Latin Finance - May 2008 - 108

roundtable particularly well. For instance, for emerging mining and oil and gas companies you need the analyst and investor community to understand geology, forward prices for oil and intricate government regulations for example, which not every analyst in every bank in every location will understand. As a result four out of the five largest mining companies in the world are listed in London. London has a concentrated amount of expertise in this particular area. Cla ud ia Ba r r er o, Pr ieto & Ca r r izo s a : Colombian companies looking abroad are in the process of beginning to look to London as an alternative to New York. Ecopetrol which is the biggest issuance standing in Colombia, was all placed very successfully in Colombia, having initially said they would list on the NYSE; this is also a testament to the development of Colombia’s local capital markets. I think companies look abroad for liquidity, pricing and international visibility. La tin Fina n ce: Does IPO cost have a significant influence when a CFO thinks about listing in London or New York? Do CFOs care about the cost of a listing? Ho llingwo r t h : A US gross spread on a $200 million dollar deal is probably 6-7%, I would guess. Where as in the UK I think it would be more sort of 3.5-5%. Nico la s Gr a b a r, Clea r y Go ttlieb : I don’t think Latin American companies have been paying the traditional US domestic equity underwriting spreads; not close to it. In the days when Latin American companies came into the US with registered equity offerings, there was intense competition for those mandates and as spreads went on that 4-7% range was reduced. Da lla s : I think it is a consideration, but I think the major consideration that CFOs take into account is which exchange will be the right strategic platform for the company? La tin Fina n ce: For CFOs and CEOs considering listing internationally, how big of an issue is compliance with the regime in New York versus London versus anywhere else when they make a decision on the listing venue. Is Sarbanes-Oxley (SOX) the only reason that Wall Street issuance has been down? Gra b a r: I will say that the hubbub surrounding SarbanesOxley and the reaction to Sarbanes-Oxley has dramatically overestimated the burdens of compliance in the US. The burdens of the US market really boil down to 404 internal control reporting and the background risk of the litigious US legal environments. The rest of it I think is really not very important. But internal control reporting under 404 is a significant cost, as is risk of class actions and changes in regulation. M o nica M cCo nville, Fr es h fields : I don’t think you can say that one is the right model and one is the wrong model. I think [the London Combined Code] is a model that seems to have worked for the London market. There are general principles that need to be adhered to, and if for some reason a company can’t adhere to it, the approach is comply or explain. Anyone who reads the combined code for example will see that London’s code is very much based on a conversation and a dialogue between issuers and investors. The main components are a greater emphasis on the strong composition of the board, the independence of the board, the importance of the chairman, and separation of the chairman and chief executive officer. The relationship between the senior independent directors and the institutional shareholders is something of great value to the London market. La tinFina nce: How important is the investor base when choosing a venue to list? What about the quality and breadth of analysts? Ve r d e g a a l: Opening to capital and where you list is a strategic decision, so it has a longer term dimension to it and is linked to where you see your company in the long run and future growth plans. A company needs to decide what kind of investor group it needs to attract. What do you want to be when you grow up as a company and how does this decision fit in and who are the partners you’re looking for. D a lla s : There are a lot of different flavors of listing which provide many options for companies these days. Companies like Telmex or Petrobras have very significant liquidity on the New York market, perhaps in some cases more than on the local market. But we have companies like Hochschild, which is a Peruvian company but it’s only listed in London, or Antofagasta, a Chilean company which is only listed in London; both have excellent liquidity. There is not just one method or strategy to raise capital; you have to find the right solution and platform for each specific case and company. Ver d ega a l: That’s definitely correct, but it continues to be our view that the bulk of the investor base for Latin American companies is in the US, that although interest in Europe is growing rapidly, that continues to be the case 108 LATINFINANCE May 2008

Latin Finance - May 2008

Table of Contents for the Digital Edition of Latin Finance - May 2008