In a move that is expected to allow India Inc to mop up resources from a larger pool, the government is considering allowing unlisted Indian companies to raise funds through maiden public issues on foreign bourses. The move may, however, reduce investment opportunities for domestic investors. Under existing guidelines, Indian companies have to first list on domestic bourses before either being able to list overseas, or simultaneously.
The finance ministry had in June 2007 set up a high-level committee under Saumitra Chaudhari, member economic advisory council of the prime minister and chief economist, ICRA. The committee is expected to submit its final report next month.
According to sources, the committee has received presentations in favour as well as against the proposed move from captains of Indian industry. However, it is learnt that the committee may allow maiden listings in overseas markets to allow Indian companies access to global markets. The government had earlier allowed the Indian firms to list on overseas bourses provided they were in losses. These companies were also supposed to list in domestic bourses within three years.
The window was subsequently withdrawn on the ground that Indian investors should participate in the growth of domestic companies. Secondly, since there was hardly any trading of Indian stocks, particularly in the European markets, the government felt the route was often misused to circumvent the lock-in clause.
The committee is also planning to let all companies, whether they are in loss or making profit, to get their maiden listings on overseas bourses, provided they list on domestic stock exchanges within a certain timeframe.
A senior banker said that the move would help transfer a greater degree of ownership of Indian equities to foreign investors, while allowing Indian companies to mop up resources from the global market.