StanChart gets RBI nod for Rs 5,000-cr IDR issue

Sebi’s anchor investor scheme may make the issue attractive

UK-based lender Standard Chartered Plc (StanChart) was in the process of finalising the size and time of its Indian Depository Receipt (IDR) issue, after having secured the approval of the Reserve Bank of India (RBI), sources said.

RBI guidelines require issuers of IDRs to secure the approval of the sectoral regulator, which in StanChart’s case is RBI itself.

Like American or Global Depository Receipts (ADRs/GDRs), where Indian companies raise resources overseas, IDRs enable foreign companies to do the same from India. ADRs and IDRs are derivatives instruments that derive their value from the shares deposited with custodians.

Since this is the first issue of its kind, Stanchart had filed a letter of intent with the capital markets regulator, the Securities and Exchange Board of India (Sebi), in January this year. Sebi has expressed its approval to the letter of intent, according to sources. However, the size and the timing of the issue have yet to be finalised by the bank’s board. Once these details are firmed up, the bank will have to file a draft red herring prospectus (DRHP) with the regulator.

The issue is expected to be in the region of Rs 5,000 crore.

When contacted, a StanChart spokesperson said, “We have been working closely with Indian regulators on this (IDRs) and on our own readiness to issue and list them. Once we are in a position to proceed, a decision would be based on market conditions and other timing considerations and we would make an announcement in the usual way, in accordance with our listing obligations.”

The bank has appointed JM Financial and UBS AG as lead managers to the issue. Goldman Sachs, Bank of America and Kotak Mahindra are the other banks appointed to manage the issue.

Last month, Sebi amended the takeover regulations and offered the facility of anchor investors to IDR issues. This is expected to increase the attractiveness of such issues. Sebi also decided that at least 30 per cent of the issue will be reserved for allocation to retail investors, who may otherwise be crowded out.