Gujarat's Gift City (Gujarat International Finance Tec-City) is fast becoming a potential platform for unlisted companies to raise equity capital through initial public offerings (IPOs).
Following regulatory changes introduced by the International Financial Services Centre Authority (IFSCA), Gift City could soon become a significant player in the IPO space.
The excitement around Gift City's IPO potential has been building up since the IFSCA introduced its direct listing framework almost a year ago. Now, discussions for several companies to list in Gift City are gaining momentum.
Reports suggest that nearly half a dozen companies, including an edtech firm, are in talks to raise anywhere from $10 million to $15 million. In fact, one company may file draft documents for an IPO as soon as this month.
Among the companies showing interest, one is reportedly looking to raise $100 million through global investors. If this deal goes ahead, it could mark the first foreign currency IPO in Gift City, an exciting prospect that may encourage more companies to explore this route.
The companies planning to file draft documents for listings are at an advanced stage of discussions, with sources indicating they may finalise their plans within the next few weeks. The infrastructure at Gift City is ready for these listings, and there are hopes that more companies, both from India and abroad, will follow suit once the first few transactions are successfully completed.
One of the companies reportedly eyeing a Gift City listing is XED Institute. Founded in 2015, XED has a global presence with offices in Singapore, the UAE, and the US.
The company offers leadership programs in partnership with global universities, catering to a niche segment. However, the company did not respond to queries at the time of publication.
For many Indian startups, Gift City could offer a way to access global markets and potentially achieve better valuations. According to industry sources, Gift City provides access to a diverse pool of investors, making it an attractive option for companies looking to scale up.
"The infrastructure is ready for both unlisted Indian and global companies to list here. Once the first successful transaction is completed, we expect more companies to follow," said a source at the NSE International Exchange.
Gift City has been gaining momentum, especially in areas like mutual funds, alternative investment funds, and green bonds. The financial centre’s appeal is further bolstered by tax benefits and other incentives that have drawn the attention of companies. The recent transition of Gift Nifty contracts from the Singapore Exchange has also brought more secondary market activity into the city.
With more regulatory changes on the horizon, sources indicate that merchant bankers may soon be granted relaxations, allowing them to set up operations in Gift City. This is expected to further fuel activity in the primary market.
The IFSCA has set clear parameters for companies wishing to list in Gift City. For example, companies need to have a revenue of at least $20 million for the last financial year or an average of $20 million over the past three years. Companies may also qualify with a pre-tax profit of $1 million in the last financial year or if their post-issue market capitalisation exceeds $25 million.
While companies looking to raise less than $50 million will only need approval from the exchange, those with larger issues must file offer documents with the IFSCA for observations. There are also other requirements, such as mandatory disclosures and the locking of promoters' shares for 180 days post-issue.
