Global Depository Receipts

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Global Depository Receipts American Depository
Receipts

• Practical aspects of the issuance

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International fund raisings

• Equity issuance through GDRs ADRs.
• Debt issuance in the Eurobond markets.

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GDRs ADRs - Main advantages

• Diversify the shareholder base.
• Take advantage of the depth in the international
  markets.
• Increases the profile of the companies due to the
  international attention and coverage.
• Able to raise funds in foreign currency.
• Quick liquidity for the shareholders.
• Get better valuations for the home market listed
  stock of the issuer.

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GDRs ADRs How to do an issue?

• Company should be convinced of the need to raise
  equity from the international markets.
• Start consultations with investment banks.
  (Goldman Sachs, Morgan Stanley, Merril Lynch,
  Lehman Brothers, HSBC, Deutche Bank etc)
• Give a mandate to the investment bank to be the
  Lead Manager of the issue.
• Lead Manager would give a timetable for the
  issue.

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GDRs/ ADRs How to do an issue? (contd)

• Lead Manager would prepare a research report
  covering the companys activities and the
  prospects for the shareholders.
• Lead Manager prepares the companys key staff
  (CEO, CFO) for the road show in international
  markets. Typically London, Frankfurt, Paris, New
  York, Singapore etc.
• Lead Manager starts the book building process
  during the road show. (book building is a process
  which determines the price of the GDR or ADR)

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GDRs/ ADRs How to do an issue? (contd)

• The price is fixed and the funds are raised.
• Listing of the GDR is done in the London or
  Luxembourg stock exchange. ADRs are listed in the
  New York stock exchange.
• GDRs the ADRs start trading in the overseas
  markets.
• Company submits returns regularly to the overseas
  stock markets to comply with listing requirements.

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Eurobond Issue to raise Debt

• The name Eurobond denotes that the bond is
  raised in an international market outside of the
  U.S. and can be done in any currency.
• The bond would be listed in the Luxembourg or
  London Stock Exchanges.
• The bond could be raised either under a Medium
  Term Note (MTN) programme or a single issuance of
  an FRN. (Floating/fixed rate note).

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Eurobond Issue Advantages

• Diversify the funding base to different markets.
  New depositors and different profile of
  depositors. (pension funds, insurance companies,
  banks etc)
• To tap the huge liquidity available in the
  foreign markets.
• Helps the profile of the issuer as an
  international player.

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Eurobond Issue How to do it?

• Engage an investment bank as the lead manager.
• Since this is a debt issue a rating agency
  (Moodys, Standard Poors, Fitch) would need to
  rate the bond.
• Lead Manager prepares the offering circular.

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Eurobond Issue How to do it? (contd)

• Engage an investment bank as the lead manager.
• Since this is a debt issue a rating agency
  (Moodys, Standard Poors, Fitch) would need to
  rate the bond.
• Lead Manager prepares the offering circular.
• Typically the lead manager would also do a credit
  research report for the investors.

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Eurobond Issue How to do it? (contd)

• Lead Manager prepares the company for the road
  show and the road show is completed.
• During the road show the lead manager does the
  book building for the bond.
• Based on the book building the price is fixed and
  the issue is done at the price fixed.
• The company gets the funds and the bonds are
  listed.

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Thank You

• For clarifications please contact
• gopakumar_at_bankmuscat.com