India Inc may raise funds in Japan via DR

NEW DELHI: India Inc may have a reason to cheer about. Japan may soon allow Indian companies to raise fund through depository receipts (DR), sources close to the development told SundayET. The proposed Japanese depository receipts (JDR) could be linked to the financing model of $90bn Delhi-Mumbai industrial corridor.

In fact, the Japanese version of the American depository receipts (ADR) will allow Indian companies to woo Japanese investors even without listing in their stock exchange, in addition to promoting the company’s brand name in Japan. The amount of Japanese household finance assets is estimated to be around $12.5 trillion.

The plan is likely to be finalised in the first week of July when president of Tokyo Stock Exchange Taizo Nishimuro will visit India as part of Japan’s trade and industry minister Akira Amari’s deligation. Representatives of five financial institution including Mitsubishi UFJ Trust and Banking Corporation, Daiwa Securities SMBC Co and Nomura Holdings will also accompamy the team.

“There could be changes of Japanese law as early as September this year to make Japanese depository receipts (JDR) possible. Already, JDR is mentioned in the economic growth strategy of the Japanese government as a tool to make Japanese financial market more attractive to Asian companies,” sources said.

The government of Japan may also offer to promote Indian companies’ issuance of JDRs in the early stage. Also, public institutes, financial institutes and other such organisations in Japan may extend possible consultations and support while issuing JDR. A senior Indian official said, “It will be quite good for Indian companies to go for JDR. Already, many Indian entities have raised fund in US through ADRs.”

In fact, ADRs enable US investors to buy shares in foreign companies without undertaking cross-border transactions. ADRs carry prices in US dollars, pay dividends in US dollars, and can be traded like the shares of US-based companies.