Cross Listing of Essar Energy - Coursework Example

The company obtains benefits from the economic activities of that foreign country, especially from the financial market’s ability to provide greater strength to the market value of that domestic company.
Cross-listing is also one of the methods of diversifying the investors’ risk profile. Investing in a company that is not a domestic company, allows much more diversification for local investors as they are now subject to different sorts of risk exposures as compared to their other counterparts. These investors are subject to the risk of the economy of that cross-listed company’s country.

In short, cross-listing provides another avenue of financial resources to the domestic company and a safeguard from a likely hostile takeover. It also provides a more incredible opportunity and flexibility to foreign investors in managing and maintaining their portfolio of investments in a diversified manner.
Essar Energy plc is one of the best private groups in India which have substantial investments in the oil & gas and power sectors. Established in 1989 in the petroleum sector only, the company has made remarkable achievements such that the company remained highly successful even in diversifying its operations by investing in refinery and later on, in the power generation and distribution sector.

In June 2010, the company cross-listed itself on London Stock Exchange after already having a presence in the local stock exchanges in India. The company raised net proceeds of around $1.8 billion from the UK investor. This had been the largest IPO subscription in London Stock Exchange after 2007 by any company. Currently, the company is a constituent of the FTSE 100 index of the London Stock Exchange.

After a tremendous turnaround and interest of the foreign investors in the stakes of Essar Energy plc, the company initiated its efforts in entering into equity markets of the USA through American Depository Receipts in December 2011. These cross-listings in various parts of the world are providing more exposure to the investors of Essar Energy plc as the company successfully managed to acquire Stanlow refinery in the UK just after one year of having been listed in LSE.
Through ADRs, the company is going to enjoy the financial benefits of the world’s largest economy by offering its shares to US investors which would eventually provide a more significant market for the existing shareholders to transact their holdings in international markets as well as provide US investors an opportunity to invest in one of the fastest growing petroleum and power generation company of India. Read More