Indian companies are mulling overseas listing to pave the way for a smooth exit of their private equity (PE) investors, experts say.
According to mergermarket, an M&A intelligence service provider, private equity firms are evaluating overseas listings as exit options in the domestic market are drying up.
A large number of international PE funds made investments in India during 2006 to 2008, but are holding on to their portfolios firms for lack of good exit opportunities.
According to investment bankers, some possible listing candidates include mobile software companies like InMobi, IMIMobile, One97 Communications, iYogi, online travel portal Yatra.Com and e-commerce players like Flipkart and SnapDeal.
Stock exchanges such as Nasdaq or the New York Stock Exchange, London's AIM exchange, or locations like Singapore and Hong Kong are being considered for listing as investor appetite for domestic initial public offerings (IPOs) appears poor, said a PE advisor.
According to audit, tax and advisory firm Grant Thornton, there were just two IPOs that listed in July 2012, having raised just $13.40 million from the public.
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Over $1 billion was raised through 30 IPOs during January-December, 2011.
A sectoral analysis of mergermarket shows mobile software, e-commerce, internet technology and consumer- oriented businesses are most likely to succeed overseas for listing purposes. Infrastructure and traditional sectors like utilities and industrials, however, may find it difficult.
Some dampeners for an overseas listing might be higher costs and stricter norms, but according to mergermarket, besides helping raise capital, an overseas IPO also helps in enhancing credibility and reputation for firms.