Global Depository Receipt -GDR

Himanshu Ahire 13

Saturday 19 June 2010 1

 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)

Saturday 19 June 2010 2

 Example

Reliance Industries ==>Deposit Agreement ==>Citibank

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

Saturday 19 June 2010 3

 Deposit Agreement

Contract Between Company & Depository Bank

Sponsored Vs Unsponsored
Duties & Rights of each Party
Treatment of Dividends
Voting Rights
Fees Will Be charge

Saturday 19 June 2010 4

 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

Saturday 19 June 2010 5

 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.
Saturday 19 June 2010 6
 GDR Advantages to Issuer

Widened Investor Base

Increased Liquidity
Global Visibility
Price Parity- Compete with MNCs
Facilitates Market Entry

Saturday 19 June 2010 7

 GDR Advantages to Investors

Ease of Investment
Simple to Trade
Global Access ( Diversification of Portfolio )
Enables Comparison
Access to Institutional Investors

Saturday 19 June 2010 8

 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
Saturday 19 June 2010 9
 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

Saturday 19 June 2010 10

 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

Saturday 19 June 2010 11

 Market Overview

Saturday 19 June 2010 12

 Top 15 Indian Companies who raised through
GDR
DR ISSUE EXCH PRICE DRs DR CAPITAL INDUSTRY
DATE PLACED RAISED (USD)
Tata Steel LSE 22-Jul-09 6,54,11,000 49,97,40,040 Indust.Metals&Mining
Larsen & Toubro LSE 13-Nov-07 40,00,000 40,00,00,000 Construct.&Materials
Tata Motors LUX 15-Oct-09 2,99,04,000 37,49,96,160 Industrial Engineer.
Tata Power LUX 27-Jul-09 1,48,38,110 33,50,44,524 Electricity
Indiabulls Financial Services LUX 10-May-07 2,29,70,903 29,99,99,993 Financial Services
Essar Oil -- 27-Apr-10 6,06,827 29,32,97,694 Oil & Gas Producers
Videocon Industries LUX 29-Sep-05 2,86,50,000 28,67,86,500 Oil & Gas Producers
Reliance Ports & Terminals -- 29-Nov-02 54,00,000 27,00,00,000 IndustrialTransport.
Essar Oil -- 28-May-10 4,65,967 22,50,01,485 Oil & Gas Producers
Axis Bank LSE 23-Jul-07 1,33,52,466 20,60,28,550 Banks
Sterling International LUX 15-Dec-09 2,11,63,267 20,12,62,669 Tech.Hardware&Equip.
Enterprises
Cal's Refineries LUX 12-Dec-07 78,80,000 19,99,94,400 Oil & Gas Producers
Axis Bank LSE 16-Mar-05 3,01,89,907 17,84,22,350 Banks
Essar Oil -- 31-Mar-08 2,23,706 17,07,86,109 Oil & Gas Producers

Saturday 19 June 2010 13

 Most Recent (Year 2010) Indian Company GDR
Placement
DR ISSUE EXCH PRICE DATE NON-US DRs NON-US DR INDUSTRY
PLACED CAPITAL
RAISED
(USD)

S.E. Investments LUX 10-Mar-10 24,50,000 3,88,57,000 Financial Services

Teledata Technology Solutions LUX 12-Mar-10 35,37,505 3,69,66,927 Software&Compute
Birla Cotsyn LUX 15-Mar-10 96,89,000 2,49,97,620 General Industrials
Ashco Niulab Industries LUX 16-Apr-10 67,55,900 99,98,732 Pharma. & Biotech
Essar Oil -- 27-Apr-10 6,06,827 29,32,97,694 Oil & Gas Producer
Kemrock Industries and Exports LUX 29-Apr-10 48,27,200 5,00,09,792 Construct.&Materia
SEL Manufacturing LUX 04-May-10 30,00,000 4,65,00,000 Personal Goods
KBS Capital Management LUX 19-May-10 12,50,000 24,37,500 Financial Services
Nissan Copper LUX 20-May-10 50,00,000 2,24,00,000 Indust.Metals&Min
Hiran Orgochem LUX 21-May-10 15,38,462 1,00,00,003 Pharma. & Biotech
Essar Oil -- 28-May-10 4,65,967 22,50,01,485 Oil & Gas Producer
Zenith Birla India LUX 28-May-10 18,11,902 2,29,93,036 Indust.Metals&Min
Beckons Industries Limited LUX 14-Jun-10 24,92,640 1,05,43,867 Chemicals

Saturday 19 June 2010 14

 Top 15 Indian Companies to Raise capital
through ADR
DR ISSUE EXCH PRICE US DRs US DR INDUSTRY
DATE PLACED CAPITAL
RAISED (USD)
ICICI Bank NYSE 25-Jun-07 4,99,49,238 2,45,99,99,972 Banks
Sterlite Industries NYSE 22-Jun-07 15,00,00,000 2,01,60,00,000 Indust.Metals&Mining
Infosys NASDAQ 21-Nov-06 3,00,00,000 1,60,50,00,000 Software&ComputerSvc
Technologies
Sterlite Industries NYSE 17-Jul-09 13,19,06,011 1,60,26,58,034 Indust.Metals&Mining
Infosys NASDAQ 09-May-05 1,40,00,000 88,36,80,000 Software&ComputerSvc
Technologies
HDFC Bank NYSE 17-Jul-07 65,94,504 60,73,53,818 Banks
ICICI Bank NYSE 17-Mar-05 2,20,87,850 46,62,74,514 Banks
ICICI Bank NYSE 06-Dec-05 1,61,90,000 43,30,82,500 Banks
Satyam Computer NYSE 11-May-05 1,50,00,000 32,25,00,000 Software&ComputerSvc
Services
HDFC Bank NYSE 20-Jan-05 76,41,365 29,99,99,990 Banks
WNS Holdings NYSE 25-Jul-06 1,27,63,708 25,52,74,160 Support Services
Dr. Reddy's NYSE 16-Nov-06 1,43,00,000 22,88,00,000 Pharma. & Biotech.
Laboratories
HDFC Bank NYSE 25-Jul-01 1,24,72,884 17,24,99,986 Banks
Satyam Computer NYSE 18-May-01 1,66,75,000 16,19,14,250 Software&ComputerSvc
Services
Saturday 19 June 2010 15
 Total Sponsored DR

Source: BNY Mellon Depository Receipts Annual Market Analysis 2009

Saturday 19 June 2010 16

 Total Sponsored DR by Country

Source: BNY Mellon Depository Receipts Annual Market Analysis 2009

Saturday 19 June 2010 17

 Annual DR Capital Rising

Source: BNY Mellon Depository Receipts Annual Market Analysis 2009

Saturday 19 June 2010 18

 DR Capital Rising by Exchange 2009

Source: BNY Mellon Depository Receipts Annual Market Analysis 2009

Saturday 19 June 2010 19

 Thank You

Saturday 19 June 2010 20