The ADS listing of Satyam Computer Services has displayed the confidence of global investors in India and its technology sector. This is seen from the fact that the ADS listing has many firsts to its credit.
This is the first time that the domestic share price of a company after ADS listing has gone up. The Satyam scrip, which closed at Rs 228.20 on Tuesday (the day its ADS was listed), witnessed a marginal increase on Wednesday, ending at Rs 229.75 on the Bombay Stock Exchange (BSE).
According to Amit Chandra, executive vice-president, DSP Merrill Lynch, the Satyam ADS listing has created a history of sorts as far as the pricing, roadshows and time-frame are concerned. Merrill Lynch was the sole global coordinator and book runner to the issue.
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It is the first time that the size of ADS issue by an Indian company was increased on the last day prior to listing by 20 per cent. "There was tremendous response to Satyam's ADRs and we had to increase the size of the issue to accommodate as many investors as we could, going by the company's philosophy of having varied investors," Chandra said.
According to listing provisions of Securities and Exchange Commission (SEC) of the US, a company can increase the size of such an issue by a maximum 20 per cent. The ADS issue of Satyam had been raised to $140 milion against the initial size of $115 million.
Despite utilising the maximum permissible limit of raising the issue size, the issue was oversubscribed 7 times on the institutional side, Chandra said. This reflects the trust and confidence in the technology sector of the country, he added.
Moreover, it was also for the first time that any Indian ADS issue was priced at parity with the domestic share price. The Satyam ADS were sold for $9.71 a piece, almost at par with the domestic shares' market price. Each ADS is equivalent to two regular shares. Until now all ADS issues were either listed at a discount or premium to domestic share price of the given company, he said.
"This also displays that the investors were comfortable with the pricing while the company's interest were also taken care of," Chandra said.
Another first to the Satyam ADS is the 'Accelerated Global Transaction'. According to Chandra, this essentially means managing the issue within a shortened time frame to prevent the market risk, especially when the volatility in markets across the world is scaling high. "This kind of structure minimises the market risk to a transaction (ADS issue)," Chandra said.
"Normally, an ADS issue takes at least about 2 weeks after the filing of the papers during which roadshows are arranged. However, in this case we selected a very short time frame of about 3-4 days covering only 2 cities for roadshows and managed such a huge response," Chandra said.
The roadshows were conducted extensively on the Net where the company management made virtual presentations and a streaming feed was put out on the Web, he added.