ADRs, GDRs slump on Nasdaq crash

DEC 19: After a promising start, hopes of record mobilisation through ADR/GDR in year 2000 dashed, thanks to the Nasdaq crash in April. In...

DEC 19: After a promising start, hopes of record mobilisation through ADR/GDR in year 2000 dashed, thanks to the Nasdaq crash in April. Indian corporates could manage to mobilise only Rs 3,966 crore as against the estimated Rs 15,000 crore, according to a release by Prime, a Delhi-based primary market data base firm.

However, this amount was still higher than mobilisations from domestic markets, which accounted for Rs 3,055 crore in 2000. It was also 1.85 per cent higher than Rs 3894 crore, which raised last year from the foreign markets. The year also saw nine foreign issues, as against six during the last year.

IT sector accounted for as much as 71 per cent of the total amount raised during the year from overseas listings, from six out of nine overseas issues during the year. Satyam Infoways, Wipro, Silverline Technologies, SSI, Aptech and Rediff represented the IT sector collecting Rs 2,822 crore. The rest Rs 1,142 crore was mopped up by ICICI Bank, Tata Tea and Usha Beltron. ICICI Bank was the largest issue picking up Rs 763 crore from its ADR issue.

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The year had started on a strong note, but as the ICE melted and the US technology index turned southwards, corporates were either forced to postpone their overseas IPO plans, or look for greener pastures. The companies which have announced plans to tap the overseas markets earlier this year, but could not go ahead include, Apollo Hospitals, Aztec, BPL Cellular, BPL Communications, Datanet, Indiainfoline, Jindal Vijaynagar, Mastek, Moser Baer, Morepen Labs, Pentamedia Graphics, Saregama, Shanta Biotech and Mphasis.

In addition, fates of companies like Zee Telefilms, Nicholas Piramal, MTNL, Indian Oil, Container Corporation of India and Essar Oil, which were announced much earlier is also to be decided.

But the race to the premium markets is yet to die down. Undeterred by weak sentiments, last three months have seen at least 86 companies announce GDR/ADR plans. These include, Bharati Enterprises, Dr Reddy’s Labs, HCL Technologies, HDFC Bank, IDBI, Indian Hotels, Polaris, Satyam Computers, TCS and Sterlite Optical Technologies.

According to Haldia, managing director of Prime, the scenario in 2001 will depend upon the state of secondary market in India as well as overseas. He also expected that the issue of valuations will be revisited.

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The Sebi is also expected to relax the limit on minimum offering. This may tempt some of these companies to ponder on the domestic listing option, he added.