StanChart to pass on entire IDR proceeds to parent

Standard Chartered India Thursday said it will use the entire proceeds from the forthcoming $500 million Indian Depository Receipts issue pay back a portion of the $1.3 billion capital its parent pumped into it during the past two years.

India's oldest and the largest multinational bank will be launching the IDRs next week. The StanChart issue will be the country's first IDR, through which the England-based parent will be diluting just 1 per cent of its stake in its Indian operations.

"This issue is not just to raise money, but to help in our greater visibility in India as we have already pumped $1.3 billion in capital in the past two years into Indian operations," StanChart chief executive for India and South Asia Neeraj Swaroop told newspersons in Kolkata.

Based on the current market capitalisation of the bank on the London Stock Exchange, the forthcoming IDR issue could be around $500 million. The price band for IDRs will be fixed on 24 May. "The entire proceeds from the IDRs will go to parent," Swaroop said.

Asked if StanChart India will need any fresh capital this year if the current growth is sustained, he said, "We are currently adequately capitalised here, with a CAR of 12.6 per cent. In 2010 the capital requirement will depend on the business mix."

Swaroop also said StanChart India is planning to acquire the remaining 26 per cent stake in UTI Securities from the Securities Trading Corporation of India by the third quarter of 2010.

Over the years, StanChart has raised its stake close to 74 per cent in UTI Securities. The bank picked up 49 per cent in the erstwhile UTI Securities in 2007-08 and subsequently raised it to 74 per cent.