On direct overseas listing, industry seeks more follow-up action: Report
The government’s decision to permit direct overseas listing of some Indian entities might need more follow-up action since the latest measures will not drive local firms to chalk out foreign listing plans, reported Business Standard quoting experts.
The government recently amended the Companies Amendment Act 2020 to allow a specified class of securities, issued by certain public companies, to list on stock exchanges in permitted foreign jurisdiction — only the GIFT City's International Financial Services Centre (IFCS) at present.
The move follows Finance Minister Nirmala Sitharaman’s remarks in September about permitting Indian companies to undertake “direct foreign listings".
Industry players say the government will need to give more clarity to truly open up the direct overseas listing avenue for local companies.
To begin with, it will have to disclose the class of securities it intends to allow. It will also need to permit more foreign jurisdictions like the US, as the GIFT City IFSC is yet to develop its investor and liquidity base, they say.
“At this stage, listing on Indian bourses may be better, as there is a real market trading with good trading volumes. However, some sectors are better valued in overseas markets. This change aims to help develop IFSC as a global market, but it may not immediately have a big impact on Indian companies," says Manan Lahoty, partner, Induslaw.
A few domestic companies have opted to list on overseas bourses by issuing depository receipts or by creating a foreign holding company structure. These will continue to remain viable options in the interim, according to experts.
“To develop a good investor base, IFSCs would have to introduce a framework commensurate with marquee overseas
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