Firms Plan Adrs To Gain Nasdaq Listing

At least 15 Indian companies are planning to adopt the American Depository Receipts (ADR) route to gain listing on the National Association of Securities Dealers Automated Quotes (Nasdaq), commencing from the first quarter of 1998.

According to Nasdaq Stock Market Asia-Pacific business development director Patrick Sutch, key Indian companies in the telecom, software, auto parts, pharmaceuticals and infrastructure sectors could gain listing on the exchange in the coming year.

Sources said Infosys Technologies and Wipro Ltd are set to lead the pack through the ADR route, commencing from the first quarter of 1998.

While the Infosys ADR could be between $25 million-$50 million, the issue size for the Wipro offering is yet to be decided.

 

A Nasdaq team will visit the country in September to discuss the listing norm developments with software and telecom companies. According to Sutch, leading Indian software companies, which have already altered their accounting practices to match the US Generally Accepted Accounting principles (GAAP) hold a positive chance to gain listing at the exchange.

Telecom companies may encounter some problems, especially after the development of a fear psychosis around telecom/cellular stocks like BPL Cellular Holding Ltd, Bharti Telecom and Hutchison Max.

BPL Cellular completed its $100 million ADR issue in its second attempt in May through a private placement. Each ADR, representing one share, was placed at $7.50 with six-seven local funds. However, sources said BPL Cellular will not be listed at Nasdaq. Instead, it may find itself on the Level 1 over-the-counter market.

``Following the initial BPL debacle (which was largely on account of wrong pricing) there was a fear factor which affected other cellular offerings. However, the capital base available at the US markets is huge which Indian corporates can still tap, Sutch said.

``The good stories will come from the software companies which have a strong growth potential.

The same goes for public sector unit offerings. It is only a matter of time before the flood of Indian paper hits the US markets but it is preferable that they select the right moment to tap the markets, said Sutch.

Since his visit to India last December, Sutch has held discussions with over 100 Indian corporates. Of these, at least 15 companies are seriously planning to tap the US markets.

The maximum total entry fee to be paid per issuer, covering all classes of security cannot exceed $ 50,000, including the original company listing fee.

Beyond this, the legal costs, accounting fees and fees to the lead managers will also have to be arranged for.