Financial Daily from THE HINDU group of publications
Monday, Dec 19, 2005
Financial Daily from THE HINDU group of publications Monday, Dec 19, 2005 |
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Stock Exchanges Corporate - Overseas Borrowings Luxembourg SE emerges top draw for India Inc Rajesh Abraham
Mumbai , Dec. 18 FOR Indian Inc, the Luxembourg Stock Exchange saw as many as 24 firms raising over $1 billion through GDRs and FCCBs, making it the most preferred destination to raise funds in 2005. The highest number of foreign companies at the Luxembourg bourse was of Indian origin — about 44 per cent (90 companies), followed by Taiwan (25 per cent) and Korea (10 per cent). Over 24 Indian companies, including Apollo Hospitals, IndiaBulls Financial Services, Videocon Industries, Bharat Forge, Jindal Saw Pipes and IL&FS Investsmart raised over $1.1 billion in 2005 calendar year, edging out high-profile rivals such as New York Stock Exchange, Nasdaq and the London Stock Exchange. This is the largest number ever from India after 1994, when 31 companies, including ITC Ltd, L&T, Tata Power and Tube Investments of India tapped the bourse. Incidentally, in 1994 too, the Indian stock markets were trading at high levels. In comparison, during the 2004 calendar year only six Indian companies (Cranes Software, Crest Animation, Elder Pharmaceuticals, LIC Housing Finance, Micro Inks and Teledata) tapped the European bourse. Analysts said the main reason for Indian companies to raise funds through Luxembourg Exchange was the speed at which they could close the GDRs/FCCB issue. "Companies which require immediate funds for expansion opt for Luxembourg," said a merchant banker, who was involved in a just-concluded GDR issue. With Indian stock markets ruling at all-time high levels, the companies are also getting good prices for their GDRs, the merchant banker said. Further, the cost of raising funds at Luxembourg is lower, compared to NYSE or Nasdaq, where stringent regulations and higher compliance levels meant higher initial expenses. In fact, there is also a view that the compliance standards at Luxembourg were much lower, prompting many Indian companies to raise funds through share issues at the bourse. "Many Indian companies that have gone to the Luxembourg exchange would find it difficult to raise similar funds from NYSE or Nasdaq," said an official at a local rating agency. Though Indian companies constitute the highest number of foreign companies at the bourse, their combined market capitalisation at 3,283.2 million euros is much lower than Taiwanese companies (7,142.9 million euros) and Korean companies (9,140.2 million euros). Some of the companies that have gone for GDR/FCCB issue at Luxembourg bourse this year are Videocon Industries ($75 million), CESC ($40 million), India Cements ($100 million), Jindal Saw ($65 million), IndiaBulls Financial Services ($130 million), Apollo Hospitals ($65 million), Emco Ltd ($10 million), Usha Martin ($25 million), Bharat Forge ($100 million), Centurion Bank ($10 million), Orchid Chemicals ($75 million), Crew BOS ($5 million), Himatsingka Seide ($60 million), IL&FS Investsmart ($98.96 million), Nagarjuna Construction ($100 million) and Gateway Distriparks ($8.46 million).
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