Govt allows direct listing by Indian cos on foreign exchanges; what does it mean for India Inc?

While speaking at the launch event of AMC Repo Clearing and a corporate debt market development fund on Friday, Finance Minister Nirmala Sitharaman made the announcement.

“A direct listing of securities by domestic companies will now be permissible in foreign jurisdictions…This will facilitate access to global capital and better valuation,” Sitharmanan said.

Globally, and particularly in the US, some of the Indian businesses are getting much better valuation and have a much wider investor base compared to India, said Amisha Vora, Chairperson and MD, Prabhudas Lilladher.

“Considering the fact that the Indian economy is on an upswing now, it will help attract more investments into India and allow Indian companies to attract more growth capital. Also, the decision will have great potential to boost the Indian startup industry,” Vora said.

Sitharaman has urged financial market regulators to focus on the quality, proportionality and the effectiveness of their decisions so that companies find further ease in doing their business.

Not only will companies have a wider investor participation and access to foreign capital, but this will also offer them a competitive platform. “Overseas listing will enhance Indian companies’ competitiveness with better capital access, broader investors base, improved valuations, and global brand boost,” said Aryaman Vir, CEO, Aurum WiseX.

Indian companies should prepare to seize this opportunity and solidify their position in the global market, Vir added. Sharing a thought similar to that of Vir, Sriram BKR of Geojit Financial Services added that it will also improve disclosures by companies.

“Since Global listing comes with better disclosure responsibilities, it in turn benefits all investors,” Sriram BKR, senior investment strategist at Geojit Financial said.

It also gives room for adopting international best practices on listing rules, information disclosures, investor interaction norms, etc, he said.

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