1. SOURCES OF RAISING
FUNDS IN
INTERNATIONAL
MARKETS
By:
MEGHA KUSHWAHA

2. SOURCES
EURO ISSUE
DEPOSITORY
RECEIPTS
AMERICAN
DEPOSITORY
RECEIPTS
GLOBAL
DEPOSITORY
RECEIPTS
FOREIGN
CURRENCY
CONVERTIBLE
BONDS

3. DEPOSITORY RECEIPT
• It is a negotiable financial instrument issued by a
bank to represent a foreign company's publicly
traded securities.
• Through it, companies in India tap the global equity
market to raise foreign currency funds by way of
equity
• When the depository bank is in the U.S., the
instruments are known as American Depository
Receipts (ADRs). European banks issue European
depository receipts(EDRs), and other banks issue
global depository receipts (GDRs).

4. AMERICAN DEPOSITORY RECEIPT (ADR)
• It is a negotiable security representing securities of a non-
US company trading in the US financial markets
• It is denominated in US dollars and may be traded like
regular shares of stock
• Securities of a foreign company that are represented by an
ADR are called American depository Shares(ADSs)
• INFOSYS Technologies Ltd was the first Indian company to
issue ADRs

5. TYPES OF ADR
SPONSORED
• Issued with cooperation of
company whose stock will
underlie the ADR
• Listing on international
Stock Exchange is allowed
UNSPONSORED
• Issued by broker, dealer or
depository bank without the
involvement of company
whose stock underlie ADR
• Trade in OTC market

6. ADR RATIOS
• 1 ADR = 1 SHARE
• ADR Ratio = 1:1
SINGLE
• 1 ADR = 5 SHARES
• ADR Ratio = 1:5
MULTIPLE
• 1 ADR = ½ SHARE
• ADR Ratio = 2:1
FRACTION

7. LIST OF ADRs ISSUED BY INDIAN COMPANIES

8. GLOBAL DEPOSITORY RECEIPT (GDR)
• It is issued by one country’s bank as negotiable
certificate and is traded on the stock exchange of
another country against a certain number of shares
held in its custody
• It is denominated in some freely convertible currency
• GDRs are often listed in Luxembourg, London,
Frankfurt, Singapore and Dubai Stock Exchange
• Reliance Industries was the first Indian company to
issue GDRs

9. LIST OF GDRs ISSUED BY INDIAN COMPANIES

10. ISSUE MECHANISM OF ADR/GDR
ISSUING COMPANY
(DR. REDDY)
DOMESTIC
CUSTODIAN BANK
(SBI)
OVERSEAS
DEPOSITORY BANK
(MORGAN STANLEY)
OVERSEAS STOCK
EXCHANGE
(NYSE)
OVERSEAS INVESTOR CLEARING HOUSE
(DTC,EURO CLEAR)
UNDERLYING SHARES
ISSUE OF DR
DIVIDEND
PAYEMENT

11. ADVANTAGES OF ADR/GDR

12. FOREIGN CURRENCY CONVERTIBLE BONDS (FCCB)
• They are debt instruments issued in a currency
different than the issuer’s domestic currency
with an option to convert them in common
shares of the issuer company
• The interest on FCCBs is generally 30% -40%
less than on normal debt paper or foreign
currency loans
• Maturity period of FCCB is 5 years but there is
no restriction on time period for converting
FCCB into shares

13. ADVANTAGES OF FCCB

14. PROBLEMS ASSOCIATED WITH RAISING OF
FUNDS IN INTERNATIONAL MAKETS

15. INDIAN DEPOSITORY RECEIPT (IDR)
• It is issued and traded in a similar manner as
that ADR and GDR
• A foreign company lists its shares in Indian
domestic market in INR terms while the
underlying shares are listed and traded in any
foreign exchange
• Till date only Standard Chartered Bank has
issued IDRs. 10 IDRs represent one share of
Standard Chartered PLC’s share listed in
London Stock Exchange.

17. THANK YOU