Listing by end-June, says CEO.
Eighteen months after starting talks with regulatory agencies, Standard Chartered Bank today filed a draft prospectus to raise up to $750 million (around Rs 3,375 crore) through Indian Depository Receipts.
This is the first time a foreign company is planning to list shares in India by issuing IDRs. The UK-based Standard Chartered Plc moved the market regulator, the Securities and Exchange Board of India, for approval to float 220 million IDRs.
“It is not for reasons of capital. The primary driver is brand,” said Neeraj Swaroop, CEO of Standard Chartered for South Asia.
While the issue would help the bank raise capital to fund expansion, Swaroop said that wasn’t the primary reason. He said the bank did not intend to use the proceeds for acquisitions as it was not looking at such a move at present.
“As a bank, you will see Standard Chartered Plc a little bit more in India. As soon as you create a constituency of investors, it will get coverage by analysts and the media. People will see the brand much more. It does give a message to stakeholders, which is our staff, clients and regulators, about our commitment to be in India. And, it does add to improving the status of Mumbai as an international financial centre,” he said.
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UBS, Goldman Sachs, JM Financial Consultants, DSP Merrill Lynch, Kotak Mahindra Capital and SBI Capital Markets are managing the issue.
While Swaroop said the issue size would be upwards of $500 million, the minimum prescribed size, Group CEO Peter Sands told reporters the bank was unlikely to raise more than $750 million. The amount would depend on investor appetite and the issue would take place in the first half.
Since rules for IDR listing were first notified more than five years ago, StanChart has been the first to come forward. “There will be others who will come forward in the future,” said Swaroop, adding the bank planned to list in India by the end of June.
The London-headquartered bank has been in India for 152 years. It has 94 branches and 17,000 employees here. In terms of profits, it has been second behind Citibank for the last two years.
It has been in India as a branch, as opposed to a subsidiary, and is unlikely to seek to convert itself in the years ahead, says Swaroop.
The bank’s profit in India rose 19 per cent to $1.06 billion (over Rs 4,600 crore) last year, contributing 21 per cent of group earnings. The Indian operations rank fractionally behind Hong Kong as the biggest profit contributor.
Most of the Indian earnings came from wholesale banking, where profits grew by half to $1 billion (Rs 4,600 crore) in 2008-09, as corporate advisory income grew on the back of cross-border financing and deals. Profits from consumer banking, which had been hit by bad debt, declined around 25 per cent to $54 million (around Rs 250 crore).
“Given the strength of the economy and the strength of leading corporates in India, I think you’re going to see further development of capital markets,” Sands said.
Standard Chartered Bank’s shares fell 1.1 per cent to 1,772 pence (around Rs 1,200) in London (at around 5.30 pm India time).
Also read: March 18: IDR rules to be relaxed to boost participation