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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (4455)	6/10/1999 10:45:00 AM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

INFY kicks butt,more Indian companies contemplate U.S listings. India firms eye ADR option to raise funds overseas By Rosemary Arackaparambil BOMBAY, June 10 (Reuters) - Indian companies looking to raise funds overseas are increasingly considering tapping the U.S. markets through American Depositary Receipts (ADR) rather than the familiar Global Depositary Receipt (GDR) market in Europe. But the stringent disclosure and accounting standards required will see them take their time, investment banking sources said. On Tuesday state-run Mahanagar Telephone Nigam Ltd said the government was exploring both GDRs and ADRs to sell three percent of the firm's shares. Pentafour Software and Exports Ltd , which makes and exports business applications, multimedia and film software, also said it is seeking shareholder approval for raising $60 million through either of the two options. Leading financial institution ICICI Ltd is also said to be planning an ADR float. The first Indian ADR issue was offered by Infosys Technologies Ltd (Nasdaq:INFY - news) in March this year and the stock is quoting at a premium of nearly 45 percent to the issue price. ''The ADR is the more attractive option because it obviously gives a wider investor audience,'' said S. Sriniwasan, vice-president, investment banking at Kotak Mahindra Capital Company, an Indian affiliate of Goldman Sachs. While GDRs are available to most investors around world, he noted they can be taken up only by a restricted class of institutional buyers in the United States. ''The ADR market being a larger market entails a whole new breed of investors who can invest in these companies.'' Information technology companies are expected to follow Infosys to the ADR market because U.S. investors are familiar with the business having been the first to recognise and popularise it as an investment, analysts say. ''We decided to do an ADR because ... being in that market was very important,'' said Nandan Nilekani, managing director and chief operating officer of the Bangalore-based Infosys Technologies. Infosys earns 95 percent of its revenue from global markets with 80 percent of that coming from North America. He said the listing gave them the currency to acquire U.S. firms which would otherwise not have been possible. It also enabled employee-stock options to global employees. Kotak's Sriniwasan said he did not expect there would be a huge rush to float ADRs like there was for GDRs. ''One, because U.S investors are very choosy and two, because investment bankers are also a lot more choosy than before.'' Sixty-three Indian companies have raised about $6.5 billion through GDRs since January 1993. But only about half the Indian GDRs are now actively traded on London's SEAQ International. With the advent of paperless trading in India, GDR trading interest at least among foreign investors registered in India is already on the decline and premiums have come off significantly. Analysts say that need not be the case with the ADR market as the pool of investors is huge.