GDRs: the foreign gateway for investment

GDRs: the foreign gateway for investment

On 9 October 2019, the pan-African trade finance provider African Export-Import Bank (Afreximbank) announced it is considering proceeding with an IPO of global depositary receipts (GDRs) on the standard segment of the Official List and the Main Market of the London Stock Exchange.

Afreximbank has an interesting share structure with four classes of shares issued to different types of investors. Its Class A shares are issued to African states and their banks. The GDRs will represent the Class D Shares.

The African bank is the fourth company to consider or complete a GDR offering in London in 2019. Two of the companies which announced a potential IPO of GDRs have however postponed their floats. The Russian freight business, Rustranscom plc, announced it was considering listing GDRs in April but subsequently issued a statement that it had received several more favourable proposals from private equity companies that appeared to be more in line with the company’s strategy. More recently, the Kazakh tech company JSC Kaspi.kz postponed its proposal to list GDRs citing unfavourable market conditions in the technology sector in particular.

The only successful GDR offering in London so far in 2019 was by the Chinese Huatai Securities which was the first issuer to list GDRs in London on the Shanghai-London Stock Connect segment of the Main Market of the London Stock Exchange. The Stock Connect segment was launched in June connecting the London Stock Exchange with the Shanghai Stock Exchange allowing companies listed on either market to issue and list depositary receipts on the other market.

In 2018, Nova Ljubljanska Banka and JSC NAC Kazatomprom completed listings of GDRs in London. However, the Belarus grocery retailer, Eurotorg Holdings plc postponed its planned offering of GDRs in November 2018 due to unfavourable market conditions.

The Market Tracker team will continue to monitor overseas companies offering GDRs in London. 

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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.