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Business News/ Companies / Start-ups/  Indian start-ups, investors, exhort PM to allow overseas listings
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Indian start-ups, investors, exhort PM to allow overseas listings

The signatories to the letter include unicorns such as Byju’s, Swiggy, Cred, Bharat Pe, and Urban Ladder, and heads of many investment firms who have invested in Indian startups

Inability to list is a major impediment to the growth ambitions of startups and also a reason why many of them are moving their base overseas, reads the letter to the PM. (AP)Premium
Inability to list is a major impediment to the growth ambitions of startups and also a reason why many of them are moving their base overseas, reads the letter to the PM. (AP)

Prominent Indian startups, investors and investment advisors have urged Prime Minister Narendra Modi to allow startups to directly list abroad. The signatories to the letter include unicorns such as Byju’s, Swiggy, Cred, Bharat Pe, and Urban Ladder, and heads of many investment firms who have invested in Indian startups.

The signatories called it the “single most significant big bang reform for the startup ecosystem". An overseas direct listing would raise the profile of these startups, make a greater capital pool available to them, and allow specialized investors to invest in these companies, especially in sectors such as software-as-a-service, insurance technology, business to business logistics, genomics, and biotechnology, they said.

“If India wants to produce multinational tech giants, permitting our startups to access global capital by listing on international exchanges is an absolute must-have," says the letter dated 29 July.

The names include Tiger Global Management partner Scott Shleifer, Falcon Edge co-founder and partner Navroz D. Udwadia, Norwest Venture Capital partner Niren Shah, Lightspeed India partner Bejul Somaia, Matrix Partners India managing director Vikram Vaidyanathan, Sequoia Capital India partner Rajan Anandan, Elevation Capital partner Ravi Adusumalli, and Nexus Venture partners Jishnu Bhattacharjee.

Inability to list is a major impediment to growth ambitions of startups and a reason why many of them move their base overseas, reads the letter. Mint has seen a copy of the letter, which also notes that overseas listing would encourage more foreign investors to back startups.

Many companies may still prefer a domestic listing as they would gain wider home brand recognition, allow for “research coverage, trading liquidity, ease of investor relations, lower litigation risk, and lower listing and ongoing compliance costs", the startups and investors said.

Many consumer-facing Indian startups such as Nykaa and Policybazaar have filed for an Indian listing in the last month. This also comes just weeks after food delivery company Zomato, a competitor to Swiggy, went public in India. CarDekho, another signatory, is a competitor to CarTrade, which is listing in India.

Many tech startups are building products and services that compete globally, which is why an overseas listing would allow these firms to compete with larger firms listed in the US and Singapore, the letter argues. The Economic Times was the first to report this development.

A startup founder who signed the letter told Mint on condition of anonymity that they expect the Indian government to allow for international listing eventually, but hoped that this letter would speed up the process.

The letter, which has 22 signatories, also notes that the government “showed intent to allow direct overseas listing" in September 2020 and allowed for some exemptions in February 2021 for Indian firms listing overseas.

An overseas direct listing regime would need to be in sync with Indian regulations so that stakeholders have all options available to them, said Gautham Srinivas, partner at Khaitan & Co.

“Questions would need to be addressed on exchange control laws, taxation, and other aspects while building such a framework," he said. “All checks and balances from an Indian regulatory perspective need to be examined and balanced with commercial considerations for businesses exploring an overseas listing option," he said.

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Published: 06 Aug 2021, 09:32 PM IST
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