Jiangsu Expressway announced this week that it has established an inaugural ADR programme, with Bank of New York acting as depository. The programme sees each ADR represent 20 Jiangsu Expressway H shares that are listed in Hong Kong. It does not represent the company's A shares listed in Shanghai.
The ADR programme is a level-1 programme, meaning that no new shares will be issued, nor will the ADRs be listed. Rather the ADRs can be traded over the counter in the US.
"[T]he establishment of the ADR programme is in the interests of the company and its shareholders as it will broaden the company's existing shareholder base, provide alternatives to invest and deal in the shares of the company and enhance the company's corporate image," says Chen Xianghui, director and managing director of Jiangsu Expressway.
This is the latest in a string of Chinese companies that have established level-1 sponsored ADR programmes through Bank of New York, including Citic Pacific, Travelsky and Zhejiang Expressway.
According to Mark Wiggin, Vice President, at The Bank of New York in Hong Kong, many companies see the Level-I programme as a stepping-stone to a more complete US listing further down the road. "It provides," he says, "a platform for a company to talk to existing and prospective investors. It is a very cost effective way of testing the water to gauge investor appetite for your stock. As such there is a lot of value in establishing a Level-1 facility."
It is undecided at this stage if Jiangsu Expressway will move up the listing ladder in the future and go for an SEC registered ADR programme or even a primary US listing. But this is the latest move by Jiangsu Expressway in a clear pattern of diversification of its shareholder base. The company first issued H shares in Hong Kong in June 1997 and then its Shanghai A share IPO came about in January 2001. Jiangsu Expressway owns and operates a series of toll roads and bridges in Jiangsu, Shanghai and Nanjing as well as interests in other mainland transportation companies.
