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NSE to start-ups: Go public for liquidity, provide exit options to venture capital funds

The exchange believes that many start-ups will go public in the next 12-24 months, as it seeks to bridge the gap between the capital markets and the start-ups ecosystem.

business Updated: Feb 26, 2018 17:39 IST
Press Trust of India, New Delhi
NSE,Vikram Limaye,National Stock Exchange
The National Stock Exchange of India Ltd. (NSE) building in BKC, Mumbai. (Aniruddha Chowdhury/Mint Photo)

Urging startups to go public once they have reached a certain scale, the National Stock Exchange on Monday said the listing will provide them liquidity, and also give exit options to private equity as well as venture capital funds which have invested in them.

“Start-ups which have reached a certain size should think of listing soon as public listing gives access to a wider and deeper capital market for fund raising, with large investments by mutual funds and FPIs,” NSE MD and CEO, Vikram Limaye told PTI over the phone ahead of the exchange’s tech conclave to be held in New Delhi.

“Besides, start-ups need to keep in mind that a public listing is one big source of exits,” he added.

He further said that liquidity and exit events are among the biggest challenges for start-ups. Traditionally in India, exits have mostly happened through acquisitions by private equity firms or larger corporations.

The exchange believes that many start-ups will go public in the next 12-24 months, as it seeks to bridge the gap between the capital markets and the start-ups ecosystem.

NSE, which provides Emerge ITP platform for listing of the new age companies in technology, data analytics, biotechnology or nanotechnology, said that such companies will drive the economy growth in the coming years

Limaye said India has fully electronic stock exchanges with high liquidity and good settlement systems. Investing in stocks also offers a tax advantage. If an investor buys listed stock and holds it for over a year, the entire profit on sale is tax free.

“For founders and employees who have employee stock ownership plan (ESOPs) and have converted those to shares, listing gives them liquidity, gives them tax-free gains and liquid stock on which they can borrow. For existing investors, their return increases on listing as the gains on sale after holding listed stocks for a year will be tax free.

“Listing also ensures that onerous conditions and differential rights in shareholders’ agreement are eliminated and all shareholders have equal rights,” he noted.

Besides, NSE’s Head pf Listing, Ishita Vora, said that the markets regulator is also willing to make conducive environment in order to encourage startup listing.

National Stock Exchange (NSE) will hold a meet a meet in New Delhi on Tuesday to talk to such entities as to whether they could access the markets.

First Published: Feb 26, 2018 17:36 IST