Page 180 - Corporate Finance PDF Final new link

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180 Corporate Finance BRILLIANT’S

GDRs may be used in either the public or à`moJ `m Vmo npãcH$ `m àmBdoQ> _mH}$Q> _| {H$`m Om gH$Vm
private markets inside or outside US. They are h¡, ^co hr dmo US Ho$ A§Xa hmo `m ~mha& BgH$mo A§Vam©îQ´>r`
marketed internationally, mainly to financial ñVa na _w»`V: \$m`Z|{e`c B§ñQ>rQ²>`yeZ Ho$ {bE _mH}$Q>
institutions. A GDR is an instrument to raise {H$`m OmVm h¡Ÿ& Bí`yAa Ho$ S>mo_opñQ>H$ _mH}$Q> Ho$ ~mha Ho$
capital in multiple markets outside the issuer’s ~hþV-go _mH}$Q> _| EH$ {gŠ`y[aQ>r {OgH$m ì`mnma EH$
domestic market through one security, which \$m°aoZ ñQ>m°H$ _mH}$Q> _| hmoVm h¡, H¡${nQ>c H$mo ~‹T>mZo H$m EH$
is traded in a foreign stock market. gmYZ GDR h¡Ÿ&
GDRs allow purchasers to gain exposure GDR nM}gg© H$mo EŠgnmoOa àmßV H$aZo Ho$ {cE
to companies which are listed on foreign AZw_{V CZ H$ån{Z`m| H$mo XoVm h¡ Omo \$m°aoZ _mH}$Q> na
markets. But there is no need to purchase the {cñQ>oS> hmoVr h¡Ÿ& naÝVw Ohm± na dmo {cñQ>oS> h¡ Cg _mH}$Q>
shares directly in the market in which they are _| S>m`aoŠQ>cr eo`a H$mo nM}g H$aZo H$s Amdí`H$Vm Zht
listed. For example, a European investor wants hmoVr h¡Ÿ& CXmhaU Ho$ {cE, EH$ `yamo{n`Z BÝdoñQ>a Omo EH$
an exposure in Indian securities could do so B§{S>`Z {gŠ`y[aQ>r _| EŠgnmoOa H$aZm MmhVm h¡ dh Eogm
via two routes: Xmo VarH$m| go H$a gH$Vm h¡:
(a) Enter the Indian stock market and buy the (a) B§{S>`Z ñQ>m°H$ _mH}$Q> _| àdoe H$aZm VWm H$ånZr Ho$
company’s stock on one of the Indian ñQ>m°H$ H$mo {H$gr EH$ B§{S>`Z _mH}$Q> go IarXZm naÝVw
markets. But this would also expose the EŠgM|O [añH$ VWm ñQ>oÀ`yQ>ar ê$c Ed§ aoJwcoeZ Omo
investor to exchange risks and statutory
rules and regulations governing purchase B§{S>`Z _mH}$Q> _| {gŠ`y[aQ>rO Ho$ nM}g Ed§ goc H$mo
and sale of securities in the Indian {ZYm©[aV H$aVr h¡, `h ^r BÝdoñQ>a H$mo EŠgnmoO
markets. H$aVm h¡Ÿ&
(b) Through GDRs, which would give the (b) GDRs Ho$ _mÜ`_ go BÝdoñQ>a H$mo B§{S>`Z ñQ>m°H$
investor ownership of the Indian _mH}$Q> H$s ao½`ycoeZ H$s eVm] H$mo _mZo {~Zm hr B§{S>`Z
company’s stock without being subject to
Indian stock market regulations to a great H$ånZr Ho$ ñQ>m°H$ H$m ñdm{_Ëd {_c OmVm h¡Ÿ&
extent.
GDRs have become synonymous to selling GDR, `yamo _mH}$Q> _| BpŠdQ>r goc H$m n`m©` ~Z J`m
equity in the Euro markets. This is so because h¡Ÿ& `h Bg{cE Š`m|{H$ H$ånZr Ûmam Z`o eo`a Bí`y {H$`o OmVo
fresh shares are issued by the company which h¢ Omo _mH}$Q> go _Zr àmßV H$aHo$ EH$ {S>nm°{OQ>ar H$mo Q´>m§g\$a
is raising money from the markets and
transferred to a depository which, in turn, H$aVo h¢Ÿ& BgHo$ ~Xco _| EH$ [agrQ> Bí`y hmoVr h¡ {Ogo {H$gr
issues a receipt which is quoted and traded at ^r ñQ>m°H$ EŠgM|O na ŠdmoQ> VWm Q´>oS> {H$`m OmVm h¡ Ohm± na
any stock exchange where it is listed. dmo {cñQ>oS> hmoVr h¡Ÿ&
Once a GDR is issued, it can be traded freely EH$ ~ma GDR Bí`y hmo OmZo Ho$ ~mX h¡, {\$a BgH$m
among international investors. GDRs are freely B§Q>aZoeZc BÝdoñQ>g© Ho$ ~rM ñdV§ÌVm go ì`mnma {H$`m Om
tradable in the overseas market like any other gH$Vm h¡Ÿ& AmodagrO _mH}$Q> _| GDR H$m ñdV§ÌVm go
dollar denominated security either on a foreign ì`mnma {H$`m OmVm h¡, O¡go {H$ {H$gr AÝ` S>m°ba {S>Zm°{_ZoQ>oS>
stock exchange or in the OTC market. {gŠ`y[aQ>r H$m EH$ \$m°aoZ ñQ>m°H$ EŠgM|O na `m {\$a
OTC _mH}$Q> _| {H$`m OmVm h¡Ÿ&