Background to Russian ADRs
Southey Capital Russian linked ADR’s and ADS’s
Whilst for some institutional investors accessing Russian equity markets directly is not an issue, for the vast majority of Institutional and Retail investors it isn’t a possibility, the increased use of ADR/GDRs is linked to the growth of the Russian economy and its opening up in the post 1990s.
As an example in 1997, Lukoil listed its Russian shares with “RU” Isin on the London International exchange and in a further effort to build liquidity in 2001 listed and ADR/GDRs in London. As a result investors were able to purchase the shares more easily and contribute to the liquidity and ability of the firm to use capital markets.
In April 2022, in response to the sanctions and suspension of listings of Russian listed ADR/GDRs from Western exchanges, the Russian central Bank invoked a rule that requires Russian domiciled form to revoke the issuance of ADR/GDRs by the 5th of May. In the mean time US sanctions also allows holders to complete any transactions in the sanctioned securities up until the 25th of May, thereafter most transactions will require a approval from OFAC.
Investors still holding Russian securities after the 25th of May 2022 are likely to find that the Clients with deposits and investors with bonds have found themselves in the difficult situation of having to file claims and accede to the tough KYC demands of the Liquidators.
Recovery Process
Holders who chose not to sell will be required to cancel their ADR/GDRs and hold the securities at a local Russian depository institution. Some brokers and custodians will organise this for clients, however there are also suggestions that should a client not cancel their ADR/GDR, then a liquidation sale could occur and but where it is not possible then a forced sale by the issuer of the ADR/GDRs could occur.
Resources:
JP Morgan ADRs
BONY ADRs – Bank Of New York ADR Corporate Actions
CITI Bank – Terminated ADR programs
Deutsche Bank ADRs – Sber Bank ADrs
Sale of GDR/ADRs
We are interested in speaking to holders of all types of GDRs and converted / exchanged securities.
Contact Us
In the strictest of confidence please feel free to contact us to discuss any Russian ADRs using the form below or the Telegram channel: t.me/Russian_ADR
