Investor demand for international diversification helped propel a sharp rise in capital raisings using depositary receipts (DR) in 2013, with 51 transactions coming from companies based in 20 countries, a jump of 65 per cent on 2012.
In 2012, 31 DR capital raisings were conducted by issuers from just 12 countries.
BNY Mellon’s year-end report on the DR industry shows that US exchanges witnessed a return of companies from around the world eager to tap American investors via capital raisings and new depositary receipt programs. The 51 DR capital raisings raised USD10.4bn, down from USD12.7bn in 2012. Of those, 36 were on US stock exchanges and raised USD5.3bn, more than half the total, while 10 transactions on the London and Luxembourg Stock Exchanges raised USD4.3bn.
China led in number of capital raisings with 14, up from only three in 2012. By value raised, the top five countries were Russia, Taiwan, China, Korea and Colombia, together bringing in more than USD7.3bn. Issuers ranged across nearly two dozen sectors, with financial services topping the list at USD2.4bn.
“Improved sentiment and climbing equity prices brought issuers back to global markets for their capital needs in 2013, especially in Asia-Pacific where DRs again proved an effective way for companies in the region to raise capital,” says Christopher M Kearns, CEO of BNY Mellon's DR business. “Last year, we witnessed a turnaround in the Eurozone debt crisis and then a spring collapse in most emerging market equities. In the second half, investors fuelled increases in equity prices across the developed markets not seen since 2008.
“Many DR issuers and investors alike enjoyed the year’s upward trends as global investment in DRs rose by more than USD150bn year-over-year through the third quarter,” Kearns says.