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Year-End 2013 Report
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Citi Depositary Receipts Year-End 2013 Report
In 2013, the global economy continued to grow at a modest pace. However, concerns over
the U.S. government shutdown and debt ceiling discussions, the European recession, and
slow growth in emerging market economies have continued to have an impact on investor
sentiment. Additionally, the EU’s consideration of financial transaction taxes and potential
impact on market players, possible changes to U.S. monetary policy and questions around
China’s potential reform measures have further added to market uncertainty.
Despite these headwinds, the total capital raised in Depositary Receipt (DR) form reached
$10.5 billion in 2013. Initial public offerings (IPOs) in DR form drove issuance, representing
$5.6 billion (or 54%) of the total capital raised in DR form — as IPOs rebounded during the
4th quarter of 2013. EMEA was at the forefront of overall capital raising with 17 issuers
raising approximately $4.6 billion. The biggest year-over-year increase came from Asia
which had 25 issuers raise $4.4 billion, up 164% compared to 2012. Moreover, in 2013,
international sentiment toward non-U.S. equities improved as evidenced by an 11.4%
appreciation in the Citi Liquid Depositary Receipt World ex-U.S. Index.
The pipeline of companies seeking to tap into the IPO market through DRs remains active.
While there have been some questions around how the emerging and frontier markets will
continue to grow, we expect robust activity driven by the need to privatize state-owned
assets, organic growth in consumer and industrial sectors, and private equity/venture-capital
monetization. The timing of these transactions will be impacted by political, regulatory and
monetary policies in those respective markets, as well as global macro-economic conditions.
As for demand for international equities, after a two-year run in which U.S. equities
dominated the investor landscape, the pendulum has begun to swing back to global
equities. According to the U.S. Federal Reserve, U.S. Investment in non-U.S. equities as
of Q3 2013 was $5.9 trillion, up 16% from the Q3 2012 level of $5.1 trillion. Additionally, as
investors moved back into equity funds through YTD October 2013, overall equity funds
witnessed an inflow of $134.4 billion. Most of the overall equity inflow was driven by inflows
of $113.8 billion into world equity funds as investor confidence rose in overseas companies.
Regulators in various geographies are keen to tap into the increased investor demand to
provide stimulus to their economies. For example, regulators in emerging markets such
as India, Russia and China are considering various changes to their regulations/market
practices that would allow them to reap the full benefits of the DR structure, and help
further integrate their local capital markets with global capital markets. Additionally,
frontier markets, such as Vietnam, are looking to introduce regulations that would support
a DR structure and allow issuers from their markets to access a new pool of international
investors. As demand for non-U.S. securities continues to grow, Citi continues to engage
in conversations with regulators in several jurisdictions to establish a framework for
permitting (or enhancing) the DR structure.
Citi Depositary Receipt Services looks forward to continuing to provide issuers, investors
and intermediaries with cross-border solutions in the global capital markets. We hope you
gain insight from our
Year-End 2013 Report
and we would be delighted to get your feedback.
For your convenience, Citi’s Depositary Receipt Services reports are available online.
To download current and previous issues, visit our website (www.citi.com/dr).
Nancy Lissemore
Managing Director
Global Head of Depositary
Receipt Services