StanChart mulls $1-billion IDR issue by June

StanChart is planning to raise up to $1 billion (over Rs4,500 crore) by June through Indian Depository Receipts

Global banking giant Standard Chartered Bank (StanChart) on Wednesday said that it is planning to raise up to $1 billion (over Rs4,500 crore) by June through Indian Depository Receipts (IDRs), reports PTI.

"We remain keen to pursue our intent to have an IDR offering. We are looking at quarter two (April-June 2010) and we are looking at $500 million to $1 billion," Standard Chartered Bank (South Asia) chief executive Neeraj Swaroop said on the sidelines of an event on microfinance.

The offering is subject to the market conditions and the Bank will have to take the final decision on it, he said. The IDR would be issued by parent entity Standard Chartered PLC.

Like American or Global Depository Receipts (ADRs/GDRs), where Indian companies raise resources overseas, IDRs enable foreign companies to do the same from India.

ADRs or IDRs are derivative instruments that derive their value from the shares deposited with custodians. The foreign companies deposit shares with a custodian, who in turn issues depository receipts based on these shares. The receipts are based on the ratio of shares equivalent to depository receipts.

The government notified the IDR rules in 2004. Market regulator Securities and Exchange Board of India (SEBI) norms too are in place for a number of years now.

SEBI guidelines permit only those companies listed in their home market for at least three years and have been profitable for three of the preceding five years for IDR issues.

Standard Chartered Bank plans to file the draft red herring prospectus with SEBI towards the end of March, Mr Swaroop had earlier said.

The Bank has appointed a host of investment bankers including Goldman Sachs, UBS, JM, Kotak Mahindra, SBI Capital and DSP Merril Lynch, to advise it on the proposed IDR issue.

In November last year, StanChart Global chief executive Peter Sands said that the proposed IDR issue would enhance the lenders commitment to the local market.

StanChart has over 94 branches in 37 cities in the country and a combined customer base of around 20 lakh retail customers, among others.

The Bank has operations in an array of verticals, including consumer and wholesale banking, private banking and small and medium enterprises (SME) banking.

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