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May 28, 2010Standard Chartered Indian Depositary Receipt (IDR) remains 90% unsubscribed till the last day of the issue.In the first 3 days it has managed to get subscription for only 10% of it issue size of 240 million Indian Depositary Receipts .That should be surprising for the issuers considering it has hired Seven Investment Banks (Goldman and UBS are the leads) and has launched it with much Fanfare.However a Review of the Standard Chartered IDR prospectus reveals deep shortcomings for the investors especially retail ones.An Analysis of the Standard Chartered IDR makes it clear StanChart is not a very attractive investment.A failure of the first Indian Depositary Receipt (IDR) issue will be tragic to the whole Indian Depositary Receipt (IDR) idea which has been modeled after the ADR and GDR instruments traded in USA and Europe respectively.The Indian Depositary Receipt (IDR) idea is good as it allows Indian investors to diversify their risk internationally but the disadvantages of IDRs compared to Indian shares is too large to ignore.
I would be surprised if Standard Chartered failed to get at least 1 time subscription considering the extensive financial network and resources it posseses . However this IDR does not merit an investment considering the shortcomings of both the IDR instrument and the underlying StanChart stock
Standard Chartered India Offering 90% Unsold Entering Last Day – Bloomberg
With one day left to complete the offer, Standard Chartered Plc has yet to find buyers for almost 90 percent of $500 million of stock it is selling in India.The London-based lender that makes at least three quarters of its profit in Asia has received orders for 22.3 million shares, according the websites of the National and Bombay stock exchanges yesterday. Standard Chartered is seeking to become the first company to sell Indian depositary receipts.The four-day sale comes after concern Europe’s credit crisis will spread erased $5.7 trillion from stock markets worldwide this month. Seven managing underwriters may close the deal if they can convince investors that shares trading for 12.3 times projected 2010 profits, the average for banks in the MSCI World Index of 24 developed countries, are worth the risk.
Domestic insurance funds are prohibited from taking part in the sale, limiting potential buyers, said Prabodh Agrawal, an analyst at India Infoline Ltd. in Singapore, in a note to clients on May 24. Record stock purchases by insurers helped boost the benchmark Sensitive Index 81 percent in 2009, making it the third-best performing equity market in Asia.
Standard Chartered, which is listed in Hong Kong and London, aims to raise as much as $573 million from the India offering, according to data compiled by Bloomberg. Ten IDRs will represent one share of Standard Chartered, the bank said in a filing on May 14. Its U.K. shares rose 4.4 percent to 1,682 pence yesterday.The bank is offering about 240 million IDRs at 100 rupees to 115 rupees each. It sold 15 percent of the offering to so- called anchor investors including ICICI Prudential Asset Management Co. and Reliance Capital Ltd. for 104 rupees a share, according to a regulatory filing this week.