London Stock Exchange in talks with Indian tech firms to list overseas

UK Parliament

The London Stock Exchange is in discussions with several Indian technology companies for their overseas stock listings, a senior executive for the British exchange told journalists, as New Delhi moves closer to allowing companies to directly access foreign markets.

India is drawing up rules to allow companies to float abroad without needing to first list shares in India as a means to help start-ups attain higher valuations and access funds more readily.

With companies such as Reliance’s digital unit – that recently raised over $20 billion from investors – considering record overseas, the relaxed rules present a chance for a number of the world’s top stocks exchanges to vie India’s rapidly growing tech and start-up businesses.

India has the world’s third-largest start-up ecosystem, which is expected to rise by 12-15% annually, the government says. In 2018, India had about 50,000 start-ups, of which around 9,000 were technology-focused, and many have drawn the likes of international investors SoftBank and Sequoia Capital.

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London Stock Exchange (LSE) is “enthusiastic and optimistic” about the prospect, and it has held talks with Indian companies in recent months, particularly in the tech industry, said Gokul Mani, its head of chief markets for India, Middle East and Africa.

“It’s several (Indian) companies in the technology sector that we’re talking to. We have a very strong technology sector representation on LSE,” Mani said.

Mani declined to mention any particular businesses, however LSE said technologies is the fourth-largest sector on the market, representing roughly 11 percent of their entire market capitalisation of London-listed companies.

India’s capital markets regulator SEBI had pronounced out 10 potential foreign markets for overseas listings, including the US and UK, back in 2018, but it took until this year for regulation to proceed forward.

Yet concerns have risen that Indian companies listing overseas will be then made to float stocks in India, we reported last month.

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This type of plan, investors say, risks dividing trading volumes between two venues, and could hurt long-term valuations.

A senior Indian officer engaged with policymaking said “we are leaning towards a (mandatory) dual listing with a liberal timeline”, adding that a last decision hadn’t been reached.

“We are thinking market liquidity will be lost if we do not have companies listing in India after they listing overseas,” said the official, adding that such listings may be permitted in seven countries, including the United States, the UK, Canada and Japan.

India’s finance ministry also SEBI did not respond to a request for comment.

Regardless of the increased burden of compliance for companies with two sets of regulatory criteria, LSE still sees a significant business opportunity, Mani said.

“From an exchange perspective, we are actually constructive about dual listings. It’s a huge part of our business,” Mani said.

LSE said about a quarter of the 2,000 businesses on the market are dual-listed or traded on other exchanges.

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The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Jonathan Landay. Editing by Steve Orlofsky.

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