Capital Corp Merchant Banking

Merchant Banking Capital Corp

Capital Corp Merchant Banking Services

In November 1998 DaimlerChrysler AG, Germany, surprised the global equity markets by being the first company to list on the NYSE using GRSs rather than ADRs. The acclaim surrounding the GRSs listing was short lived, however, as evidence grew the following year that trading activity in the combined DaimlerChrysler share was much weaker than hoped. A study conducted by Ohio State University published in early 2000 indicated that only 5% of the transactions in Daimlers shares were traded via the GRS listing on the NYSE.

Although it is difficult to explain all of the forces at work in DaimlerChryslers share trading, the GRSs listing rather than ADRs is considered a major one. Another major factor is that the newly combined company was actually dropped from Standard and Poors 500 Index when the index was rebalanced.

Of the 10 European companies listing on the NYSE in 2001, only Deutsche Bank chose to use GRSs rather than ADRs. The seven other companies including Siemens, BASF and Norartis, claim to have seriously considered GRSs, but concluded that the initial costs of ADRs were substantially lower and their liquidity in the American marketplace greater. Although there are few explicit up front costs associated specifically with GRS listings, traditional German firms have issued much of their equity in bearer form.

Prior to being able to issue GRSS, the firms would need to go through the process of registration of shares for trading via the electronic linkages with New York. Deutsch Bank, evidently as part of its preparations, had issued registered share in Frankfurt in 1999.