Home ›› 25 Mar 2022 ›› Stock
India has frozen plans to allow local firms to list overseas as it seeks to bolster its own capital markets, government officials and industry sources said, in a blow to foreign funds and stock exchanges seeking to tap into the country’s tech boom.
New Delhi’s decision marks a sudden reversal in policy after officials said late last year that the new rules for overseas listings would be announced in February.
Three senior government officials with direct knowledge of the decision told Reuters the plan had been put on hold as India believes there is enough depth in local capital markets for firms to raise funds and get good valuations. They declined to be named as the move has not been made public.
India’s finance ministry did not respond to a request for comment. Indian equity markets have boomed as enthusiastic retail investors and a pandemic-induced flood of easy money pushed prices to record highs, encouraging a slew of Indian tech founders to go local with their initial public offerings (IPOs).
More than 60 companies made their market debut in India in 2021 and raised a total of more than $13.7 billion, which was more than the previous three years combined. Like other global markets, Indian stocks have been rattled by Russia’s invasion of Ukraine, and the volatility has delayed IPO plans.
But the outlook for such listings dimmed after digital payments app Paytm (PAYT.NS), backed by China’s Alibaba (9988.HK) and Ant and Japan’s Softbank (9984.T), plunged on its debut in November, raising questions about valuations. Its shares have slumped 75 per cent from its issue price.
Even before Paytm’s rout, U.S. venture capitalists such as Tiger Global and Sequoia Capital had lobbied Prime Minister Narendra Modi to allow Indian firms to list abroad to achieve better valuations, Reuters has reported.
