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Year-End 2015 Report
| Global DR Trends
companies, including non-U.S. companies, to raise capital
through initial public offerings and list in the United States.
The JOBS Act established a new category of issuer known
as an Emerging Growth Company (EGC) for which significant
regulatory burdens were lifted. A company qualifies as an EGC
if it had less than $1 billion in gross revenues during the most
recently completed fiscal year. Notably, EGCs receive certain
exemptions from procedural and disclosure requirements
during a transition period of up to five years following an IPO.
The JOBS Act has opened the door for many non-U.S. issuers
to access U.S. capital markets through IPOs. In 2015, there
were 19 DR issuers who completed their IPOs by way of the
JOBS Act, qualifying as EGCs and taking advantage of the
reduced reporting requirements and the lower costs associated
with going public under the Act. These 19 companies equated
to 86% of the global DR IPO deals in 2015. In terms of country,
Chinese companies had the largest number of JOBS Act-
related deals in 2015, as five issuers went public. From an
industry standpoint, 63% of the JOBS Act deals were for
companies in the pharmaceutical and biotechnology space.
Impact of the JOBS Act into 2016
Since its enactment in 2012, over 50 EGCs have gone public in
DR form in the U.S. markets under the JOBS Act. This trend
should continue into 2016 as small and medium-sized foreign
issuers look to test the waters and tap into investor demand
while raising capital. At year end, there were more than five
foreign issuers qualifying as EGCs which have publicly filed
registration statements with the SEC for future DR IPOs under
the JOBS Act.
Global DR capital raising activity in 2015 totaled $11.0 billion,
a decrease of $27.4 billion (-71%) versus 2014. Approximately
$2.2 billion (20%) was raised through IPOs and $8.8 billion
(80%) was raised through follow-on offerings. Regionally,
Europe, Middle East and Africa (EMEA) led capital raising activity
by dollar value as issuers from the region raised approximately
$6.0 billion. Asia Pacific experienced the sharpest decline
year-over-year by dollar value, down 86% as 2014 witnessed
Alibaba Group’s $25 billion capital raising in the largest DR IPO
in history. From an industry standpoint, pharmaceutical and
internet companies accounted for approximately $6.8 billion
(62%) of the total DR capital raised in 2015.
The total amount of DR capital raised through IPOs decreased
significantly in 2015 to $2.2 billion, down 93% year-over-year,
driven by less activity originating out of China. The largest
DR IPO of the year was for Videocon d2h Ltd, an Indian media
company, which raised $362 million in new capital on NASDAQ.
DR follow-on capital raisings increased 59% versus 2014 as
19 issuers raised $8.8 billion. EMEA issuers accounted for
$4.6 billion (52%) of follow-on capital raised and Asia Pacific
issuers accounted for $3.6 billion (43%). Israeli pharmaceutical
company Teva led 2015’s DR follow-on transactions, raising over
$3.7 billion in the latter half of the year. In terms of industry,
pharmaceutical, internet companies and banks accounted for
82% ($7.3 billion) of the total follow-on capital raised.
The JOBS Act of 2012
The Jumpstart Our Business Startups Act (JOBS Act) was
enacted by the U.S. Congress in 2012 to encourage more
2015 DR Capital Raising
By Type
By Country
By Industry
DR Capital Raisings
ADR
94%
GDR
6%
Others
13%
Brazil
4%
UK
5%
France
5%
India
17% China
21%
Israel
35%
Others
15%
Telecommunications
4%
Biotechnology
7%
Banks
12%
Internet
17%
Pharmaceuticals
45%
Source: Bloomberg and Depositary Data Interchange
Value: $11.0 Billion
Value: $11.0 Billion
Value: $11.0 Billion