Axis Bank may issue GDRs soon

Axis Bank may come out with a global depositary receipt (GDR) issue in the next two months. But the plan is still at the discussion stage and no details have been finalised, according to sources.

“It is being discussed internally in the bank and there have been suggestions given by many in the bank to come out with a GDR issue,” industry sources said.

The bank’s share price has been rising sharply on expectations of the GDR issue. Axis Bank’s shares have risen by 2.6 per cent so far this week compared with Bank Nifty, which fell by 2.2 per cent. The share ended at Rs 917.60 on the National Stock Exchange, down 4.08 pe cent from Tuesday.

However, Axis Bank Chief Executive Officer Shikha Sharma said there is no GDR plan “as of now”. Industry sources also said JP Morgan might get the bank’s mandate for the proposed GDR issue.

Usually, a GDR issue is priced at a discount to the prevailing market price. “Going by the time the GDR issue may come, the stock price should rise above Rs 1,000. In that case the GDR could be priced in the band of Rs 1,000-1,200 depending on the market price at that time,” said an analyst. In July 2007, Axis Bank had come out with a GDR issue and had priced it at a discount of 1.7 per cent to the closing price of its existing GDR and at a 3.5 per cent discount to its existing share price on NSE. At that time, UTI Bank’s shares were trading at Rs 644.60. In the previous GDR issue, the bank had raised Rs 21.8 crore and the GDRs were listed on the London Stock Exchange.