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The Rediff Business Special/Nikhil Faleiro

In the early Nineties, European stock exchanges were the ultimate destination, and Global Depository Receipt the ultimate instrument, for Indian companies in search of high finance. Now it is the American bourses in general and the New York Stock Exchange and Nasdaq Stock Market in particular that are being eyed.

The trend started in March this year when the Bangalore-based Infosys Technologies went in for a listing on Nasdaq and successfully completed its $ 57 million (1$ = Rs 43.57) American Depository Receipts issue. On September 21, ICICI became the first Indian company to be listed on the New York Stock Exchange with its ADR offer of US $ 275 million (with a green shoe option of US$ 40 million). ICICI is also only the second Indian company to be listed on an American exchange.

And now, Modicorp, UTV, Satyam Infoway, Dilip Chabbria Designs, Dr Reddy's Laboratories, HCL Technologies, MTNL, HDFC Bank, McDowell and Company, Reliance Industries, Zee Telefilms, Mastek and Pentafour Software are seeking to break into the highly protected (read high entry barriers) American financial market.

The US market is marked by stringent US Securities and Exchange Commission rules and exacting accounting standards. Meeting the SEC stipulations and succeeding in raising the finance is considered an achievement, and a reflection of the company's transparent operations.

By raising Rs 70 billion from the American market, ICICI has demonstrated to the world the confidence American investors have in Indian companies. K V Kamath, managing director and CEO, ICICI, says, ``We wanted to show to the world that India has globally accepted companies. The listing on the NYSE was the first step to prove this point.''

What makes the US markets attractive? They are larger and more liquid, says an analyst. Sure, they are more expensive -- entry fee is $ 29,000 for small issues with less than a million shares and an annual fee of $ 410,710; for large issues, it is $90,000 and $ 50,000 respectively. But the stringent US laws mean that fly-by-night operators would keep off US funds.

The laws are so stringent that even companies waiting to tap the ADR market cannot disclose their issue size because it might send the share price soaring. Patrick Sutch, executive, business development, Nasdaq, says, ``There are several reasons why Nasdaq is best suited for Indian companies, liquidity being the foremost. Nasdaq is the most liquid market in the US.''

Indian companies had raised some $ 25 billion on the European exchanges in the early Nineties. But now, they see a pot of gold on the American shores. One analysts remarks, ``About $1 trillion (1 trillion = 1,000 billion; 1 billion = 1,000 million) are waiting for Indian companies. And they are running after this money like dogs after a bitch in heat.''

Nasdaq's Sutch says, ``It seems to me that God has given India its strengths in software development. India should use this new talent to become a superpower and create wealth for its citizens. Indian companies should not miss this opportunity, the kind of which comes rarely.''

If Indian companies succeed in attracting the US market's attention, it would lead to infusion of capital, but at highly competitive rates. But then, the prestige associated with getting listed on a US exchange is unparalleled. The National Association of Software and Service Companies is assisting Indian software corporates to get listed on the US bourses. Dewang Mehta, chairman, NASSCOM, says, ``Indian software companies have already gained an international reputation for providing world class services. It should not surprise anyone if their ADR issues succeed.''

Manish Shah, vice-president, Gold Crest Securities, sounds a note of caution. ``Indian companies will have to stay on their toes. One wrong step and they would be consumed by the vortex that surrounds the American financial market."

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