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Equities take the ADS route

In a move that will significantly enhance the free float in Indian equities available to overseas investors, sponsored American depositary shares (ADS) offerings worth about $2 billion from Indian companies and banks are expected to be in the market in the first half of this year. Top information technology companies such as Infosys and Satyam Computers and privately owned banks HDFC Bank and ICICI Bank have announced plans for their sponsored ADS offerings.

On December 8 the board of directors of New York Stock Exchange-listed Satyam Computer Services approved a $360 million sponsored ADS offering for March 2005. This will double the ADS available to overseas investors to about 20% of the company's equity capital. Ramalinga Raju, chairman of Satyam, said that the company had decided to increase Satyam's float in the ADS market because ?positive global trends towards offshoring have resulted in enhanced interest in Indian IT companies?. Indian IT stocks rallied sharply after the re-election of president George W Bush in the US, on hopes that the uncertainty about outsourcing to India had disappeared.

Under a sponsored ADS offering, local investors who own Indian shares in the company can tender them for sale.