By eliminating the time compliance step, India is set to speed up the return of overseas-based Indian startups eager to join the country’s IPO boom, according to bankers, lawyers and investors.
Since last month, companies based overseas are no longer required to obtain approval from the National Company Law Tribunal for the so-called “reverse flip” merger with their domestic subsidiaries.
This has shortened the process time to about 3 to 4 months compared to the previous 12 to 18 months.
Several of the Indian startups that previously established their headquarters abroad (for better access to capital and lower tax bills) are now lining up to return home from key global financial centers.
“With the IPO market thriving, a reverse flip makes sense. Moreover, the streamlined merger process, designed to facilitate swift and efficient scheme approvals without court intervention, further supports this strategic move,” said Mehul Shah, a partner at corporate law firm Khaitan & Co.
Before the rule change, only a handful of companies such as Walmart-backed digital payments firm PhonePe and online investment platform Groww had engineered a reverse flip.
A nameless executive stated that Groww took “several years to finish the process”.
The return of startups preparing for IPO is understandable as India requires only domestic companies to be listed on its stock exchange, with limited dual listings, and these companies’ performance in overseas listings has been quite modest.
IPOs in India also provide startup investors with a higher potential for profitable opportunities.
What needs to be done now is to enhance investment knowledge to seize this great opportunity and many other promising prospects.
You need to make investment decisions and take responsibility for any possible outcomes. Therefore, you must become stronger, wiser, and more capable than anyone else.
