Financing alternatives for Indian companies on AIM

July 2007

Agenda

      

AIM: financing alternative for Indian companies Indian issuers on AIM Routes to AIM for Indian issuers Case studies AIM institutional investor base AIM regulation Deciding between markets

AIM: financing alternative for emerging India

 Worlds

most successful market for growth stocks

 New path to international financing for emerging Indian companies  AIM offers: Access to investors beyond FIIs Liquidity for small companies High quality disclosure, appropriate for smaller companies World-class profile of London Stock Exchange  India-related companies / investment funds raised $2.7 billion on AIM in 2006
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AIM: financing alternative for emerging India

 Transaction structures on AIM for Indian businesses:

IPO of holding company or subsidiary abroad (shares) Follow-on offering for Indian listed company (GDRs) IPO of India-focussed investment company

Why choose AIM from India?

 Internationalises capital structure  Locates financing, investor base in global markets  Offers access to differentiated investor base  Indian companies have a wider choice of equity sources pre- and post-IPO  QIPs mean international listings only worthwhile for strategic reasons  AIM is appropriate in specific circumstances, for high-quality issuers  AIM is not a general alternative to the Indian equity market
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Objectives

New financing source, specialised tool

Indian domiciled companies on AIM

Great Eastern Energy Corporation

Coal-to-methane December 2005 19 million (shares)
Transaction undertaken prior to August 2005 ban on overseas IPO of Indian domiciled companies

Noida Toll Bridge Co.Ltd

Infrastructure project March 2006 $50 million (GDRs)

Foreign companies (holding Indian assets) on AIM

Platinum Mining Corporation of India Orissa mine April 2005 14 million Hardy Oil & Gas plc Offshore Bay of Bengal June 2005 15 million Eros International plc Bollywood film content distribution July 2006 27 million KSK Power Ventur plc Power generation November 2006 31 million West Pioneer Properties Ltd. Retail real estate December 2006 $40 million

India-focussed investment companies on AIM

Trinity Capital plc
Real estate investment company April 2006 250 million

Eredene Capital plc

Real estate investment company May 2006 57 million

INDIA HOSPITALITY CORP

India Hospitality Corp

Tourism infrastructure August 2006 $100 million

Ishaan Real Estate

Real estate projects (K. Raheja) November 2006 207 million

India-focussed investment companies on AIM

Hirco plc
Real estate projects (Hiranandani) December 2006 383 million

Unitech Corporate Parks plc

Real estate projects (Unitech) December 2006 360 million

DEV PROPERTY DEVELOPMENT PLC

DEV Property Development plc

Real estate projects (Indiabulls) February 2007 138 million

Naya Bharat Property Development plc

Investment in Indian land March 2007 $60 million

India-focussed investment companies on AIM

Evolvence India plc
Private equity fund of funds March 2007 $65 million

PROMETHEAN INDIA PLC

Promethean India plc

Private equity April 2007 $100 million

The Indian Film Company

Film fund June 2007 $110 million

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(1) IPO of shares in overseas entity holding Indian assets

IPO of shares in overseas entity holding Indian assets  Applicable in case of:
significant overseas presence international acquisitions globalisation at early stage start-up businesses not fully valued in India equity stories with better acceptance overseas

 Hardy Oil & Gas (AIM, June 2005): existing offshore holding, attracted by AIM E&P valuations  KSK Power Ventur (AIM, November 2006): tapped AIM demand for early-stage Indian infrastructure

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(2) IPO of shares in overseas subsidiary of Indian company

IPO of shares in overseas subsidiary of Indian company  IPO of business held outside India by an Indian parent company  Separate capital structure for financing international expansion  Promoter dilutes at subsidiary not parent company level  Possible applications:
capital for overseas is large relative to parent risk profiles overseas / at home differ international business has separate identity equity story of international business more attractive to global than domestic investors

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(3) Follow-on GDR offering by listed Indian company

