Depositary receipts hit highest point since 2007

$37.3 billion in depositary receipt (DR) capital was reached last year – the highest levels since 2007 and triple last year’s figures, according to research from Citi.

88% of this figure ($32.8) came from initial public offerings (IPOs) issued in DR form, over half of which were driven by Chinese IPOs. This included the largest IPO in history, in which $25 billion was raised by e-commerce giant Alibaba. However, DR popularity soared in 18 countries, including Colombia, Russia and Brazil, says the report.

In many countries, DR activity has enjoyed the support of regulators and advocates over the past 12 months, playing a major role in its growth. In India, the M.S. Sahoo Committee lobbied for the easing of depositary receipt regulations, in order to allow the creation of OTC Level I ADRs in both sponsored and unsponsored form, while Taiwan has similarly paved the way for easier creation of OTC traded non-capital raising DRs. In Romania, regulations have been altered to facilitate the use of DRs in the EU by local exchange listed companies, for secondary offerings and non-capital raising listings

“The significant increase in depositary receipt capital raising and trading volumes shows that DRs are a beneficial vehicle for issuers and investors alike,” said Nancy Lissemore, Global Head of Depositary Receipt Services at Citi.

“With countries such as India and Taiwan embarking on DR regulatory changes to expand investor access, we see a lot of opportunity for growth.”

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