GIFT City Exchange Set For First Foreign-Currency Listing

India’s NSE International Exchange is aiming to attract its first equity listing in a foreign currency this quarter, a milestone it says will demonstrate a new fundraising avenue for firms.

The NSE IX exchange, situated in the financial hub of Gujarat International Finance Tec-City, or GIFT City, is initially targeting unlisted companies for the debut, chief executive officer V. Balasubramaniam said in an interview. These may be Indian firms with foreign holdings or even Silicon Valley or Delaware-based entities, he said, without providing any names.

GIFT City is an initiative of Prime Minister Narendra Modi aimed at positioning India as a global financial hub to rival Dubai or Hong Kong. The zone offers exemptions from certain taxes and regulatory restrictions, making it a more attractive for international capital raising.

A number of Chinese companies have gone ahead with international listings in Hong Kong, and some of them have now become global multinationals, Balasubramaniam said. “It’s the same opportunity that GIFT City is offering to Indian corporates.” There are five to six companies preparing to list, he said.

The planned listing will help underscore the growing sophistication of India’s capital markets and offer companies an alternative to domestic exchanges. A foreign-currency listing in GIFT City may also benefit Indian firms looking to expand globally by reducing currency conversion and hedging costs.

The Securities and Exchange Board of India is working with the International Financial Services Centres Authority — GIFT City’s unified regulator — to address outstanding regulatory issues, Balasubramaniam said. Once resolved, this will enable already listed Indian companies to raise capital on the international exchanges, he said.

“An Indian company that is already listed can decide to do a follow-on public offering in GIFT City as a separate dollar float, or it could do an offer for sale,” he said.

Indian companies have previously accessed overseas markets primarily through instruments such as American depository receipts. Firms in the nation raised more than $20 billion via initial share sales last year.

The absence of securities transaction and capital gains taxes in GIFT City is another major incentive for foreign investors, Balasubramaniam said.