Follow-on GDR offering by listed Indian company  Alternative to a QIP (or conventional London-, Luxembourg- or other listed GDR)  Applicable where:
equity story only attractive overseas issuer targets international investors only broader distribution than FIIs via aftermarket

 Noida Toll Bridge (AIM, March 2006)

Guidelines for use of GDRs on AIM
 GDRs can be used only when external share offering is restricted, as in India  AIM disclosure on the DR programme same as conventional GDR offering in UK  All rights associated with the underlying to be available with the DR (e.g. voting and dividend rights)  No upfront payment to issuer, cost of depositary paid by company  DRs must be able to settle electronically via CREST, using depositary interest

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(4) Investment company to finance Indian projects

Investment company to finance Indian projects  AIM offers access to global investors seeking Indian real estate, infrastructure, private equity opportunities  AIM investment companies: vehicle for promoters/corporates to raise equity away from parent  Investment company regulation:
disclosure of investment strategy no % cap, control allowed partially paid structures not allowed follow-on offerings easy to execute

 Ishaan Real Estate (AIM, November 2006): 207 million for FDI-compliant real estate
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Case study

KSK Power Ventur

Highlights
 IPO of offshore holding company  Effected via 29% capital increase  Structured via Isle of Man, with Mauritius subsidiary holding Indian domiciled operating company  Proceeds for new power generation projects, development of coal resources

Transaction profile
Date Amount raised Market cap at IPO Commission on placement Nominated advisor fee Format Nominated adviser UK law Isle of Man law Reporting accountants Competent persons report Board of directors November 2006 31 million 138 million 4% of capital raised 175,000 Shares Arden Partners Lawrence Graham Cains Advocates Mazars IMC Group Consulting One UK-based director

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Case study

Ishaan Real Estate

Highlights
 Independent closed-end investment company  Indian FDI-eligible real estate (SEZs, IT parks)  Target IRR of 20%, leveraged  78% invested at launch in 8 projects  Co-invest with K. Raheja entities, ensuring quality pipeline  Ishaan to invest via Mauritius holding and SPVs, holding stakes in Raheja Indian property ventures  Board of 5 non-executives

Transaction profile
Date Amount raised Domicile Commission on placement Fees as % gross proceeds Format Nominated adviser + broker Joint Glo-Co, books Special advisor UK, US law Isle of Man law Reporting accountants Property valuers November 2006 207 million Isle of Man 3.0% - 3.5% 4.3% Shares Deutsche Bank Deutsche, JP Morgan ENAM Lovells Simcocks Advocates Ernst & Young Cushman & Wakefield

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Case study

Ishaan Real Estate

Execution issues

Investors
 All investors with more than 3% disclosed at admission to AIM  Major investors in Ishaan:
Alliance Capital Blackrock International Capital International Fidelity Investments Henderson Global Investors HSBC Investments Jardine Fleming Asset Management Lone Pine Capital Franklin Templeton Investments ZA Capital

Transaction completed in about 6 months Due diligence required on 8 projects, for immediate investment upon completion Valuation of all targeted projects by Cushman & Wakefield Reg S and Rule 144a components to the offering Disclosure focussed on structure of fund, agreement with investment advisor, and initial portfolio of investments Detailed disclosure on board of directors Lock-up under AIM rules requiring directors of a newly created company not to sell shares for 12 months 170 page offer document

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Case study

Noida Toll Bridge

Highlights
 First follow-on offering by an Indian-listed company on AIM  Effected via 50% capital increase when Noida was reporting net losses  Objectives:
re-finance debt finance new road link raise profile in capital markets broaden shareholder base

Transaction profile
Date Amount raised Over-allotment Total cost Format GDR ratio Nominated adviser Co-financial adviser UK law Reporting accountants Competent persons report March 2006 $50 million 10% 5% of capital raised GDRs +DIs 1:5 shares Collins Stewart Edelweiss Capital Mishcon de Reya SR Batliboi (E&Yo) Halcrow

