India opens foreign exit route

The Indian Finance Ministry lifted a restriction on private companies listing on overseas exchanges.

Private equity-backed companies in India are soon to be free to list on the stock exchange of their choice, an exit route denied since 2005.

The Indian Finance Ministry removed the roadblock which previously only permitted companies to list overseas if they also listed on India’s stock exchange.

“Undoubtedly this decision has the potential to go a long way in providing a badly needed long-term financing option for private limited companies,” said in a statement Ibukun Adebayo, emerging markets co-head at the London Stock Exchange Group.

Adebayo said the benefits of an international listing for Indian companies are: improved valuations, greater capital availability, more liquidity and a higher profile.

However, GPs with Indian portfolio companies must still await final clarity until official policy is released. The Sahoo Committee, responsible for the rules minutiae, submitted a report to the Finance Ministry but it is yet to be made public and further measures, if any, are yet to be announced.

Additionally, political and economic uncertainty continues as India heads towards general elections in May. “It is unlikely that we will know whether 2014 will be the year for Indian overseas issues until the second half of the year is upon us,” said Adebayo.