Citigroup Announces 2006 Depositary Receipts IPO Capital Raised Reaches $20.9 Billion - a Record High - and Total DR Capital Raised Reaches $28.2 Billion

Business Wire, Dec 19, 2006

All Time Records Also Set for 2006 DR Trading

DR Trading Value Increases 31% to $1.55 Trillion; Trading Volume Rises 13% to 42.3 Billion DRs

NEW YORK -- Year-to-date capital raised in the form of DRs as primary offerings (primary offerings are Initial Public Offerings (IPOs) of companies coming to the U.S., London or Luxembourg markets for the first time) by non-US companies through December 12, 2006 totaled $20.9 billion, a 75% increase over full year 2005.(1) This was the highest full year IPO total ever, exceeding the previous record of $17.1 billion set in 1994, and the $16.9 billion total in 2000.

The 2006 YTD total was paced by two IPOs on the London Stock Exchange in the form of Global Depositary Receipts, or GDRs. (GDRs are DRs issued simultaneously in two or more markets through a global offering.): Rosneft (Russia) whose $6.4 billion IPO in DR form in July was the largest DR capital raising in history, and Lotte Shopping Co. (Korea) whose $3.0 billion IPO in DR form in February was the largest DR capital raising in history by an Asian issuer.

Total year-to-date 2006 capital raised in DR form (primary and secondary offerings) was $28.2 billion, a 3% decrease from full year 2005. The 2006 level was the third highest full year total ever, following the record $30.0 billion raised in 2000, and last year's total of $29.1 billion. The $28.2 billion of DR capital raised in 2006 was comprised of $20.9 billion (74%) in primary offerings and $7.3 billion in secondary offerings (companies with existing programs offering additional tranches of DRs in the market). By comparison, during 2005, $12.0 billion (41%) were in primary offerings, and $17.1 billion in secondary offerings.

"A receptive investor market, a rally from the mid-year global market downturn, and liquid trading conditions were major drivers of the surge in DR IPOs overall," said Nancy Lissemore, Managing Director of Depositary Receipt Services for Citigroup Corporate and Investment Banking. "The recent trend toward listings in London and Luxembourg is continuing. Nearly 81% of the $20.9 billion raised through primary offerings in 2006 was in GDR form and was listed in London or Luxembourg, while the remaining 19% was listed on U.S. exchanges. The balance has shifted from 2000, when 89% of DR IPOs from non-US companies were listed on U.S. exchanges."

DR Capital Raising Grows Worldwide

Eastern European and Middle Eastern issuers drove the worldwide increase in overall 2006 DR capital raisings, raising $10.6 billion, a 108% increase over 2005. Issues from that region accounted for 38% of the total. Asian issuers raised $12.6 billion, a 25% decrease from 2005, accounting for 45% of the total. Issuers from Western Europe raised $3.0 billion, a 29% year-on-year decrease, for 10% of the total. Latin American issuers raised $2.1 billion, a 33% decrease from 2005, for a 7% share.

The volume of DR capital raisings is reflected in the relative performance of equity market indices. Across all regions, the Citigroup Liquid DR Indices have outperformed the U.S. market, providing an accurate measure of international investor sentiment towards non-US companies with liquid cross-listed DRs.

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Sources: Bloomberg Financial Markets, Standard & Poor's

"The Citigroup Liquid DR Indices are the only indices in the world that exclusively contain liquid cross-listed DRs," said Lissemore. Academic research has shown that non-US companies that cross-list their shares on a major exchange can benefit from, on average, a sustainable valuation premium of 31% over companies that don't cross list.(2)Lissemore continued, "Our research has shown that, on average, firms with liquid cross-listed DRs can enhance their valuation premiums by an additional 24% over less-liquid cross-listed firms. We call this enhanced valuation the 'liquidity premium'."

DR Trading Value Increases by 31% Over 2005, While ADR Trading Volume Rises 13%.

Projected full-year 2006 DR US$ value of trading (based on actual November YTD data for the U.S. market, and October YTD for the London market) is an all-time record $1.55 trillion, up 31% over 2005's total of $1.18 trillion. U.S.-listed ADRs represent $1.27 trillion of the 2006 total, up 31% from 2005. London-traded GDRs represent $275 billion of the total, also up 31% over 2005.(3)

The combined 31% growth in DR trading value kept pace with growth in the U.S. and London home market securities. For the U.S. market (excluding ADRs), projected full-year 2006 US$ value of trading is $33.0 trillion, up 38% from last year, and projected US$ value of trading for the London Stock Exchange (excluding GDRs), is $7.1 trillion, up 30% over 2005.(4)

Lissemore added "as a result of the shift in primary offerings towards the London and Luxembourg markets over the last five years by non-US issuers, the compounded annual growth rate in US$ trading value of London-traded GDRs since 2001 is 105%, compared to 13% for U.S.-listed ADRs."

Projected full-year 2006 ADR trading volume on U.S. exchanges (based on November YTD actual) is a record 42.3 billion ADRs traded, up 13% over 2005's total of 37.4 billion.