GIFT City listing may cut out domestic investors, says Sanjeev Bikhchandani

Sanjeev Bikhchandani, Founder, Info Edge India Ltd

As the government opens the door for companies to list on the GIFT City's international exchanges, Info Edge founder Sanjeev Bikchandani has said it may be preferable for startups to look at Indian bourses as domestic investors are more receptive to home firms and the process less complex.

On January 24, the government issued a notification allowing domestic public companies to list directly on global exchanges at the International Financial Services Centre (IFSC) in Gujarat's GIFT City.

The move will enable Indian startups and other unlisted companies to access both domestic and international markets for raising capital in rupees and foreign currency.

“To the best of my knowledge allowing Indian companies to list in GIFT City enables them to access overseas investors who may not want to invest in Indian markets. This, however, may cut out Indian investors from that company. In general, Indian stock exchanges and Indian investors have been more receptive to Indian companies than overseas stock exchanges,” Bikchandani said.

The Info Edge founder drew parallels with a similar move in the past when startups were given the go-ahead to list in the United States. The clamour soon subsided as the firms found more value in domestic public listing, which delivered better returns and was less complex.

“The requirement for US listing is much higher than India. It became clear that even if you allow overseas listing, India startups may prefer listing in India because that's where the investors are for their companies,” Bikhchandani said during an analysts call to discuss Info Edge’s third quarter results.

The government is promoting the GIFT City as a "gateway for global capital and financial services for the economy" and is trying to attract companies through tax-breaks and other incentives.

Over 80 fund managers with commitments of $30 billion and investments of over $2.93 billion have set up in the GIFT City in the past three years, data from the IFSCA, which regulates financial services in GIFT City, shows.