Monday, September 22, 2008
Listing of an Indian Company Issue on AIM
PRELIMINARY LEGAL CONSIDERATIONS ON THE LISTING OF AN INDIAN BUSINESS ON AIM
A presentation by A.R.A. Law
www.steptoe.com/attachment.html/3075/ARA_S&J+Presentation+(3).PPT
http://www.steptoe.com/assets/attachments/3075.PPT#449,1,PRELIMINARY LEGAL CONSIDERATIONS ON THE LISTING OF AN INDIAN BUSINESS ON AIM
A presentation by A.R.A. Law
www.steptoe.com/attachment.html/3075/ARA_S&J+Presentation+(3).PPT
http://www.steptoe.com/assets/attachments/3075.PPT#449,1,PRELIMINARY LEGAL CONSIDERATIONS ON THE LISTING OF AN INDIAN BUSINESS ON AIM
Foreign Currency Convertible Bonds (FCCBs)
Role of FCCBs in Indian Market Scenario
Ekta Gupta
National Law University
September 5, 2006
Abstract:
Efficient capital markets are a critical component for any developed economy and Indian capital markets today are amongst the best regulated markets wherein the regulatory framework has kept pace with the significant growth in the securities markets. The story of Indian capital market reveals an efficient trading and settlement infrastructure, high levels of disclosure and fostering an environment of innovation. In this back drop it is seen that a new trend of corporate financing is gaining ground. The sale of Foreign Currency Convertible Bonds by domestic companies and banks has surged over the last couple of years. Thus, this article in the first part seeks to examine some fundamental concepts related to Foreign Currency Convertible Bonds, viz, its nature, regulatory mechanism, tax treatment, advantages and disadvantages. The second part analyses whether Foreign Currency Convertible Bonds can be considered as a 'Golden instrument' for raising funds in all market scenario wherein it is concluded that Foreign Currency Convertible Bonds can be advantageous only in a booming market and cannot be the buzzword in a bearish market, which the Indian markets did experience a little while back. In a bearish market, listed companies may resort to Qualified Institutional Placements that have been introduced by SEBI vide guidelines dated May 8, 2006. Lastly, the article also examines the concerns arising out of sudden increase in access to foreign currency convertible bonds by Indian companies. In this regard it is concluded that Press Note released by the Finance Ministry on November 17, 2005 relaxing the pricing guidelines is indeed a step in the right direction.
Gupta, Ekta,Role of FCCBs in Indian Market Scenario(September 5, 2006).
Available at SSRN:
http://ssrn.com/abstract=928396
Ekta Gupta
National Law University
September 5, 2006
Abstract:
Efficient capital markets are a critical component for any developed economy and Indian capital markets today are amongst the best regulated markets wherein the regulatory framework has kept pace with the significant growth in the securities markets. The story of Indian capital market reveals an efficient trading and settlement infrastructure, high levels of disclosure and fostering an environment of innovation. In this back drop it is seen that a new trend of corporate financing is gaining ground. The sale of Foreign Currency Convertible Bonds by domestic companies and banks has surged over the last couple of years. Thus, this article in the first part seeks to examine some fundamental concepts related to Foreign Currency Convertible Bonds, viz, its nature, regulatory mechanism, tax treatment, advantages and disadvantages. The second part analyses whether Foreign Currency Convertible Bonds can be considered as a 'Golden instrument' for raising funds in all market scenario wherein it is concluded that Foreign Currency Convertible Bonds can be advantageous only in a booming market and cannot be the buzzword in a bearish market, which the Indian markets did experience a little while back. In a bearish market, listed companies may resort to Qualified Institutional Placements that have been introduced by SEBI vide guidelines dated May 8, 2006. Lastly, the article also examines the concerns arising out of sudden increase in access to foreign currency convertible bonds by Indian companies. In this regard it is concluded that Press Note released by the Finance Ministry on November 17, 2005 relaxing the pricing guidelines is indeed a step in the right direction.
Gupta, Ekta,Role of FCCBs in Indian Market Scenario(September 5, 2006).
Available at SSRN:
http://ssrn.com/abstract=928396
GDR Related News
April 2008
Depository receipts back in favour
Download the article from
http://www.citi.com/transactionservices/homepage/securitiesfunds/dep_rec_bk.pdf
Jul/Aug 2007
2,000th sponsored DR
Russia's state-controlled Vneshtorgbank (VTB) raised nearly $8 billion in its sale of a 22.5% stake in the company, making it Russia's seventh-largest company by market capitalization. VTB selected The Bank of New York as the depositary bank for its global depositary receipt program. Each GDR represents 2,000 of VTB's ordinary shares.
The GDRs, which trade on the London Stock Exchange,were the 2,000th sponsored DR program available to investors worldwide, according to The Bank of New York. They also were the largest DR offering ever from a bank, the second-largest DR offering from a Russian issuer and the second-largest DR offering in history, following Rosneft oil's $6.4 billion initial public offering in DR form in July 2006.
