Following a week of roadshows across Asia’s main financial centres, Brazil’s Vale, the second largest diversified mining company in the world by market capitalization, listed on 8 December 2010 both common depositary receipts and Class A preferred depositary receipts on the Main Board of the Stock Exchange of Hong Kong, by way of introduction.Vale is the largest non-financial Western company to be listed in Hong Kong and was also the first-ever corporate to list Hong Kong Depositary Receipts (HDRs).
Common shares and Class A preferred shares of Vale are presently listed on the BM&FBOVESPA, in São Paulo, and, in the form of American Depositary Receipts (ADRs) in a ratio of 1:1, on the New York Stock Exchange. They are also traded on NYSE Euronext in Paris. Vale is one of the largest listed companies in the world, valued at more than US$173 billion.
With its secondary listings of HDRs, Vale’s shares will be capable of being traded almost 24 hours across all time zones. The listings in Hong Kong seek to raise the company’s profile with Asian investors in particular but did not involve any offering of new shares or public offering of securities – no new proceeds were raised pursuant to the introduction.
The HDRs are traded under stock codes of 6210 and 6230 respectively, in board lots of 50 each, and on a T+2 settlement basis, as are all equity securities listed in Hong Kong. Vale’s HDRs are quoted and traded in Hong Kong dollars (although issuers of HDRs also have the option for these to be quoted in US dollars).
JP Morgan was the sponsor to Vale’s listing in Hong Kong and is also the designated dealer for the HDRs, trading for which has initially been approved for about 7% (in the case of the common shares) and just over 5% (in the case of the preferred securities) of Vale’s share capital.
According to HKEx’s website, at the close of the first morning session, the trading volume in the common HDRs was just shy of US$4 million equivalent, about ten times more than for Vale’s preferred HDRs.
The framework for the listing of HDRs was first introduced on 1 July 2008, although no company had so far seized the opportunity to issue depositary receipts there. The issue and listing of HDRs are subject to the same rules as those for ordinary shares.