Depositary receipt (DR) activity has been booming for the first half of 2014, with DRs raising approximately $9.5 billion in capital during this time, a 178% increase over the same period last year, according to a report by Citi.
Approximately 55% of this capital raising came from IPOs, representing $5.2 billion, an astounding 992% increase since last year, while the rest came from follow-on offerings.
Issuers from Asia led the way for DR capital raising, accounting for nearly 59% of the total. Specifically, China has raised the most capital, with $4.3 billion from 23 issuers, including over $2 billion from the IPO of Chinese e-commerce company JD.com. Issuers from Russia accounted for the second largest total with $1.3 billion, followed by Brazil with $1.1 billion.
The majority of DR capital raising, 72%, came in the form of American Depositary Receipts (ADRs).
Overall DR trading volumes increased 4% year over year to total 76.3 billion during the first half of 2014, while DR trading values increased by $229 billion (18%) over the same period to $1.5 trillion. NASDAQ-listed ADRs accounted for the majority of the increase with $134 billion.
“Investors continue to leverage depositary receipts to access international equities, as evidenced by the demand for DRs in capital raisings and the upward trajectory of DR trading volumes during the first half of 2014,” says Nancy Lissemore, global head of Depositary Receipt Services at Citi.“
Citi also determined that international sentiment toward non-U.S. equities improved during the first half of 2014, as the Citi Liquid Depositary Receipt World ex-U.S. Index, rose by over 5%. Plus, U.S. investment in non-U.S. equities as of the first quarter of 2014 rose 18% year over year to $6.7 trillion, according to the Federal Reserve, with net inflows of $365 billion accounting for most of the increase.
Lastly, unsponsored DR programs rose from 1,543 to 1,601, with trading volumes of unsponsored ADRs increasing by 48% to nearly 1.2 billion in the first half of 2014.
Depositary Receipts Capital Raising and Trading Volumes Rise, Finds Citi
Depositary receipt (DR) activity has been booming for the first half of 2014, with DRs raising approximately $9.5 billion in capital during this time, a 178% increase over the same period last year, according to a report by Citi.