Global Finance Media Inc. Jul/Aug 2007
http://findarticles.com/p/articles/mi_qa3715/is_/ai_n19510848
November 6, 1994
Recognizing the growth of the market, the London Stock Exchange said in August1994 that it would begin allowing G.D.R.'s to be listed, much as big exchanges in the United States have long listed A.D.R.'s. East India Hotels was the first G.D.R. in London.
World Markets; Depository Receipts: Now, the World
By RICHARD W. STEVENSON, Published: November 6, 1994
New York Times
http://query.nytimes.com/gst/fullpage.html?res=9C02E4D6143EF935A35752C1A962958260&sec=&spon=&pagewanted=all
Depository receipts back in favour
Download the article from
http://www.citi.com/transactionservices/homepage/securitiesfunds/dep_rec_bk.pdf
Jul/Aug 2007
2,000th sponsored DR
Russia's state-controlled Vneshtorgbank (VTB) raised nearly $8 billion in its sale of a 22.5% stake in the company, making it Russia's seventh-largest company by market capitalization. VTB selected The Bank of New York as the depositary bank for its global depositary receipt program. Each GDR represents 2,000 of VTB's ordinary shares.
The GDRs, which trade on the London Stock Exchange,were the 2,000th sponsored DR program available to investors worldwide, according to The Bank of New York. They also were the largest DR offering ever from a bank, the second-largest DR offering from a Russian issuer and the second-largest DR offering in history, following Rosneft oil's $6.4 billion initial public offering in DR form in July 2006.
Global Finance Media Inc. Jul/Aug 2007
http://findarticles.com/p/articles/mi_qa3715/is_/ai_n19510848
November 6, 1994
Recognizing the growth of the market, the London Stock Exchange said in August1994 that it would begin allowing G.D.R.'s to be listed, much as big exchanges in the United States have long listed A.D.R.'s. East India Hotels was the first G.D.R. in London.
World Markets; Depository Receipts: Now, the World
By RICHARD W. STEVENSON, Published: November 6, 1994
New York Times
http://query.nytimes.com/gst/fullpage.html?res=9C02E4D6143EF935A35752C1A962958260&sec=&spon=&pagewanted=all
Recent GDR Issues from India
Thursday, Nov 08, 2007
The Hindu ePaper
L&T GDR issue price at $100
MUMBAI: Larsen & Toubro has priced its $400 million Global Depositary Shares (GDS) offering at $100 per share. Each GDS represents one equity share of the company of nominal value of Rs. 2 each. The GDS are proposed to be listed on the Luxembourg Stock Exchange.
http://www.hindu.com/2007/11/08/stories/2007110856441700.htm
The Hindu ePaper
L&T GDR issue price at $100
MUMBAI: Larsen & Toubro has priced its $400 million Global Depositary Shares (GDS) offering at $100 per share. Each GDS represents one equity share of the company of nominal value of Rs. 2 each. The GDS are proposed to be listed on the Luxembourg Stock Exchange.
http://www.hindu.com/2007/11/08/stories/2007110856441700.htm
Sunday, September 21, 2008
Auctions versus book building
11 auctions were conducted from 1999 up to Google’s 2004 extravaganza. They differ from those of bookbuilt IPOs in a number of respects. Issuers choosing the auction route left less money on the table and saved on underwriting fees. Underwriter spreads in the bookbuilding group ran about 7%, but spreads for the auction IPOs were significantly lower. Only three out of the 11 auction IPOs had spreads of 7%, and Google’s was just 2.8%. With the exception of a single issuer, the auction group faced lower underpricing and, in some cases, IPOs were overpriced. The authors found that the combination of underwriting spreads and underpricing averaged 9.62% for the auction IPOs and 15.6% for the bookbuilding sample. Some argue that underpricing brings better analyst coverage and reduces litigation risk, but the complete absence of litigation among the auction group trounced the bookbuilding sample’s litigation rate of 7.2%.
http://www.bowne.com/securitiesconnect/details.asp?storyID=1592
Reference
Bookbuilding Versus Auction Selling Methods: A Study Of US IPOs
By: Prof. Kuntara Pukthuanthong, Prof. Nikhil Varaiya, and Prof. Thomas Walker San Diego State University (KP, NV); Concordia University, Montreal, Canada (TW)
Venture Capital: International Journal of Entrepreneurial Finance - Vol. 9, No. 4, Pgs. 311-345
http://www.bowne.com/securitiesconnect/details.asp?storyID=1592
Reference
Bookbuilding Versus Auction Selling Methods: A Study Of US IPOs
By: Prof. Kuntara Pukthuanthong, Prof. Nikhil Varaiya, and Prof. Thomas Walker San Diego State University (KP, NV); Concordia University, Montreal, Canada (TW)
Venture Capital: International Journal of Entrepreneurial Finance - Vol. 9, No. 4, Pgs. 311-345
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