Non-U.S. Companies Raise $37.3 Billion through Depositary Receipts in 2014

Total volume reaches highest level since 2007; India and Taiwan embark on regulatory changes for depositary receipts

NEW YORK--()--The market for non-U.S. companies raising capital in depositary receipt (DR) form reached a significant milestone in 2014, with $37.3 billion in DR capital raised. The total represents the highest level since 2007 and is up more than three times from 2013 levels.

According to an industry report from Citi, initial public offerings (IPOs) in DR form dominated issuance, representing $32.8 billion – or 88% – of the total, as DR IPOs rebounded in 2014, up five times from the prior year. Chinese companies accounted for more than half of this year’s DR IPOs, driven by online e-commerce company Alibaba Group Holding Limited, which raised more than $25 billion in the largest IPO in history. Follow-on offerings in DR form represented approximately $4.4 billion – or 12% – of the total in 2014, down 7% from 2013.

“The significant increase in depositary receipt capital raising and trading volumes shows that DRs are a beneficial vehicle for issuers and investors alike,” said Nancy Lissemore, Global Head of Depositary Receipt Services at Citi. “And with countries such as India and Taiwan embarking on DR regulatory changes to expand investor access, we see a lot of opportunity for growth.”

Notable DR Market Highlights of 2014

  • Capital raising transactions from 18 different countries, including China, Russia, Colombia and Brazil, increased in terms of dollars raised and number of deals.
  • The top five issuers in terms of DR capital raised were Alibaba ($25 billion), JD.com ($2 billion), Grupo Aval ($1.2 billion), Oi S.A. ($1.1 billion) and Lenta Ltd. ($1 billion).
  • The Communications, Consumer (Cyclical), and Financial sectors accounted for approximately 91% of the total capital raised.
  • DR trading volumes were up 8.7 billion shares, to 152 billion shares, versus 143.3 billion shares in 2013, driven by higher volumes in Asia and Latin America. Since 2006, overall DR trading volumes have grown at a Compound Annual Growth Rate (CAGR) of 9%.
  • The number of unsponsored DR programs has increased to more than 1,600, with volume up 56% from 2013.
  • Investor demand remained strong, with U.S. investment in non-U.S. equities rising to $6.6 trillion during the third quarter of 2014, up 10% from $6 trillion in same quarter last year.

Notable Regulatory Highlights of 2014

As many regulators look to facilitate growth in local markets through the increased investor demand for international equities, 2014 saw numerous developments aimed at increasing access to depositary receipts. In India, the M.S. Sahoo Committee advised easing depositary receipt regulations to allow the creation of OTC Level I ADRs in both sponsored and unsponsored form. Taiwan followed through with similar proceedings to allow the creation of OTC traded non-capital raising DRs. And officials in Romania modified regulations to allow local exchange listed companies to utilize DRs in the EU for secondary offerings and non-capital raising listings.

For more details on 2014 DR highlights, please refer to the 2014 Year End Report on the Citi DR website: www.citi.com/dr.

Citi

Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.

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Contacts

Media:
Citi
Robert Julavits, 212-816-8020
robert.w.julavits@citi.com

Contacts

Media:
Citi
Robert Julavits, 212-816-8020
robert.w.julavits@citi.com