The Experiences of a Recent IPO: Snam Rete Gas - Annual Equity Capital Markets Conference
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Annual Equity Capital Markets Conference,
London 21 March 2002
The Experiences of a Recent IPO:
Snam Rete Gas
Salvatore Russo
President and CEO
Snam
Snam Rete
Rete Gas
Gas Overview
Overview
IPO
IPO Preparations
Preparations
IPO
IPO Process
Process
The
The Offering
Offering
Closing
Closing remarks
remarks
Snam Rete Gas Overview
IPO
IPO Preparations
Preparations
IPO
IPO Process
Process
The
The Offering
Offering
Closing
Closing remarks
remarksThe gas chain in Italy
before the Letta Decree
Supply Infrastructure Sales to end users
Domestic Power Generation
•Snam
Production Transmission •Enel
• Eni / Agip Network and •Edison
• Others Storage Dispatching Industrial
• Eni / Agip • Snam •Snam
Import • Edison • Others
•Snam
Distribution
•Enel
LNG Residential
Network
•Edison • Italgas
•Italgas
•Snam
•Others • Other LDCs
• Other LDCsEni gas sector reorganization
in November 2000
Sales to
Supply Infrastructure
end users
(regulated)
Transmission Power Generation
Equity Gas
Network and (Eni / Gas & Power)
(Eni / Agip
Division) Dispatching
Storage
Industrial
(Stoccaggi
Gas Italia) (Eni / Gas & Power)
Import
of Gas LNG Distribution
Network Residential
(Eni / Gas & Power) Re-gasification
(Italgas) (Italgas Più)
Listed on Stock Exchange in a 1 year time frameWhat is Snam Rete Gas?
Scale and Focus
• Snam Rete Gas has a total
network length of 29,670km
(96% of total Italian system)
• 70% of national network less
than 20 years old
Year 2001
Snam Rete Gas national network
Snam Rete Gas regional network
Others
Entry pointsWhat is Snam Rete Gas?
Positioned in a Strong and Growing Market
Absolute volumes growth
Consumption by sector (bcm)
(bcm) 2000-2010
92
83
70
56 56
22 20 52
17 16 47
15 15 44
9
31 36
3 12 23
1996 2000 2005 2010
lgi .
Fr K
rm E
Sp y
ain
ce
um
Be eth
y
Ge Ro
U
l
Ita
an
an
N
Power generation OtherSnam
Snam Rete
Rete Gas
Gas Overview
Overview
IPO Preparations
IPO
IPO Process
Process
The
The Offering
Offering
Closing
Closing remarks
remarksIPO Preparations
MAIN IPO PRECONDITIONS
BUSINESS /
LEGAL CREATING A
MARKET
SEPARATION NEW CULTURE
FRAMEWORK
Advisor’s role in positioning
Snam Rete Gas equity story
Eni Market
Objectives Demands
Actions and decisions must support IPOEstablishing a market framework
Continuous and Constructive Dialogue with Regulator
Clear, transparent and
stable
Fair return and efficiency
Attractive business
targets
for investors
Attractive incentives
Long term visibilityLegal Separation
Capital Gains Tax
Ongoing Tax Optimisation
Legal Constraints
Accounting Constraints
Market Messaging
OPTIMAL LEGAL / STRUCTURAL OUTCOMECreating a New Independent
Culture
Name of Newco
New Mission, Strategy, Objectives
IT and Management Systems
New Organisational Structure
Incentives
From Eni division to independent company
... in 6 monthsIPO Preparations
IPO PRE-CONDITIONS
BUSINESS /
LEGAL CREATING A
MARKET
SEPARATION NEW CULTURE
FRAMEWORK
Authority’s Delibera: New Name & New
Transfer of assets
criteria for setting tariff Managment Team
(July 2001)
(May 2001) (Nov 2001)Snam
Snam Rete
Rete Gas
Gas Overview
Overview
IPO
IPO Preparations
Preparations
IPO Process
The
The Offering
Offering
Closing
Closing remarks
remarksChoosing JGCs and JBR
Quality Sector Research
Business Knowledge
CRITERIA
Placing Power in International
Transactions
Trust and Relationships
Key People and AccessSetting a Timetable
• Summary timetable by workstream by week
• Supported by detailed work plans for each area
RESP December January February March April May June July August September October November
Week Starting on 4 11 18 25 1 8 15 22 29 5 12 19 26 5 12 19 26 2 9 16 23 30 7 14 21 28 4 11 18 25 2 9 16 23 30 6 13 20 27 3 10 17 24 1 8 15 22 29 5 12 19 26
