Global Depository Receipts & American Depository Receipts Practical aspects of the issuance

International fund raisings Equity issuance through GDRs & ADRs. Debt issuance in the Eurobond markets.

GDRs & ADRs - Main advantages Diversify the shareholder base. Take advantage of the depth in the international markets. Increases the profile of the companies due to the international attention and coverage. Able to raise funds in foreign currency. Quick liquidity for the shareholders. Get better valuations for the home market listed stock of the issuer.

GDRs & ADRs – How to do an issue? Company should be convinced of the need to raise equity from the international markets. Start consultations with investment banks. (Goldman Sachs, Morgan Stanley, Merril Lynch, Lehman Brothers, HSBC, Deutche Bank etc) Give a mandate to the investment bank to be the Lead Manager of the issue. Lead Manager would give a timetable for the issue.

GDRs/ ADRs – How to do an issue? (cont’d) Lead Manager would prepare a research report covering the company’s activities and the prospects for the shareholders. Lead Manager prepares the company’s key staff (CEO, CFO) for the road show in international markets. Typically London, Frankfurt, Paris, New York, Singapore etc. Lead Manager starts the book building process during the road show. (book building is a process which determines the price of the GDR or ADR)

GDRs/ ADRs – How to do an issue? (cont’d) The price is fixed and the funds are raised. Listing of the GDR is done in the London or Luxembourg stock exchange. ADRs are listed in the New York stock exchange. GDRs & the ADRs start trading in the overseas markets. Company submits returns regularly to the overseas stock markets to comply with listing requirements.

Eurobond Issue to raise Debt The name Eurobond denotes that the bond is raised in an international market outside of the U.S. and can be done in any currency. The bond would be listed in the Luxembourg or London Stock Exchanges. The bond could be raised either under a Medium Term Note (MTN) programme or a single issuance of an FRN. (Floating/fixed rate note).

Eurobond Issue – Advantages Diversify the funding base to different markets. New depositors and different profile of depositors. (pension funds, insurance companies, banks etc) To tap the huge liquidity available in the foreign markets. Helps the profile of the issuer as an international player.

Eurobond Issue – How to do it? Engage an investment bank as the lead manager. Since this is a debt issue a rating agency (Moodys’, Standard & Poors, Fitch) would need to rate the bond. Lead Manager prepares the offering circular.

Eurobond Issue – How to do it? (cont’d) Engage an investment bank as the lead manager. Since this is a debt issue a rating agency (Moodys’, Standard & Poors, Fitch) would need to rate the bond. Lead Manager prepares the offering circular. Typically the lead manager would also do a credit research report for the investors.

Eurobond Issue – How to do it? (cont’d) Lead Manager prepares the company for the road show and the road show is completed. During the road show the lead manager does the book building for the bond. Based on the book building the price is fixed and the issue is done at the price fixed. The company gets the funds and the bonds are listed.

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