DR capital raising increases as Asians seek investment abroad

Total cash raised declines on drop-off from eastern Europe and the Middle East

The number of capital raisings through DRs rose 65 percent last year from 2012 as global sentiment improved and companies from Asia-Pacific sought to raise capital abroad.

A total of 51 companies from 20 countries raised capital through DRs last year – an increase on the 31 DR capital raisings from 12 countries in 2012, according to BNY Mellon. The cash total raised, however, dropped to $10.4 bn in 2013 from $12.7 bn in 2012 as the average size of the individual capital raisings declined and activity from the Middle East, Africa and eastern Europe fell.

Asia-Pacific spurred the increase in the number of capital raisings last year, with the number from China climbing to 14 in 2013 from 11 the previous year. Taiwan’s Fubon Financial completed the largest offering from Asia, at $850 mn.

‘Improved sentiment and climbing equity prices brought issuers back to global markets for their capital needs in 2013, especially in Asia-Pacific where DRs again proved an effective way for companies in the region to raise capital,’ says Christopher Kearns, CEO of BNY Mellon’s depositary receipts business, in the report. ‘Last year, we witnessed a turnaround in the eurozone debt crisis and then a spring collapse in most emerging market equities.’

Russia led the market in terms of capital raised, at $2.6 bn, as the country’s TCS Group raised $1.1 bn in a single offering, BNY Mellon says. The financial services sector raised the most capital, at $2.4 bn. US stock exchanges were home to 36 of the year’s 51 offerings, which raised a combined total of $4.3 bn. The London and Luxembourg exchanges held 10 offerings that raised a total of $4.3 bn.

BNY Mellon adds that Capital World Investors became the biggest institutional investor in the global DR market last year as its DR holdings increased to $18.95 bn from $15.47 in 2012. Dodge & Cox held the number two spot with $18.51 bn in DRs and Fidelity Management fell from first place to third as its holdings sank by $2.4 bn to $17.81 bn.

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