China leads doubled DR activity worldwide

Trading volumes jump 15 percent in first half of 2014 

The number of companies that raised capital through DR programs more than doubled in the first half of this year, according to a study by BNY Mellon, driven primarily by Chinese firms seeking investment abroad.

Capital raisings surged to 41 transactions in the first six months of 2014, up from 20 in the same period last year and reaching their highest level in three years, reports the investment bank. At the same time, the amount raised through DR programs jumped to $9.1 bn from $3.6 bn a year earlier.

The amount raised so far this year comes close to the $10.4 bn reached throughout the whole of last year in 51 capital raisings. In 2013, the number of capital raisings increased 65 percent on 2012’s levels, but fell more than 20 percent in terms of total cash raised.

‘After a period marked by concern over US Federal Reserve tapering, investor sentiment is again turning to emerging markets to seek out innovative companies with which to partner,’ says Christopher Kearns, CEO of BNY Mellon’s DR business. ‘The vigorous return of foreign IPOs on US exchanges, using the efficiency and scope of DRs, would indicate that global firms and investors see this as a healthy marketplace with strong upside.’

The Asia-Pacific region accounts for about 60 percent of capital raisings in the first half of 2014, while China alone accounts for almost half of the globe’s DR schemes, with 18 programs in the country raising a combined total of $4.5 bn.

The top three companies in DR price performance in the first half are Chinese, including Vipshop, which gained 124 percent in value, Bitauto, which rose by 52 percent and YY, which increased by 50 percent.

Total trading in DRs climbed 15.5 percent in terms of cash value to $1.48 tn while the number of DRs traded increased by 3.5 percent to $74.6 bn. As of the end of Q1 2014, investment in DRs around the world totaled $826 bn, an increase of 18 percent from a year earlier.

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