MUMBAI: Finance Minister Nirmala Sitharaman announced, on Friday, Indian companies can list their shares directly on foreign exchanges at the International Financial Services Centre (IFSC) in Gujarat International Financial Tech (GIFT) City.
The decision will enable Public and privately held Indian firms to access foreign funds and get better valuations.
“I had said in May 2020 that direct listing of securities by Indian public companies would be permissible in foreign jurisdictions,” she said at an event in Mumbai.
“Now, I am pleased to announce that the government has taken a decision to enable the direct listing of listed and unlisted companies on the IFSC exchanges. This will facilitate access to global capital and result in better valuation for Indian companies,” she added.
The provisions for direct overseas listing were approved by the government, as part of the Covid relief package announced in May 2020. Currently, overseas listings by domestically listed entities are done through American Depository Receipts (ADRs) and Global Depository Receipts (GDRs). Also, only listed companies are allowed to issue depository receipts which can be listed in foreign markets.
A senior government official present at the event said that the rules for direct overseas listing of Indian companies will be notified in a few weeks. Initially, domestic firms will be allowed to list on the IFSC, and later, they will be permitted in specified seven or eight foreign jurisdictions.
The Finance Minister inaugurated AMC Repo Clearing Ltd. (ARCL) and launched Corporate Debt Market Development Fund (CDMDF) for the development of the corporate bond market in India.
The Rs 30,000 crore fund will function as an entity on standby and will provide stability to the corporate bond market during times of financial stress through asset purchase mechanisms.
Its function will involve purchasing investment-grade corporate debt securities when debt markets face a crisis. The move is likely to bolster the confidence of mutual funds and investors in the corporate debt markets while also improving secondary market liquidity in corporate debt securities.
SBI Funds Management will serve as the investment manager of the CDMDF. With the aim to develop the corporate debt market in India, the government in the Budget 2021-22 announced developing a Backstop Facility for corporate debt securities.