Weak response so far to Standard Chartered's India listing

28th May 2010, Comments 0 comments

Britain's Standard Chartered Bank, seeking to raise 588 million dollars by selling shares in India, has received bids covering just a quarter of the issue, data showed on Friday.

Data at the Mumbai and the National stock exchanges showed that the London-based lender's Indian Depository Receipts (IDR) issue had received about 49 million bids out of 204 million on offer.

The issue, which opened Tuesday and ends Friday evening, is open to retail, institutional and overseas investors and corporates, with every 10 IDRs representing one share.

Some 36 million IDRs have been set aside for anchor investors.

Bankers familiar with the matter said they were confident that demand would improve by the end of the day. One told AFP on condition of anonymity: "Bids often come in right at the closing (of the issue)."

Volatile global market conditions may have led to the low levels of response so far. Another problem keeping investors away may be that IDRs attract a capital gains tax and a dividend distribution tax.

The price band for the offering is 100-115 rupees per IDR. The stock exchange data showed that most bids were at the lower end of the bracket.

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

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

India is the 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 is seeking to list its IDRs on India's two leading stock exchanges, the Mumbai and the National stock exchange, in June.

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

© 2010 AFP

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