Foreign exchanges tempt Indian companies to list

Officials from LSE and SIX have been in India, talking to potential issuers to list securities on their platforms

Global exchanges are looking to egg Indian companies to explore the possibility of listing abroad, on the back of a regulatory shift towards easier norms for fund-raising abroad.

Officials from two global exchanges have been in India in the past two months in the matter. London Stock Exchange and SIX Swiss Exchange have been here, talking to companies.

Last month, officials from Zurich-base SIX Swiss held meetings with potential Indian issuers to list their securities on its platform. “We are eagerly looking at the development (to allow Indian companies abroad sans a domestic Initial Public Offer). We understand the companies will have to list their depository securities (DR) in the overseas market and not the common stock. On Six, DRs can also be part of the indices, which ensures after-market liquidity,” said Marco Estermann, executive director.

He said they were awaiting the fine print on listing abroad. SIX is the third-largest bourse in Europe. Switzerland has a rich pool of investable capital, due to its large pension and the private banking sector.

Alastair Walmsley, head of equity primary markets at the London Stock Exchange Group, was in Mumbai earlier in the week, talking to companies. “At any given time, we would normally expect to have active dialogue with 10-20 companies in India…I think the Sahoo committee recommendations will help in clarifying the regime and tangible demonstrations of India’s commitment to liberalisation and to enabling its businesses to compete on a level playing field…There are companies that have said we are keen to raise capital internationally. We believe the listing regime is moving in the right direction,” he said.

The Sahoo committee recommended an easier regime for DRs. It is said to have asked for extending the ambit of such receipts to beyond common shares, including debentures and shares of private companies. The government has also allowed unlisted companies to raise money directly from foreign exchanges, through listing of securities even if they haven’t first listed in India. The government modified the foreign direct investment policy to reflect this change in stance on December 6.

There were two foreign equity issuances in 2013, which raised a total of $40 million or Rs 219 crore, according to information from Prime Database. Another Rs 32,542 crore was raised domestically through equity issues in 2013. This included initial public offers, follow-on public offers and offers for sale.

Overseas Equity Fund Raising
Year	Amount Raised($ Millon)
2004	272.7
2005	3,181.03
2006	2,035.93
2007	7,552.09
2008	489.76
2009	3,720.33
2010	1,174.03
2011	553.5
2012	161.88
2013	40.00
SOURCE: PRIME DATABASE