International companies continue to turn to US stock exchanges to connect with American investors for their IPOs and subsequent capital raising, according to BNY Mellon's Depositary Receipts 2014 Midyear Update.
The first half of 2014 saw the highest level of DR capital raisings in the last three years. As of 30 June, 41 capital markets transactions globally raised more than USD9.1 billion, well ahead of the USD3.6 billion raised through 20 transactions during the same period in 2013.
BNY Mellon served as depositary bank for 18 of this year’s deals, which have raised over USD3.1 billion.
Companies from Asia-Pacific have dominated activity to date, accounting for almost 60 per cent of capital raised with more than USD5.5 billion. China was responsible for nearly half of the new capital raising DR programmes, led by online direct sales firm JD.com, whose IPO on NASDAQ raised USD1.8 billion in May. The majority of DR transactions in the first half of 2014 were from emerging countries. TBC Bank’s listing of DRs on the London Stock Exchange represented the largest IPO ever to come out of Georgia. BNY Mellon also supported Brazilian telecarrier Oi in raising USD3 billion in the public markets, 40 per cent of which was in DR form.
“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 M Kearns, CEO of BNY Mellon’s Depositary Receipts 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.”
Depositary receipts typically represent non-US companies’ ordinary shares and trade on traditional and over-the-counter markets and major stock exchanges worldwide. There are now more than 3,700 DR programmes globally available to investors.
Fifty-five new sponsored DR programmes were established through 30 June, the biggest jump in sponsored programmes since 2011. BNY Mellon served as depositary for 28 of those.
The volume and value of total DRs traded rose compared to a year ago. Some 74.6 billion DRs valued at USD1.49 trillion were traded globally in the first half of 2014, up 3.5 per cent and 15.5 per cent, respectively, from the first half of 2013.
As of 31 March, 2014, total global investment in depositary receipt programmes stood at USD826 billion, up 18 per cent compared to the same period in 2013.
