African issuers of global depositary receipts could benefit from the fact that they are remote from the effects of the US-centric credit crunch, says Stuart Matty, partner at White & Case, the law firm that advised two Nigerian banks last year on listings of GDRs on the London Stock Exchange (LSE). “While the credit crunch has undoubtedly had an impact on issuers in emerging economies, knocking investor confidence in emerging markets generally, the African market appears to be removed from this and is on a roll at the moment,” he says.
White & Case acted for Diamond Bank, a leading Nigeria-based commercial bank, in its combined international and domestic offering of GDRs last December that raised $500 million, with $100 million coming from the international offering and $400 million from the domestic offering. Earlier last year it advised Guaranty Trust Bank of Nigeria on its London GDR listing.
“Nigeria has real potential in the eyes of investors, and we expect to see more issuers from the country and surrounding countries coming to the international markets in 2008,” Matty says.
Diamond Bank’s GDRs, each of which represents 100 ordinary shares, are included on the Official List of the UK Financial Services Authority. The GDRs are traded on the Professional Securities Market of the LSE. Morgan Stanley acted as global coordinator and sole bookrunner for the international offering, while Vestiva Capital Management was the domestic coordinator and joint domestic underwriter.