Overview

US equity markets are the largest, most liquid, and in many ways the most advanced in the world. They show a well-diversified base; some of the largest investing institutions are US-based and over 50 per cent of US residents own shares or equity-based investments.

This chapter introduces the salient details of offering shares in the largest capital market in the world. The focus is on non-US issuers selling shares into the US markets and is weighted towards the documentation and process issues. Specific issues relating to marketing, syndication, allocations or stabilization are dealt with in the chapters devoted to those topics.

A later section covers depository receipts (DRs), securities representing foreign shares but traded on a local stock exchange. The main DRs are American depository receipts (ADRs), which trade on one of the US exchanges, but global depository receipts (GDRs) also exist, issued primarily by Asian companies and traded primarily on European stock exchanges. The London and Luxembourg Stock Exchanges are the main homes for GDR listings.

The realization by US investors that there were opportunities beyond America's borders drove some of the biggest changes to international equity offerings in the 1990s. Estimates at the beginning of the decade put US institutional ownership of foreign assets at less than 2 per cent of total assets. By the end of the decade, international assets were believed to be between 12 and 14 per cent of total assets. In comparison, UK institutional investors held approximately 24 per cent of their portfolios...