COSRA Meeting Cartagena Capital Markets for SMEs and Corporate Governance Novo Mercado and BOVESPA...
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Transcript of COSRA Meeting Cartagena Capital Markets for SMEs and Corporate Governance Novo Mercado and BOVESPA...
COSRA MeetingCOSRA Meeting
CartagenaCartagena
Capital Markets for SMEs Capital Markets for SMEs and Corporate Governanceand Corporate Governance
Novo Mercado and BOVESPA Novo Mercado and BOVESPA MAISMAIS
Maria Helena SantanaMaria Helena Santana
BOVESPA – Brazil’s Stock BOVESPA – Brazil’s Stock
ExchangeExchange
9/1/059/1/05
2
AgendaAgenda
Facts about BOVESPA
Background: The Brazilian Market Before
the Novo Mercado
Strategy
Results
A Step Further: BOVESPA MAIS
3
BOVESPA – Brazil’s Stock ExchangeBOVESPA – Brazil’s Stock Exchange
Since 2000, Brazil’s only liquidity center for equity trading
Specialized trading systems for equities and corporate bonds
Direct Market Access facilities (16% of the trades)
383 listed companies (Jul/05)
US$ 372 billion market capitalization
Daily average trading value: US$ 594 million
68% of the trading in Latin American exchanges
2nd market in the world for equity options (number of contracts)
4
BackgroundBackground
BOVESPA’s Mission
Providing liquidity to listed shares
Offering an alternative source of financing
to the Brazilian companies (the
overwhelming majority of them are Small
or Medium Enterprises - SMEs)
Brazilian market reality was very different
Primary market totally stagnated
5
Primary Market ActivityPrimary Market Activity
2
0
1
0
1 1
0
1
0
1995 1996 1997 1998 1999 2000 2001 2002 2003
# of IPOS
6
BackgroundBackground
Performing this mission depended on
reactivating the primary market
And reaching SMEs involved further pre-
requisites
Investors: only QIBs, largely international
Low interest in smaller deals
No individual investors
Smaller intermediaries not engaged in
underwriting operations
Large investment banks do not perform
deals below US$ 100 million
7
BOVESPA’s StrategyBOVESPA’s Strategy
Broaden the investor base and the
exchange’s institutional role
Market Popularization Campaign:
“BOVESPA where you are”
Raise awareness on stock market by
Congress, the judicial branch and
government bodies
Improve the ‘quality of the product’:
investor protection, disclosure /
transparency and better corporate
governance
8
The Novo Mercado and CG LevelsThe Novo Mercado and CG Levels
Private sector initiative based on and
enforced through a contract with
BOVESPA
Joining is voluntary and market driven
Companies committed to the highest
standards of corporate governance
Set of rules over and above the
Corporations Law, reflecting market
demands and requirements
What was the outcome?What was the outcome?
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Primary Market ActivityPrimary Market Activity
# of IPOS
2
01
01 1
01
0
7 7
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
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Share offerings Share offerings (2004/2005)(2004/2005)
* IPO
Year CompanyVolume of the Public Offering (US$ million)
SpecialListing
Segment
# ofInvestors
Natura* 243 Novo Mercado 4,445Gol* 283 Nível 2 11,397ALL* 189 Nível 2 3,425CPFL Energia* 287 Novo Mercado 2,750Grendene* 216 Novo Mercado 7,905DASA* 158 Novo Mercado 2,892Porto Seguro* 136 Novo Mercado 5,919Renar Maçãs* 6 Novo Mercado 1,698Submarino* 176 Novo Mercado 4,022ALL 235 Nível 2 1,513Gol 235 Nível 2 1,213Localiza* 108 Novo Mercado 2,397TAM* 225 Nível 2 809Lojas Renner* 378 Novo Mercado 1,212Energias do Brasil* 334 Novo Mercado 114
OHL*1 184 Novo Mercado 468TOTAL 3,393
2005
2004
(1) Preliminary data
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A Market for IPOsA Market for IPOsThe success of the Novo MercadoThe success of the Novo Mercado
Better corporate governance contributed
to broaden investor interest
Increased confidence, specially from
foreign investors
More favorable pricing, stimulated new
IPOs
Offers occurred at multiples much
higher than the market average
13
A Market for IPOsA Market for IPOsThe success of the Novo MercadoThe success of the Novo Mercado
Better corporate governance contributed to reduce resistance to secondary offerings
Made the exit through a stock exchange listing feasible, even in IPOs Important for recycling private
equity/venture capital portfolios
These players tend to “prepare” and “direct” companies to the access market
14
A Step FurtherA Step Further
Creating an alternative for a greater
number of companies, especially SMEs
15
Companies committed to CG
requirements
BOVESPA programs to support companies
Greater flexibility in trading
Investors with medium-term
horizons
BOVESPA MAISBOVESPA MAISPillarsPillars
16
BOVESPA MAISBOVESPA MAISAn OverviewAn Overview
New listing segment of the organized OTC
market managed by BOVESPA Public companies registered with CVM and
BOVESPA
Signature of a contract with BOVESPA Compliance with listing rules
Mandatory use of arbitration for shareholder/company disputes
17
Investor rights (one share one vote; tag
along rights)
Disclosure (cash flow statements; insider
trades; related party transactions; annual
corporate events schedule)
6 month lock-up period after IPO
Ongoing requirements in terms of: Minimum free float (7th year on)
Financial-Economic Performance (minimum
soundness)
BOVESPA MAISBOVESPA MAISListing rulesListing rules
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Electronic trading through the same
platform of the BOVESPA’s main board
Trading rules adapted to liquidity levels: Calls (electronic auctions) at set times during
the trading session and a closing call
Number of calls can increase in accordance
with rise in liquidity
Continuous trading for shares with high
liquidity or employing market makers
BOVESPA MAISBOVESPA MAISFlexible tradingFlexible trading
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Program to Enhance Company Exposure on Market
Fostering regular coverage by analysts and investors in order to improve demand for shares
Professional Training Program Building the internal culture of a public
company Discounts on annual listing fees paid to
BOVESPA 100% in 1st year, with a gradual reduction
through the 4th year after listing
BOVESPA MAISBOVESPA MAISSupport to Listed CompaniesSupport to Listed Companies
20
Our perception onOur perception onHow to develop the access How to develop the access marketmarket It is first necessary to activate the main
market
Without investors there is no market
mechanism that will work Larger companies attract more attention from
investors
Divulge success stories and inspiring examples
Strengthen the intermediation industry
Today, there are much better conditions for
the success of the access market for SMEs in
Brazil
BOVESPA is now working to make it happen!
21
THANK YOU!THANK YOU!
Maria Helena Santana
Listings and Issuer Relations Executive
Officer
Phone: 55 11 3233-2150
www.bovespa.com.br
e.mail: [email protected]