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Private Sector & Public Sector Enterprises - ADR, GDR, ECB & FCCB The public and private sector enterprises, banks and other financial institutions tap the securities market to finance their capital expansion and growth plans. Even mutual funds which are an important investment intermediary mobilizes the savings of the small investors. Funds can be raised in the primary market from the domestic market as well as from international markets. In the domestic market, issuer can raise funds through financial securities like equity shares, preference shares, Debentures, Bonds etc. They can raise funds through public offer and/or through private placement. Indian companies can also raise resources from international capital markets through Global Depository Receipts (GDRs)/American Depository Receipts (ADRs), Foreign Currency Convertible bonds (FCCBs) and External Commercial Borrowings (ECBs) including Masala Bonds. Global Depository Receipts (GDRs) is a negotiable financial instrument that is issued by a foreign depository bank other than the US representing a specified number of shares of a foreign company’s stock. GDR are generally traded in European Stock Exchanges. American Depository Receipts (ADRs) An American depositary receipt (ADR) is a negotiable certificate issued by a U.S. depository bank representing a specified number of shares of a foreign company's stock. The ADR trades on U.S. stock markets as any domestic shares would. Foreign Currency Convertible Bonds (FCCBs) are bonds issued by Indian companies and subscribed to by a non-resident in foreign currency. They carry a fixed interest or coupon rate and are convertible into a certain number of ordinary shares at a predetermined price. External Commercial Borrowings (ECBs) are commercial loans (in the form of bank loans, buyers credit, suppliers credit, securitized instruments, floating rate notes and fixed rate bonds) availed from any internationally recognized source such as bank, export credit agencies, suppliers of equipment, foreign collaborators, foreign equity holders and international capital market. Indian companies have preferred this route to raise funds as the cost of borrowing is low in the international markets. Masala Bonds are rupee-denominated bonds issued outside India by Indian entities. They are debt instruments which help to raise money in local currency from foreign investors. NISM 7 SORM Exam Preparation - https://modelexam.in/nism-exams/nism-series-7-sorm.html NISM 15 Research Analyst Exam Preparation - https://modelexam.in/nism-exams/NISM_Research_Analyst.html #adr #gdr #ecb #fccb #debt #financemarket #capitalmarket #depository #nism #sebi #securities #securitiesmarket #securitiesoperations #financialeducation #sharemarket #stockmarket #stockmarketforbeginners #stockmarketindia
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