StanChart to raise Rs 2,700 cr through its maiden IDR issue

UK based multinational bank Standard Chartered PLC plans to raise anything between Rs 2400 to Rs 2700 crore through its maiden issue of 24 crore Indian Depository Receipts (IDR) that is slated to open on May 25.

The bank said that while it has no need to raise capital at the moment, the purpose behind the issue of IDRs is primarily to enhance its market visibility and brand presence in India. " India is a strategic market for us. We are already listed in the London Stock Exchange and Hong Kong Stock Exchange. Now we are looking at getting listed in an Indian stock exchange as a part of our brand commitment to India", said Neeraj Swaroop, chief executive, India & South Asia, Standard Chartered. The capital raised would be repatriated fully to UK, to the company's central core of capital as par norms.

The bank that has presence in 70 countries across the world has had operations in India for the last 152 years with its first branch in Kolkata in 1858. India accounted for 20 per cent of Standard Chartered's profit before tax(PBT) in 2009 calender year. While the global PBT was $5.5 billion, India contributed $1.06 billion.

The price band for the issue that will be open between May 25 and May 28 will be fixed and declared on May 24 during which the closing price of SC Plc as on London Stock Exchange will be taken into consideration. Every 10 IDRs will be representing one share of Standard Chartered Plc. There will be a discount 5 per cent on issue price for retail investors.

While the IDRs that would be listed both on Bombay Stock Exchange and National Stock Exchange would be tradeable from day one, they could be converted into equity shares only after one year. IDRs are like American or Global Depository Receipts (ADRs) are derivative instruments that derive their value from the shares deposited with custodians. The foreign company will deposit shares with a custodian, who will issue depository receipts based on these shares.