermarket to survey 200

corporate executives and

investment bankers familiar

with cross-border listings

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Key themes

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Key themes

Survey findings include:

• Both emerging and developed markets find cross-border listings attractive

• Mid-caps dominate

• Liquidity and opportunism drive cross-border listings

• No single stock exchange is right for all companies

• On-the-ground expertise is paramount

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Liquidity is king …

Corporate respondents’ top three reasons for choosing to list on a particular

foreign exchange relate to market liquidity:

98%

92%

83%

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78%

60%

38% 36% 35%26%

… but it’s not everything

Benefits of listing abroad, according to corporate respondents.

Increased

liquidity

Timing of

offering

Fewer

disclosure

requirements

Simpler

accounting

Fewer listing

requirements

Reduced

transaction

costs

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No one Stock Exchange is the answer

Respondents’ top exchanges for meeting specific desired goals:

ASX NYSE TSX TSX LSE

TSX LSE ASX HKSE NYSE

FSE HKSE

ACCESS TO

NEW

INVESTORS

VISIBILITY /

MARKETING

FUTURE

ACCESS TO

CAPITAL

INCREASED

LIQUIDITY

COMPARED TO

HOME MARKET

RAISING

CAPITAL

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No one stock exchange is the answer

INDUSTRYTOP EXCHANGES BY NUMBER OF LISTINGS

#1 #2 #3

Technology, Media & Telecommunications Shenzhen ChiNext NASDAQ NYSE

Metals & Mining ASX HKSE Shenzhen SME

Energy & Power NYSE ASX HKSE

Consumer Products & Services LSE-AIM Shenzhen SME HKSE

Financial Services LSE NASDAQ NYSE

Industrials Shenzhen SME Shenzhen ChiNext HKSE

Healthcare & Pharmaceuticals NASDAQ Shenzhen ChiNext Taiwan OTC

Building, Construction & Engineering Shenzhen SME HKSE BSE

Real Estate NYSE HKSE SGX

Number of listings, including dual listings, from January 1, 2008 through December 1, 2014. Source: Thomson Reuters.

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Factors respondents found most important when choosing their financial, legal

and accounting advisers:

On-the-ground expertise is paramount

98%

71%

59%

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The global picture‒ Cross-border IPOs surged in the first half of 2014

Domestic IPOs increased by 29% in the first six months

Cross-border IPOs grew by more than 151% in value, raising a total of

US$25.7 billion in 102 listings

‒ Companies increasingly looking beyond their domestic markets and traditional

financing centers

Tap deeper pools of capital

Access more sophisticated investor bases

Compete against peer companies

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Cross-Border IPO Index ‒ Track the flow of cross-border IPOs through our Cross-Border IPO Index

Semiannual scoring and analysis of cross-border IPO activity relative to

overall IPO activity

Global index score grew to 32.7 as compared to 22.0 in the same period

last year

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Regional Comparison

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_ Growth driven by favorable economic conditions and steadily rising

stock markets in the region

_ The top US cross-border IPO by capital raised was Alibaba in New

York followed by JD.com, Inc., on NASDAQ

_ Retail, financials and high technology are the top three industries for

capital raised in US cross-border IPOs

Companies raised US38.1billion in 57 cross- border IPOs in US in the first half of 2014, a 601 % increase over capital raised during the same period last year

The US

– Even before Alibaba, US exchanges saw ten Chinese issuers raise US$3.5 billion in cross-border IPOs and deliver aftermarket performances that outperformed the Dow Jones Industrial Average

– These factors resulted in the region’s index score increasing to 23.8 in the first half of 2014 as compared to 13.4 in the same period last year

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The US

– Growth supported by a steady stream of Chinese companies listing on NASDAQ and the NYSE

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The lure of the US

‒ China, Israel and European companies choosing to list on NASDAQ

or NYSE

‒ The US has seen 51 cross-border IPOs which raised US$37.0 billion

accounting for 23% of deal numbers and 48% of proceeds in 2014

and is now outpacing the UK and Hong Kong for overseas listings

‒ Familiarity with US accounting regulations, strength of its markets,

access to capital and success of Alibaba IPO are likely to encourage

more cross-border IPOs on US exchanges

First nine months of 2014, saw more cross- border listings into the US than the whole of 2013

Source : EY Global IPO Trends 2014 Q3

Asian companies listing in the US, 2014

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Issue Date Issuer NameDomicile

NationTF Macro Industry

Proceeds amount

including overallotment

sold in this market

($ Mil)

Exchange

where issue

is listed

9/18/2014 Alibaba Group Holding Ltd

China High Technology 25,032.30 New York

5/21/2014 JD.com Inc China Retail 2,047.03 Nasdaq

3/25/2014 Nord Anglia Education Inc Hong Kong

Consumer Products and Services

349.60 New York

4/16/2014 Weibo Corp China High Technology 328.44 Nasdaq

5/15/2014 Jumei Intl Hldg Ltd China High Technology 279.93 New York

5/7/2014 Cheetah Mobile Inc China High Technology 193.20 New York

10/9/2014 MOL Global Inc Malaysia High Technology 168.75 Nasdaq

4/8/2014 iKang Healthcare Group Inc

China Healthcare 167.08 Nasdaq

4/2/2014 Tarena International Inc China High Technology 137.70 Nasdaq

11/17/2014 eHi Car Services Ltd China Consumer Products and Services

120.00 New York

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– Use of VIE structures (Variable Interest Entity) has drawn

attention from the Securities and Exchange Commission

(SEC) and the People's Republic of China (PRC)

– Regulators question whether VIE structures - which allow

for foreign investment in Chinese companies - are legal in

China

– Alibaba Group, which relied on a VIE structure when

listing on the NYSE, noted in its filing that, “there are

substantial uncertainties regarding the interpretation and

application of current and future PRC laws, rules and

regulations”

– Scrutiny surrounding the legality of VIE structures may

reduce investor appetite for Chinese IPOs listed in US

Warning Signs

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A slowdown in US cross-border IPOs appears unlikely in the short-term

BUT

The US surge - will it last?

– US exchanges continue to be a highly desired destination

for Chinese companies. It is important to evaluate the

company's corporate structure

– Certain corporate structures may create risk for both

companies and investors

– In 2015, analysts predict the opening of the Shanghai-

Hong Kong Stock Connect will further bolster investor

confidence in domestic listings and slow the growth of

cross-border lPOs

– While there is little doubt Asia Pacific will be a driving

force for cross-border IPOs, domestic IPOs may take on

a more prominent role for companies seeking to raise

capital in the region

Warning Signs

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The US surge - Will it Last?

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Questions?