Bpl Cellular Adr Float Cleared

Its application to the Foreign Investment Promotion Board (FIPB), however, has been deferred by a week by the board. Sources said that the deferment could likely be on account of the uncertainties in the telecom industry.

The clearance bodes well for Indian corporates as the European market for Indian paper is no longer buoyant. However, companies tapping the ADR market have to follow a stringent process laid down by the American stock-market regulator Securities Exchange Commission (SEC). Under the SEC guidelines, the corporates have to meet the US GAAP accounting standards depending on the level at which they will tap the four-tiered market.

 

BPL has opted for the third level where the fresh shares are issued to retail investors; at this level there is fresh infusion of funds into the company's coffers. On the first level, equity is issued to wholesale investors and hence it does not require an adherence to the stringent SEC standards.

Reliance and Great Eastern Shipping had sought to issue ADRs a few years ago but were denied permission. Great Eastern wanted to tap the second level of the ADR market where existing shares are placed with a depository in the US which then issues the receipts in lieu of the underlying scrips.

While there is no fresh infusion of equity funds into the company, corporates opt for this route for the listing benefit and the consequent publicity generated in the American market.

According to the BPL application, the company will be raising $200 million with a greenshoe option of up to 15 per cent through a SEC-registered offering.