Budget unlikely to allow overseas listing of start-ups

Venture capital and private equity funds have been demanding for a long time that start-ups be allowed to directly list overseas.
Image for representation
Image for representation

NEW DELHI: The Union Budget this year is unlikely to give start-ups the much-needed relief allowing them to list overseas. Government officials have said that the issue is unlikely to be resolved so easily and need wider discussion. Venture capital and private equity funds have been demanding for a long time that start-ups be allowed to directly list overseas.

Anurag Jain, Secretary, Department of Promotion of Industry and Internal Trade, recently said that the government is engaging with the start-up community and is trying to understand their need to list overseas. “Why should we allow our start-ups to go overseas for listing,” said Jain. He said that DPIIT is in talks with revenue and other departments to resolve the issue.

In a recent meeting of the Prime Minister with VCs and PE fund managers ahead of the budget, the issue was raised by investors and the government hinted that it may decide on the matter soon. Those discussions had raised the hope of the start-up community that the decision in this regard may be taken in the budget. However, going by the government official response, it is unlikely that that the budget would have anything on the overseas listing.

Experts say allowing overseas listing is one big bang reform that the start-ups are hoping for. They say that while the market regulator — Securities and Exchange Board of India (Sebi) — has done a lot to make it easier to list in India, listing abroad has the dual advantages of speed and liquidity.

“There is also greater maturity in terms of market expectations from loss making but highly scalable tech ventures, which some fear might be missing in Indian markets,” says Utkarsh Sinha of Bexley Advisors, an advisory firm that supports tech/media companies & investors in early funding rounds.

The government has been reluctant to allow domestic start-ups to directly list overseas as it is keen to keep the value creation on-shore. Experts also believe that listing in India would allow the government to have greater oversight and target the right policies for the sector.

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