Stanchart to float 1st IDR for over Rs 2,200 cr; list in June

Rakesh Pathak and Joyeeta Dey

New Delhi, Mar 30 (PTI) In what would be the first case
of an MNC raising capital from India, UK's Stanchart Tuesday
announced that it would float Indian Depository Receipts to
mop up over USD 500 million (Rs 2,250 crore) and list the same
on bourses by June.

Seeking to float 220 million IDRs, the UK-based banking
major moved market regulator Sebi for approval of the scheme,
guidelines for which were cleared way back in 2004. The bank
had earlier said that the issue size could be between USD 500
million and USD 750 million.
"We have a strong presence in India. We are the oldest
foreign bank in the country. We have good business and IDR is
to give opportunity to Indian investors to participate in the
global story," Stanchart PLC's CEO (India and South Asia)
Neeraj Swaroop told PTI immediately after filing for IDR with
Securities and Exchange Board of India.
Stanchart began its Indian operations in April 1858 in
Calcutta (now Kolkata).
Asked about the pricing of the instrument, he said that
at present Stanchart PLC was being traded at 17 pounds a share
but "we have not decided on the conversion rate."
While the banking major is looking for mopping up at
least USD 500 million, it has not fixed any upper limit,
Swaroop said, adding that he would also want the employees to
participate in the issue.
The proceeds would be repatriated to the global entity
for normal business activities and there was no shortage of
capital adequacy.
"We have not faced any shortage of capital in the past.
We will not face (in the future). India can get capital if
required," he said.
He, however, said that no decision had been taken for
fixing a quota for employees and it would be decided when the
issue nears completion and would depend on a host of issues
like retail response.
Asserting that India, which contributes to 20 per cent of
global profits, would continue to be the focus area, he said
that this year the bank would enter a host of specialised
corporate equity services to assist IPOs, brokerage and equity
solution to the Indian industry.
He said that Stanchart had posted a significant USD one
billion profit in 2009 and added that the outlook was good.
He, however, refrained from giving any numbers for the future
but pointed out that profits for the last five years had been
growing at an average of 41 per cent, while income was rising
at an average of 30 per cent.

The principal rationale for listing is brand building and
business development in India, Stanchart's second largest
market. It accounts for 20.5 per cent of the Group profits,"
the bank said in a statement.
Stanchart has over 94 branches in 37 cities in the
country. Its retail customer base stands at around 20 lakh.
Investment bankers including Goldman Sachs, UBS, JM, SBI
Capital and DSP Merrill Lynch advised Stanchart on the said
issue.
In November last year, Stanchart Global CEO Peter Sands
said that the proposed IDR issue would enhance the lenders
commitment to the local market.
The bank has operations in an array of verticals,
including consumer and wholesale banking, private banking and
SME banking.
IDRs work like Global Depository Receipts or American
Depository Receipts — foreign-listed securities against
underlying equity shares of Indian companies -- through which
Indian companies raise resources overseas.
Sebi guidelines for IDR issue permits only the companies
listed in their domestic market for at least three years and
have been profitable for three of the preceding five years for
IDR issues. PTI JD
SDE