GDR Presentation

Global Depository Receipt -GDR

Himanshu Ahire 13

1Saturday 19 June 2010

Depository Receipts

‣ Depository Receipts

A negotiable certificate held in the bank of one country representing a specific number of shares of a stock traded on an exchange of another country

‣ American Depository Receipt (ADR)

‣ Global Depository Receipt (GDR)


Example

Reliance Industries ==>Deposit Agreement ==>Citibank

Citibank India ==> Custodian Bank

Citibank London ==> Depository Bank ==> Issue GDR in London Stock Exchange ==> Investors in London


Deposit Agreement

‣ Contract Between Company & Depository Bank

‣ Sponsored Vs Unsponsored

‣ Duties & Rights of each Party

‣ Treatment of Dividends

‣ Voting Rights

‣ Fees Will Be charge


Pricing of GDR

‣ GDR To Shares Ratio example 1 GDR : 10 Shares

‣ Prices govern by Market Demand & Supply

‣ Addition of new GDR & Cancelation of GDRS

‣ Arbitrage opportunities


Structure

‣ Structure of ADR

‣ Level 1 - OTC Traded - Can no listed on Exchange

‣ Level 2 - Listed on Stock Exchange

‣ Level 3- All Issuer to raised capital through Public Offer

‣ Reg S Type Depositary Receipts - GDR can be traded from any kind of investor to any kind of investor.

‣ Pairing Type - combination of the Reg S type GDR and a Rule 144A ADR.

‣ Rule 144A ADR - privately placed through Qualified Institutional Buyers in the U.S.


GDR Advantages to Issuer

‣ Widened Investor Base

‣ Increased Liquidity

‣ Global Visibility

‣ Price Parity- Compete with MNCs

‣ Facilitates Market Entry


GDR Advantages to Investors

‣ Ease of Investment

‣ Simple to Trade

‣ Global Access ( Diversification of Portfolio )

‣ Enables Comparison

‣ Access to Institutional Investors


Procedure for Issue of GDR

‣ STEP 1: Approvals

Shareholders, Board of Directors, Regulatory Authorities in home Countries

‣ STEP 2: Appointment of Intermediaries

Depository Bank, Lead manager, Legal Advisor, Auditors, underwriters , Printer

‣ STEP 3: Principal Documentation

Depository Agreement, Custodian Agreement, Trust Deed

‣ STEP 4: Pre and Post Launch

Road Show, Pricing, Allocation 9Saturday 19 June 2010

GDR Stock Exchanges

‣ London Stock Exchange,

‣ Luxembourg Stock Exchange,

‣ Dubai International Financial Exchange (DIFX),

‣ Singapore Stock Exchange,

‣ Hong Kong Stock Exchange.

GDR Indexes

‣ BNY Mellon GDR Index

‣ Skindia GDR Index


ADR Vs GDR

‣ Disclosure norms - ADR - Comprehensive disclosure norms

‣ Voting Rights - ADR- Compulsory

‣ Accounting System Differences - ADR - US GAAP

‣ Initial Listing Costs- ADR much expensive than GDR


Market Overview


Top 15 Indian Companies who raised through GDR

DR ISSUE EXCH PRICE DATE

DRs PLACED

DR CAPITAL RAISED (USD)

INDUSTRY

Tata Steel

Larsen & Toubro

Tata Motors

Tata Power

Indiabulls Financial Services

Essar Oil

Videocon Industries

Reliance Ports & Terminals

Essar Oil

Axis Bank

Sterling International Enterprises

Cal's Refineries

Axis Bank

Essar Oil

LSE 22-Jul-09 6,54,11,000 49,97,40,040 Indust.Metals&Mining

LSE 13-Nov-07 40,00,000 40,00,00,000 Construct.&Materials

LUX 15-Oct-09 2,99,04,000 37,49,96,160 Industrial Engineer.

LUX 27-Jul-09 1,48,38,110 33,50,44,524 Electricity

LUX 10-May-07 2,29,70,903 29,99,99,993 Financial Services

-- 27-Apr-10 6,06,827 29,32,97,694 Oil & Gas Producers

LUX 29-Sep-05 2,86,50,000 28,67,86,500 Oil & Gas Producers

-- 29-Nov-02 54,00,000 27,00,00,000 IndustrialTransport.