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Case study
GDR structure
Investors had option to take GDRs (clear via Euroclear or Clearstream) or GDRs + Depositary Interest (CDIs) All investors took GDRs + CDIs Fees waived for investors in GDRs and CDIs company to pay fees GDR/GDR + CDI holders exercise vote Depositary Bank to inform holders of shareholder meetings, ensure votes exercised only as instructed by holders

Noida Toll Bridge

Execution issues
Transaction completed in 3 months Substantial size of transaction relative to existing capital (33.33% of enlarged share capital) Placing on best-effort basis Extensive due diligence: CPR deemed necessary for offer document Consent from debt restructuring procedure received Accounts: IFRS summary, Indian GAAP historical, all IFRS from 2007 Extensive disclosure on material contracts, board, articles 12 month working capital statement as per AIM rules 250 page offer document

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Hardy Oil and Gas trading

2006/7
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Total 2006/7

#Trades
203 373 89 86 120 196 145 215 152 106 259 257

Value (m)
5.4 7.0 1.9 1.4 2.3 2.2 1.0 2.3 2.0 1.6 5.1 11.3

#Shares (m)
1.8 2.5 1.9 0.5 0.9 0.9 0.3 0.7 0.6 0.5 1.4 2.6 14.6

Market Cap (m)

155.0 175.2 177.1 159.87 140.0 154.6 172.5 178.1 174.8 192.9 222.3 272.5

Av. Value trades

26,601 18,820 21,348 16,530 19,170 11,470 7,007 10,516 13,171 15,385 19,624 43,935

12mth turnover of shares % of outstanding 12 month annualised turnover of shares % of free float Shares outstanding (m) Free float

27% 95% 57.2 27%

IPO price Current price Change

1.44 4.56 + 217%

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Eros International trading

2006/07
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

#Trades
42 10 9 22 159 205 812 376 300 183 212

Value (m)
2.5 1.7 0.1 5.4 8.7 13.7 16.9 25.0 22 6.9 8.6

#Shares (m)
1.3 0.9 0.1 2.7 3.6 4.9 4.9 6.8 5.7 1.7 2.2 25.2

Market Cap (m)

192.5 193.5 193.5 209.5 265.5 351.4 413.1 407.6 438.4 431.8 435.1

Av. Value trades

59,620 173,644 13,667 243,467 54,485 66,893 20,877 66.524 74,854 37,604 40,870

Total Jul-Feb 2006/07

Jul-May annualised turnover of shares % of outstanding Jul-May annualised turnover of shares % of free float Shares outstanding (m) Free float

26% 104% 110.0 76%

IPO price Current price Change

1.76 3.98 + 119%

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Price performance
At offer (/$) 12-06-07 % change

Hardy Oil & Gas

1.44 1.76 1.07 0.82 1.01 0.22 3.96 0.25 5.70 1.00 1.00 1.00 1.00 1.00 1.00 5.00 1.00

4.56 3.98 2.53 1.28 1.53 0.12 3.5 0.25 6.35 0.94 0.89 1.06 1.08 0.85 0.92 3.81 1.06

217% 119% 136% 56% 51% -46% -12% 0% 11% -6% -11% 6% 8% -15% -8% -14% 6%

IPOs

Eros International KSK Power Ventur West Pioneer Great Eastern Energy Platinum Mining

Follow-on Investment companies

Noida Toll Bridge Eredene India Hospitality Ishaan DEV Property Naya Bharat Evolvence Trinity Capital Unitech Corp Parks

* or $

Hirco Promethean India

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Most active institutions Number of AIM companies invested, 2006

New issues AIMMost active Institutions investor base: major institutions Total invested in AIM companies, $ million, 2006* $ 1,968 1,286 1,245 1.237 1,130 1,070 1,034 952 850 720 Most active institutions by number of IPO investments

- Fidelity - Artemis -F&C - AXA - Gartmore - AMVESCAP - RAB Capital - Goldman Sachs - Merrill Lynch - HSBC

