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ACG Core Track: Capital Markets Update: From Leverage to IPO

ACG Core Track: Capital Markets Update: From Leverage to IPO. Wednesday, March 23, 8:45 – 9:30 a.m. Sponsored by William Blair & Company and BDO. From Leverage to IPO. Moderator: Brett Paschke, William Blair & Company Panel: Duff Anderson, Solebury Capital Markets

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ACG Core Track: Capital Markets Update: From Leverage to IPO

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  1. ACG Core Track: Capital Markets Update:From Leverage to IPO Wednesday, March 23, 8:45 – 9:30 a.m.Sponsored by William Blair & Company and BDO

  2. From Leverage to IPO • Moderator: • Brett Paschke, William Blair & Company • Panel: • Duff Anderson, Solebury Capital Markets • Timothy R. Curry, Jones Day • Janis Koyanagi, Toronto Stock Exchange / TSX Venture Exchange • Pam Buchanan, NASDAQ OMX Sponsored by:

  3. Equity Capital Markets Review March 2011

  4. Markets Have Recovered as Stability Returns Money Market Assets Inflows to Equity Funds Volatility Index LTM Equity Index Performance Equity Capital Markets Review ($ in billions) (Index Value) ($ in trillions) ACTIVE GRAPHS are causing excessive crashing. The originals Charts are located in an exhibit folder at the following location: S:\BOILERS\Department Wide Boilers\Equity Master Boiler\Support\2009 Equity Master Boiler - Active Graph Chart Support.pptx Source: Equidesk, ICI Research and Fact Set. Data as of March 20, 2011. 1

  5. Earnings Have Driven Market Recovery… LTM Yield Rates S&P 500 P/E Ratio S&P 500 – Top Line Results Weekly Inflows to Equity Funds Equity Capital Markets Review ($ in billions) (Index Value) • Support File - Factset • Updated 3-20-11 • GMM • Support File – Data emailed to GMM from Janet Hartmann in BIC each Wed • Updated 3-16-11 • GMM 29.5x • Active Graph • Updated 3-20-11 • GMM • Support File - BBG • Updated 3-20-11 • GMM 16.4x 15.3x 7.3x Source: Bloomberg, FactSet Research Systems, and Investment Company Institute (ICI) Data as of March 20, 2011. 2

  6. …Resulting in Increased IPO Activity IPOs Filed Monthly IPO Backlog IPOs Priced Annually IPOs Priced Monthly Equity Capital Markets Review 0 0 Source: Equidesk. Data as of March 20, 2011. Data does not include REITs, Closed End Funds, and SPACs. 3

  7. IPO Pricing Environment Has Improved Equity Capital Markets Review Average One-Day Return Offer Price Relative to Filing Range 3 10 15 (# of Deals) 10 11 8 11 9 16 20 19 6 Source: Dealogic as of March 20, 2011. Does not include REITs or CLEFs. 4

  8. Healthcare and Technology Lead the Way IPOs Priced YTD by Primary Sector Current IPO Backlog by Primary Sector Equity Capital Markets Review • Support File - Dealogic • Updated 3-20-11 • GMM • Support File - Dealogic • Updated 3-20-11 • GMM Business Services Business Services Commercial & Industrial Commercial & Industrial Consumer & Retail Consumer & Retail Financial Services Financial Services Technology Healthcare Healthcare Technology • Support File - Dealogic • Updated 3-20-11 • GMM Source: Dealogic as of March 20, 2011. (1) Backlog defined as IPOs initially filed or revised within the past 180 days. 5

  9. IPO Size and Structure Considerations Equity Capital Markets Review Percentage of Company Sold Average Secondary Component of IPOs By offering size: 80%-100% 0%-20% 60%-80% 40%-60% 20%-40% Implied Market Cap at Initial Filing Market Cap at Offering >5.0B >5.0B 1.5B – 5.0B <150M 1.5B – 5.0B <150M 750M – 1.5B 750M – 1.5B 150M – 300M 300M – 750M 150M – 300M 300M – 750M Source: EquiDesk. Excludes Closed End Funds and REITs. January 1, 2005 through December 31, 2010. Average percentage of secondary shares sold calculated as a percentage of total shares (primary and secondary) sold; secondary component percentage data only includes deals with secondary components. 6

  10. IPO Company Characteristics Equity Capital Markets Review IPOs Priced LTM ($ in millions) Source: Dealogic, excludes REITs and closed-end funds. LTM as of 3-20-11. Note: Each category independently sorted by decile. (1) Mean EPS Estimate 60 days after pricing 7

  11. Small Cap Companies Dominate U.S. Exchanges Equity Capital Markets Review NASDAQ % of Companies % of Market Cap • Less than $1 billion market cap companies are a majority of companies on U.S. Exchanges: • 75% of NASDAQ • 40% of the NYSE As of March 3, 2011. Source: CapitalIQ 8

  12. Overall Follow-On Market Overview % Marketing Type % Shelf Takedown Relative Offering Size as a % of Market Value Offering Size vs. Liquidity Equity Capital Markets Review No support files, all from Equity boiler • See Equity Boiler • Updated 3-20-11 • GMM • See Equity Boiler • Updated 3-20-11 • GMM • See Equity Boiler • Updated 3-20-11 • GMM • See Equity Boiler • Updated 3-20-11 • GMM Source: Dealogic and FactSet Research Systems as of March 20, 2011. All values are median for each respective period. Offer/3 and 6 Month performance for follow-ons priced less than their specified time periods are calculated from pricing to present. 9

