British bank Standard Chartered, which does 90 per cent of its business in the Far East and India, is to become the first foreign company to list shares (known as Indian Depository Receipts) on an Indian stock exchange.
The company, which has operated in India for over 150 years and last year turned a $1bn profit there, will raise $600m in a listing in Mumbai next week.
This is small money for Standard (it recently made a bridging loan of $475m to Air India to fund the purchase of three Boeing planes) but a big sign for multinationals generally who have been restricted in how they operate in India.
In general they are not allowed to run consumer-facing businesses. Tesco, for instance, has operated in India since 2008 through a deal with conglomerate Tata (which owns Jaguar and Land Rover) but only through a cash and carry business selling to Tata hypermarkets. Wal-Mart has a similar deal with Bharti.
The IDR route may be a way to move liberalisation forward and, if that happens, there will be a flood of big foreign companies keen to invest in India’s huge population with its prosperous middle class.
And where they go their US and European-owned agencies will follow. Some are already ensconced in India in a significant way including Omnicom’s BBDO which has just launched its Proximity integrated agency in India.
With growth for the big agency groups WPP, Omnicom, Publicis, Interpublic and Havas restricted by the deficit problems in the Eurozone (although North and South America are booming away nicely) an Indian market that could rival China is a mouth-watering prospect.