Change In Lead Coordinator To Delay $200m Concor Gdr

Container Corporations $200 million global depository receipt (GDR) issue has suffered another setback with the government decision to review the appointment of JP Morgan as the lead coordinator of $200 million issue.

The company had completed its pre-market survey and was on the verge of launching the issue when the government decided to defer the issue.

The review of the global coordinators has been necessitated by JP Morgans decision to limit its equity-based activity in South-East Asia following the currency crisis.

JP Morgan officials confirmed that they had informed the government about their decision to quit the equity business in South-East Asia, but they were willing to assist the government is seeing the issue through.

Government officials, however, said since the US investment banker had decided to limit its equity business in South-East Asia, it would be difficult to retain them as lead coordinators. As a first step, the government decided to refer the matter to the task force, assisting the committee of secretaries overseeing the disinvestment process.

Since the global coordinators have been appointed after a beauty parade and their appointment was ratified by the Cabinet, a Cabinet clearance would also be necessary for the change.

JP Morgan is being assisted by other international investment bankers, including SWC Warbur, HSBC and DSP-Merrill Lynch. Since the government could appoint any of these investment bankers in lieu of J P Morgan as lead managers, heavy lobbying is expected to clinch the mandate.

Another fallout of this decision is likely to be its impact on I-Sec, the 60:40 joint venture between ICICI and JP Morgan. I-Sec is likely to be forced to go it alone ICICI may buy out J P Morgan following the latters decision quit equity business. The fate of the joint venture is set to be reviewed by the JVs board later this month. If I-Sec has to go it alone, it will lose business on account of its joint venture partners decision.

The government is proposing to divest 10 million shares in Concor, while the company proposes to sell 2 million shares. Concor will sell another 2 million shares if the greenshoe option is exercised. Following the GDR, the governments stake in the company will fall from 77 per cent to 51 per cent.

Concor has an equity base of Rs 65 crore, of which 23 per cent is held by public and foreign institutional investors (FIIs).