So far Indian companies can list abroad only via depository receipts, a less liquid proxy for shares which are less attractive for investors.
The government will form an expert panel to encourage venture capital and private equity investments, following a record breaking 2021 for PE/VC investments, Finance Minister Nirmala Sitharaman said in her Budget speech.
The government, via this panel will examine “appropriate measures” to scale up investments, indicating more policies that could help investors who are pouring foreign capital into Indian companies.
Foreign investors’ concerns over the years have included paying a higher rate of tax than domestic investors and their portfolio companies not being allowed to directly list abroad. So far Indian companies can list abroad only via depository receipts, a less liquid proxy for shares which are less attractive for investors.
“Such a panel will definitely help the PE/VC industry and address its concerns. For example, we need to look at how ESOPs are treated for startups, and how carry (a VCs profit) is treated as business income and not capital gains,” said Anil Joshi, managing partner at Unicorn India Ventures, an early stage investor
Having a panel will help solve this issues and streamline investments into India, he added.
The Finance Minister also said that more Fund of Funds, which will be managed by private fund managers, but where the government will contribute about 20% of capital will be encouraged to boost investments.
In 2021, companies raised $77 billion of venture capital and private equity, more than 60% compared to 2020, and 154% higher if Reliance Jio’s exceptional fundraising spree was counted, according to an EY report.
Internet startups particularly drove the funding surge, with 43 unicorns- private companies valued at over a billion dollars-in 2021 alone, compared to a record 11 in a previous single year.
New investors, including hedge funds, mutual funds and other financial institutions also backed private companies which were planning for a stock market listing
https://www.moneycontrol.com/news/business/startup/budget-2022-government-to-form-expert-panel-for-pevc-investments-amid-funding-boom-8017961.html/amp
