Mumbai: Standard Chartered Plc will open its Indian depository receipt (IDR) issue—the first by any multinational entity— on 25 May to raise $500-750 million (Rs2,250-3,375 crore). The issue will close on 28 May.
An IDR is a rupee-denominated instrument in the form of a depository receipt against the underlying equity of the issuing company.
Going strong: Standard Chartered group chief executive Peter Sands. Abhijit Bhatlekar/Mint
The bank plans to sell 240 million IDRs, each of which will represent one share of Standard Chartered.
Retail investors will be given a 5% discount to the price on the London Stock Exchange. At this point the stock is trading at 1,678 pence (Rs1,123), down 1.47%. The price band will be announced on 24 May and the IDRs will be listed on the Bombay Stock Exchange and the National Stock Exchange.
Peter Sands, group chief executive, is confident the IDR programme will be a success. The listing will differentiate Standard Chartered from the other foreign banks operating in the country, he said in an interview. Edited excerpts:
Does local listing make you an Indian bank?
We are an Indian bank in the sense that we have over 17,000 staff in the country, the highest that we have in any market. The biggest single nationality within Standard Chartered worldwide is Indian.
If you go back into history, we opened our first two branches in 1858—one was in Calcutta (now Kolkata) and the other in Shanghai.
This listing is in a way homecoming for us—coming back to our roots.
How would you capitalize on the India listing?
I think the India listing will significantly contribute to raising our visibility in the market and our brand profile. Our share price will be listed in the daily newspapers and the price movement will be discussed. It will build an understanding of Standard Chartered outside India. Many people know less of what we do in the rest of the world.
Who are your target investors?
The primary focus of this IDR is to attract Indian investors—both institutional and individual. This is an opportunity for Indian investors to invest directly in an international business for the first time.
We have a very successful business in India, which makes just under 20% of our group profits and the balance 80% comes from other growth markets such as Asia and Africa and Middle East. What is special is that they (Indian investors) get an opportunity to invest in a global company.
This listing gives Standard Chartered access to a new market. What does India gain from this?
The money we raise here has to by regulation be remitted as part of our global capital. Standard Chartered has invested in India in multiples of what it’s taking away from the country.
This is a milestone for Standard Chartered as well as India. This is an important step in the development of the Indian financial markets and Mumbai as an international financial centre.
We are pioneering something which I think other companies will follow.
Would you expect special treatment from the regulators and the governments post the IDR?
We have a supportive and structured relationship with the regulators and government. We wouldn’t be doing this (listing) if we didn’t think this was going to make a difference to our brand and our profiling in the country. We do think that the listing differentiates us as we have a very long history here and a large branch network that shows our commitment to the country. It differentiates us from others, considering that we will be the only one listed in the country.
I don’t expect any automatic change in the regulatory framework applied to us as a result of this listing.
Are you happy with the current regulations?
Of course, we would like to have more branches in India, but we already have over 90 branches—more than any other foreign bank in the country. We are very happy to work within the constraints, the regulatory framework as it is and as it evolves. We have consistently displayed that within that regulatory framework, we have been able to build a successful business.
I am particularly appreciative of the support and cooperation we received from the Reserve Bank of India and the Securities and Exchange Board of India towards preparing the IDR issue.
Will it help you attract talent as it will be easier for you to offer stock options to employees?
It does make it easier to offer a share-based compensation structure and worldwide we do believe that a share-based compensation is an important part of our compensation package. The attraction to talent is broader than that. Talent will be attracted to the fact that there is a visibility to the bank and an awareness of its performance and reach.
What’s your assessment of the bank’s India franchise?
India is already our second largest market in terms of profitability. It made a billion dollar profits for the first time in 2009. It’s just behind Hong Kong and who knows which of them will be the large source of profits this year. There is quite an internal rivalry within the group. I see a significant opportunity in both our consumer and wholesale banking businesses.
You are not the largest foreign bank in India. Citibank is larger than you despite your growth through acquisition.
The matrix that I care for is profitability and based on this I think we are the top international bank (in India).