Capital-raising nearly triples, dominated by Asia; 33 new sponsored DR programs to date
NEW YORK, July 22, 2013 — U.S. exchanges have seen a return of companies from around the world eager to tap American investors via initial public offerings, according to BNY Mellon's Depositary Receipts 2013 Midyear Update.
The first six months also saw a recovery in DR capital raising, which nearly tripled over levels of a year ago. More than $3.6 billion was raised through 20 transactions, compared with $1.25 billion in the same period last year. Companies from Asia-Pacific accounted for almost half, raising more than $1.67 billion in capital.
LightInTheBox, the online retailer co-founded by a former Google China executive, represented the first Chinese IPO completed in the U.S. this year and jumped 17.5% on its NYSE debut1. Electronic payment processor, QIWI, mounted the first offering of DRs by a Russian-based company on NASDAQ while also listing its DRs on the Moscow Exchange. In addition, UBIC became the first Japanese company to raise capital in the U.S. since 2009 when it listed DRs on NASDAQ in May.
"Taken together with the record highs reached by U.S. markets earlier this year, these initial public offerings may be seen as 'green shoots' for a recovery in emerging equities that have been depressed by low interest rates for some time," said Christopher M. Kearns, CEO of BNY Mellon's Depositary Receipts business. "Savvy global companies continue to gauge market and investor sentiment carefully, and many are eager to broaden their shareholder base through the convenience and reach of DRs."
Thirty-three new sponsored programs were established through June, with BNY Mellon acting as depositary for 20 of those. DRs typically represent non-U.S. ordinary shares and trade on traditional and over-the-counter markets and stock exchanges. There are now almost 3,700 DR programs available to investors globally, compared with about 3,500 last year.
Overall, about 72 billion DRs traded in the first half of 2013, 10% fewer than the same period a year ago. DR trading value of $1.26 trillion was down 16% from 2012, largely driven by exits from emerging markets. The report shows North American investors - the world's biggest DR holders - reallocated funds away from international equity to domestic stocks, reducing their DR holdings by 8.9% year-on-year.
On a regional basis some interesting trends arose, mainly suggestive of investor rebalancing. Trading in Mexican DRs grew as a share of total Latin American volume as Brazil's share shrank, reflecting the reversal in fortunes as Brazil's economy slows and Mexico enjoys relative buoyancy2.
Detailed first half highlights include:
BNY Mellon ADR Index Performance
The two best-performing BNY Mellon country indices were those consisting of DRs from companies in Japan and Switzerland, returning 16% and 10%, respectively.
As for top-performing individual companies, China's automobile distributor Lentuo enjoyed a fourfold gain in its DR price in the first half of 2013, while those of U.K. travel agent, Thomas Cook, almost tripled. The majority of the top-ten performers were technology companies, according to the BNY Mellon Classic ADR IndexSM Series and S&P Dow Jones indices. These include Denmark's Vestas Wind Systems, Taiwan's Himax Technologies and China's Hanwha SolarOne, whose DRs more than doubled in price, along with French specialty pharma group Flamel Technologies. Japan's Fuji Heavy Industries and Sony, as well as Australia's Novogen and China's YY Inc., saw nearly a doubling in their DR price.
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BNY Mellon acts as depositary for more than 2,700 American and global depositary receipt programs, acting in partnership with leading companies from 68 countries. BNY Mellon is committed to helping securities issuers access the world's rapidly evolving financial markets and delivers a comprehensive suite of depositary receipt services. Learn more at www.bnymellon.com/dr.
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1 First Chinese IPO of 2013 Delivers Decent Pop, Wall Street Journal, June 6, 2013
2 Brazil's Fiscal Spending Fails to Translate into Growth, Financial Times, June 13, 2013
This release is for informational purposes only. BNY Mellon provides no advice nor recommendation or endorsement with respect to any company or securities. Nothing herein shall be deemed to constitute an offer to sell or a solicitation of an offer to buy securities. Depositary Receipts: Not FDIC, State or Federal Agency Insured; May Lose Value; No Bank, State or Federal Agency Guarantee.