Standard Chartered to float first IDRs for over Rs2,200 crore

The Bank plans to float 220 million IDRs; looks at listing by June

In what would be the first case of an MNC raising capital from India, UK’s Standard Chartered has announced that it would float Indian Depository Receipts (IDRs) to mop up over $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 $500 million and $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,” Standard Chartered PLC's CEO (India and South Asia) Neeraj Swaroop told PTI immediately after filing for the IDR with SEBI.

Standard Chartered began its Indian operations in April 1858 in Calcutta (now Kolkata).

Asked about the pricing of the instrument, he said that at present Standard Chartered PLC was being traded at £17 a share but “we have not decided on the conversion rate.”

While the banking major is looking at mopping up at least $500 million, it has not fixed any upper limit, Mr 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 (the same 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% 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 solutions to the Indian industry.

He said that the organisation had posted a significant $1-billion profit in 2009 and added that the outlook was good.

Mr Swaroop, 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%, while income was rising at an average of 30%.
“The principal rationale for listing is brand-building and business development in India, the Bank’s second largest market. It accounts for 20.5% of group profits,” the bank said in a statement.

The Bank 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 Standard Chartered on the said issue.

In November last year, Standard Chartered 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 issues permit only the companies listed in their domestic markets for at least three years and have been profitable for three of the preceding five years.
 

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