StanChart bank IDR makes lukewarm debut
Despite being the first-ever Indian depository receipt (IDR), the Standard Chartered IDR issue witnessed a weak response from investors on Day One.business Updated: May 25, 2010 22:49 IST
Despite being the first-ever Indian depository receipt (IDR), the Standard Chartered IDR issue witnessed a weak response from investors on Day One. In a market fuelled by global uncertainties, the UK-based bank received a first-day subscription of only 5 per cent. The bank is looking to raise Rs 2,760 crore through the issue of 24 crore IDRs.
“The lacklustre response to StanChart IDR is more to do with wrong timing than other factors. Markets are very nervous at present,” said Motilal Oswal, chairman and managing director, Motilal Oswal Securities Ltd.
Problems in Greece and Spain seem to have impacted sentiments, prompting people to play safe. “Moreover, retail response is always low in the initial days,” Oswal said.
“With change in subscription norms, which mandates 100 per cent payment with the application, investors do not apply on the first day,” said Prithvi Haldia, founder and managing director, Prime Database.
“Selling pressure in markets on Tuesday might have hit subscriptions numbers, because pre-placement numbers suggest fair demand for the IDR,” said Sarabjit Kaur Nangra, vice-president, research, Angel Broking.
IDRs are receipts issues by a depository in India in Indian rupee. As foreign companies cannot list in India, IDRs are a medium through which they can raise money in and also get listed on Indian stock exchanges. This allows domestic investor to hold ownership interest in a foreign company while investing through Indian stock exchanges in Indian rupee.