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

Fri, 9th Oct 2020 13:06

* India framing rules to allow companies to list directly
abroad

* London Stock Exchange says closely tracking developments

* LSE in talks with several tech companies-exec

* Indian govt considering mandatory secondary listing-source

By Aditya Kalra and Aftab Ahmed

NEW DELHI, Oct 9 (Reuters) - London Stock Exchange
is in talks with several Indian technology firms for their
overseas stock listings, a senior executive for the British
exchange told Reuters, as New Delhi moves closer to allowing
companies to directly access foreign markets.

India is drawing up rules to allow companies to float
overseas without having to first list shares in India as a way
to help startups reach higher valuations and access capital more
easily.

With companies such as Reliance's digital unit - which
recently raised over $20 billion from investors - considering
listing abroad, the relaxed rules present an opportunity for
some of the world's leading stocks exchanges to vie for India's
rapidly growing tech and startup companies.

India has the world's third-largest startup ecosystem, which
is expected to grow by 12-15% annually, the government says. In
2018, India had about 50,000 startups, of which around 9,000
were technology-focused, and many have attracted the likes of
global investors SoftBank and Sequoia Capital.

London Stock Exchange (LSE) is "enthusiastic and optimistic"
about the prospect and has held talks with Indian companies in
recent months, particularly in the tech sector, said Gokul Mani,
its head of primary 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 name any specific companies, but LSE said
technology is the fourth-largest sector on the exchange,
representing around 11% of the total market capitalisation of
London-listed companies.

India's capital markets regulator SEBI had marked out 10
possible foreign markets for overseas listings, including the
United States and Britain, back in 2018, but it took until this
year for regulation to move forward.

However concerns have risen that Indian companies listing
overseas will be subsequently forced to float shares in India,
Reuters reported last month.

Such a plan, investors say, risks splitting trading volumes
between two venues, and could hurt long-term valuations.

A senior Indian official involved in policymaking said "we
are leaning towards a (mandatory) dual listing with a liberal
timeline", adding that a final decision had not 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 could be allowed in
seven countries, including the United States, United Kingdom,
Canada and Japan.

India's finance ministry and SEBI did not respond to a
request for comment.

Despite the increased burden of compliance for companies
with two sets of regulatory standards, LSE still sees a major
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 around a quarter of the 2,000 companies on the
exchange are dual-listed or traded on other exchanges.
(Reporting by Aditya Kalra and Aftab Ahmed in New Delhi,
editing by Louise Heavens)

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