LSE emerges as top draw for India Inc

In 2005, Indian companies' global depositary receipts trading on the London Stock Exchange (LSE) have quadrupled year-on-year, said Martin Graham, director, market services, LSE.

Indian companies have applied for and admitted GDRs worth $1.3 billion on the LSE's trading platform for depositary receipts, the International Order Book (IOB) in 2005, a four times rise from about $400 million in 2004.

"This rise in the number of GDR issue has coincided with the LSE emerging as the most liquid market in the world and the most prestigious international platform which helps to endorse the best standards of corporate governance," Graham said.

Also, the LSE has made admission procedures to the trading platform, simple and quick. "This has led to an increase in the number of Indian firms applying for admission of their GDRs to LSE's IOB", he added.

In 2005, eight companies chose that route (totalling US$ 913 million, see table).

The IOB, an e-trading system, is the LSE's market for trading liquid overseas securities in the form of depositary receipts. "It has the added option for member firms to display their identity pre-trade, offering greater visibility in the market," he added.

At present, 21 Indian companies are listed on the LSE and another 17, listed on the Luxembourg Stock Exchange are admitted to trade on the LSE.

In 2005, five Indian companies had their GDR offering, a total of US$ 391 million, approved by the UK Listing Authority (UKLA) and were admitted to the LSE. (See the table).

The companies that list their securities with the UKLA gain automatic admission to IOB. Graham, currently in town to meet prospective clients, says the year-on-year rise in Indian companies heading towards LSE in 2006 is likely to be higher.

"You can see companies from sectors such as finance, commodities and infrastructure trading on our platform. Further, as we have eased the procedures, it is likely that the number of companies seeking listings will be much higher than those seeking admittance," he added.

Commenting on LSE's growth path for the year, he said, "There will be an increased focus on funds. Last year, we had 15 new exchange traded funds showing tremendous growth in volumes. In 2006, you can see them double with most in property and commodities sectors", he added.

On the LSE's diversification plans, Graham added that there is still time for another exchange. "We are currently seeing immense potential in equities and will continue to focus on it. And as part of this, we will focus on an increase in clientele from India, China and Russia," he said.