Some of India's best known startup founders and investors have written to the Prime Minister's Office (PMO) urging the Centre to allow startups to list overseas -- a move planned for years but on which action seems to have stalled 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, said that enabling 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". A copy of the letter was seen by Moneycontrol.
US capital markets are far bigger than India, making it an attractive place for Indian startups to list, given increased investor interest and more sophisticated investors. Investors in other developed markets are also more used to seeing high-growth sometimes loss-making companies and those companies may be valued better in foreign stock markets.
Software as a service (SaaS), InsurTech, business to business logistics, genomics and biotech companies could gain from listing abroad, they suggested 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 first step towards allow direct overseas listing when it amended the Companies Act, 2013. In February, companies listed abroad were given more compliance freedom than Indian companies. However, further action is awaited, letter noted.
Currently, Indian companies can list abroad by issuing American Depository Receipts (ADR) or Global Depository Receipts (GDR), a proxy to shares, which represent the company's stock, but are less liquid and may not fetch the same sort of excitement and valuation that actual shares do.
The letter also addressed concerns of capital and wealth creation shifting abroad, saying that Indian companies listing abroad will in fact elevate their profile and attract more foreign investments in India. Further, companies can be listed both in India and abroad. In the last few years, many startups including Ola, Oyo and Byju's, among others, have had substantial overseas business, and a listing there could spur employment and wealth creation for their employees too.
These are the people who signed the letter: Amrit Acharya, CEO, Zetwerk; Jaydeep Barman, CEO, Rebel Foods; Abhiraj Singh Bhal, cofounder, Urban Company; Anindya Dutta, managing director, Stanza Living; Ashneer Grover, co-founder, 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, partner, Falcon Edge Capital; and Vikram Vaidyanathan, managing director, Matrix Partners India.
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