The International Financial Services Centres Authority has released a consultation paper to allow companies to list shares at GIFT City without a public offer. This move seeks to boost liquidity and global visibility for established firms by simplifying the listing process. Investors should watch for the final notification and the specific disclosure standards mandated for these issuers.
The International Financial Services Centres Authority (IFSCA) has introduced a new framework that could change how companies access capital markets within the Gujarat International Finance Tec-City (GIFT) City. The proposed rules aim to simplify the entry for companies by removing the requirement for a traditional public offer, which is usually a lengthy and expensive process.
Financial Thresholds for Eligibility
Under the proposed rules, companies that are not already listed in India or on foreign exchanges must meet specific financial criteria to qualify for this direct listing route. To ensure that only stable businesses participate, the regulator has set three potential benchmarks. A company must show at least $20 million in operating revenue, or $1 million in pre-tax profit. Alternatively, the company must have a post-listing market capitalization of at least $50 million. These requirements are intended to act as a filter, focusing on established companies that may already have institutional backing but seek the advantages of being a listed entity.
Strategic Benefits for Companies
While traditional listings are primarily used to raise new capital, the direct listing route at GIFT City focuses on other strategic benefits. For many established firms, the goal of listing is not necessarily to raise cash but to provide a clear mechanism for price discovery for their current shareholders. By listing on an exchange, these companies can improve their governance standards and gain corporate visibility. This framework also allows for a smoother exit or partial stake sale for early-stage investors without the volatility often associated with a full-scale Initial Public Offering (IPO).
Regulatory Requirements and Reporting
Even without a public offer, the process will remain strictly regulated. Companies will be required to submit an information document that is vetted by a registered investment banker. This document must include a detailed look at the company’s financial history, risks, and litigation status. The regulator has mandated that financial statements for at least three years be provided, and they must align with global standards like IFRS or US GAAP.
For Indian companies that choose this route, the standard rules for minimum public shareholding will still apply. Foreign companies will need to ensure at least 10% of their shares are held by the public after the listing. To manage the initial trading phase, the regulator proposes using a special pre-open session to help set the stock price, and the potential use of market makers to ensure there is enough trading activity to support buy and sell orders. The approval process is designed to be efficient, with a goal for exchanges to provide in-principle clearance within 15 days of filing.