Corporate Finance : Global Depositary Receipts

THE AMERICAS

Emerging Markets Fund Leads BLDRS Volume

 

 

The baskets of listed depositary receipts, or BLDRS, a family of four exchange-traded funds launched on the Nasdaq Stock Market in November 2002, are gradually gaining investor acceptance, if trading volume is any guide.

 

Bank of New York is the trustee and provides the indexes for the BLDRS Funds. Nasdaq Financial Products Services is the sponsor.The ADR indexes are the first exchangetraded funds to list on Nasdaq.

 

Each share of a BLDRS Fund represents an undivided interest in a portfolio of depositary receipts. The shares can be bought and sold throughout the trading day, similar to shares of stock.

 

“The BLDRS Fund family broadens the advantages and enhances the visibility of depositary receipts as a convenient and cost-effective way to invest in non- US securities,” says Joseph Velli, senior executive vice president of Bank of New York’s Worldwide Securities Processing Services Center.

 

Each BLDRS Fund has its ordinary expenses capped at 0.3%. Brokerage commissions apply.

 

The BLDRS Emerging Markets 50 ADR Index Fund has proved to be the most popular of the four funds, based on trading volume to date, according to Nasdaq.The emerging markets fund includes 11 ADRs issues by Brazilian companies, as well as six each by companies in India and China.The fund’s five-largest holdings comprise Taiwan Semiconductor Manufacturing, Telefonos de Mexico, SK Telecom,Kookmin Bank and China Mobile HK.

 

The BLDRS Emerging Markets fund traded 96,846 shares in January, up from 22,431 shares in December 2002, and 9,959 shares in the two weeks it was traded in November 2002.

 

The BLDRS Asia 50 ADR Index Fund traded 71,398 shares in January, followed by the Developed Markets 100 ADR Index Fund, with 31,212 shares for the month, and the Europe 100 ADR Index Fund, with 19,897 shares.

 

Brazil’s Suzano Launches Program

 

Suzano Petroquimica, one of Brazil’s largest petrochemical companies, launched a sponsored American depositary receipt program in the US over-the-counter market for its preferred shares.

 

One ADR is equivalent to 10 preferred shares. Bank of New York is the depositary.

 

Suzano Petroquimica was spun off in September 2001 from Companhia Suzano de Papel e Celulose.

 

The Suzano group along with Petrobras and Unipar are constructing a $1.1 billion petrochemical complex north of Rio de Janeiro.The complex will include one of the largest polyethylene plants in the world.

 

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EUROPE

Airspray Begins Level 1 Facility

 

Netherlands-based Airspray, a manufacturer of dispensing systems that operate without gas propellants, established a sponsored Level 1 American depositary receipt program in the US overthe- counter market.

 

According to Airspray, the company’s commercial presence in the United States and the success of its dispensers for liquid hand soap have led to significant interest for its shares by US investors.

 

Airspray makes dryspray dispensers, fingerpump foam dispensers and dispensers that combine separated ingredients at the time of use.The company’s clients include Unilever, Colgate, L’Oréal and Johnson & Johnson. Cosmetics and skin-care equipment account for 64% of Airspray’s revenue.

 

The company’s US subsidiary, Airspray International, handles sales and marketing in the Americas.

 

The company’s shares have been listed on Euronext in Amsterdam since May 1998. Each ADR represents one ordinary share.

 

JPMorgan Chase Names Baggioli

 

JPMorgan Chase announced that Marco Baggioli was named vice president and head of its American depositary receipt group for Europe, the Middle East and Africa.

 

Based in London, Baggioli will lead the single largest division in the bank’s ADR business.

 

Prior to joining JPMorgan, he was a director of sales and marketing for Merrill Lynch’s EMEA securities services division in London.

 

JPMorgan says its ADR business accounts for 44% of the ADR market’s capitalization. The bank plans to expand in the EMEA region,where its clients include 150 of the region’s most-prominent ADR issuers.

 

ASIA

Hong Kong Firm Issues ADRs

 

Hong Kong-based Artel Solutions Group Holdings initiated a Level 1 American depositary receipt program in the US overthe- counter market.

 

The company distributes computer components and information technology products in Hong Kong and in China. In addition, it provides technical services and support.

 

Each ADR is equivalent to 50 of Artel Solutions’ common shares.The company’s stock was listed on the main board of the Hong Kong Stock Exchange in October 2001 and was added to the Hang Seng Composite Index in March 2002.

 

Artel is one of Intel’s authorized principal distributors. In December 2002 Artel obtained exclusive distribution rights for Samsung’s network security products in China.

 

Chemical Maker Trades on Portal

 

Mumbai-based DCW, a diversified manufacturer of basic chemicals such as polyvinyl chloride (PVC), soda ash and caustic soda, launched a Rule 144A program for securities not registered with the US Securities and Exchange Commission.

 

The depositary receipts trade on the National Association of Securities Dealers’ Portal system.

 

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Gordon Platt

 

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