Ind capital market to be leader in GDR for 2008-09

Mumbai, Apr 2 (UNI) Indian capital market will continue to be a leader in Global Depositary Receipt (GDR) market in 2008-09 due to capital raised through Qualified Institutional Placement (QIP) from USD 1.3 billion to USD 3.2 billion in 2006-07.

J P Morgan India Executive Director and Chief Representative, New Delhi, Bharat Reddy told mediapersons here today that since the roll-out of QIP, some companies which previously raised funds through GDR issuance have opted to adopt the QIP route.

''The capital raised through GDR/ADR has also grown from USD 3.8 billion to USD 7.3 billion during the same period. While QIP is on the rise, it is not at the expense of GDR and we still see a sizeable pipeline of GDR offerings to launch in first and second quarters during the 2008,'' he said.

India enjoyed the focus of foreign investors in the past few years. While the Sensex index has performed very strongly since 2003, the amount of Depositary Receipt (DR) capital raised has increased from USD 31.5 million in 2004 to USD 7.3 billion in 2007.

Indian companies were increasingly becoming active in cross border M&A activities, Mr Reddy added.

Meanwhile, J P Morgan Managing Director, Asian Pacific Head of DR, Kenneth K L Tse stated that larger corporations such as the Tata Group and Reliance Group have ventured beyond their country borders and acquired companies in Europe and North America. Those Indian companies with liquid DR programs will have the advantage of using DRs as an additional acquisition currency, adding flexibility to their global expansion plan, he said.

''Some of the largest companies today such as BP plc and Vodafone, have expanded through successful using of DRs as acquisition currency. In the past few years, we have seen GDR and American Depositary Receipt (ADR) issuers from a broad range of industries as telecomm, steel, banking and pharma. We can see diversification into other industries such as Business Process Outsourcing (BPO), solar energy and media. This trend might continue into 2008,'' he added.

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