The market for non-U.S. companies raising capital in depositary receipt (DR) form remained strong during the first half of 2014, with $9.5 billion in DR capital raised.
According to an industry report from Citi, initial public offerings (IPOs) in DR form drove issuance, representing $5.2 billion – or 55% – of the total, as IPOs rebounded during the first half of 2014, up 992% from the first half last year. Follow-on offerings in DR form represented approximately $4.3 billion – or 45% – of the total in the first six months of 2014, up 46% from the first half of 2013. Asia was at the forefront of overall capital raising, with 23 issuers raising approximately $5.6 billion. Among the most notable IPOs, Chinese e-commerce company JD.com, Inc. raised more than $2 billion in DR form.
“Investors continue to leverage depositary receipts to access international equities, as evidenced by the demand for DRs in capital raisings and the upward trajectory of DR trading volumes during the first half of 2014,” said Nancy Lissemore, Global Head of Depositary Receipt Services at Citi. “With our unparalleled global presence, local expertise, and industry-leading distribution network and investor relations support, Citi continues to be a provider of choice for issuers globally.”
Other notable DR market highlights in the first half of 2014 include:
- Transactions from China ($4.3 billion), Russia ($1.3 billion) and Brazil ($1.1 billion) combined for 71% of total capital raised.
- The top two DR capital raisings came from issuers in the Communications industry: JD.com, Inc. ($2 billion), based in China, and Oi S.A. ($1.1 billion), based in Brazil.
- The Communications, Consumer (Cyclical), Financial and Technology sectors accounted for approximately 82% of the total capital raised.
International sentiment toward non-U.S. equities improved during the first half of 2014, with the Citi Liquid Depositary Receipt World ex-U.S. Index – which acts as a gauge of international investor sentiment toward non-U.S. markets – gaining over 5%. Investor demand remained strong, with U.S. investment in non-U.S. equities as of the first quarter of 2014 rising to $6.7 trillion, up 18% from $5.6 trillion in the first quarter of 2013, according to the U.S. Federal Reserve. Net inflows of $365 billion accounted for most of the increase. On a sequential basis, U.S. investment in non-U.S. equities in the first quarter of 2014 rose 2% from $6.5 trillion in the fourth quarter of 2013. Through May 2014, world equity funds witnessed estimated inflows of $59.2 billion.
For more details on 2014 DR highlights, please refer to the 2014 mid-year report in the Research section of the Citi DR website: www.citi.com/dr.
Citi
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