irideus for nasdaq 040809

Irideus™ - The Intermediated Research Initiative - A Higher Form of Research

The Intermediated Research Initiativewww.irideus.org

Argus Research Company, Pipal Research, & Independent International Investment Research Plc

A Higher Form of Research: Presentation by Mark Fenton and Karena Bernard for Nasdaq, April 8, 2009

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http://www.irideus.org/


Contents

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What is Irideus?

Our Distinctive Value Proposition

Opportunity for Exchange to Create Competitive Advantage

Next Steps


A global problem for investors, companies, and their Exchanges

Broker research coverage has trended down, leaving many companies under-researched

Recent cost pressures on financial institutions are expected to accelerate the trend

Public companies without research are invisible to the investor base

Public companies without three sources of research lack a consensus estimate

Lack of coverage impairs liquidity & access to new capital Competitiveness of the listing venue is compromised A new challenge in the wake of routed global equities:

restoring the confidence of investors in equity as an asset classs

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What is the Intermediated Research Initiative?

An international program to address research coverage gaps in smaller and mid-cap companies, by providing research which is objective, comprehensive, cost-effective and widely distributed

A model for provision of research that addresses the perceived quality and objectivity problems associated with traditional, sponsored research

An institutional-quality research solution A suite of prepared legal agreements Your out-of-the-box solution to provide cost effective

objective research on listed companies

Irideus™ - The Intermediated Research Initiative - A Higher Form of Research 4

Key Attributes

An intiative harnessing three leading independent research firms

Arbitrary matching of research firm to company Minimum two year contract term, with advance payment Intermediator oversight Homogeneous approach to research format/template and

data elements Compelling price point for smaller companies Established global distribution relationships to facilitate

wide exposure – delivering world-class research to an international audience

5Irideus™ - The Intermediated Research Initiative - A Higher Form of Research


Contents

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What is Irideus?



Next Steps

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•Best practice for Exchange to facilitate and encourage research on all issuers•Improves liquidity profile•Best practice for Exchange to facilitate and encourage research on all issuers•Improves issuer liquidity•Improves Exchange’s health and competitiveness as a listing venue•Research discipline feeds back to improve the general standards of disclosure and governance of issuers on the Exchange•Raises international profile

•Best practice for issuers – demonstration of commitment to investors, at only a modest cost•Enhances issuer transparency, to maximise the ROI of maintaining a public listing•Drives issuer liquidity•Fosters health of issuers by creating conditions for capital raising•Reduces cost of capital for issuers

•Access to wider, deeper information on issuers•Enhances the range of investment choices•Arms-length relationship between issuer and research firm underpins investor confidence•Institutional quality research, free of charge

Key benefits


For Investors

For Exchanges

For Issuers

Who is behind Irideus?

Three distinctive global firms with strong international reputations and long pedigree in independent research

- Argus Research (USA) - Pipal Reseach (USA)

- Independent International Investment Research Plc (UK) All three firms stand behind the London Stock Exchange

scheme, PSQ Analytics, to deliver world-class research Two of the firms – IIIR and Argus – have been key participants

in the US GRAS scheme, intermediated by the Regulators Combined resources of firms delivers a unique global footprint

and breadth of knowledge across sectors Collectively the firms have the intellectual resources, scale and

expertise to rapidly address the widest of coverage gaps


Argus Research Company, Pipal Research Corporation, and Independent International Investment Research Plc

Argus Research Company:Founded in 1934, Argus is a leader in independent equity research, offering in-depth economic analysis as well as forecasts and ratings on more than 700 U.S. and international firms. Argus employs a rigorous six-step process to analyze companies, and provides clients with regular updates through consultation and conference calls, online publications, and more than 4000 individual research reports a year.

Independent International Investment Research Plc:IIR is the UK’s leading source for impartial research and strategy for global equities and foreign exchange. The Group has become a leading specialist in the USA for the provision of research on non-US companies. Core product offerings are: GEO Monitor™, providing research on Initial Public Offerings from around the world; Research Oracle™ (www.researchoracle.com ), which provides access to the Group’s international research free of charge; and Global Research, which provides access to financial models, sector analysts, short-term trading strategies, and corporate access services. IIR is a member of the British Olympic Association Council, promoting and assisting Team GB athletes in Beijing 2008 & London 2012.

