SUMMARY
The government has reportedly chosen not to mandate a secondary listing in India for domestic firms which choose to list in overseas bourses
Several Indian startups, as well as venture capital and investment firms, have long argued in favour of a provision that would allow Indian startups to directly list overseas
The new policy is expected to allow domestic firms to list their shares in seven foreign countries for initial purposes, including UK, Canada, Switzerland and the US
As we near the Diwali festive season, a long-awaited reform for the Indian startup ecosystem is on the horizon. This week, the government has reportedly chosen to not mandate a secondary listing in India for domestic firms which choose to list in overseas bourses.
Last month, the Companies (Amendment) Bill, 2020, which seeks to allow domestically listed companies to list certain class of shares in overseas markets, was passed in Parliament.
Now it seems that the Ministry of Corporate Affairs (MCA) and the Department of Economic Affairs have reportedly done away with the clause that required Indian startups and companies to list their shares in a domestic bourse as well, in case they chose to list overseas.
The government is expected to announce the new policy in the next two weeks, sources told Reuters. The new policy is expected to allow domestic firms to list their shares in seven foreign countries for initial purposes, including UK, Canada, Switzerland and the US.
With the coming of the new policy, startups would be able to directly list overseas without having to first list shares at home. It is expected that this would help startups attain higher valuations and access capital more easily.
Several Indian startups such as Flipkart, PhonePe and PolicyBazaar, among others, are planning to issue an Initial Public Offering (IPO) in the near future, with some of them also planning to list overseas.
Stakeholders in the Indian startup ecosystem including startup founders, investors and venture capital firms have long argued in favour of a provision that would allow Indian startups to directly list overseas, without having to mandatorily list their shares in an Indian stock exchange, in case they chose to go for an IPO. Now it seems that the pandemic year, an abysmal one in terms of revenues for Indian startups could end with a silver lining.
A recent Inc42 Plus report, “State Of Indian Startup Ecosystem 2020”, predicts two possible scenarios in relation to the funding for Indian startups this year. Worryingly, both scenarios predict a sizeable fall in funding amount for the Indian startup ecosystem this year.
In the first scenario, it is expected that if high-ticket investments in growth and late-stage startups will flow in the remainder of the year, with investors confident about putting their money in buoyant sectors such as edtech, fintech, ecommerce, online gaming and enterprise tech, then the total capital raised by India startups this year could reach $11.3 Bn, an 11% decline from last year’s total funding amount for Indian startups — $12.7 Bn. In the first half of 2020, the Indian startup ecosystem has raised $5.2 Bn in total funding.
In the second scenario, high-ticket investments may take a hit while investors’ confidence in beneficiary sectors, mentioned above, is expected to be moderate. In that case, the total funding amount for Indian startups in 2020 would be $8.1 Bn, a 36% fall from last year’s total.
Other News
- A report from app analytics firm Sensor Tower for the third quarter (Q3) of 2020 shows Times Internet-owned MX TakaTak — which launched on July 9 in the immediate aftermath of India’s ban on TikTok — own the 12th spot in the rankings for most downloaded apps, worldwide, through the Google Play Store. The report shows that MX TakaTak garnered around 50 Mn downloads in Q3 2020. The other two popular Indian apps in the segment, Josh and Moj, have also ranked at the 13th and 14th spots respectively, both registering more than 40 Mn downloads each.
- Bengaluru-based Indian edtech platform Unacademy, on Thursday (October 15), announced that it will undertake an ESOPs (employee stock ownership plan) buyback programme worth INR 25-30 Cr in December this year. All Unacademy employees who have been granted ESOPs and have completed more than one year with the company will be eligible to participate in the latest liquidity round. The buyback, scheduled for December 10, 2020, will also allow exited employees to participate and sell anywhere between 25% to a full 100% of their ESOPs to the company.
- More than 150 new brands joined the Indian Premier League (IPL) 2020 edition as advertisers this season. In the first 22 days of IPL 2020, the ecommerce sector accounted for 35% of ad volumes. There were more than 30 new categories advertised during this period. And five of the top 10 categories in terms of advertising volume were from the ecommerce sector. While Chinese phone-maker Oppo was the top advertiser, Dream11 was the most advertised brand on TV during IPL matches, followed by Vi Cellular Phone Service, digital payments company PhonePe, Oppo’s F17 Pro phone and BYJU’S Classes.
- The Internet Freedom Foundation (IFF), an Indian digital rights advocacy group, has raised concerns over the government’s move to call on tech companies to allow backdoor access to encrypted communication, asking if such a statement was issued with legal consultation.
- After submitting a report before the National Green Tribunal (NGT), the Central Pollution Control Board (CPCB) has issued show-cause notices to Flipkart and Patanjali Peya. Both companies have been asked to shut down operations and pay environmental compensation for non-compliance with provisions of Plastic Waste Management (Amendment) Rules 2018.
Among this week’s movers and shakers, Facebook India appointed the cofounder and former executive director of the Centre for Internet and Society Sunil Abraham as the director for data and emerging tech, public policy.
From the funding and acquisitions corner, nearly $251.5 Mn was invested across 22 Indian startups this week.
We will be back with next week’s edition of News Roundup.
