By Santhosh V Perumal
Business Reporter
Fast growing Qatar and its corporate sector have the largest opportunity to raise funds through global depositary receipts (GDRs) and as many as three companies are set to launch GDRs this year to part fund its overseas expansion, according to a top official of a foreign bank.
Gotke: Upbeat on Qatar’s depositary receipts
This was disclosed by Peter Gotke, vice president (depositary receipts) of Bank of New York Mellon (BNY Mellon), at the sidelines of the second Financial Thought Leaders summit, which began yesterday.
Of the three prospective issues, one is expected before Ramadan and other two during the third and fourth quarters, Gotke said without divulging further details.
BNY Mellon, which claims 72% market share in mandating the depositary receipts in the Middle East and North Africa region, had mandated an issue for Qatar Telecom a decade ago.
“We are now working on a couple of mandates in Qatar. There are three that have mandated us. It is in finance and diversified sectors,” he said but declined to specify the size.
Gotke said the BNY Mellon has already been in touch with the foreign investors, who have been looking for investment opportunities in Sub Saharan Africa, Egypt, Qatar and Saudi Arabia.
Asked when these are expected to hit the market, Gotke said, “We are working hard to get these programmes off the ground. May be one will be launched before Ramadan and the rest could be in Q3, Q4.”
Equating Qatar to the Egyptian model where one or two companies that raised capital went in for mergers and acquisitions, brought in strategic investors and raised their profile dynamically, he said, “We think Qatar has a very similar profile and it could grow exponentially.”
Finding that Qatar has done quite a lot of acquisitions, he said the country has made fantastic investments in London.
“May be that is more on real estate and strategic investments. I think absolutely the companies that have reasonable growth trajectory (will) have propensity to invest and acquire,” Gotke said.
About the prospects in the Gulf region, he said at the moment there are less than 10 depositary receipt programmes. This year may see four or five new companies coming out with such issues but “Qatar has the largest opportunity at this moment.”
Most of the depositary receipts in this region have been GDRs rather than American depositary receipts because London understands the Middle East region well and the dynamics of each company within each jurisdiction.
Highlighting that globally, depositary receipts worth $1.8trn was traded in 2010, he said, so investors in this region are very keen to tap into that liquidity. “Markets here are often been accused of not liquid and it is true,” he added.
For companies with reasonably good health and liquidity is not an issue, he said, having secondary market activities in London or wherever gives an opportunity to tap into new sources of liquidity and investors.
“Depositary receipts, which are the acquisition currency, will be a valuable instrument should Qatari companies look to acquire companies in Europe, Asia or any part of the world,” he said.
