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Equity funding in Germany

Equity funding in Germany. 2 nd ANNUAL IFR EQUITY CAPITAL CONFERENCE 12 November 2010. 216%. 166%. 2009. 2010. Analysis of German ECM deal flow. German ECM market in Western Europe (2010 YTD). German ECM transactions split by type (2010 YTD).

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Equity funding in Germany

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  1. Equity funding in Germany 2nd ANNUAL IFR EQUITY CAPITAL CONFERENCE 12 November 2010

  2. 216% 166% 2009 2010 Analysis of German ECM deal flow German ECM market in Western Europe (2010 YTD) German ECM transactions split by type (2010 YTD) Comparison of German ECM products 2009 and 2010 (by volume) n/m Germany is a strong “European ECM country”; rights issue dominate activity in 2010 Source: Dealogic

  3. 30 25 20 15 10 5 0 2007 2008 2009 2010 German ECM volumes driven by balance sheet restructuring German Primary Issues 2010 YTD Case Study: Heidelberger Druckmaschinen Type of offering: Rights Issue Transaction volume: €419.3m Subscription ratio: 2 new : 1 old 30.2% discount to TERP Share Price Development Driven by capital intensive industries Industry Split* Utility & Energy 2% Other 2% Financial 4% Real Estate / Autos / Industrials 69% Construction 5% Healthcare 8% Rescue Rights Issue Net debt/EBITDA 2011 pre: 3.2x Structural industry decline Electronic 11% Use of proceeds: Repay credit lines Geographical split of investors contacted by Commerzbank Investors contacted by Commerzbank Germany Use of Proceeds* Existing shareholders 12% New Investors General Corp. Purposes 4% International 79% 21% Acquisitions 6% 88% Growth 7% Repay debt / Restructuring 84% Heavy rights trading Over 80% of rights were recycled Net debt/EBITDA 2011 post: 2.7x 99.85% take-up ratio Pressure for shareholders to follow their money but significant support required from new investors Source: Dealogic. * Based on Size of transaction - Below EUR5bn (excludes Deutsche Bank rights issue)

  4. Placement Investor preference for de-risked opportunities (1) Brenntag Estimated demand Share Price Development IPO – 29 Mar 2010: €747.5m • Price €50 (just below mid-point of €46 - €56 range) • 70% primary and 30% secondary shares • 29% free float after the IPO • 10 days investor education, 9 days bookbuilding • Books ~ 3 - 4x covered • Discount to fair value • IPO price: 15.7% • Price range: 5.6% - 22.4% Placing price IPO price Estimated demand Secondary – 1 Oct 2010: €668m • Price €60.75 • Discount to previous close 0.4% • Premium to IPO price 21.5% • 258 daystrading • Transaction represented 73.5% of pre-deal free float • Speed: overnight accelerated bookbuilding • Premium to IPO price 21.5% • 2 corporate results announcements since IPO • 6 months trading history IPO market still not fully-functioning relative to market opportunities for listed companies Source: Dealogic, IFR, Commerzbank

  5. Placement Investor preference for de-risked opportunities (2) Kabel Deutschland Estimated demand Share Price Development IPO – 19 Mar 2010: €660m • Price €22 (low end of €21.50 - €25.50 range) • 100% secondary shares • 38% free float after the IPO • 10 days investor education, 9 days bookbuilding • Books ~ 1 - 2x covered • Discounts to fair value • IPO price: 20.1% • Price range: 7.4% - 21.9% Placing price IPO price Estimated demand Secondary – 30 Sep 2010: €413m • Price €27.50 • Discount to previous close 3.8% • Premium to IPO price 25% • 100 days trading • Transaction represented 50% of pre-deal free float • Speed: overnight accelerated bookbuilding • Premium to IPO price 25% • 2 corporate results announcements since IPO • 6 months trading history IPO market still not fully-functioning relative to market opportunities for listed companies Source: Dealogic, IFR, Commerzbank

  6. Significant international presence in Index stocks magnified in ECM transactions How “German” is the German IPO market? DAX (top 30 listed companies) MDAX (next 50 listed companies) Holdings by investor country Holdings by investor country IPOs raising > €500m IPOs raising €100m - €500m Investors by country (Commerzbank estimates) Investors by country (Commerzbank estimates) Source: Dealogic, Commerzbank

  7. High concentration in German fund management: the top 10 funds manage 75% of equity AuM • Low relative equity assets: German equity funds total USD 123bn (44% of assets invested) vs. UK equity fonds of USD 417bn (61% of assets invested)* insufficient domestic depth alone, with a well-covered deal requiring 20-30 'power investors' • Large and growing universe of high-value investors located in London and New York (both long and hedge) with funds targeting opportunities in Germany stock selection based on sector, market value or style (also region but rarely country) Dispersion of AuM Why are German investors less prominent in German deals? Possible reasons for the market dynamic • ABBs require speedy decision-making; IPOs require intensive education and model-building the largest funds have both the resources (manpower and uninvested capital) and internal processes to place game-changing orders quickly • Investment banks (whether on risk or not) are motivated to build early momentum for best execution focus early attention on investors that can make a difference; supplement with long-tail to maximise price tension • Pilot-fishing and other test marketing also give the largest investors an added timing advantage Speed * Source: European Fund and Asset Management Association (EFAMA), Q2 2010

  8. Selling “Germany” to the world requires an international platform Commerzbank’s distribution platform Investor Relations focus at side Germany 3 dedicated equity sales hubs German Investment Seminar New York German Mid Cap Day London 120 corporate roadshows in the last 12 months 87% of DAX represented at CEO/CFO level (Jan 2011) Frankfurt New York London German Mid Cap Day New York 100 Research specialists including more than 30 equity analysts covering over 200 stocks (100% of DAX and MDAX) #1 for Germany Country Analysis – Extel Surveys 2010 Research organised into German focus-sectors Commerzbank ECM track-record in 2010 European core sectors Germancore sectors Automotive Mid-Caps Construction Chemicals Financials Power & Utilities Life Science Large Caps Mid-Caps Steel &Capital Goods Real Estate TMT Consumer / Retail Transport & Logistics Utilities Our platform delivers “German insight” from German sectors on a global basis

  9. Ute Gerbaulet Global Head of Equity Capital Markets Phone +49 69 136 22974 Mail ute.gerbaulet@commerzbank.com Dan Oakes Head of International ECM Origination Phone +44 20 136 7475 3802 Mail daniel.oakes@commerzbank.com Headquarter Kaiserplatz Frankfurt am Main Germany www.commerzbank.de Postanschrift: 60261 Frankfurt am Main Phone +49 (0)69 / 136-20 Mail info@commerzbank.com

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