SEBI approves trading platform for start-ups

By Aman Shah and Rafael Nam

MUMBAI (Reuters) - The capital market regulator plans to set up an alternative trading platform for internet startups, relaxing some of its requirements in an effort to encourage these companies to list at home instead of overseas.

The Securities and Exchange Board of India (SEBI) said the Institutional Trading Platform will be open to a broad range of technology companies, according to a statement released after its quarterly board meeting.

The relaxed requirements include reducing the lock-in period for investors in startups to six months compared with three years for some initial public offerings (IPOs) and diluting disclosure standards for companies, SEBI said.

The rules, which were widely expected, are aimed at luring startups that may have considered an overseas listing, given India has stringent requirements for regular IPOs.

The platform is also set to give investors in startups an easier exit. About 3,100 startups in India have raised $7.2 billion in venture capital and private equity funding since 2013 -- most of it going to technology companies, according to Thomson Reuters data.

"We hope that through this mechanism a large number of startups will be able to list within the country," SEBI Chairman U.K. Sinha told a news conference.

"I hope that this market will become reasonably vibrant."

Startups can apply for a full listing on India's main exchanges after three years on the platform, which will not be open to retail investors.

India has a burgeoning tech startup scene that has attracted big global investors. For example Japan's Softbank Corp has bought stakes in online retailer Snapdeal and taxi firm Ola Cabs.

Startup executives welcomed the SEBI measures,

"We should not expect things to happen suddenly. But this is definitely exciting," said Manish Dugar, chief financial officer of InMobi, a mobile advertising platform.

SEBI also adopted other measures targeted at regular IPOs, including reducing the time period for listings and allowing easier access for retail investors.

SEBI also plans to adopt new standards for major stakeholders, including a requirement they would not be able to own more than 10 percent of the firm after exiting from most of their investments.

For full SEBI statement see: http://bit.ly/1QNIITD

(Addditional reporting by Swati Bhat and Nivedita Bhattacharjee; Editing by)