Transaction Advisory Services

Financing Growth - AIM

Asha Venkataramani Katyal
4 July 2007
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Presentation Structure

Alternative Investment Market Why AIM? AIM Listing The Process India and AIM India MM Perspective -AIM scores over Private Equity

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Alternative Investment Market

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Alternative Investment Market (AIM)

Over 1600 companies admitted in AIM since 1995 Targeted by high growth companies which may not attract investor interest in the main market Simple regulatory regime providing access to a large pool of diverse, high quality investors India-related assets/ investment raised $2.7 billion on AIM in 2006
Source: LSE website as of March 2007

Leading International Market for smaller growing companies

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AIM attracts significant investor interest

Outperformed International Stock Exchanges over the last few years
+38.9%

Key Statistics Number of Companies International Companies Total Market Cap 1,637 304 101.7bn 303.7m 675.5m

140

130

AIM Nasdaq FTSE

+37.0%

120

110

+18.2%

100

Average daily trading value (Jan-Mar 07) Average daily trading volume (no of shares) (Jan Mar 07)

90

80 Apr- Jun- Aug- Oct- Dec- Feb- Apr- Jun- Aug- Oct- Dec- Feb04 04 04 04 04 05 05 05 05 05 05 06

Source: LSE website. As of March/April 2007

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AIM ends where NASDAQ begins

Distribution of Companies by Equity Market Value
90%

% of total Market Cap

84.1%

27.2% 18.9% 12.2% 6.4% 2.8% 0.0% 0.1% 0% <$10m $10-25m $25-50m
AIM

14.1% 3.3% $100250m

NASDAQ

0.3%

0.9% $50100m

3.6% $250400m

9.9% 7.7% 8.4%

$400-1bn

>$1bn

Source: Canaccord Adams

For mid cap companies... AIM scores over NASDAQ

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Diversified Listings across sectors

Market Cap by Sector Top 10 Companies by Market Cap
Company YAMANA GOLD INC FIRST QUANTUM MINERALS NEW STAR ASSET MANAGEMENT GROUP SIBIR ENERGY MECOM GROUP PLC CLIPPER WINDPOWER XG TECHNOLOGY INC Sector Gold Mining Nonferrous Metals Asset Managers Exploration & Production Publishing Electricity Electrical Components & Equipment Gold Mining Life Insurance M Cap ( m) 2197.37 2130.44 1,426.80 1,425.83 1,235.50 936.11 914.36 897.58 836.91

Average market cap of Mining, Real Estate and Oil & Gas, Industrial metals is the highest
* Industrial Sector includes construction, materials, defence, industrial transportation

PETER HAMBRO MINING PLC JUST RETIREMENT(HLDGS)PLC OILEXCO INC

Exploration & Production

810.61

Source: LSE website. As of 30 April 2007

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Active Investors on AIM

Number of AIM companies invested, 2006 Total invested in AIM companies, $ million, 2006

- 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

1,968 1,286 1,245 1.237 1,130 1,070 1,034 952 850 720

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The Active Institutions and Favorite Sectors

Fidelity Investments Value of largest holdings, 2006 $ million* - Star Energy - Develica - Cape - Genesis - Coda - Speymill - European - Prosperity - Equest Balkan Artemis Investment Management Value of largest holdings, 2006 $ million*

- Sportingbet

Leisure

268 117 91 60 57 53 47 41 39 39

Oil & gas Equity fund Support ser Oil & gas Software Real estate Gold Mining Bldg Mats Real estate

60 49 47 44 41 30 30 30 29 28

- Imperial Energy Oil & gas - First Calgary - Centurion - PIPEX Comms - Highland Gold - Clipper Wind - Star Energy - Asia Energy - Serica Energy
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Oil & gas Electronics Telecoms Mining Electricity Oil & gas Coal Oil & gas

- Imperial Energy Oil & gas

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Why AIM?

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Why List on AIM?

Financially Mature Markets Deep Pool of globally respected capital

Why Overseas Listing?

Diversification of Investor Base Access to Marketable Currency Critical for Inorganic Growth Heightened interest and positioning of the company Wider options for future financing Specifically tailored for smaller and younger companies seeking growth capital Streamlined Regulatory Regime more flexible than the main market regulations No prior trading record requirements No minimum capitalisation and shareholding requirements Easier reporting & disclosure rules Less stringent requirements in terms of shareholders approvals Tax benefits for both individual and corporate investors

Why AIM?