Pipal Research Corporation:Pipal Research Corporation, a subsidiary of Firstsource Solutions, is a leading independent investment research, corporate intelligence and analytics company. Pipal’s financial services offering serves a broad spectrum of clients from buy side to sell side to investment banks and commercial banks, providing a range of services, including equity/ sector/ country research, fixed income research, financial modelling and valuation, forensic accounting, portfolio performance assessment and reporting, investment due diligence, pitch books and other custom research. Pipal’s global delivery model enables it to deliver timely, high quality, objective and cost effective research. Pipal is headquartered in Chicago, USA and has operations in UK, India and Ireland.


High quality research processes

Collection of background information on the company and its markets, suppliers, and sector

Construction of a draft earnings model Company visit by the analyst to interview management

and gain first hand exposure to facilities/premises/ operations

Provide a draft initiation report for management to review on the basis of factual information only

Publish research to a global audience on Thomson Reuters, Bloomberg, Factset, Capital IQ, ProQuote,Research Oracle.


Irideus delivers the scale for affordability, without compromising quality

The price point for the research report is a key determinant of the take-up amongst issuers

To keep the price point at the lowest possible level, Irideus operates to gain scale economies

Three is the optimal number of participating research companies, to deliver both scale/price point together with a viable degree of randomness in matching

As Irideus extends its operations to new geographies, all clients benefit from the wider concentration of sector expertise and benchmarking against global peers


Broad sector coverage

-Consumer staples

-Consumer Disc.

-Energy

-Healthcare

-Materials

-Industrials

-Telecom Services

-Financials

-Information Tech

-Consumer staples

-Consumer Disc.

-Energy

-Healthcare

-Materials

-Industrials

-Telecom Services

-Financials

-Information Tech

-Consumer staples

-Consumer Disc.

-Energy/Green Tech

-Healthcare

-Materials

-Industrials/Manufacturing

-Telecom Services

-Financials

-Information Tech


http://www.iirgroup.com/

Standardized deliverables for cost efficiency and uniformity

A draft report for management comment An Initiation Report, without management veto or input Established global distribution on Thomson Reuters,

Bloomberg, FactSet, Capital IQ, Research Oracle Bespoke portal/platform for Intermediator to white label Quaterly/semi-annual update Ad hoc updates driven by company/industry/economy

news flow Annual update report


Sample report format



Contents

15

What is Irideus?



Next Steps

Exchange can play a transformational role

Intermediator usually expected to be an Exchange (but could also be regulator, as in the 2004 US Global Research Settlement)

Oversight of the issuer contract and SLA’s Arbitrator in case of disputes Liaison with market participants* PR, marketing and sales to issuers De facto endorsement of the proposition Provide distribution through web portal Provide market education program


Opportunity for Exchange

to create a distinctive

proposition for member firms

* Issuers, Regulators etc

Exchange must consider several key decision points

Include ratings and price targets?

Adopt Irideus standard research template, or add/subtract elements?

Budget/price point? Elective or compulsory? Subsidised, pass-through, or

profit centre? Existing exchange website/new

bespoke portal/Irideus portal? Bi-lateral or multi-lateral

contract with issuer?

Local incorporation of Irideus required?

Local regulation of Irideus members required?

Own branding (e.g. PSQ Analytics) or Irideus branding?

Degree of engagement in marketing activities?

Two, three or five year issuer commitment?

Hands-on, or mechanical matching of company to research firm?


Irideus brings implementation

-ready solutions with experience to

advise on these issues


Contents

18

What is Irideus?



Next Steps

Suggested next steps

Local market survey to quantify demand and price point and nature of product gap

Irideus to provide draft Memorandum of Agreement for Intermediator; and draft Client Agreement for issuers

Determine time-line to launch, with associated marketing communications plan to address all market players

Irideus to make a pricing proposal based on expected scale of local operations and precise requirements of the Exchange, regulators, issuers and market

Collect expressions of interest/Letters of Intent from Issuers to reliably quantify demand – particularly if local establishment investment required.


Thank You

John Eade, CEO Argus Research, New YorkTel. +1 (212) 425-7500 Email: [email protected] Shane Smith, CEO Independent International Investment Research Plc, London Tel. +44 7785 276 703 Email: [email protected]

Sanjeev Arora, CEO Pipal Research, ChicagoTel. +1 (312) 404 9894 Email: [email protected]


mailto:[email protected]



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