Definition of the Conferimento 's perimeter C,P,S,L
Selection and appointment of fiscal advisor to the Company C,S
Conferimento
Selection and appointment of auditors C
Selection and appointment of PR advisor C
Due Diligence C,P
Preparation by Snam of the pro-forma updated financial accounts
Delivery of the Appraisal P
General Shareholders Meeting to approve the Conferimento , and fix price for shares
Conferimento 's Act prepared by the Notary and then filed into the Companies' Register L
Conferimento 's Act C,L
Submission to Autorità of the Transitory period proposal C
Meeting with the Autorità to discuss material submitted by Snam C,S,N
Autorità
Sensitivity analysis on RAB, Wacc, X factor, Po
Possible meeting with Autorità
Definition by Autorità of Wacc, RAB and Revenue Formula
Delibera b y Autorità on the Network Code
Snam's proposed Transitory regime C
Definition of the Network Code by Autorità
Preparation of financial model, analysis of info received, request for additional info C,S
Preparation by Snam of a 2001 - 2005 REGIT business plan and 2006-2010 estimates C
Analysis of the debt structure: possible debt restructuring needed in order to reach an optimal
capital structure and identification of the financial debt to be transferred to Regit C,S
Valuation
Comparable companies analysis S
Second meeting on results on preliminary valuation C,S
REGIT valuation update according to the outcome of the Regulatory discussions C,S
Preparation / finalization of REGIT business plan 2002 - 2003
Finalization of REGIT's financial model taking into consideration the final outcome
of the Regulatory discussions S
Preparation of valuation document C,S
Final update valuation S
Preparation of relevant documentation required for the IPO S,C
Appointment of the Global Co-ordinator C
Selection and appointment of legal advisor to the underwriters GC,C
Management presentation C
Decision on the offer methodology: primary vs secondary offer C,S
Board approves financial results as of 31/12/00 and Budget 2001 C
Start drafting Italian prospectus and IOC C,GC,L,S
Preparation business plan and Qmat C
Filing in Consob / Borsa Italiana of the prospectus, request for admission to listing, budget 2001,
business plan 2002 - 2003, Qmat and preliminary valuation document C,GC,L
Submission to Consob / Borsa Italiana of Italian prospectus with 1st half results GC,L,A
IPO
Analyst presentation GC
Publication of research
Black out period begins
Pre-marketing GC
Approval from Borsa Italiana for listing C,L
Approval from Consob to publish Italian prospectus C,L
Advertising compaign GC,C
Roadshow and bookbuilding GC,C
Retail offering in Italy GC
Pricing and underwriting agreements signed GC,S
Allocation (before market opens) GC
Start of trading on MTA
Setting and Keeping to Timetable is KeyIPO Team
Workstreams created to maximise efficiency
Steering Committee
Due diligence & Offer Marketing &
Business Plan Equity story
Documentation process structure Communication
Accountability Responsibility Organisation PreparationThe Equity Story
SRG Investment Case:
Focus and Scale
Strong and growing Prepared for new
market environment
Value from efficiency and Financial strength and
performance shareholders returns
An effective equity story is REAL and SHAPED for the
CompanyCommunication Overview
COMMUNICATION OF INVESTMENT CASE VIA
INSTITUTIONAL AND RETAIL MARKETING CAMPAIGNS
Institutional Investors Retail
• Pre-marketing by Analysts • Communication campaign
• Roadshow • Media relationship
Clarity, Credibility, Consistency, SimplicityInstitutional
Communication
DEFENSIVE GROWTH
Key messages tailored for investor audience
ITALY LONDON REST OF EUROPE
• SRG is not ENEL • SRG has more growth • Emphasis on context
than Lattice
• Explanation of comps