160 130 120 118 90 84 78 72 67 65

- Fidelity - Artemis - New Star - AMVESCAP - Merrill Lynch - AXA - Gartmore - Schroders - Goldman Sachs - UBS

- Fidelity - Artemis - RAB Capital - AXA - Gartmore - UBS - AMVESCAP - Henderson - Merrill Lynch - CSFB

32 31 25 20 17 17 16 16 15 14

Source: Teather & Greenwood, Growth Company Investor * Translated into $ at 1.00 = $1.90 Data for mid-year 2006

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AIM investor base: interest by sector

Number of institutional holdings by sector, 2006

Value of institutional holdings by sector, 2006 $ billion*

- General Financial - Mining - Software, IT services - Support services - Oil & gas - Media - Real estate - Pharma, biotech - Travel, leisure - Electronics

880 802 568 494 441 415 301 301 300 195

- Mining - Oil & gas - Real estate - General financial - Support services - Industrial metals - Travel, leisure - Pharma, biotech - Media - Software, IT services

$ 13.0 10.4 9.0 8.8 5.1 4.3 4.2 3.5 3.1 2.2

Source: Teather & Greenwood, Growth Company Investor * Translated into $ at 1.00 = $1.90 Data for mid-year 2006

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AIM investor base: leading investors

Fidelity Investments Value of largest holdings, 2006 $ million* Artemis Investment Management Value of largest holdings, 2006 $ million* $268 117 91 - Star Energy - Develica Deutschld - Cape - Genesis - Coda - Speymill - European Goldfields - Prosperity Minerals - Equest Balkan - Imperial Energy Oil & gas $ 60

- Sportingbet - Imperial Energy - First Calgary - Centurion Electronics - PIPEX Comms - Highland Gold - Clipper Windpower - Star Energy - Asia Energy - Serica Energy

Leisure Oil & gas Oil & gas

Equity fund 49 Support ser 47 Oil & gas Software 44 41

Electronics 60 Telecoms Mining Electricity Oil & gas Coal Oil & gas 57 53 47 41 39 39

Real estate 30 Mining Bldg Mats 30 30

Real estate 29 Oil & gas 28

Source: Teather & Greenwood, Growth Company Investor * Translated into $ at 1.00 = $1.90 Data for mid-year 2006

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AIM regulation
Eligibility  Admission rules adapted to suit young, growing companies  Rules allow market to decide on free float, track record  Short, principles-based rule book  Market practice-driven disclosure  IFRS financial data  Advisors prepare document, Exchange does not approve it  Similar concept to SEBI filing for QIPs Supervision  Exchange supervises, licences advisors

Disclosure

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AIM data

AIM companies Overseas AIM companies Market value Market turnover 2006 UK company admissions 2006 Overseas company admissions 2006 IPOs on AIM, 2006 Capital raised (new & further) since 1995 Total capital raised in 2006
Note: translated at 1.00=$1.95

1,642 294 $187 bn $113bn 293 107 261 $72 bn $26 bn

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Hybrid order-driven and market maker system: SETSmm

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AIM admission ceremony

Admission ceremony:  opening of market  reception with representatives from the company, advisers and Exchange Benefits:  completion event for the issuer and working group  media coverage to raise profile at launch  featured on Exchange website

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Visual guide to AIM website

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What we provide in AIM service

Initial Public Offering (IPO) on AIM through GDR application approval from Ministry of Finance, Government of India. AIM Listing application process, guidance and advisory services, selection and coordination with all the Capital Market agencies / professional firms involved for AIM listing, on your behalf. Advising and assisting you in preparing Financials and other Documents eligible to get the company admitted in the AIM LSE, before due diligence is carried out by Law Firms and Chartered Accountants. International Tax Planning. Incorporation of Offshore Companies as strategic corporate decision. Consultation and arrangement on the Finance through other alternatives.

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