Global Depository Receipt

(GDR)

Serious Information

Trivia

A Global Depository Receipt is a certficate issued by international bank, which can be subject of worldwide circulation on capital markets. A bank certificate issued in more than one country for shares in a foreign company. The shares are held by a foreign branch of an international branch. The shares trade as domestic shares, but are offered for sale globally through the various bank branches. A financial instrument used by private markets to raise capital denominated in either U.S. dollars or Euros.

A GDR is very similar to an American Depository Receipt. (First created in 1927 by JP Morgan, to make it easier for USA citizens to invest in British retailer Selfridge, American Depositary Receipts, also sometimes called American Depository Receipts, are certificates representing stocks of a foreign company, but listed on USA stock exchanges or over the counter, and all transactions are in USA dollars, and all communication in English).

These instruments are called EDRs when private markets are attempting to obtain Euros.

Many stocks have a GDR (Global Depository Receipt), and can be dealt in London on the International Bulletin Board quoted in US dollars on a three-day settlement. It is important to note that custody can be an issue for retail customers, which is why many of the stocks are GDRs. Trading is between 9am and 3pm London time and the market is order driven and totally electronic.

You will need to check with your stockbroker about charges and commissions - watch out for extra costs.

The 1990s witnessed an explosion in the number of ADRs issued and the amount of capital raised by companies mostly from developing countries.

The accumulated evidence appears to suggest that Global Depositary Receipts from India between 1992 and 1998 issuance increases
stock prices permanently probably by reducing cost of capital and increasing liquidity.

Trivia

In 2005 Nigerian banks United Bank of Africa and Standard Trust Bank have agreed plans to merge and create the biggest bank in West Africa. Standard Trust is 100% Nigerian-owned, but United Bank has some foreign investors, including New York-based Global Depository Receipts (32.8%), and Banca Nazionale del Lavoro and Monte del Paschi di Siena, both from Italy, who each have a 2.4% stake.

Animal-rights activists have targeted the world's largest overseer of assets, the Bank of New York, for its relationship with British animal-testing firm Huntingdon Life Sciences, according to the Financial Times newspaper. US citizens are able to invest in Huntingdon through American Depositary Receipts (ADRs), an investment vehicle held by US banks that represents shares in foreign companies.

In 2001 Gazprom's shares were currently only available to international investors in the form of American Depositary Receipts,

In 2004 India launched its biggest-ever share flotation, with the $1.2bn (£660m) debut of software firm Tata Consultancy Services

In 2002 Telephone giant China Telecom's massive flotation looks set to start next month, and could raise as much as $4bn for the company. The firm's application for a listing in the US with the Securities and Exchange Commission, filed , allots 159.6 million American Depositary Shares (ADSs) - each worth 10 shares in the company itself - to the US market.

Muscat. 17 August 2005: In an extraordinary general meeting (EGM) held, shareholders of BankMuscat (SAOG), Oman’s premier financial institution, approved a proposal to allow the Bank to increase its authorized share capital from RO 75 million (U.S. $ 195 million) to RO 125 million (U.S. $ 325 million) comprising 125 million shares of a nominal value of RO 1 each. The Bank plans to issue up to 6,878,765 Global Depository Receipts (GDRs), which represents 10% of the Bank’s issued share capital, as on date. BankMuscat has already obtained all necessary regulatory approvals to go ahead with the proposed issue.

In 2006 The SM Group’s global depository receipts, backed by shares in Banco de Oro Universal Bank (BdO), were listed on the London Stock Exchange, attracting investors from the USA and Europe. BdO’s global depository receipt is the only Philippine issue listed in the London Stock Exchange. The global depository receipts were issued by Primebridge Holdings, a subsidiary of SM Investments Corp. The global depository receipts were backed by 20 shares of BdO and priced at $12.70 each.In a disclosure to the stock exchange, BdO and SMIC said 41 percent of the orders were placed by investors from the United States and 32 percent from European investors.“The success of this GDR offering reaffirms international investors’ confidence in the BdO team and the strategy that they are undertaking,” SMIC chief financial officer Jose Sio said.The SM Group raised some $100 million from the issuance of 9.1 million global depository receipts (GDRs). Australia’s Macquarie Bank Ltd. was lead manager for the issue with the Bank of New York as depository bank.

In INDIA there has been some negativity on the use of the certficates. In 2006 in order to make the domestic capital market more efficient and discourage issuance of foreign currency convertible bonds (FCCBs) and global depository receipt (GDRs), Sebi amended norms to allow listed companies to raise funds from domestic market by placing securities with qualified institutional buyers Faced with complex norms, while raising funds via public offerings in the domestic market, most of the listed companies prefer raising funds from international markets through FCCBs and GDRs.

Links on websites on subject

http://www.prism.gatech.edu/~rc166/Revised%20ADR%20paper.pdf : An Empirical Study of Exchange-Traded ADRs from India

Lonympics sites

An Index of web pages on the subject of shares, stocks, FOREX and Finance.

An Index of web pages on Geography

Index of web pages on the subject of shares, stocks, FOREX and Finance.

A to B - B to A Travel and fact guide

Birthplaces of Scottish First ministers, and other Scottish leaders

Worst regimes 20th century

politics