India mulls direct listing of local companies on London Stock Exchange

The United Kingdom on Monday said that India is looking at direct listing of companies on the London Stock Exchange. Simultaneously, both countries announced the setting up of India Infrastructure Financing Bridge.

Theannouncements were made after the 12^th India UK India-UK Economic Financial Dialogue held in New Delhi. Finance Minister Nirmala Sitharman led the Indian side while the UK side was led by Chancellor of the Exchequer Jeremy Hunt.

“We are particularly pleased to make a big step forward to make a first confirmation by India that it will explore the London Stock Exchange as international destination for the direct listing of Indian companies,” Hunt said. In July, Sithraman had announced direct listing on GIFT (Gujarat International Finance Tec-city) which will help companies access global market for fund.

She had said that the government had taken a decision to enable direct listing of listed/unlisted companies on IFSC exchanges, which will be operationalised shortly enabling start-ups and companies of like nature to access global market through GIFT IFSC. This will also facilitate access to global capital and result in better valuation for Indian companies, she added.

At present, Indian companies can access the overseas equity markets only through depository receipts or by listing their debt securities in foreign markets. In 2020, the Centre amended the Companies Act, allowing the direct listing of Indian companies on foreign stock exchanges, but a framework has not been put in place so far.

Meanwhile, the joint statement hoped that recent announcement to enable Indian companies to list their equity shares on the international exchanges in GIFT IFSC, which will facilitate access for the entities based on UK to invest in Indian companies. In addition, a new UK-India Pensions and Insurance Partnership will support the growth of the sector in both countries. The partnership will focus on knowledge sharing, growing bilateral investment and diversifying risk, including through pension fund trade missions to encourage increased bilateral investment, the statement added.

Meanwhile, on Monday, Sitharaman said the UK expressed willingness to further extend its footprint in the GIFT city.  “I am pleased with the tangible progress achieved through the India-UK financial partnership which has evolved into a public and private sector collaborative forum for dialogue across the financial sector,” she said.

“We have also launched the UK India Infrastructure Financing Bridge. It is a collaborative venture by NITI Aayog and City of London Corporation aimed at harnessing collective expertise in planning and implementing major infrastructure projects,” Sitharaman said.

Ample opportunities

She said with emerging technologies such as Artificial Intelligence and Machine Learning redefining financial services and India’s new Digital Personal Data Protection Act, there are ample opportunities for both nations to collaborate on frameworks for secure and inclusive financial intermediation.

“The success of the India-UK Green Growth Equity Fund is a testament to the efficacy of public-private partnerships in channelling large-scale sustainable finance,” she said.