Standard Chartered's India offering opens
Britain's Standard Chartered Bank on Tuesday began selling shares in India, hoping to raise up to 588 million dollars in the first initiative of its kind in the country by a foreign firm.
The London-based lender is selling shares through Indian Depository Receipts (IDRs) -- rupee-denominated certificates similar to US Depository Receipts that show ownership of shares in an overseas firm.
The issue saw modest bidding from investors on the opening day, receiving bids for 11.17 million shares, data showed at Tuesday's closing on the Mumbai stock exchange.
The price band for the offering is 100 to 115 rupees per IDR.
Most of the bids came at the lower end of the price band, on a day when investor interest was shaken globally by concerns over Europe's debt woes, with the benchmark 30-share Sensex ending the day 2.7 percent lower.
"Typically, most bids (demand) are likely to emerge on the last day of subscription," an investment banker said, on condition of anonymity.
The process ends Friday.
Standard Chartered, a bank that makes most of its profits in Asia, will issue 240 million IDRs through the offer, which is open for subscription to retail, institutional and overseas investors and corporates.
Banking analysts expect a strong response for the offering. Standard Chartered Bank, which has revenue streams across emerging markets such as India, Africa, the Middle East and Southeast Asia.
"This issue offers Indian investors a chance to invest in a global entity with widespread global presence," said an analyst with brokerage Sharekhan.
Standard Chartered, analysts say, is better positioned than other global banks in a tough economic climate, as a majority of its business comes from high-growth emerging markets.
"The bank could deliver decent returns to investors in the long-term, looking at its past track record and future growth prospects," said analyst Tiju Samuel of private sector HDFC Securities.
IDRs however attract higher capital gains and dividend tax, compared to local shares, so this could limit trading interest.
Buyers of the certificates can earn bonuses or dividends.
The bank is aiming to boost its brand and visibility in India, where it opened its first branch more than 150 years ago.
India is Standard Chartered Bank's second largest and fastest-growing market after Hong Kong, with profit in excess of one billion dollars in 2009.
Once the issue closes, the bank will list its IDRs on India's two leading stock exchanges, the Mumbai and the National stock exchange, in June.
On Monday, the bank said it had allocated shares worth 80 million dollars to six anchor investors as part of the listing.
Every ten IDRs represents one Standard Chartered share.
Standard Chartered will become the first foreign company to list in India through the IDR route. Foreign companies are not allowed to list shares in India.
The funds raised will be repatriated to the bank's London headquarters as capital reserve to be used for growth and expansion plans.
"It is a form of homecoming. We see this as a bold, strategic move to increase our brand presence and visibility in India," the banking group's chief executive Peter Sands said this month.
The bank has hired investment banks including Goldman Sachs, UBS Securities and Bank of America-Merrill Lynch to manage the offering.
Unlike several other leading lenders, Standard Chartered emerged relatively unscathed from the financial crisis and did not require a bailout from the British government to stay afloat.
© 2010 AFP