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Japan as Target for Taiwanese VCs

2007 Taiwan Venture Forum. Japan as Target for Taiwanese VCs. December 10, 2007. Nomura International (Hong Kong) Ltd., Taipei Branch Asia Investment Banking. Table of Contents. 1. Japan for Fundraising P. 2 2. Japan for Value Addition P. 6 Japan for Exit P. 10 About Nomura P. 14.

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Japan as Target for Taiwanese VCs

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  1. 2007 Taiwan Venture Forum Japan as Target for Taiwanese VCs December 10, 2007 Nomura International (Hong Kong) Ltd., Taipei Branch Asia Investment Banking

  2. Table of Contents 1. Japan for Fundraising P. 2 2. Japan for Value Addition P. 6 • Japan for Exit P. 10 • About Nomura P. 14

  3. 1.Japan for Fundraising

  4. Targets for Fundraising in Japan • Investors in Japan who invest in venture capital and private equity funds are institutional investors such as banks and insurers, corporations with strategic angle, and high net worth Institutional Investors Corporations High Net Worth

  5. Japanese Institutional Investors as Target • Japanese institutional investors (“JII”) are prime target for fundraising in Japan • Below shows the total assets of major financial institutions Banks Life Insurers Non-life Insurers Note1) Total assets in USD million, USD1=JPY110, as of March 2007 Note2) MUFG: Bank of Tokyo Mitsubishi UFJ + Mitsubishi UFJ Trust Mizuho: Mizuho Bank + Mizuho Corporate Bank Resona: Resona Bank + Saitama Resona Bank + Kinki Osaka Bank + Resona Trust CMTH: Chuo Mitsui Trust Bank + Chuo Mitsui Asset Trust Fukuoka FG: Fukuoka Bank + Shinwa Bank + Kumamoto Family Bank

  6. Japan US / EU Pan Asia China / India / Vietnam Trend for Alternative Investment for JII • JII has constantly increased their investment in alternative assets by increasing allocation Strategic Allocation by JII Target Region on PE (%) Source) ”The 2005-2006 Russel Serve on Alternative Investing”

  7. 2.Japan for Value Addition

  8. Strategic Focus of Taiwan and Japan • Taiwanese companies focus more on designing and low-cost manufacturing in high-tech industry while Japanese companies tend to give up full line-up and focus more on premier technology • Supplementary effects are more likely between Taiwan and Japan Premier technology Designing Low-cost manufacturing Taiwanese Companies’ Focus Japanese Companies’ Focus

  9. Opportunities for Value Addition • Taiwanese companies could add value by making alliance with Japanese companies, obtaining outsourcing business, cultivating Japanese market and acquiring Japanese companies. Alliance OEM / ODM Market Acquisition

  10. Former shareholders of Nikko Shareholders of Nikko Citi (US) Citi (US) Shares of Citi （Target） Nikko Cordial （Target） Nikko Cordial 100% 67.2%→100% 100% 100% Citigroup Japan Holdings (Japan) Citigroup Japan Holdings (Japan) Amendments of Corporation Law in Japan Reorganization under Corporation Law • Acquisition of Japanese company by foreign company (Available in May 2007) • Under the Corporation Law, the “subsidiary’s use of its parent’s shares as consideration” will become effective on May 1, 2007, which will enable foreign companies to conduct a cross-border “triangular merger” to acquire Japanese company. • Deregulation of the “restriction on subsidiary's holding of its parent’s shares” for the purpose of engaging cross-border as well as domestictriangular mergers in Japan will also become effective on May 1, 2007 (Art. 800 of the Corporation Law). Case of Triangular Merger by Foreign Company in Japan

  11. 3.Japan for Exit

  12. Benefits of Listing in Japan Listing in Japan Share Exchange New Market Cultivation Financing M & A Revenue Expansion Business Expansion

  13. Numerical Listing Criteria in TSE Tokyo Stock Exchange 1st Section(direct) Tokyo Stock Exchange 2nd Section Mothers # of shareholders Min. 2,200 Min. 800 Min. 300 shareholders (at least 500 new units listed) Float shares* • Min. 20,000 units • Min. 35% of outstanding shares • Min. 4,000 units • Min. Mkt. Cap JPY1 bn • Min. 30% of outstanding shares • Min. 2,000 units • Min. Mkt. Cap JPY500mn • Min. 25% of outstanding shares Market Cap. Min. JPY50 bn Min. JPY2 bn Min. JPY1 bn Operating history*** Min. 3 years Min. 3 year Min. 1 year Equity Capital Min. JPY1 bn Min. JPY1 bn - Pre-tax profit or Market Cap. Min. JPY100mn-400mn or Min. JPY100 bn Mkt. Cap. Min. JPY100mn-400mn or Min. JPY100 bn Mkt. Cap. - Audit Audit 2 years with no false statement etc. Audit 2 yearswith no false statement etc. Audit 2 years (when the operating history is more than 2 years) On November 1,2007,TSE enacted the new test for Float Shares. Float Shares means outstanding shares excluding the shares owned by directors, treasury stocks, shares owned by major shareholders who possess above 10% of outstanding shares, shares owned by other special interest parties**. ** Special interest parties means a) director’s spouse and relatives with kinship within second degree, b) those companies whose majority of voting shares are controlled by directors or a), and c) affiliate companies and directors thereof ***Continuous operating history after the establishment of BOD

