Indian cos line up for overseas issues

NEW Delhi, Jan 25: Depository receipt issues are back in vogue among Indian corporates after a two-year lull as they seek to cash in on a ...

NEW Delhi, Jan 25: Depository receipt issues are back in vogue among Indian corporates after a two-year lull as they seek to cash in on a boom triggered by successful overseas issues by information technology firms.

At least 11 firms, including ICICI Bank, Zee Telefilms and several infotech companies, have announced plans to issue either American depository receipts ADRs or global depository receipts GDRs and more are expected to join the rush. The flurry of issues comes after a two-year gap during which Indian firms found market conditions comparatively difficult.

Sanctions imposed on India after it conducted nuclear tests in May 1998 and a subsequent sovereign rating downgrade weakened overseas investor appetite for Indian paper. Total funds raised through GDRs shrank to 70 million in fiscal 1998/99 April-March from 291 million in 1997/98 and 1.35 billion in 1996/97, according to data from the Centre for Monitoring Indian Economy, an independent think-tank. A Finance Ministry official toldReuters that ADR and GDR issues have raised 692.42 million so far in 1999/2000, and issues worth at least as much again are in the pipeline.

Infosys leads Indian charge: The sparkling success of software firm Infosys Technologies Ltd, the first Indian firm to list on the US Nasdaq exchange, led other software firms to eye the American markets as well. Infosys offered stunning returns to its investors in 1999, with its ADR ending the year at 330, up 870 per cent over its issue price of 34 in March.

quot;Infosys has definitely inspired other companies, particularly software firms,quot; said Bhaskar Ghose, Bank of New York8217;s vice-president and country representative for India. quot;We can expect more IT companies to join in,quot; he said.

Among software companies expected to hit the market are Rediffusion Communications, which runs internet portal rediff.com, diversified computer software and hardware firm Wipro Ltd, SSI, Pentafour and Internet firm Satyam Infoway, which has already issued ADRs once.

Government freesdepository receipt issue: Companies also are expected to find it slightly easier to issue depository receipts after the government last week eased guidelines for their issue.

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The government said firms issuing ADRs and GDRs through registered stock exchanges could now do so without prior clearance from the Ministry of Finance. Private placements of ADRs and GDRs are now also eligible for automatic approval provided the issue is lead-managed by an investment banker. quot;I do not think any firm hoping to tap overseas markets really viewed the ministry8217;s approval as a major hurdle,quot; Ghose said. quot;The government8217;s move may help the marginal cases but the point is investment bankers look only at firms they are confident about,quot; he said.