Joseph Velli, Bank of New York
Joe Velli came to the Bank of New York after leaving Citibank,
where he also was involved in the depositary receipt business. One
of the early evangelists of the ADR as a way to fund Latin American
equity issuers, he now looks out over a market that has established
itself as a major financing tool for the region’s companies.

On milestone equity issues…
The first thing that comes to mind as a milestone is CTC. Looking
back, it was the first Latin American company to list on the New
York Stock Exchange through the use of ADRs to raise funds.To do
that deal, there were obstacles and complexities relateing to
American and Chilean law that needed to be resolved. Anytime you do
a first transactions in a country you have to marry the two
countries to a yard stick to ensure that the process works not just
for the original placement but for the secondary market as well.
And Chile had, and still has, certain foreign exchange controls. We
had to examine voting and unique features related to the Chilean
voting process. The concept of establishing a nominee to represent
offshore beneficial shareholders had to be examined. So these are
some of the technical matters we dealt with, along with their
lawyers and bankers, and the transaction took a long time. That’s
probably still the biggest legal bill in the history of ADRs in
Latin America.Looking back, at the time, no one could have
predicted the growth that followed. At the time of CTC it was
considered really cutting edge. This was a virgin country, this was
Latin America, and it still carried a stigma. No one, I don’t
think, had predicted that it would be followed by six or seven or
eight years of billions and billions of dollars in financing.The
process rotated country by country, because CTC was first, then
there was a lull in which nothing happened in Chile, and then
things quickly focused on Mexico. Each country had a watershed deal
that changed the outlook of that country. In Brazil, you had
Telebras, in Mexico Telmex, Chile had CTC-with each of them, once
that first big deal happened, it opened the flood gates (for
successive deals). What was important about YPF, for instance, was
that it opened up the market to other companies, it gave confidence
to other companies and to international investors. It created
confidence in Argentina more than just in YPF. It was the right
company to open the door, just like CTC, just like Telmex.

On the importance of international investors…
We are very equity focused here, and when we think of the equity
market flourishing, it’s because of a combination of things. Local
officials decided to improve the Mexican stock exchange to make it
more transparent, for example. But the single biggest event may not
have occurred in Latin America and to me, the single biggest event
is the US attitude toward investing in Latin America-that has
really changed the landscape. US investors diversifying their
portfolios overseas and focusing on the emerging markets really
pushed a lot of these reforms and initiatives. Countries said,
“Hey, these people would like to invest, but we need to change some
thing.” They recognized that investors were waiting at their