Channel: Markets

Tuesday, April 13, 2010
A tale of two markets - defining moments for Mumbai and London
Two transactions that will redefine the linkages between the financial centres of India and the UK

Not quite the melancholy depiction of the epic work by Dickens, this story when complete will redefine the linkage between Mumbai and London in its own unique way. In the last four weeks two very different capital market plays have been announced by stellar British and Indian institutions.


First announcement was made by Standard Chartered Bank plc that plans to raise approximately USD 500-600mn on an Indian Exchange through the use of Indian Depository Receipts (IDR), and if successful it will become the first company to do so. The Bank which probably has the largest emerging markets footprint will capitalise on its large customer base in India and its long history with the country (It set up its first branch in the year 1850 in Calcutta). It is a unique institution that is headquartered and listed in London but draws its strength from outside the home market. The bank has had a formidable run based on its focus on Asia, Middle East and Africa.


The second announcement was made by Essar Energy‡, part of the Essar Group of India. The company plans to IPO in London to raise USD 2.5bn catapulting it straight to the FTSE 100 category. If successful it will become the largest ever listing by an Indian company outside India. The group is the second largest private energy company in India with assets ranging from oil & gas to those producing power from thermal sources.


Standard Chartered entrusted UBS and Goldman Sachs as the global co-ordinators as well as book running lead managers whilst JM Financial, BofA Merrill Lynch, Kotak Investment Banking and SBI Capital Markets were appointed as book running lead managers.


Essar Energy appointed JP Morgan Cazenove and Deutsche Bank as the joint-co-ordinators and lead managers for the London Stock Exchange transaction.


?There is no doubt that on completion the companies will gain a status to be envious of and become cash rich. But the real winners will be the cities of London and Mumbai. The former will strengthen its position as a truly global financial centre attracting major global companies and the latter will break new ground providing a precedent to other organisations that might want to tap into the wealthy and fairly engaged Indian investor pool.


It will not be surprising to see a queue of Indian companies outside London Stock Exchange and that of British and other global companies outside the Indian regulator (Securities and Exchange Board of India – SEBI) in the weeks and months immediately after these two respective listings.


‡ The price range for Essar Energy has already been set and the shares are expected to start trading at the end of April or early May.

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