  14. Case Study – Asia Media • Background • Asia Media would enhance its profile in Japan to expand their business in Japan • By listing on TSE, AM is trying to obtain many blue-chip Japanese corporations as client to place advertisement via AM’s facilities • Japanese investors are interested in PRC’s growth potential • First Ever in Japan • First Ever PRC issuer to achieve the IPO in Japan • First Ever “WFOE” (Wholly Foreign Owned Enterprise) structure to be utilized in Japan • Secondary performance • The opening price was JPY 672, 5% higher than the offer price (JPY 640), closed with JPY 752 on the IPO date, 17.5% higher than the offer price • Nomura’s clients are very actively trading the shares after the IPO • Nomura invited Asia Media to annual “Nomura Asia Equity Forum” where issuers can dialogue with investors directly • Implication of this IPO • Foreign companies, which would enhance corporate profile in Japan, could follow Asia Media with TSE listing • Japanese investors might be more interested in foreign issuers’ IPO in Japan Offering Summary Company Asia Media Co.,Ltd. (HQ located in Beijing, registered in Bermuda) Ticker Code 2149 Listing Venue TSE, Mothers Global Listing Date Apr 26, 2007 Securities Offered Ordinary Shares Issue Size JPY 5,152mn (US$ 43.3mn) Fund Raised Amount JPY 3,680mn (US$ 30.9mn) Mkt. Cap. (at offer price) JPY 33,523mn (US$ 282mn) Offer Price (IPO price) JPY 640 Price Range JPY 600 – 640 Pricing Valuation 31.6x (FY2006 EPS) Lock-up 80% plus, on pre-money basis IPO Coordinator Nomura Use of Proceeds R&D, Capex., M&A Associate Press (Apr 27)Headline : China's Asia Media debuts on Tokyo bourse as 1st mainland company to launch IPO in Japan TOKYO (AP) - Asia Media Co., a Beijing-based provider of television program guides, made an impressive debut on the Tokyo Stock Exchange Thursday, as it became the first mainland Chinese company to go public in Japan. Asia Media shares finished the day's session at 752 yen (US$6.32; €4.63) per share, up 17.5 percent from its initial public offering price of 640 yen (US$5.38; €3.94), the TSE said on its Web site. Thursday's debut marked the first time for a company based in mainland China to go public on a Japanese stock market, the exchange said. A total of 8.857 million Asia Media shares, which are listed on the TSE's Mothers market for emerging companies, changed hands Thursday, the exchange said. The company is expected to use the proceeds from the listing to expand its operations in China, and is likely expand into Japan as well, according to the Japanese business daily Nikkei. The listing may set a precedent for other Chinese companies to list on the stock exchanges here as retail investors in Japan begin to aggressively buy Chinese and other Asian stocks.Chinese companies sell shares in foreign markets both to raise money and to boost their visibility in hopes of making themselves more appealing to potential foreign partners. South China Morning Post (Apr 27)Headline : Asia Media listing gets on with the programmeAsia Media, a Beijing-based provider of TV programme guides, made an impressive debut on the Tokyo Stock Exchange yesterday, as it became the first mainland company to go public in Japan.

  15. 4.About Nomura

  16. Nomura Group – Global Financial Service Company • Nomura Group is a global financial services company with offices in 30 countries • Founded in 1925 in Osaka, the Group employs over 16,000 people worldwide • Nomura is dedicated to providing a broad range of financial services for individual, institutional, corporate and government clients • Our business activities include investment consultation services for retail investors in Japan, securities brokerage services, securities underwriting for governments and corporations, merger and acquisition and financial advisory services, merchant banking, capital market services and asset management for investment trusts Nomura Group Domestic Retail Global Markets Global Investment Banking Global Merchant Banking Asset Management Global Fixed Income Global Equity Asset Finance Shareholders’ Equity in US$m (historic rates) Financial Performance of Nomura Holdings, Inc. (US$bn) Nomura Note) As of 31 March 2007 Source) Financial statements of the named firms

  17. Thank you!

  18. Eiji Tanaka田中 榮治 Co-Head of Investment Banking, Taiwan Nomura International (Hong Kong) Limited, Taipei Branch 14F, 109, Min Sheng East Road, Sec. 3, 10544, R.O.C. Telephone +886-2-2547-9351(Direct) Mobile +886-(0)932019073 Facsimile +886-2-2547-9386 E-mail tanaka.eiji@tw.nomura.com

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