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Non-U.S. Companies Raise $10.5 Billion Through Depositary Receipts In 2013

The market for non-U.S. companies raising capital in depositary receipt (DR) form remained strong in 2013, with $10.5 billion in DR capital raised.

According to an industry report from Citi, initial public offerings in DR form drove issuance, representing $5.6 billion - or 54% - of the total, as IPOs rebounded during the 4 th quarter of 2013. In 2013, follow-on offerings in DR form represented approximately $4.9 billion – or 46% - of the total, up 135% compared to 2012. The EMEA region was at the forefront of overall capital raising with 17 issuers raising approximately $4.6 billion. The biggest year-over-year increase came from the Asia Pacific region which had 25 issuers raise $4.4 billion, up 164% compared to 2012.

“The dramatic increase in follow-on offerings shows that there is healthy investor demand for equity issued by non-U.S. companies,” said Nancy Lissemore, Managing Director, Global Head of Depositary Receipt Services, Citi. “Due to a combination of Citi’s global reach, local expertise, an industry-leading distribution network, and specialized investor relations support, Citi as Depositary was able to obtain a dominant market share in follow-on offerings in DR form and 33% market share in total capital raised in DR form.”

Other Notable DR Market Highlights in 2013 Include:
  • Transactions from Russia ($2.6 billion), Taiwan ($2.1 billion) and China ($1.4 billion) combined for 58% of total capital raised.
  • The top two DR capital raisings overall came from issuers in the financial sector: TCS Group Holdings ($1.1 billion) based in Russia, and Fubon Financial (US$0.9 billion), based in Taiwan.
  • The Financial, Communications and Industrial sectors together accounted for approximately 59% of the total capital raised.

International sentiment toward non-U.S. equities improved in 2013, with the Citi Liquid Depositary Receipt World ex-U.S. Index, -- which acts as gauge of international investor sentiment towards non-U.S. markets -- gaining over 11%. Investor demand remained strong, with U.S. Investment in non-U.S. equities as of Q3 2013 at $5.9 trillion, up 16% from the Q3 2012 level of $5.1 trillion, according to the U.S. Federal Reserve. Net inflows of $752 billion accounted for most of the increase, which was further supported by an increase in asset values of $90 billion. On a sequential basis, U.S. investment in non-U.S. equities in Q3 2013 was up 6% versus the Q2 2013 level of $5.6 trillion. Increasing asset values of $218 billion accounted for most of the total increase quarter-over-quarter, which was further supported by net inflows of $109 billion.

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