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Wipro debuts on NYSE at a discount to domestic stock

Rediff Money Bureau

India's Wipro Limited's American Depository Share or ADS debuted on the New York Stock Exchange on Thursday at $44-1/2, as against the offer price of $41-3/8. In other words, the ADS of the company with diversified businesses enjoyed an encouraging premium.

The market expected a premium listing, so was disappointed with the offer price.

The offer price is at a 13.7 per cent discount to the company stock's closing price of Rs 2,222.65 at the Bombay Stock Exchange on Thursday.

The company had made a public offering of 2.75 million ADS in the US. The ADS are represented by an identical number of shares

The ADS issue's proceeds stood at $114 million. Wipro had earlier projected $136 million as its target. The company had projected the figure of $63.86 as the likely ADS price, but later lowered it to $52.48.

At 1600 GMT, the ADS at $43-3/4 was off earlier highs due to volumes of 1.23 million shares.

Marketmen feared that Wipro's BSE stock price could be affected if investors' likely disappointment with the ADS leads to hectic sales.

Analysts even termed the ADS issue at a discount to the domestic stock price as suicidal. "Is Wipro hinting that its stock is overvalued in India?" asked an analyst.

At the BSE, Wipro's stock price rose 16 per cent to close at Rs 2, 223 while the benchmark Sensitive Index climbed up 3.04 per cent on Thursday.

Wipro is the eighth Indian firm to list on a US exchange and the fourth Indian firm to list on the NYSE.

Wipro Limited is based Bangalore where another Indian infotech major Infosys Technologies operates from. Infosys is the first-ever Indian firm to list in the US. Its ADRs listed on the NASDAQ in March 1999.

Besides exporting software services, Wipro makes soaps, electric bulbs, childcare products, computer hardware and vegetable oil.

Ceremony marked Wipro's opening session at the NYSE. Group chairman Azim Hasham Premji rang the opening bell. After listing at $ 44.50, the ADS price dipped marginally to $ 43.375 by 2130 IST.

At the time of writing this report, Premji was scheduled to ring the closing bell as well, a rare honour for any executive in the 200-year history of the NYSE.

The closing session is to be doubly star-studded, thanks to the guest appearance of General Electric chairman Jack Welch. Wipro's prominent customers are also expected to attend the closing ceremony.

Soon after the listing, Premji interacted with mediapersons across the world in a live, exclusive phone-in event. When he told rediff.com that the ADS price climbed up to $ 46 soon after the opening, his statement met with applause from the participants. The audio-visual show was witnessed by cheering Wipro employees in Bangalore through a live satellite feed.

Asked if he would exchange any success formulas with GE's Welch, Premji told rediff.com: "There's no agenda for the meeting as such. But when it is Jack Welch, you never know what to expect."

Later, in a statement, Premji said Wipro has now become a "global corporation in every sense of the word".

Addressing his employees, he said: "We are now on the threshold of something bigger. And that is to achieve leadership at a global level. Listing at the NYSE is the first step towards achieving our vision. The ADS listing elevates the Wipro brand to a totally different league. It would also provide Wipro with global currency to make inorganic growth a reality.

"This listing places Wipro on the global platform. This will create huge opportunities for professional growth and wealth creation for you."

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