Standard Chartered IDR: apply?

I have been inundated by brokers and issue managers alike about why the Stan C  public issue of IDR (Indian Depository Receipt) is such a great product.

I agree. I would love to have a big global bank with aggressive growth plans in markets like Asia, Africa, …and other parts. So inspite of the fact that it is not exactly cheap, I think it is a good company in which to put my money, so I will subscribe.

What will happen?

Well companies wait for the leader – then the followers run in. So Sony, Samsung, LG, Hyundai, Nokia, Pepsi, Coke, McDonalds..not necessarily in that order will all want to issue IDRs. This is good because most of them have been subject to much tougher regulations and shareholder movements. So these companies may payout better, there may be some shares more favorably priced.

Am saying this because in our office we ran a dividend yield screen on a world wide portfolio (on Bloomberg) and only 2 Indian companies even came to our list – Ongc and J&K Bank.That was last week – since then Ongc has gone up. Not sure now! If Japan is a yield market, suddenly you might get Sony shares at say 3% yield or a Samsung at a lower p/e than an Indian company.

All this is good news for the media (more ads), merchant bankers (more mandates), brokers, bankers, INVESTORS – Indian companies will learn to treat you better.

And Samsung, LG, Sony, Coke, Pepsi, McDonalds, Hyundai, Volvo, ….may all give you discount coupons. L O L.

Who will buy these shares – retail investors like you and me. Mutual funds – maybe? big investors, …so suddenly there will be a market cap of US $ 1-2 billion. Not bad.

What does the investor get? Exposure to a foreign market which likes dividend yield. Foreign exchange risk – a 10% gain in the foreign market being wiped out by a 10% strengthening of the Rupee…welcome to the world of uncertainty. Again banks will sell you a foreign exchange risk cover…..the circle continues. It is a White Man’s world…

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3 Responses to “Standard Chartered IDR: apply?”

  1. Standard Chartered issues IDR in India on May 25th, 2010 at 2:54 pm

    […] them plain derivatives of shares . Read more on IDR . You can read more here and Subra’s view here Chartered today announced a price band of Rs 100-115 a piece for its Indian Depository Receipts […]

  2. I can’t understand the rationale for why Standard Chartered is doing an IDR.”The issue will also increase our market visibility and brand profile, apart from giving Indian investors an opportunity to participate in our growth,” said Peter Sands, group chief executive.I can’t understand the logic of the above statement.If its a PR exercise why not buy some ad slots?
    http:/ /green worldinvestor. com

  3. It will be fantastic to have more IDRs as their dividend yield is good and they are (to a large extent) fair in their transactions. I would love to have IDRs of P&G, Unilever, Pfizer, Coca cola etc. This is advisable for ‘rich’ investors who want to do currency diverisification and who care only about dividend and stability of company. Not so rich investors can continue to hold Indian shares since the capital appreciation is higher which is their main objective.

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