Plans to allow local firms to list overseas put on hold by Govt: Report

In a bid to bolster its own capital markets, India has frozen plans to allow local firms to list overseas, government officials and industry sources said. This comes as a blow to foreign funds and stock exchanges seeking to tap into the country's tech boom.

The government’s decision marks a sudden policy reversal after officials said late last year that the new rules for overseas listings would be announced in February. The plan, according to three senior government officials, 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.

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.

However, just like other global markets, Indian stocks have been rattled by Russia's invasion of Ukraine, and the volatility has delayed IPO plans.

In the past, 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.

The change in view comes, according to the officials, after the stock market debut of food-delivery giant Zomato, which clocked a high valuation.

When Zomato went public on Mumbai's exchange in July, its offer was 38 times oversubscribed and its stock jumped 66%. And Indian cosmetics-to-fashion platform Nykaa surged 96% on its debut, achieving a valuation of nearly $14 billion.

Both have given up much of those gains in recent months.