GOING GLOBAL - ARE INDIAN COMPANIES GETTING LISTED ABROAD?
By Ruma Dubey
If you have ever visited the New York Stock Exchange (NYSE), it is quite a feeling to see some Indian company’s quotes showing up on the screen. And the small, handful of companies listed on the NYSE are some of the best that we have in India - Dr. Reddy’s Labs, HDFC Bank, ICICI Bank, Tata Communication, Wipro, Tata Motors, WSN Holdings and Sesa Sterlite.
And then there are a handful of companies listing on the NASDAQ or National Association of Securities Dealers Automated Quotations, the second largest stock exchange in the world, after NYSE.
In 2013, the Govt of India allowed unlisted Indian companies to list on overseas markets without having to be publicly traded on domestic exchanges. The rule was that the money raised abroad could be used for retiring foreign debt or for overseas operations including acquisitions. But if the funds raised are not used abroad, they will have to be remitted to India within 15 days and parked in banks.
Well, some companies made a run of it and got themselves listed on the NASDAQ – MakeMyTrip, Rediff.com India, Sify Technologies and Videocon d2h.
Actually the news here is not about Indian companies listing abroad but about how foreign stock exchanges are literally wooing companies to list on their bourses. And we are not talking about NYSE and NASDAQ alone, London Stock Exchange, Tokyo Stock Exchange, Bermuda Stock Exchange, Singapore Exchange, Luxembourg Stock Exchange and the SIX Swiss Exchange have been meeting Indian firms, trying to convince them of the benefits of listing abroad.
In fact a three member team from the Swiss Exchange visited Bengaluru last year, trying to woo companies in the auto, auto ancillary, pharma, biotech and medtech sectors . The Tokyo Stock Exchange has also been trying to do the same, trying its best to make it attractive for Indian companies to raise capital in Japan. Some three Indian companies had shown interest but ICICI Bank is the only Indian entity to have raised $25 million in the pro-bond market section of the TSE.
A whole load of Indian companies are listed on the Luxembourg Stock Exchange – the maximum listed abroad, totally over 100. Singapore Stock Exchange has a handful like Karuturi Gobal, Confidence Petroleum, Websol Energy and Visesh Infotecnics. London Stock Exchange comes second highest in terms of Indian companies getting listed.
And now that global bourses are wooing all over again, urging Indian companies to get listed - not because they see Indian companies are growth harbingers but because they themselves are stuck in a quagmire and they see foreign companies getting listed as a source of growth. Their own trading revenues are down as more and more transactions are moving away from exchanges. The $25 billion IPO from Alibaba and then Ferrari are pointers to this very same war of the exchanges.
As per Bloomberg, more than 150 foreign companies debuted on exchanges in New York, London, Hong Kong and Frankfurt last year, raising about $67 billion. And exchanges with the biggest share of foreign IPOs - NYSE, Nasdaq, London Stock Exchange and Hong Kong Stock Exchange, earn about 10 to 20% of their income from listing fees.
Indian companies would also do well listing abroad as it will get them the obvious – money first but more importantly, make them global in the real sense. They need to comply with international norms and that automatically gives them a higher rating when it comes to disclosures. Plus, these are mature markets in the developed countries and that will most certainly add more depth.
Wonder when the BSE will start wooing companies abroad to get listed on its exchange….