International Corporate Finance: Value Creation with Currency Derivatives in Global Capital Markets, + Website

CHAPTER 9

Sourcing Equity Globally

Daimler Chrysler shares will trade in the U.S. in dollars, on the Deutsche Borse in Deutsche marks, and in 16 other markets around the world in whatever currency these markets would choose. We created for the first time a concept where equity could follow the sun.

Richard Grasso, CEO of the New York Stock Exchange

The increasing integration of national capital markets offers access to new and cheaper sources of financing beyond those available to firms in their home markets. Thus going “global” rather than staying “domestic” when it comes to financing is increasingly becoming a way of life for many firms, whether they are domestic or multinational in their sales reach and regardless of where they are domiciled. Consider, for example, the global initial public offering (IPO) odyssey of Jazztel, an upstart Spanish telecom. Jazztel was considering an IPO on the New York NASDAQ (rather than the Madrid Bolsa) for funding its ambitious capital expenditure program, estimated at $750 million over the next 10 years. Following the liberalization of the Spanish telecom market on December 1, 1998, Jazztel became the first alternative service provider to challenge the giant monopolist Telefonica (a recently privatized Spanish state-owned telecom) by providing a full range of high-quality, tailor-made integrated voice, data, and Internet services at attractive prices. As a Spanish telecom company aiming exclusively at the domestic telecom market, one would ...