Daily Management Review

Indian PM Narendra Modi Urged By Global Investors And Indian Startups To Allow Overseas Listings


A call on India's Prime Minister Narendra Modi to change regulations to allow Indian companies to list overseas for better access to capital was given by a group of leading investors including Tiger Global, Sequoia Capital and Lightspeed, said reports based on a letter sent to the Indian government.  
Even though a change in rules was made by the Indian government September that will allow Indian companies to get publicly listed directly on foreign exchanges such as on the New York Stock Exchange or Nasdaq, rules required to govern such listingsare yet top be announced by the government.
Modi was urged to expedite the policy change by about 22 investors and top Indian startups such as food-delivery app Swiggy and online tutoring firm Byju's, in a letter sent to the prime minister in which the signatories called the changes in regulations as an "unfinished reform agenda".
"The current inability of unlisted companies to tap international markets for raising capital is ... an impediment to the growth ambitions of Indian startups," they said in the July 29 letter.
No comments on the issue were made by Swiggy and Sequoia as well as the other firms and Modi's office.
According to analysts, the new policy will be a shot in the arm for Indian unicorn start-ups that are valued at more than $1 billion as well as the digital unit of conglomerate Reliance which is planning a listing in the United States following the firm raising more than $20 billion from investors last year.
However in recent months, a number of companies are deciding to get listed in India.
Recently, a very successful initial public offering was launched on Indian bourses by Indian food delivery Zomato which is backed by China's Ant Group. In the listing the company was valued at $13 billion. On the other hand, the Indian ride hailing company Ola, backed by Japan’s investment firm SofftBank is also reported to be planning an Indian listing.
"Even as some companies are gearing up to list in India, many others are keen to evaluate the option of an international listing," the letter said and underscored the much bigger market capitalization than in India that other markets like the United States have.
The London Stock Exchange (LSE) has led talks with a number of Indian tech firms about their overseas listings even as the LSE is keeping a close watch on the policy change in India, said reports.  Overseas listings will come as an opportunity for some of the leading stock exchanges of the world to lure in the rapidly growing startup companies in India.
The concern within the Indian government about foreign listings is that such a listing could prompt Indian startups to look out for higher valuations through access to a wider group of investors and therefore would decide to only get listed overseas which would be a damper for Indian markets.
Such concerns were "unfounded", the group of investors and startups told Modi in the letter, adding that interest of group of investors and startups would be incerased by overseas listings.