  13. Overall Follow-On Market Overview (cont’d) Pricing Relative to Filing and Last Trade Performance Since Offering Average Secondary Share % for FOs with Selling Shareholder Component by Deal Value(1) Equity Capital Markets Review • Support File - Dealogic • Updated 3-20-11 • GMM • See Equity Boiler • Updated 3-20-11 • GMM • See Equity Boiler • Updated 3-20-11 • GMM Source: Dealogic as of March 20, 2011. All values are median for each respective period. Offer/3 and 6 Month performance for follow-ons priced less than their specified time periods are calculated from pricing to present. (1) Averages do not include FOs where secondary shares offered equals zero. Data reflects IPOs priced LTM as of above reference date. 10

  14. Canadian Markets… TSX & TSXV Global Leaders 8th in EquityFinancing 7th in MarketCapitalization 14 *S&P is a trademark owned by Standard & Poor’s Financial Services LLC As at December 31 2010

  15. Global Exchange Leader for New Listings in 2010 *NASDAQ Information does not include secondary financings Source: Exchange Websites, World Federation of Exchanges, (TMX analysis of public information)

  16. Listed Issuers Span the Spectrum Market Capitalization Distribution of Listed Issuers Source: Capital IQ, TSX and TSXV Market Intelligence Group As at March 18 2011 for the US Exchanges and as at February 28 2011 for TSX and TSXV

  17. Canadian equity marketplace is ideal for small to mid-cap IPOs Total IPOs in Canada and U.S. • Average amount raised during IPO (2010) • U.S. markets: US $252.9 million • TSX: US $89.9 million • TSX Venture: US $6.6 million Source: Hoovers IPO Central

  18. Access to Capital Toronto Stock Exchange and TSX Venture ExchangeTotal Financings (C$Billions) 1999 – 2010 *TSX Venture Exchange commenced operations on November 29 1999

  19. 428 Issuers 1847 Issuers 476 Issuers 612 Issuers 51 Issuers 256 TMX Group Serves Companies at all Stages of Growth Market Capitalization Toronto Stock Exchange and TSX Venture Exchange Unique feeder system As at December 31, 2010 491 graduates + 97 M&A* *From January 1, 2000 – December 31, 2010 Toronto Stock Exchange issuer base: 1,516 issuers, ~$2.2 trillion market cap TSX Venture Exchange issuer base (excludes NEX): 2,154 issuers, ~$71.5 billion market cap 19

  20. International Companies Choose to List on TSX and TSXV TSX and TSXV International Listingsby Country/Region TSX and TSXV International Listings by Sector Total International Listings as at December 31, 2010 = 318 TSX = 176 listings, QMV=$180.5 B TSXV = 142 listings, QMV= $6.6 B Other includes Bermuda, BVI, British West Indies, Cayman Islands, Channel Islands, Dubai, Guernsey, Israel, Trinidad

  21. U.S. Based Companies by Numbers & Sector $95B Market Cap 155 US Companies TSX (80) TSXV (75) $3.0B Raised Through 122 Financings in 2010 21 New US Companies Listed in 2010 Total U.S. Listings as at February 28 2011 = 155 TSX = 80 listings, QMV=$92.4B TSXV = 75 listings, QMV= $2.8B

  22. U.S. Based Listed Company Financings TSX Venture Exchange is a global benchmark of excellence for junior public equities and along with Toronto Stock Exchange forms a first-rate tiered system for the growth of emerging public companies. 2008 - $707 M raised 2009 - $1.8 B raised 2010 - $2.8 B raised 2008 - $255 M raised 2009 - $151 M raised 2010 - $223 M raised *Companies that are headquartered in the US

  23. International Investment Community Trades on Toronto Stock Exchange • 25 International Brokers including: • Barclays Capital • Citigroup • CSFB • Deutsche Bank • Goldman Sachs • HSBC • JP Morgan • Macquarie Capital Markets • Merrill Lynch • Morgan Stanley • Raymond James • Thomas Weisel • State Street • UBS • 80 Canadian Brokers including: • BMO Nesbitt Burns • Canaccord Genuity • CIBC World Markets • GMP Securities • RBC Capital Markets • Scotia Capital Markets • TD Securities • National Bank Financial Toronto Stock Exchange Volume and Transactions (2004-2010) Volume CAGR 9% Transactions CAGR 29% ~40% of daily trading originates from International brokers

  24. performerscompanies with annual returns greater than 50% TSX & TSX Venture 24

  25. Coming Up Next… • ACG Core Track (Elizabeth G) • 10:00 – 11:00 a.m. The Sell Side Process: Tactics for a Changing Game • 11:15 a.m. – NoonLower Middle Market Update • 2:00 – 3:00 p.m.Strategies for Add-On Acquisitions • Noon – 1:45 p.m. Lunch & Keynote with General Stanley McChrystal (Ret)Sponsored by Fifth Street Capital (Elizabeth Ballroom)

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