Mumbai: UK bank Standard Chartered’s Indian depositary receipts traded near their offer price in their debut but below their equivalent London close, in the first such issue in Asia’s third-largest economy.
The bank, which raised about $530 million after pricing its IDRs towards the lower end of an indicated range, has said the offering was aimed more at building its brand and presence in its second-largest market by profit than about raising funds.
The stock was the most actively traded on both the Bombay Stock Exchange and the National Stock Exchange on Friday, with nearly 22 million shares changing hands after about 90 minutes of trade.
By 10:30 a.m., the IDRs traded at Rs104.6, versus its issue price of Rs104 a share, in a Mumbai market up 0.9%. The IDRs opened at Rs105, rose as much as 2.9% to Rs108 but also slipped to as low as Rs100.60 in early deals.
Standard Chartered’s Thursday closing price in London of 1,649 pence indicated a price of about Rs113 per IDR at Friday morning’s exchange rates, as 10 IDRs are equivalent to one London-listed share in StanChart.
Indian regulations may keep a lid on performance in the near term.
Insurance companies, for example, are not allowed to invest in foreign stocks, and the IDRs cannot be converted into London shares in their first year.
“I see the IDRs trading at 6-8% discount to London price in the short-term before a trend is determined,” said Arun Kejriwal, director of KRIS.
“There are several reasons for this discount -- most important is insurance companies, who have money, can not invest, second is this can not be converted to equity within one year. So people who have arbitrage angle in mind will not be interested,” he said.
StanChart’s profit in India rose 19% to $1.06 billion last year, contributing 21% of group earnings and ranking India fractionally behind Hong Kong as its biggest profit contributor.
The largest international bank in India, where it has had a presence for 152 years, StanChart has 94 branches and 17,500 staff in the country. It is expanding across Asia after weathering the financial crisis better than many rivals.