Gift City may see its first IPO soon, marking a new era for unlisted firms

Ed-tech firm among half dozen eyeing direct listing at financial hub

GIFT City in Gujarat could soon emerge as an independent platform for unlisted companies to raise equity capital via initial public offerings (IPO).

 

According to sources, primary market activity is showing signs of a surge with nearly half a dozen companies, including an edtech firm, initiating discussions for listings.

 

This comes almost a year after the regulator — International Financial Services Centre Authority (IFSCA) — issued its direct listing framework.

 

Sources said these companies have initiated discussions to raise capital of $10-15 million and one of them may file draft documents for an IPO as early as this month.

 

A source said that one company is eyeing a $100 million fundraise from global investors.

 

If approved, these could be the first listings in foreign currency in the fledgling financial centre, which will encourage more companies to explore the route.

 

“Around four-five companies are planning to file their draft papers for listings. The discussions are at an advanced stage and may reach finality within a few weeks,” said a person aware of the developments.

 

Another source said that one of the companies eyeing GIFT City listing is XED Institute, which was founded in 2015 and has global presence with offices in Singapore, UAE, and the US. 

 

 

The company caters to a niche segment of senior leadership by offering programmes in partnerships with global universities.

 

Emailed queries and messages to XED remained unanswered till the time of going to press.

 

Industry players said GIFT City could provide access to the global markets at better valuation from a more diverse investor group for certain Indian startups.

 

“We expect one filing very soon. We will follow the timelines once the filings are done. Once a good transaction is demonstrated, we are sure the number of companies planning to list here will rise. The infrastructure is ready for both unlisted Indian and global companies to list,” said a source at the NSE International Exchange.

 

With several tax benefits, GIFT City has gained momentum with mutual funds, alternative investment funds, and green bonds.

 

Further, the transition of GIFT Nifty contracts from the Singapore Exchange has also brought secondary market activity into the financial centre.

 

“A notification on relaxations for merchant bankers to set up in GIFT City is expected soon following which the primary market may gain momentum,” said another source.

 

According to the parameters set by IFSCA, companies must have revenue of $20 million in the last financial year or averaged over the last three years. Companies may also be eligible if their pre-tax profit is $1 million in the last financial year. A firm is also eligible if the post-issue market capitalisation is $25 million. 

 

Issuers are required to file offer documents with IFSCA for observations. However, those with issue size of $50 million or less are exempt and only require the exchange's nod.

 

The IFSCA norms also mandate material disclosures in the offer document.

 

Further, pre-issue shareholding of promoters and controlling shareholders of the issuer will be locked for 180 days from the date of allotment of the IPO.

 

Issuers also need to appoint a credit rating agency for monitoring the use of IPO proceeds.

 

The framework also allows listing of  depository receipts (DRs) and special purpose acquisition company (Spacs).

 

In July 2023, the finance minister had first announced the decision to allow direct listing of public Indian companies on the international exchanges in IFSC. Later in 2024, the required amendments to the regulations were notified providing the final framework. 

Breaking new ground

 

• Initial fundraises may be $10-15 million
• Fundraises below $50 million exempted from Ifsca observations
• Norms under direct listing scheme specify eligibility conditions for listings
• Firms may seek listing on international exchanges for better valuation, access to diversified investor pools