Here’s where many got confused.
Its American Depositary Shares (ADS) will be a newly issued equity form of ownership representing the underlying equity shares (common stock) of Sterlite. The equity shares will be on deposit with Citibank, N.A., which will issues the ADSs.
This procedure will allow the ADSs to be traded in U.S. dollars on the New York Stock Exchange.
Note: Sterlite has been a publicly traded company since 1988. Its shares have been traded on the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited. Since April 2007, its shares have been included in S&P CNX Nifty, which is a diversified index of 50 Indian stocks listed on the National Stock Exchange.
That’s why the prospectus lists no price range for the pending offering. That is never done with secondary offerings.
No Passport Required
For anyone interested in the Sterlite offering, here’s some interesting background.
Sterlite Industries (India) Limited is the principal subsidiary of Vedanta Resources plc, a diversified and integrated metals and mining company, with principal operations in India, Australia and Zambia.
Here’s a similar story of another recent “IPO,” which in reality, was a secondary offering.
STARLIM (NASDAQ: LIMS), an Israeli-based provider of laboratory information management systems, priced its “IPO” in the United States. The company offered 2.1 million ordinary shares at US$13.50 each on May 23, 2007. Its shares had been traded on the Tel Aviv Stock Exchange since November 1993. The U.S. offering price was discounted off its previous close on the Tel Aviv Stock Exchange of NIS54.91 per share or about US$13.73.
The “IPO” did not produce an opening-day moonshot. It closed at $13.53 per share, UP 3 cents from its offering price.
A final note on the Sterlite offering.
On Friday, June 8, a well-known, late evening TV financial personality touted the coming “IPO” as a buy at $14 and a sell at $20.
On Friday, June 15 –- a week later — Sterlite closed at Rs543 or about US$13.60 per share.
If you wish to follow the commentator’s advice, you can front run the U.S. offering by storming into the Bombay Stock Exchange and buy all you want below the $14-per-share recommended price.
(Click on IPOScoop.com’s secondary calendar and you’ll see Sterlite’s ADSs are expected to trade on Wednesday, June 20.)
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