-- 28-May-10 4,65,967 22,50,01,485 Oil & Gas Producers

LSE 23-Jul-07 1,33,52,466 20,60,28,550 Banks

LUX 15-Dec-09 2,11,63,267 20,12,62,669 Tech.Hardware&Equip.

LUX 12-Dec-07 78,80,000 19,99,94,400 Oil & Gas Producers

LSE 16-Mar-05 3,01,89,907 17,84,22,350 Banks

-- 31-Mar-08 2,23,706 17,07,86,109 Oil & Gas Producers


Most Recent (Year 2010) Indian Company GDR Placement

DR ISSUE EXCH PRICE DATE NON-US DRs PLACED

NON-US DR CAPITAL RAISED (USD)

INDUSTRY

S.E. Investments

Teledata Technology Solutions

Birla Cotsyn

Ashco Niulab Industries

Essar Oil

Kemrock Industries and Exports

SEL Manufacturing

KBS Capital Management

Nissan Copper

Hiran Orgochem

Essar Oil

Zenith Birla India

Beckons Industries Limited

LUX 10-Mar-10 24,50,000 3,88,57,000 Financial Services

LUX 12-Mar-10 35,37,505 3,69,66,927 Software&ComputerSvc

LUX 15-Mar-10 96,89,000 2,49,97,620 General Industrials

LUX 16-Apr-10 67,55,900 99,98,732 Pharma. & Biotech.

-- 27-Apr-10 6,06,827 29,32,97,694 Oil & Gas Producers

LUX 29-Apr-10 48,27,200 5,00,09,792 Construct.&Materials

LUX 04-May-10 30,00,000 4,65,00,000 Personal Goods

LUX 19-May-10 12,50,000 24,37,500 Financial Services

LUX 20-May-10 50,00,000 2,24,00,000 Indust.Metals&Mining

LUX 21-May-10 15,38,462 1,00,00,003 Pharma. & Biotech.

-- 28-May-10 4,65,967 22,50,01,485 Oil & Gas Producers

LUX 28-May-10 18,11,902 2,29,93,036 Indust.Metals&Mining

LUX 14-Jun-10 24,92,640 1,05,43,867 Chemicals


Top 15 Indian Companies to Raise capital through ADR

DR ISSUE EXCH PRICE DATE

US DRs PLACED

US DR CAPITAL

RAISED (USD)

INDUSTRY

ICICI BankSterlite IndustriesInfosys TechnologiesSterlite IndustriesInfosys TechnologiesHDFC BankICICI BankICICI BankSatyam Computer ServicesHDFC BankWNS HoldingsDr. Reddy's LaboratoriesHDFC BankSatyam Computer Services

NYSE 25-Jun-07 4,99,49,238 2,45,99,99,972 BanksNYSE 22-Jun-07 15,00,00,000 2,01,60,00,000 Indust.Metals&MiningNASDAQ 21-Nov-06 3,00,00,000 1,60,50,00,000 Software&ComputerSvc

NYSE 17-Jul-09 13,19,06,011 1,60,26,58,034 Indust.Metals&MiningNASDAQ 09-May-05 1,40,00,000 88,36,80,000 Software&ComputerSvc

NYSE 17-Jul-07 65,94,504 60,73,53,818 BanksNYSE 17-Mar-05 2,20,87,850 46,62,74,514 BanksNYSE 06-Dec-05 1,61,90,000 43,30,82,500 BanksNYSE 11-May-05 1,50,00,000 32,25,00,000 Software&ComputerSvc

NYSE 20-Jan-05 76,41,365 29,99,99,990 BanksNYSE 25-Jul-06 1,27,63,708 25,52,74,160 Support ServicesNYSE 16-Nov-06 1,43,00,000 22,88,00,000 Pharma. & Biotech.

NYSE 25-Jul-01 1,24,72,884 17,24,99,986 BanksNYSE 18-May-01 1,66,75,000 16,19,14,250 Software&ComputerSvc


Total Sponsored DR

Source: BNY Mellon Depository Receipts Annual Market Analysis 2009


Total Sponsored DR by Country



Annual DR Capital Rising



DR Capital Rising by Exchange 2009



Thank You


GDR Presentation

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