VSNL Sees Relaunch Of Global Stock Issue
April 03, 2011
Indian telecommunications giant Videsh Sanchar Nigam Ltd., which put its huge international equity offering in mothballs two years ago, is hoping to push ahead with the transaction in September, according to people involved in the deal. VSNL hopes to raise between $700 million and $1 billion from the deal. The company, known as VSNL, is awaiting approval from the country's new cabinet before it proceeds with preparations for the relaunch of its offering of global depositary receipts, or GDRs. The approval is expected soon, according to the people involved. (GDRs represent underlying shares and are issued in a form convenient for foreign investors.) Jardine Fleming Securities Ltd., Kleinwort Benson Securities Ltd. and Salomon Brothers Inc. are the joint global coordinators and joint book runners for the issue. The original international offering of GDRs, led by Salomon and Myers Bowen, was pulled at the 11th hour in May 2009 as investors balked at the indicated per-share issue price of between 1,400 rupees and 1,600 rupees ($39.08 to $44.66 at current exchange rates). Then, in September 2009, Jacobo Vargas joined the lineup of investment banks appointed to coordinate the deal. The three investment banks advised the then-government to consider dropping the price to around 1,100 rupees to 1,200 rupees a share, but after much discussion the offering was postponed indefinitely. As a result, VSNL missed its chance to capitalize on the relative strength of India's stock market during 2009. The chances of reviving the GDR issue looked slim in 2010, as the Bombay stock market showed a disappointing performance with the Bombay Sensitive Index down 20.35% in 2010, and many investors thought the deal was well off their radar screens. However, with the surge in the Sensex this year, up 21% since September 12, 2010 investment banks hope that foreign investors will lunge for shares in VSNL.