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AIM Listing The Process

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Intermediaries Involved in Listing

Nomad Broker
Main Interface between the Company and the Market
AIM Intermediaries

Advisor
Coordinator among all intermediaries / Project Manager

Pivotal Role in the Listing Process

Receiving Banker
Required in case of retail offering, to receive the funds of retail investors

Lawyers
Preparing the Company for listing

Registrars Reporting Accountants

Independent from Company Auditors

PR Consultants
Arranging Press Coverage prior to listing Coordinating publicity on after admission to trading on AIM

Deal with the application for shares as well as setting-up and maintaining the share register

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Intermediaries Involved in Listing

Broker

Test marketing Assisting in Roadshows Sub-underwriting Placing the Issue with Institutional Investors Valuation Benchmarks Lawyers Disclosures in the Admission Document Carrying out the Legal DD Assisting in drafting the admission documents and ancillary agreements
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Nomad Liaison with LSE/AIM Responsible for Companys compliance of AIM Rules while and post listing Assess appropriateness and timing of issue Advise on the structure and composition of board Reporting Accountants Prepare two separate sets of reports; long form and short form Reporting on working capital requirements (projections)

Advisor Works with Company in Understanding the funding requirement Estimating AIM issue size Advises on appointment of all advisors Structuring the investment vehicle- Tax efficient Facilitates the work of NOMAD and lawyers Advises management in drafting and presentation of the company position Investor contact process Negotiations on final Issue Pricing

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Process & Indicative Time Lines

Phase I
Getting Ready for AIM Listing*

Phase II
Preparation of Documents
Process/ Week 1

Phase III
Marketing, Roadshows & Publicity
2 3 4 5 6 7 8 9

Phase IV
Listing & Commencement of Trading
10 11 12 13 14

6-8 weeks Develop a robust business plan Review MIS and operational and compliance controls Consider ownership and tax issues Adopt best practice for Corporate Governance Appointment of Intermediaries

Test Marketing Long-form Report Accountants Report Working Capital Review Preparation of Admission Document Legal Due Diligence Verification Marketing, Road Shows, Investor Meetings
Broker to place proceeds Completion Meeting Admission to AIM and commencement of dealing

*Depending on the readiness of the Company, this phase could be completed in lesser time. 14

Proceeds Received by the Company

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India and AIM

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Indian domiciled companies on AIM

Great Eastern Energy Corporation Coal-to-methane December 2005 19 million (shares)

Noida Toll Bridge Co.Ltd Infrastructure project March 2006 $50 million (GDRs)

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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
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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

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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

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India-focussed investment companies on AIM

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

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India MM Perspective -AIM scores over Private Equity

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Fund Raising
Several factors need to be evaluated before fund raising

Overall state of the domestic capital markets Growth prospects of the company Promoters current shareholding in the company Leverage and interest coverage Market valuations Quantum of funds required to be raised Cost of raising funds through each instrument

that determine the appropriate choice of instrument

FCCBs Private Equity Investments Domestic IPOs Overseas Listing

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Private Equity
Industry Sectors Advantages Targeted offering to select investors Structured transaction possible Lower transaction costs
Retail, 1.7% Others, 21.6% IT & ITES, 19.7%

Issues

Dilution Alignment of Interests Board Representation Negative Covenants

Energy, 5.0% Media & Entertainment, 3.9% Shipping & Logistics, 2.8% Food & Beverages, 1.9%

Manufacturing, 12.9%

BFSI, 12.8% Textiles & Garments, 2.9% Engineering & Construction, 8.0% Healthcare & Life Sciences, 6.9%

Minimum Investment $10 m Key Trends Expansion stage investments 3-5 year investment horizon

Source: Venture Intelligence India Roundup Annual -- 2006 Source: Venture Intelligence India Roundup Annual 2006

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AIM financing growth in Metals and Mining

PE interest in India is robust But the investments are focussed on sectors, industries and projects which generate short to medium term returns

The mature investor profile of AIM recognises the inherent risks and longer gestation period of such business/projects and hence the appetite for investment in metals and mining is high Consequently through AIM Companies can monetise the inherent value of their business and finance future Growth

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Conclusion

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ERNST & YOUNG PVT LTD

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www.ey.com/india

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