Like money managers in Hong Kong, Singapore and London, individual investors in the US will now try their luck with a new product to bet on India. In what reflects a growing appetite for Indian stocks, a leading American institution has applied to SEC, the US capital market regulator, for floating “unsponsored ADRs (American Depository Receipts)” of more than 50 Indian companies.
“Unsponsored ADRs will be issued depending on the demand and it will be subject to minimum offer size. These ADRs will also have to comply with maximum FII limit set by the company. It must be noted that this will be treated as FDI investment,” said Sangeeta Lakhi, a colleague of Rajani.
“Also, being a dollar-denominated instrument, it will not pose an exchange rate risk to investors… They will not be directly impacted by compliance issues or a change in the tax regime in India,” said Hitesh Jain, partner at ALMT Legal.