Britain's Standard Chartered lists in Mumbai through IDRs

11th June 2010, Comments 0 comments

British bank Standard Chartered's Indian Depository Receipts (IDRs) traded close to their offer price in debut trading on the Mumbai stock exchange on Friday, in the first issue of its kind.

The bank, which makes most of its profits in Asia, last month raised 530 million dollars through the pioneering sale of IDRs.

IDRs are rupee-denominated certificates similar to US Depository Receipts that show ownership of shares in an overseas firm, with every 10 IDRs representing one Standard Chartered share.

Foreign companies are not allowed to list shares directly in India.

The Standard Chartered IDR rose to a day's high of 108 rupees, before retracing to 104 at noon, as the benchmark 30-share Sensex rose 1.2 percent.

India is the bank's second largest and fastest-growing market after Hong Kong, with profit in excess of one billion dollars in 2009.

"This is a historic development as we got a strong response despite global volatility," Standard Chartered chairman John Peace told reporters in Mumbai.

"India is in our DNA. We hope to go from strength to strength with a focus on emerging markets," he said.

Standard Chartered, analysts say, is better positioned than other global banks in a tough economic climate, as the majority of its business comes from high-growth emerging markets.

"The bank is a good long-term buy. We expect the local IDR to track the London price and global clues," said Gaurav Dua, head of research with Mumbai brokerage Sharekhan.

The IDR price was below the bank's London stock exchange closing price of 1,649 pence on Thursday, which works out at 113 rupees per IDR, with 10 IDRs equivalent to one Standard Chartered plc share.

"We will see a trend where the IDRs will initially trade in the range of a 6 to 8 percent discount to the underlying London stock's price," said Arun Kejriwal, director of Kejriwal Research.

Local trading interest could be limited as IDRs attract higher capital gains and dividend tax compared to local shares.

Buyers of the certificates can earn bonuses or dividends.

The funds raised through the IDR will be repatriated to the bank's London headquarters as capital reserve to be used for growth and expansion plans.

The bank's offering had opened for subscription when global markets plunged due to eurozone concerns last month.

Standard Chartered is the largest international bank in India in terms of branches, where it has had a presence for 152 years. The bank now operates 94 branches in India with a staff of 17,500 people.

© 2010 AFP

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