London, May 14: U.K.-based banking major Standard Chartered (StanChart) plans its initial share sale in Indian markets between May 25 and 28 to raise up to $750 million, becoming the first foreign entity to list shares on domestic bourses.
The bank plans to sell 240 million shares, or Indian Depository Receipts (IDRs), with every 10 IDRs representing one share of Standard Chartered.
“The IDR issue is a strategic move to reinforce our commitment in the market… allowing investors in India direct access to our performance,” Standard Chartered Group Chief Executive Peter Sands told reporters here on Thursday. StanChart said retail investors and eligible employees, whose bid amounts do not exceed Rs.1 lakh, would be given a 5 per cent discount. The issue was likely to have an anchor investor.
The shares will be listed on the Bombay and National stock exchanges. The price band will be announced later.
IDRs are derivative instruments that derive their value from shares deposited with custodians. Foreign companies deposit shares with a custodian who, in turn, issues depository receipts based on these shares.
Foreign companies can use this instrument to raise money from the domestic market. Like American Depository Receipts and Global Depository Receipts (ADRs/GDRs), which Indian companies use to raise resources overseas, IDRs enable foreign companies to do the same in India.
UBS Securities and Goldman Sachs Securities are the global co-coordinators for the issue, while other book-running lead managers include JM Financial, DSP Merrill Lynch, Kotak Mahindra and SBI Capital Markets.
Mr. Sands said the company would use the proceeds to support the bank’s business growth in India and abroad.
As per SEBI guidelines, IDRs can be issued by companies that have been listed in the home market for a minimum of three years, and have registered a profit in at least three of the five years before the issue. The norms state that no individual, entity or group of entities, other than QIBs, can hold IDRs exceeding 5 per cent of the issue. QIBs, or a group of QIBs, can hold up to 15 per cent of the IDR issue.
StanChart, which has been operating in India for 150 years, has over 94 branches in 37 cities and a combined customer base of around 20 lakh retail customers. The bank has operations in an array of verticals, including consumer and wholesale banking, private banking and SME banking. Standard Chartered is currently listed on bourses in London and Hong Kong. Mr. Sands said the bank’s exposure to Europe was minimal and its business carries ‘very little’ risk from the current debt-crisis in the region.
—Agencies