Tata Steel may launch GDRs in Singapore

Tata Steel is considering the Singapore Stock Exchange for listing a possible global depository receipt (GDR) issue for mobilising $500 million (Rs 2,100 crore) to part-finance its $12.9 billion (Rs 52,350 crore) acquisition of Anglo-Dutch steel maker Corus.

This will be over and above a Rs 3,655-crore domestic rights issue and a Rs 4,350 crore convertible preference share issue the company announced last month. Details of its overseas listing have not been disclosed.

Sources said the Tata group favoured Singapore because Tata Steel had become an established name in the investor fraternity in the country following the acquisition of Singapore-based NatSteel a few years ago. Also, Singapore's fledging bourse recently listed its first GDR and it trades closer to the Indian time zone.

When contacted, the Tata Steel spokesperson said the company had not taken any decision on its proposed overseas issue. "We will decide when it happens. We have not set any time frame for the overseas issue," he added.

However, the possibility of Tata Steel issuing a GDR issue on the London Stock Exchange could not be ruled out since Corus was a UK company, sources said.

The GDR issue, which will be Tata Steel's first share sale after 15 years, will be launched after the rights issues. Priced at Rs 300 apiece, one rights equity share will be given to the shareholders for every five shares they hold.

The company will also launch a 1:7 rights issue of convertible preference shares simultaneously. These shares will attach a coupon rate of 2 per cent. They can be converted into shares of Rs 500-600 each after two years.

The company will witness over 40 per cent of equity dilution after the two rights issues and the GDR issue.