1 Investment Club Friday, September 30th

2 MARKET UPDATE Colin Evanko, Mac Erb, Katie Gonick, Marie Bucklin

3 Markets Dow Jones Closed at 18143.45 Down 1.07% yesterdayDown 1.35% past 5 days S&P 500 Closed at Down .93% yesterday Down 1.2% past 5 days

4 Company Updates Wells Fargo update -- “Congressional Grilling”SABMiller and AB InBev Merger Microsoft acquisition of LinkedIn?

5 Oil: OPEC deal Proposal of production cuts to increase oil pricesLimit output from 33.2 million barrels a day to million barrels a day This is a 200,000 to 700,000 cut in productions of barrels per day Iraq against production cut numbers threatens the production cuts Crude Oil per barrel prices closed at $47.20 per barrel Increased 1.42% yesterday

6 Global Aspects: Japan and EurozoneJapan: Deflation Attempted shift signals from central bank have not made a difference “Inflation would happen because people expect it to occur” New strategy: hold down credit costs Government stimulus package? Eurozone: Immune to Stimuli Inflation remains at zero Economy has been strong against Brexit In need of new stimuli to continue growth Holding down credit costs will encourage consumers to borrow and spend more Euro inflation going on 2nd year at zero

7 Currencies Deutsche Bank Dollar rises 0.3% (WSJ)

8 2016 PRESIDENTIAL ELECTIONJesse Glaser and Natalie Soler

9 TRUMP VS. CLINTON: ECONOMIC POLICY

10 Republican Candidate for PresidentDONALD J. TRUMP Republican Candidate for President

11 Winning the Global CompetitionAn America First Economic Plan; donaldjtrump.org

12 Reshaping America’s Tax SystemOnly 3 tax brackets Limit corporate tax to 15% No more estate tax Mostly benefit rich Trickle-down

13 2.7 Trillion Dollars 10 yearsThat’s a lot of money 10 years And a lot of years

14 Trade Severely taxing Chinese goods, “cheaters” Criticizes NAFTAWould just shift production to Vietnam/Mexico Criticizes NAFTA Appointing people to “win for America” Send US into recession/trade war Sectors projected to be hurt: Nonspecified retail trade, wholesale, hospitals, restaurants

15 Jobs/Economic Recovery“Jobs are leaving America” False: +15M jobs in last 7 years, inequality has declined for first time in 35 years Will recovery end? Preying on fear Reality: longest recovery in history Trade policies not pro-growth

16 Democratic Presidential CandidateHillary Clinton Democratic Presidential Candidate

17 Economic Policies Taxes Climate Change Healthcare Wall Street LeaveProgressive income tax bracket, ranging from 10% to 43.6% ($5 million and above) Reintroduce Federal Estate tax Climate Change Half a billion solar panels installed by the end of her term $60 billion Clean Energy Challenge - cut carbon emissions Healthcare Promote and expand Obamacare Defend access to reproductive healthcare Wall Street Impose a risk fee based on size and risk of contributing to another crisis Impose a tax on HFT Leave 12 weeks of paid family and medical leave Campaign Finance Overturn Citizens United

18 10,400,000*

19 Jobs and Wages Emphasis on Infrastructure (government sponsored*)Economy on track already to create 7.2 of those million Only 3.2 million would be new Clean energy superpower Oppose the TPP → bring back jobs to America

20 $498,000,000,000*

21 Taxes and Revenue Amount of tax revenue over 10 years*$381 B from income, $11 B from corporate, $106 from Estate Economy on track already to create 7.2 of those million Only 3.2 million would be new Introduce a 43.6% tax bracket for income $5 million and above Reduce GDP by 1% in the long-run Reintroduce Estate Tax back to 2009 level of 45%

22 The IPO Process and the Saudi Aramco IPORand Lewis, Heman Matharu

23 What is an IPO? Initial Public OfferingFirst time a previously private company offers shares to the general public Public receives ownership position in the company in the form of equity capital Most companies only issue 20-30% of its shares on the public market during an IPO

24 Pros and Cons of an IPO: Pros:Raise capital - expansion efforts and to pay back debt Exit for existing investors - PE/VC backed Obtain an acquisition currency Reward Employees Marketing the business Cons: Giving up control/ownership/ subject to regulatory scrutiny - answer shareholders with quarterly earnings reports No need for cash/exit Compliance Costs - higher for public companies because of Sarbanes-Oxley

25 Step 1: Decision and PitchCompany decides to go public, board and major shareholder approval needed Relationship banks get notice, other banks invited to pitch for spot on deal Firm going public looks at relationship, IPO track record, reputation Joint Book Runners and Co-Managers (1-2: at least 10), ~12 banks per deal

26 How Banks get mandated:Relationship banks grow relationships: inform clients of new ideas/acquisition targets, market updates, catch-up meetings, always on call Banks makes sure to be aware of deal and to be included on initial proceedings Invited to Pitch? Pitch book has to be perfect (no grammatical errors!) IPO pitch could involve 100+ page presentation, company has to like senior management Pitch book includes market overview, bank qualifications, IPO valuation/strategy for execution etc. Chosen for role? Role given will directly impact fees

27 Step 2: Kickoff meeting: everyone involved in IPO, discuss registration forms and timeline Ongoing due diligence: Customer calls, industry/market due diligence, legal and IP due diligence, financial and tax due diligence Diligence call with senior management: Are you planning on increasing/decreasing this expenditure? What are key risks for the company going forward? Are you considering an acquisition? Etc.

