Silverline launches $ 125 mn ADS issue

Silverline launches $ 125 mn ADS issue
ENS ECONOMIC BUREAU

MUMBAI, JUNE 20: Silverline Industries Ltd has become the first Indian software firm to list on the New York Stock Exchange, pricing its American Depository Shares (ADSs) at $25 each on Tuesday, an 11 per cent discount to the domestic market price.

The company's $ 125 million issue evoked good response from US investors. The price is widely in line with market expectations, and analysts expect the ADS to rise further by 10-20 per cent on listing, in line with the buoyant tone in US markets. Each ADS is equal to two shares. It will trade under the symbol SLT.N.

Other Indian companies listed on the NYSE are ICICI and ICICI Bank. At least three more Indian companies, including Zee Telefilms, are likely to list their shares on the NYSE in the near future.

Silverline priced five million ADSs which included a 15 per cent greenshoe of 650,000 ADSs. The ADS's 11 per cent discount was over the share's closing on Monday at Rs 627.15. On Tuesday, Silverline shares rose 6.35 per cent to a high of Rs 667 ahead of the pricing announcement, but came down later. "It is an attractive price for the ADS investor and the listing should be around $30-35," said an analyst.

Most analysts said the domestic price was maintaining a premium on expectations of the higher listing. "The domestic share is already reflecting a higher listing price for the ADS. This shows there is still a heavy demand for technology stocks and this could pave the way for several Indian listings in the next few weeks," he said.

The market was not surprised by the pricing at a discount. India's premium software firm and darling of the country's bourses, Infosys Technologies, listed on the Nasdaq exchange in March 1998 and priced its American Depository Receipt at about an eight per cent discount to the domestic market price. Silverline said the pricing of $25 compared with a price of $ 19.68 in the preliminary prospectus.

This is the second overseas issue by an Indian company in the last one week. Internet portal Rediff.com had launched a $ 55 million issue and listed its shares on the Nasdaq last week. Satyam Infoway is the third Indian company listed on Nasdaq.