London prepares for India’s highly anticipated Overseas Listing Policy

The landscape of IPO opportunities for ambitious, growth-hungry Indian companies is set to change dramatically once India’s forthcoming Direct Overseas Listing Policy is introduced.

This new policy will allow Indian incorporated companies to list on select overseas stock exchanges by issuing their common equity shares to overseas investors (instead of Depositary Receipts). The Overseas Listing Policy will also allow foreign companies the ability to list on Indian exchanges.

This policy will lead to significant new options available to Indian companies. They will be able to have a primary listing on an overseas exchange of their choice without having to undergo the cumbersome and tax unfavourable process of changing their incorporation to an overseas jurisdiction.

In addition, it is likely that they will no longer need to have a prior domestic listing to access international equity capital, as is the requirement for the issuance of Depositary Receipts.


London: the world’s most international exchange

As the world’s most international stock exchange with nearly 40% of its listed companies being from outside the UK, London stands tall and ready to welcome this new generation of Indian issuers.

In 2020, 25% of the world’s cross-border IPO capital was raised in London, including 15 IPOs and a further 11 introductions and new listings from international companies. Three of London’s five largest IPOs were international. The appetite for international companies to tap into London’s depth of investor base has remained strong in 2021, with companies listing from North America, Europe, Africa and Asia-Pacific.

London Stock Exchange has a strong historic legacy of supporting Indian companies through its equity and debt markets. Since the mid 1990’s, 71 Indian companies have tapped London’s equity markets and raised £8.5bn ($14.5 bn). We have seen 19 issuers have raised over £13bn on our debt markets by issuing 41 Eurobonds & masala bonds. Moreover, the bulk of world trading in the Global Depositary Receipts (GDRs) of India’s largest and best-known companies takes place on London Stock Exchange’s International Order Book (IOB), the world’s most liquid electronic trading platform for GDRs. The total turnover of Indian GDRs in 2020 on the IOB was $3.76bn, 73% above 2019 numbers. Reliance Industries is one of the most heavily traded GDRs on IOB with more than $11m being traded daily.


Breadth of market structures to suit different needs

The breadth and flexibility of London’s market structures provide strong opportunities for Indian companies to flourish. It’s a market that comfortably accommodates private equity and VC exits, regularly seeing secondary proceeds of more than 40% during an IPO. It’s a market that is open to companies of all sizes, growth stages and sectors - from traditional businesses such as banking, financial services, energy and resources to newer, high-growth sectors including technology and consumer internet, renewable energy and life sciences. 

With Tech becoming London’s fastest growing sector for IPO’s (29 tech IPO’s in 2021 and 49% of IPO funds raised), India’s flourishing high growth tech unicorns will find receptive & knowledgeable investors in London who are prepared to accord the right valuation. Prominent non-UK tech companies listed in London include Network International (UAE), Trustpilot (Denmark), Kaspi (Kazakhstan), Avast (Czech Republic) and Tiny Build and Boku (USA).

Those aspiring to adopt the world’s highest corporate governance standards and benefit from inclusion in premium equity indices such as the FTSE 100 & 250 series can choose to have a Premium Listing. A Premium Listing in London means that a company is viewed as a very high-quality investment. Recent examples are the Danish global review platform Trustpilot, the fashion brand Dr. Martens and the cyber security company Darktrace.

Some Indian founders may wish to tap into London’s global investor base but also to maintain control while scaling. In this case, a Standard Listing provides this degree of certainty through dual class shares while also holding the attractive future option of moving onto the Premium segment, where it will have the ability to qualify for the FTSE indexes and access further pools of capital.

Smaller, growth-hungry firms can look to AIM, which has become the world’s most successful growth market and currently attracts businesses from 75 countries. Over its 25 years, AIM companies have raised £121bn; 38% at admission and 62% through further fundraising, highlighting the long-term nature of support provided by investors to companies on the market. Today, 179 of its 837 companies are incorporated overseas – with primary operations taking place in 78 countries, including India. On AIM you can IPO at a significantly smaller size compared to the US markets. In recent years, the average market capitalization of an AIM company at IPO has been $120m, compared to nearly $1bn on Nasdaq[1].

For more than 150 years, investors have looked to London’s investment funds market as a rich source of innovative and non-correlated income opportunities. Indian funds with underlying income generating assets, such as solar energy & wind farms or toll roads, can tap into public investors through London Stock Exchange Specialist Funds Segment.


Benefits for Indian companies to list in London

The opportunity for Indian companies to list in London will provide a springboard for their global growth ambitions, providing access to deep liquidity in London and high-quality institutional capital at an earlier and smaller size range than in the US – and usually at a lower cost.

Access to a rich ecosystem

Approximately £8.5trn in assets is managed in London, with assets tripling since 2009. The UK is Europe’s principal investment centre and the second largest in the world[2]. Uniquely, more than 50% of the equities listed in London are owned by non-UK institutions[3]. An Indian company that lists in London does not just tap into the UK’s substantial domestic pools of capital but – it gains access to a truly diverse and international investor base which expands well beyond India’s Foreign Portfolio Investor (FPI) pool. A London listing also means the ability to access North American investors without the additional costs and risks of a North American listing.

A London listing gives Indian companies the ability to expand a company’s investor base with active and passive funds that track global benchmark indices such as FTSE 100 & FTSE 250. Approximately 75% of the revenues generated by companies in the FTSE100 – one of the world’s key indices – come from outside the UK. These internationally active companies are therefore supported by an equally international investor base. 

A global acquisition currency

Listing in London provides a universally accepted acquisition currency to support the international M&A aspirations of Indian companies. Since 2016 London Stock Exchange-listed companies have used their stock to buy businesses in 55 countries[4], more than any other exchange in the world.

Increased international profile

A London listing increases international visibility and enables Indian companies to build a global profile. Take London Stock Exchange’s Green Economy Mark: this is a world-first data-driven green classification and Mark for equity issuers – recognising listed companies and funds which derive 50% or more of their revenues from environmental solutions. This unique Mark is fast becoming an important benchmark for global investors.

Access to rich ecosystem

Indian companies in emerging sectors such as technology, e-commerce, fintech, life sciences, biotech and renewable energy gain access to London’s rich ecosystem of investors, analysts and professional advisers.

Certainty on IPO pricing

The price discovery mechanisms in the IPO process in London incorporates early engagement with prospective investors, ensuring accurate valuations of a company and proper pricing for IPO and few, if any, excessive ‘pops.’

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Contact our team

Gokul Mani

Head of Africa, Middle East & India, Primary Markets

Mohan Bhuyan

India Representative, Primary Markets




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