Printer Friendly

GDR becomes a favorite fund-raising instrument.

Taipei, June 22, 2009 (CENS) -- Thanks to the upturn of the local stock market and the intention of some domestic enterprises to solicit foreign and especially Chinese capital, global depository receipts (GDRs) have become a favorite fund-raising tool for domestic enterprises again this year, which are estimated to issue US$1-2 billion (NT$33-66 billion) worth of GDRs this year.

Two tech firms Gintech Energy Corporation and Wistron Optoelectronics have successfully issued GDR, at scales of US$53 million and US$224 million, respectively, so far this year, breaking the frozen state of Taiwan's GDR market since the outbreak of global financial tsunami last year. Wistron even managed to cut the discount rate for its GDRs to only 2%, compared with typical 10% for GDRs issued by tech firms in the past or maximum legal cap of 20%, giving the market sentiment a strong boost.

A number of domestic enterprises have also announced GDR issuance plans, including a US$300 million plan of Tatung, US$215 million of Prime View International, US$200 million of Farglory Group., and NT$10 billion of KGI Securities, which, plus the previous two cases, add to over US$1 billion.

Some others are mapping out their GDR plans including Shin Kong Financial Holding with a US$500 million plan, Inotera Memories with US$400 million plan, Fubon Financial Holding, and Chinatrsut Financial Holding.

Investment bankers forecast that GDR issuance could peak in the fourth quarter this year, noting that one special feature of the GDR market this year is the participation of many conventional industry firms and financial firms, breaking the dominance by tech firms in the past.

Banking managers pointed out that GDR issuance enables domestic enterprises to raise foreign currency-denominated funds directly, at lower cost and exchange rate risk, so as to meet their foreign-currency obligations.

In addition, GDR issuance can be a prelude to the solicitation of foreign capital, notably Chinese capital, as the issuing companies can issue new shares for GDR buyers to convert their GDRs into stocks directly upon the maturity of GDRs.

On the other hand, the strong upturn of the local stock market has considerably enhanced the interest of foreign investors in GDRs issued by Taiwanese enterprises, due to the increased value of stocks used as collateral for GDR issuance.

((PL)) (GE)
COPYRIGHT 2009 China Economic News Services
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2009 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:global depository receipts
Publication:The Taiwan Economic News
Geographic Code:9TAIW
Date:Jun 22, 2009
Previous Article:MSI lands LG's contract orders for CULV-based NB PCs.
Next Article:Draft guidelines for structured-note business criticized as too strict.

Related Articles
Egypt's GB Auto GDRs to trade OTC in NY/Lon.
Fubon financial to float record-high US$900M in GDR.
Fubon Financial in Taiwan suspends largest GDR issuance.
Qualified funds & ADRs rule mkt Closure Corus cost AN international consortium's of By in.

Terms of use | Privacy policy | Copyright © 2021 Farlex, Inc. | Feedback | For webmasters |