• Non-Energy
benchmarks • Italy has constructive • Focus on growth
Autostrade regulatory framework
“ A rare combination of defensiveness and growth”Retail
Communication
BRAND ”Snam” BONUS SHARE
Medium term
Focused Safe Ecological
profitability
A “bond-like share”
NATIONAL MEDIA MARKETING CAMPAIGN BUILT SUPPORTMarketing Milestones
Presentation to Syndicate Analysts
INSTITUTIONAL RETAIL
Presentation to Retail
Analyst Pre-Marketing Banks
Roadshow Roadshow Presentations
• 7 countries visited
• 11 presentations in Rome and Milan
• 10 small group meetings
Ones on ones with
Broad multi media (Print,
investors
• 59 one-on-ones
Radio, TV) campaignSnam
Snam Rete
Rete Gas
Gas Overview
Overview
IPO
IPO Preparations
Preparations
IPO
IPO Process
Process
The Offering
Closing
Closing remarks
remarksInterpreting Market Data
Market Environment
O Progressive Market Downturn
O No Equity Offering Since June
O Sept 11th Shock Magnified Effect
105
100
95
90
85
80
75
70
65
60
03-Oct
10-Oct
01-Aug
08-Aug
15-Aug
22-Aug
29-Aug
05-Sep
12-Sep
19-Sep
FTSE 100 DJ EURO STOXX 26-Sep MILAN MIB 30Your Stock is not the Market
115
25,000
110
20,000
105
100 15,000 Inflows: -37%
Outflows: -27%
95
10,000
EUR m
90
5,000
85
80 0
75
-5,000
70
10-Sep
12-Sep
14-Sep
16-Sep
18-Sep
20-Sep
22-Sep
24-Sep
26-Sep
28-Sep
30-Sep
02-Oct
04-Oct
06-Oct
08-Oct
10-Oct
12-Oct
14-Oct
16-Oct
-10,000
00
01
1
0
Ma 1
1
0
0
1
1
Se 0
De 0
Se 1
0
0
0
1
0
1
0
0
1
y-0
y-0
n-0
l-0
t-0
r-0
l-0
t-0
g-0
v-0
g-0
b-0
n-0
n-0
n-0
r-0
b-0
p-0
c-0
ar-
ar-
p-0
Ju
Ju
Oc
Oc
Ap
Ap
Ma
No
Au
Ju
Au
Ja
Ju
Ja
Fe
Fe
M
M
LATTICE GROUP NATIONAL GRID MILAN MIB 30 GAS NATURAL SDG Inflows Outflows Net Flows
120
Utilities performance peaked relative to
the Basic Resource (paper, metals)
Assessment and Judgement
115 sector on 20th September
110
• Key comparable (Lattice)
105
outperformed in aftermath of
100
Sept 11th
95
• Sector switching between
90
defensive and cyclical stocks
85
• Funds flows showed first signs
27-Aug 7-Sep 20-Sep 3-Oct 16-Oct 29-Oct 9-Nov 22-Nov
of re-building
DJ Stoxx Utilities Sector /DJ Stoxx Basic Resources SectorOffering Results
8,7%
Retail Italy 6,6%
USA 6,0% High quality
Institutional
Institutional 31,5% Demand
UK 12,0%
59,8% ENI
Others 6,9%
Offer
Offer 55 times
times subscribed
subscribed over
over at
at issue
issue price
price (2.8
(2.8 Euros
Euros per
per share)
share)
Priced
Priced above
above mid-point
mid-point of
of the
the range
range and
and at
at aa 3%
3% premium
premium to
to RAB
RAB
SRG
SRG was
was the
the first
first IPO
IPO since
since Sept
Sept 11th
11th and
and the
the largest
largest since
since June
June 2001
2001
Admitted
Admitted into
into MIB30
MIB30 since
since March
March 18,
18, 2002
2002Pricing criteria and Allocation
Responsible pricing is key to aftermarket
performance
Focus on pricing levels of top quality
investors
Aim to build strong group of reference
shareholdersStock Price Performance
1100
1075
1050
1025
1000
975
950
925
900
875
850
06/12/01
11/12/01
16/12/01
21/12/01
26/12/01
31/12/01
05/01/02
10/01/02
15/01/02
20/01/02
25/01/02
30/01/02
04/02/02
09/02/02
14/02/02
19/02/02
24/02/02
MIB All share Index Eurostoxx Snam RG
Utilities Index
STRONG AFTERMARKET PERFORMANCE
28Snam
Snam Rete
Rete Gas
Gas Overview
Overview
IPO
IPO Preparations
Preparations
IPO
IPO Process
Process
The
The Offering
Offering
Closing remarksClosing remarks
Consistency and Clarity of Equity Story
Organisation, Preparation, Accountability
Significant Senior Management Effort
Right Advice and Placing Team
Judgement in Interpreting the Market
Successful
Successful IPO
IPO
Trigger for lasting change Platform for delivering valueAnnual Equity Capital Markets Conference,
London 21 March 2002
The Experiences of a Recent IPO:
Snam Rete Gas
Salvatore Russo
President and CEOYou can also read
