Posted by: qmaxim | May 31, 2010

Tables are turning?

Since independence, most of the cash flows to India have been in one direction that is from developed countries into India. In the last   decade or so, the direction has become two way  to an extend with  some  Indian companies buying assets abroad, one  example was  the taking over Jaguar- Landrover by Tata motors. Many of the leading companies like Infosys, Wipro, ICICI bank had successful  US Depository Receipts (ADR) issues and are  listed in the US stock exchanges such as  NASDAQ.  The money so collected can be repatriated   to India. Meanwhile, flow of money from foreign investors to Indian  stock markets and other sectors has become large running into Billions of Dollars per month.

Now,  a curious reversal of roles is  taking place. Yesterday, London headquartered Standard Chartered Bank  successfully issued Indian Depository Receipts (IDR) which mopped up more than  half a Billion Dollars. (Read news item   below). This money  will be repatriated back to London. In addition, the company intends to list these  shares in the Indian stock exchanges.

Is it start of  a  new trend, are the tables turning ?

Read on….

Standard Chartered bank’s India offer oversubscribed

Fri May 28, 1:13 pm ET

MUMBAI (AFP) – The 588 million dollar Indian offering of Standard Chartered Bank was more than twice oversubscribed by its close Friday, as bids from investors came in just hours before the deadline.

The issue, which opened on Tuesday despite volatile global market conditions, is being viewed by bankers as a success, with investors confident of the bank’s growth strategy, which focuses on emerging markets. Data at the Mumbai and the National stock exchanges showed the London-based lender’s Indian Depository Receipts (IDR) issue had received about 446 million bids out of 204 million on offer — a 2.19 times oversusbcription.

The issue closed Friday but data is still being collated, the bank said, so the final bid figure could be even higher.

The “high-net worth individual” category was oversubscribed 1.7 times; qualified institutional buyers about three times; and retail investors 0.7 times, a source familiar with the matter told AFP on Friday.

“We are very happy. Initially the markets were nervous due to volatile global conditions and a slow start for the offering,” a banker said, also on condition of anonymity.

The late surge came after Standard Chartered received bids covering just 16 percent of the issue between Tuesday and Thursday.

Foreign companies are not allowed to list shares directly in the country and Standard Chartered, which makes most of its profits in Asia, will become the first foreign company to list in India through the IDR route.

IDRs are rupee-denominated certificates similar to US Depository Receipts that show ownership of shares in an overseas firm.

The issue was open to retail, institutional and overseas investors and corporates, with every 10 IDRs representing one share .Standard Chartered will now seek to list its IDRs on India’s two leading stock exchanges, the Mumbai and the National stock exchange, in June. The funds raised will be repatriated to the bank’s London headquarters as capital reserve to be used for growth and expansion plans.

India is the bank’s second largest and fastest-growing market after Hong Kong, with profit in excess of one billion dollars in 2009.The price band for the offering was 100-115 rupees per IDR. The stock exchange data showed that most bids were at the lower end of the bracket. The bank is aiming to boost its brand and visibility in India, where it opened its first branch more than 150 years ago.

The bank has hired investment banks including Goldman Sachs, UBS Securities and Bank of America-Merrill Lynch  to manage the offering.

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