Update: Soon after I published this post I saw that Business Standard reports that the IDR will be priced between Rs. 100 and Rs. 115, and BL has a good article about this IDR as well. I think you should read those two stores instead of spending more time here.
I was going through the NSE website today, and saw the Standard Chartered Red Herring Prospectus there for an IPO that is going to come out on May 25th and close on May 28th.
Standard Chartered is going to issue 240 million Indian Depository Receipts (IDR) with every 10 IDRs representing one share of US $ 0.50 nominal value. The prospectus states that the basic EPS for a 50 cent share has been Rs. 78.38 in 2009, so for the IDR, the EPS to be considered would be Rs. 7.83. In 2008 the EPS was Rs. 89.67, and it was Rs. 82.16 in the year before that. Just for reference, I did a quick check on SBI P/E on Bloomberg and saw that it was 12.28. The prospectus itself states the industry composite P/E as 16.77. The price band has not been declared yet, and I will update this post once it is declared.
As is becoming the norm – there is a 5% discount for retail investors and employees on this issue.
Standard Chartered has two business divisions: Consumer banking and Wholesale banking, and here is a brief on what these divisions do from the prospectus:
Consumer Banking products and services include banking services, deposit-taking services, credit cards, personal loans, mortgages, auto finance and wealth management services. Major markets include Hong Kong, Singapore, Malaysia, Indonesia, South Korea, Pakistan, India, Taiwan and the UAE. Principal customers of the Consumer Banking business are individuals in Asia, Africa and the Middle East. In addition to serving individuals, Consumer Banking also offers a range of deposittaking, trade, lending and other banking services to SMEs. As at 31 December 2009, the Group has approximately 1,700 branches and 5679 ATMs operating in more than 71 markets. These are a key part of the distribution network for its Consumer Banking business. Wholesale Banking provides a wide range of solutions to help corporate and institutional clients facilitate trade and finance across some of the important growing markets and trade corridors in todayâ€™s global economy.
The Wholesale Banking structure, bringing Corporate and Institutional Banking and Global Markets under one management team, provides customers with an efficient level of service and promotes the cross-selling of products and services to customers through the Groupâ€™s emerging market network in Asia, Africa and the Middle East. This is complemented by a sales origination platform in India, the UK, the US, Australia and Japan. Wholesale Banking customers include multinational and large local corporations, banks, other financial institutions and, particularly in Hong Kong, India, the UAE, Singapore and Malaysia, medium-sized local companies.
I will update the post with more details when the pricing is out.