India cos plan listing in Singapore via reverse takeover

Many Indian companies in the infrastructure sector including a GMR subsidiary is looking at the option to take the reverse takeover route to get themselves listed on the Singapore stock exchange and save on listing costs.

Under the reverse takeover route, an Indian unlisted company will first acquire a listed company on the Singapore exchange. The Indian company then uses its shares to exchange for shares in the listed company and gets listed. This way the Indian company saves on the listing costs and the lengthy process to get listed on the Singapore exchange, a banker said.  

The acquirer may have to make an open offer to the remaining shares of the Singapore company as per the local takeover laws depending upon the trigger clause.

In the second part of the “back door” listing process, the Singapore listed company offers shares to new investors to bring down promoter holding as a follow on offer, a banker who is advising many Indian companies said.

“This is a good way to get listed on the SGX without going through the rigmaroles of a listing process. This is fast and good way to get listing in a global exchange,” the banker said.

GMR Energy, which has a joint venture with Sinar Mas which owns coal assets in Indonesia,  was looking into this route to get itself listed, the banker said. But no final decision has been taken as yet, the banker said.

GMR Energy took over 30% stake in PT Golden Mines (Gems) in 2011 for close to $ 450 million to $550 million. The acquisition was funded by a combination of debt and internal accruals and was made by GMR via an offshore vehicle based in Singapore. GMR Energy is a subsidiary of GMR Infrastucture which is listed on the Indian stock exchanges.

According to a M&A lawyer the transaction as well as the issue of new shares has to be approved by the Singapore stock exchange. As per the exchange rules, the enlarged company has to re-comply with the SGX listing requirements and Singapore company  in the same way as an initial public offer.

Bankers say this is route is recommended for those companies which are looking for a listing abroad and plan to raise funds in the near future. With costs of funds at a very high in India, many companies prefer to raise funds from overseas markets via selling equity as well as debt.