Indian Startups May Soon Start Listing Overseas

Indian startups may become the new eye candy for foreign investors as RBI and SEBI come together allowing them to enlist themselves in foreign jurisdiction. The tech ecosystem is flourishing at a steady pace in India. This pace might get some acceleration if Indian startups decide to approach funding by enlisting themselves outside India.

However, until recently, SEBI, the stock market watchdog, had certain compliances which made listing on foreign exchanges a troublesome task.

Under the current rules, Indian companies are allowed to issue only specific currencies such as depository receipts on foreign stock exchanges- that too only if you are a company enlisted in India. This is about to change as the government along with SEBI and RBI has now allowed Indian conglomerates to enlist themselves abroad.

What are the Changes Made by the Government
Companies that are Seeking Foreign Stock Exchanges
Benefits of Listing On Foreign Stock Exchanges
Key benefits of listing Overseas
Creating a Brand Presence
Native Concerns
FAQ

What are the Changes Made by the Government

In the Companies (Amendment) bill 2020 passed by Rajya Sabha in September last year, it seeks to amend Sec 23 of Companies Act 2013, which prescribes the manner in which private and public companies may issue securities.

Earlier, the companies who preferred enlisting themselves on foreign stock exchanges were compelled to do so with several restrictions laid out by SEBI. With the amendment coming into force, not only existing Indian companies but newbies too can enlist themselves under foreign stock exchanges. The center along with SEBI and RBI are working on a framework to bring this into practice.

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Companies that are Seeking Foreign Stock Exchanges

Infosys, the Indian tech giant became the first company to get listed on a foreign stock exchange when it enlisted itself on  NASDAQ (National Association of Securities Dealers Automated Quotations) on March 11, 1999. Post Infosys, a number of Indian companies decided to join the league including ICICI, HDFC Bank, Wipro and travel tech company MakeMyTrip.com.

Along with NASDAQ, there are other exchanges overseas that are trying to grab the attention of Indian companies. Amongst the top ones are NYSE, Tokyo Stock Exchange, London Stock Exchange who are trying to meet Indian firms and lure them into enlisting themselves on these platforms.

India has more than 30 unicorns such as OLA, Byju’s, Swiggy and Paytm who could be beneficiaries of this government initiative. While this is being applauded and celebrated, UK based Bay Capital announces Pre IPO investment in India’s largest insurance aggregator, PolicyBazar.com.

Siddharth Mehta, founder and chief information officer of Bay Capital, said, “We are excited to partner with the excellent management team of PB Fintech, which is transforming the way insurance is bought in India. Customer centricity has been the heart of their proposition and has helped them become the platform of choice for customers."

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Benefits of Listing On Foreign Stock Exchanges

Indian startup ecosystem has now been exposed to a vast capital market which was in oblivion before the announcement. Of course, there are companies who have taken the road to foreign stock exchanges but notably it took Indian companies 30 long years to finally go abroad.

SEBI has been a tenacious watchdog and companies have struggled to move out of their regional boundaries. With the changes prompted by the center, Indian companies, especially startups are doing the happy dance since a vast capital market has been exposed to them.

Key benefits of listing Overseas

Wider Investor base

Listing overseas will expose Indian companies to a larger pool of investors broadening their investor base.

Soared  Valuations

More investors along with an understanding of global influence, raised cap for funding.

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Creating a Brand Presence

Overseas listing has put companies like Wipro, HDFC Bank, ICICI on the global map and will do the same for companies that are considering this move. No pros for any decision exist without their cons. Economic experts fear that Indian companies may face tax complications in a market regulated by foreign law makers. Dual listing may bring concerns over co-existing in foreign waters and on the home ground.

Native Concerns

Internet entrepreneur Sanjeev Bikhchandani says an estimated Rs 17 trillion of market cap has been transferred abroad after young Indian Startups were forced to shift their company domicile overseas by foreign investors promising the funds they need for growth.

There is a fear shared by many economic well wishers that listing overseas would be giving up a part of the ecosystem which is full of potential and may drive the aspiring Indian entrepreneur away from his/her roots.

FAQ

Which country has the most number of Startups?

United states is the country which has the most number of Startups.

Can Indian companies list overseas?

Ministry of Finance, Government of India announced that Indian companies would now be allowed to list their shares directly in foreign stock exchanges.

Is dual listing allowed in India?

The Indian government has decided not to mandate secondary listing for domestic firms which choose to list on overseas stock exchanges.

Conclusion

Indian ecosystem is a hidden treasure which is about to get explored by the global market. Several startups have been meaning to raise funds through ICOs (Initial Coin Offering) which is through crypto funding.

Apparently, we are running out of investors in India and foreign involvement is seeking an approval at large. While this may be a great opportunity for upcoming companies, there will always be dismay of profits  flowing out of the country.

Listing overseas calls upon a bundle of opportunities for Indian companies to have a global footprint. It not only will enable India to aspire for a spot in the global marketplace but also will take Indian ecosystem towards becoming a global superpower.