GIFT City to soon see first set of direct listings as companies finalise IPO papers

For companies to be listed on exchanges at GIFT City it should have a revenue of Rs 20 million in the last financial year or on an average over the last three years as well. Further, it should have a pre-tax profit of $1 million in the last financial year or average over the last three years.

A bunch of companies are in the final stages to file their initial draft prospectus for public issues with the GIFT City regulator in a couple of months, said people aware of the development. If approved, the companies will be the first ones to list on the GIFT City exchanges, NSE IX and India INX.

The International Financial Services Authority (IFSCA), which is the regulatory body for GIFT IFSC, had notified the final regulations for direct listing last year in August. However, there were certain challenges, which led to the delay in actual listing of the companies.

Around 3-4 companies are actively engaged in the process of finalising their IPO documents, said a person familiar with the matter.

As and when the companies list, it would be the first instance of actual fund raising through an initial public offer (IPO) at GIFT City since currently the activity at the special financial region is limited to derivatives trading.

Currently, the regulations allow only Indian unlisted companies that want to raise capital from foreign investors to list on the GIFT exchanges. This move, reduces the number of the pool of companies that could want to list on NSE IX or either India IX, said a person on the condition of anonymity.

"The Indian unlisted companies should have an interest in foreign currency fund raising so it can hedge certain risks. Also, if the company has entire business in India why will it want to deal in foreign currency unless it has operations outside," the person added.

Another challenge is that there are limited investment bankers who are interested to take over the IPO operations for companies to list in GIFT City exchanges.

For companies to be listed on exchanges at GIFT City it should have a revenue of Rs 20 million in the last financial year or on an average over the last three years as well. Further, it should have a pre-tax profit of $1 million in the last financial year or average over the last three years.

Currently, NSE IX, a subsidiary of the National Stock Exchange (NSE) offers derivative contracts, which replicates the Nifty 50 index, called as GIFT Nifty. GIFT Nifty has the highest volumes among all contracts on NSE IX with a total cumulative volume of around $1.4 trillion, as per a presentation shared by the NSE IX official at an event in Gujarat.

India INX, subsidiary of BSE recently launched its Sensex index derivatives contracts, which will replicate the BSE Sensex index.

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