The US capital markets are much larger than India, making it an attractive place for Indian startups to list, given the increased interest from investors and more sophisticated investors.
Some of India’s best-known startup founders and investors have written to the Prime Minister’s Office (PMO) urging the Center to allow startups to be listed abroad, a move planned for years, but in which the action seems have recently stalled.
The CEOs of Swiggy, Urban Company, Cred, Infra.Market, Byju’s and Unacademy, along with partners from Sequoia Capital, Accel, Lightspeed and Tiger Global, among others, said allowing foreign listing will be “the most significant reform of the big bang for the startup ecosystem and will instantly pave the way for Indian companies to be on the global map. ” A copy of the letter was seen by Moneycontrol.
The US capital markets are much larger than India, making it an attractive place for Indian startups to list, given the increased interest from investors and more sophisticated investors. Investors in other developed markets are also more used to seeing high-growth companies, sometimes at a loss, and those companies may be better valued in foreign equity markets.
Software as a service (SaaS), InsurTech, business-to-business logistics, genomics and biotech companies could all benefit from going overseas, they suggested in the letter. Listed Indian companies have a total market capitalization of $ 3 trillion, while this figure in the US stands at $ 50 trillion.
In September 2020, the government took the first step to allow direct listing abroad when it amended the Companies Act 2013. In February, companies listed abroad were given more freedom of compliance than Indian companies. However, further action is expected, the letter noted.
Currently, Indian companies can be listed abroad by issuing American Depository Receipts (ADR) or Global Depository Receipts (GDR), a substitute for shares, which represent the shares of the company, but are less liquid and may not obtain the same kind of enthusiasm and appreciation as real stocks.
The letter also addressed concerns of capital and wealth creation shifting abroad, saying that Indian companies listed abroad will indeed raise their profile and attract more foreign investment in India. Furthermore, companies can be listed both in India and abroad. In recent years, many startups like Ola, Oyo, and Byju’s, among others, have had substantial business abroad, and a listing there could spur employment and wealth creation for their employees as well.
These are the people who signed the letter: Amrit Acharya, CEO of Zetwerk; Jaydeep Barman, CEO of Rebel Foods; Abhiraj Singh Bhal, co-founder of Urban Company; Anindya Dutta, CEO of Stanza Living; Ashneer Grover, co-founder of BharatPe; Amit Jain, CEO of CarDekho; Sriharsha Majety, CEO of Swiggy; Asish Mohapatra, CEO, OfBusiness; Gaurav Munjal, CEO of Unacademy; Byju Raveendran, CEO of Byju’s; Souvik Sengupta, founder of Infra.Market; Kunal Shah, founder of Cred; Ravi Adusumalli, founder of Elevation Capital; Rajan Anandan, Partner of Sequoia India; Jishnu Bhattacharjee, CEO of Nexus Venture Partners; Neil Mehta, Managing Partner of Greenaoaks; Prasanth Prakash, founding partner of Acdel; Niren Shah, CEO of Norwest Venture Partners; Scott Shleifer, partner. Tiger Global Management; Bejul Somaia, Partner at Lightspeed India; Navroz Udwadia, partner at Falcon Edge Capital; and Vikram Vaidyanathan, Managing Director of Matrix Partners India.
