After a boom year in 1994 spawned some 40 new Indian GDRs sending fund managers who had invested in the subcontinent laughing to the bank, 1995 returns sagged miserably. Only three GDRs made it past the gate – and those were all towards the end of the year.
Now bucking that trend is Flex Industries, which launched a $30 mn GDR in December to trade under Regulation S in Luxembourg and on the 144a market in the US.
‘Flex is a good sign that India and emerging markets are bouncing back,’ says Peter Duggan, vice president and product manager for DRs at Bankers Trust Co. ‘It was a surprise that anything got off the ground in India at all, given the uncertainty surrounding April’s elections. The market was watching carefully to see how Flex would be received, and it turned out to be a success.’
‘You can’t have a consistently rising stock market with bombs going off and political turmoil,’ says Harvey Black, managing director of MBf Unit Trust Managers Ltd.
Black was named fund manager of the year for 1994 by Hong Kong’s Sunday Morning Post on the strength of the Indian subcontinent returns by his MBf Venture Portfolio Fund. That bias also drove his fund down during 1995. ‘Still, after having taken a serious look at the economic picture and the earnings per share perspective, we are sticking with the Indian region,’ Black adds.
With lead manager Crosby Securities handling the book, Flex coasted smoothly through pricing in December for around 3 mn GDRs at $8.05, then exercised a Greenshoe option for 621 mn additional shares.
