Bric Countries Likely to Lead DR Capital Raising in 2011

By Platt, Gordon | Global Finance, January 2011 | Go to article overview

Bric Countries Likely to Lead DR Capital Raising in 2011


Platt, Gordon, Global Finance


Corporate Finance Focus

Coming off the bailout ot Ireland, and with several other European countries denying they need outside help, the outlook for the financial markets in 2011 is somewhat clouded, but emerging markets will continue to attract investors in the year ahead, according to bankers who specialize in depositary receipts. "The aftershocks of the global financial crisis that hit the world in 2008 make navigating the markets quite a challenge," says Michael Cole-Fontayn, chief executive of BNY Mellon's depositary receipt business. "The outlook is mixed in Western Europe, and coupled with a fairly dull recovery in the US, this means that the focus will continue to be on emerging markets in 2011."

Companies based in Brazil, Russia, India and especially China - the Brie countries - will continue to lead the way in DR capital raising in the year ahead, bankers forecast.

"The higher-growth markets will appeal to investors," ColeFontayn says. "According to the findings of our 6th Global Investor Relations Trends survey, companies will follow the capital and will raise more equity in Asia." Standard Chartered Bank, for example, became the first foreign company to list in India through an issue of Indian depositary receipts last May.

Never More Popular

DR programs have never been more popular with corporate issuers, as well as with investors, Cole-Fontayn says. "The value of DRs increased substantially in 2010, and investors have been rewarded for taking risks in emerging markets," he says. "Those who hesitated have missed some opportunities." While there is a risk that Europe's sovereign debt crisis could spread to Portugal and Spain, the European Central Bank has extended an emergency loan program and is buying bonds of peripheral European economies to keep the crisis contained.

One lesson of the global financial crisis is that markets are correlated, Cole-Fontayn says. "But the G20 [group of 20 leading economies] seem united when they meet at times of crisis," he says. There will be windows of opportunity in 201 1 tor well-prepared issuers to raise capital. Cole-Fontayn says. "We expect an acceleration of European financial institution capital-raising, to get ahead of any potential bailout activity and to prepare for Basel III capital standards," he says.

Meanwhile, India could accelerate its privatization program, and its economy has been surprisingly strong, Cole-Fontayn says. The Russian market is also attractive, he adds. Russian GDR offerings in London recently included a supermarket (St. Petersburgbased O'Key), a technology company (Mail.ru) and a transportation company (Transcontainer, a subsidiary of Russian Railways).

Companies based in China accounted for 34 capital-raisings in the first 11 months of 2010, and Brazil has the most open market of all, Cole-Fontayn says.

$17 Billion of DR Equity

Nancy Lissemore, managing director of depositary receipt services at Citi, says $17 billion of equity capital was raised in DR form globally from 57 IPOs and follow-on issues in the first 11 months of 2010. This was slightly more in dollar terms than in the same period a year earlier, when there were 49 such issues. "We expect continued growth in the number of deals and in the dollar amounts in 2011," Lissemore says.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Bric Countries Likely to Lead DR Capital Raising in 2011
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.