28 Step 3: The S-1 Filing S-1 Registration Statement: Public learns of IPO, financial statements, key data, company overview and risks, overview of IPO - how many shares are being offered 30 day wait for SEC approval/comments No future projections released

29 Step 4: S-1 revisions madePre-selling offering: Pre-IPO analyst meeting, start talking with investors ( issue a “red herring”), just about the story no info about the deal Pre-marketing ( 2 weeks): research analysts and institutional investors (thoughts on deal), initial price range set by banks after consulting with client (critical) Banks list best investors based on: brokerage commissions, interest and track record, potential brokerage fees (equity syndicate) S-1 amended with adjusted price range based on investor feedback

30 Step 5: Roadshow (1-2 weeks): Bankers and company management travel to meet investors; orders are taken: how many shares and what will you pay? Bankers brag on demand from investors (never want to be the bank who got the least investors), price range further revised Pricing: Maximum Price desired for banks, shareholders and company management, need to be careful Offering adjusted if necessary

31 Step 6: The Pricing Meeting: Investor demand, deal over or under subscribed, price at low or high end of range? Allocation: Syndicate team will allocate shares to investors (favor given to top investors) Trading: The general public can finally buy and sell shares IPO fees typically range from 3-7% depending on size of company, risk/workload for bank, # of banks on deal, track record As the deal gets larger, the fees drop

32 Saudi Aramco IPO: Oil Price crisisSaudi Aramco currently the world’s most valuable company - $2T (~4x bigger than Apple and Alphabet) Planning to sell 5% to public to create “war chest”, prepare for country’s post- hydrocarbon age Profits are shrouded in secrecy 5% predicted to raise ~$100 billion, largest IPO ever (5x bigger than Alibaba) Being called “Wall Street’s Biggest Event Ever”

33 Unique deal: Valuation and current owners SizeSituation - proceeds will bulk up sovereign wealth fund to help diversify economy, scrutiny from regulators Banks: As of right now J.P. Morgan, HSBC and Moelis and Company are being considered for top spots; there will be many more Company accounts for 90% of government revenue Considering multiple exchanges Recent Developments: OPEC!!!

34 Saudi Aramco IPO Facts to consider:$2-3 Trillion valuation Produces 1-8 barrels of oil around the world (12% of global production) 261 billion barrels of oil reserves U.S. buys 1 million barrels a day from Aramco 93% tax to government Can pump a barrel of oil for less than $10

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36 Background Originally an American based oil company, it was nationalized by the Saudi government in 1980 Produces petroleum, natural gas and other petrochemicals Deals with exploration, production, refining, distribution and marketing Activities are monitored by the Saudi Arabian government 65,000 Employees – large proportion are geophysicists and geologists

37 Financial Data As a state owned company, a lot of the data is unavailable $378 billion annual revenue (2014) Biggest producer of oil in the world – 12% of the world’s production Produces 10.3 million barrels of crude oil per day (2016) 261 billion barrels in oil reserve – 2nd only to Venezuela with 297 billion

38 Continued On average, it costs them $9.90 to pump 1 barrel of oilThe US buys 1MM bpd from Aramco, China buys 1.4 MM bpd 75% of its oil is sold overseas, while the remaining is sold domestically at a discount Refineries – 4 domestic, 6 joint venture domestic, and 5 international joint ventures in the US, China, Japan and Korea

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40 Average Cost to Pump 1 Barrel of Oil

41 INTERVIEW QUESTION Jason Shavel

42 INTL FCSTONE / THOMSON REUTERSKat Stevens and Maggie Evans

43 Contact Lauren Pisauro before interview for extra prepCareer Opportunities: Sales and Trading Internships Summer 2017 (juniors) Fixed-Income Institutional Sales (full-time) Deadline is October 2 to apply Apply on Career Spot a cover letter résumé college transcript. INTL FC Stone will be on campus 10/12 to conduct 1st round interviews Contact Lauren Pisauro before interview for extra prep

44 Career Opportunities cont:Go To Market Associate (full-time 18 month rotational program) Working with some of the largest financial companies in the world and help them obtain the data and information Apply on the Thomson Reuters website under careers Resume Cover letter Contact for information about the company or this opportunity