Citi reports that Depositary Receipt Capital Raised in the First Half of 2020 Totalled USD8.8 billion, Asia-Pacific Generates 80% of Total

Despite global market uncertainty, demand for non-US equities ensued as issuers raised USD8.8 billion in depositary receipts (DR) during the first half of 2020.

This represents a 25% decrease compared to the first half of 2019, according to an industry report from Citi.

DR capital raisings were driven primarily by activity in the Asia-Pacific region, with total capital raisings of USD7.0 billion through the end of June – 80% of the total pool, reports Citi. Total IPO capital raised amounted to USD4.9 billion, while total follow-on capital raised amounted to USD3.9 billion, during the same time period. China-based issuers raised a combined USD6.1 billion, accounting for 69% of the total DR capital raised in the first half of 2020. Among these issuers, China Pacific Insurance (Group) Co., a Shanghai-based insurance provider, raised USD1.9 billion in its June IPO – the largest DR IPO capital raising of the first half of 2020 and the second ever Shanghai-London Stock Connect deal. Secondary offerings were driven by Pharmaceuticals and Biotechnology, totalling USD1.8 billion, up 39% from first half of 2019.

The trend of Emerging Growth Companies (EGCs) raising capital continued in the first half of 2020, with 13 of 16 new issuers choosing to come to market via the JOBS Act. Enacted in 2012 to help small emerging companies access capital in the US, the JOBS Act modifies capital raising regulatory requirements for a new category of issuer known as an EGC (defined as an issuer generating less than USD1.07 billion in gross annual revenue). Of the JOBS Act IPO DR deals in the first half of 2020, China-based issuers accounted for 12 of the 13 deals and 97% of total capital raised.

Amidst market volatility, Citi Depositary Receipt Services remains committed to supporting global issuers seeking to raise capital in DR form, says the firm.

Scott Pollak, Global Head of Depositary Receipt Services, Citi, said: “Citi was the depositary bank for over 40% of the DR capital raising deals in the first half of 2020, continuing our leading position in the industry. The continued DR capital raising activity demonstrates that the DR structure remains an attractive vehicle of choice for issuers to raise capital.”

Other Notable DR Market Highlights in the first half of 2020 include:

  • Total DR trading volume was up 49% and total DR trading value was up 34% versus first half of 2019.
  • DR trading volume was highest within the Banking sector with 19 billion DRs traded, while DR trading value was highest within the Internet Services sector with USD851 billion in DRs traded.
  • Trading volume of unsponsored ADR programs increased 78% from the first half of 2019 to 4.1 billion, while total number of programs dropped 1% to 1,437.
  • Unsponsored ADR programs from China, Japan, and France accounted for 51% of the total unsponsored trading volume.