Standard Chartered Gets Bids for 2.2 Times Shares

May 28 (Bloomberg) -- Standard Chartered Plc received orders for 2.2 times an estimated $500 million in shares on offer in India as bidders responded to a new rule by committing funds on the final day of the sale.

The London-based lender that makes at least three quarters of its profit in Asia received orders for 447.7 million shares as of 5:25 p.m., according to data from the National and Bombay stock exchanges. It agreed to sell an additional 36 million Indian depository receipts to so-called anchor investors earlier this week.

Indian and overseas funds, who are required to pay the full amount at the time of making their bid under a rule that came into effect this month, waited until the final hours of Standard Chartered’s four-day sale to avoid tying up capital. Europe’s debt crisis has also made it more difficult for companies worldwide to sell new stock.

“From now on, we are likely to see share sales get subscribed only on the last day of the offer because of the new regulations on bid payments,” A. Murugappan, head of investment banking at ICICI Securities Ltd., said in an interview in Mumbai today. It is also “getting increasingly difficult to pull deals off because of the volatility in the markets.”

The bank, which is the first company to seek to sell IDRs, is offering about 240 million shares at 100 rupees to 115 rupees each. It sold 15 percent of the offering to investors including ICICI Prudential Asset Management Co. and Reliance Capital Ltd. for 104 rupees a share, according to a filing this week.

Barring Insurers

Domestic insurers are prohibited from taking part in the sale, limiting potential buyers, Prabodh Agrawal, an analyst at India Infoline Ltd. in Singapore, said in a note to clients on May 24. Record stock purchases by insurers helped boost the benchmark Sensitive Index 81 percent in 2009, making it the third-best performing equity market in Asia.

Still, “the bank emerged unscathed from the recent financial crisis,” said Agrawal, who has a “subscribe” rating on the stock. The company also has a “stable funding base, and a well-capitalized balance sheet.”

Standard Chartered, which is listed in Hong Kong and London, aims to raise as much as $573 million from the India offering, according to data compiled by Bloomberg. Ten IDRs will represent one share of Standard Chartered, the bank said in a filing on May 14.

London, Hong Kong Trading

U.K.-traded shares of Standard Chartered fell 1.4 percent to 1,659 pence today. In Hong Kong, the stock rose 1.2 percent to HK$185.50.

Standard Chartered began the final day of its sale with bids for 11 percent of the stock on offer.

Investors may be deterred by regulatory risks tied to Standard Chartered’s global operations and concern that currency fluctuations affecting the IDRs, whose underlying shares are denominated in British pounds, Abhijit Majumder, an analyst at Prabhudas Lilladher Pvt. in Mumbai, wrote on May 24.

UBS AG, Goldman Sachs Group Inc., JM Financial Services Ltd., Bank of America Corp.’s Merrill Lynch & Co., Kotak Mahindra Capital Co., SBI Capital Markets Ltd. and Standard Chartered-STCI Capital Markets Ltd. are managing the sale.

Individuals and employees who bid for 100,000 rupees of shares or less will be eligible for a 5 percent discount on the final price, the bank has said. Retail investors will get up to 30 percent of the issue and employees 2 percent.

Standard Chartered, which counts India as its most profitable overseas market after Hong Kong, and rivals including Credit Suisse Group AG are seeking to win corporate clients in the world’s second-fastest growing major economy. The bank has been in India for more than 150 years.