Some of India’s best-known eminent startup founders and investors have written to the Prime Minister’s Office (PMO) asking the Centre to enable startups to list overseas — a transit intended for years but on which action seems to have been delayed recently.
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, stated that permitting overseas listing will be “the single most significant, big bang reform for the startup ecosystem and will instantly pave the way for Indian companies to be on the global map”.
US capital markets are far more significant than India, making it attractive for Indian startups to list, progressing investor interest and more advanced investors. Investors in other advanced markets are also more used to seeing high-growth, sometimes loss-making companies, which may be valued better in foreign stock markets.
Software as a service (SaaS), InsurTech, business to business logistics, genomics and biotech companies could enlarge from listing abroad, they recommended in the letter. Indian listed companies have a total market cap of $3 trillion, while this figure in the US stands at $50 trillion.
In September 2020, the government took the initial step towards allowing direct overseas listing when it amended the Companies Act, 2013. In February, companies listed abroad were given more docility freedom than Indian companies. However, further action is anticipated, the letter remarked. Currently, Indian companies can list abroad by issuing American Depository Receipts (ADR) or Global Depository Receipts (GDR), a proxy to shares, which describe the company’s stock but are less liquid and may not retrieve the same sort of enthusiasm and estimate that actual shares do. The letter also addressed capital and wealth creation matters shifting abroad, saying that Indian companies listing abroad will levitate their profile and attract more foreign investments in India. Moreover, companies can be listed both in India and abroad. In the last few years, many startups, including Ola, Oyo and Byju’s, have had substantial overseas business, and a listing there could encourage employment and wealth creation for their employees.
Startup officials who signed the letter: Amrit Acharya, CEO, Network; Jaydeep Barman, CEO, Rebel Foods; Abhiraj Singh Bhal, cofounder, Urban Company; Anindya Dutta, managing director, Stanza Living; Ashneer Grover, cofounder, BharatPe; Amit Jain, CEO, CarDekho; Sriharsha Majety, CEO, Swiggy; Asish Mohapatra, CEO, OfBusiness; Gaurav Munjal, CEO, Unacademy; Byju Raveendran, CEO, Byju’s; Souvik Sengupta, founder, Infra. Market; Kunal Shah, founder, Cred; Ravi Adusumalli, founder, Elevation Capital; Rajan Anandan, Partner, Sequoia India; Jishnu Bhattacharjee, managing director, Nexus Venture Partners; Neil Mehta, managing partner, Greenaoaks; Prasanth Prakash, founding partner, Acdel; Niren Shah, managing director, Norwest Venture Partners; Scott Shleifer, partner. Tiger Global Management; Bejul Somaia, partner, Lightspeed India; Navroz Udwadia, Falcon Edge Capital; and Vikram Vaidyanathan, managing director, Matrix Partners India.
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