With the markets showing signs of improvement, competition among leading global bourses to woo Indian companies to list on their platforms is getting hotter. The new entrant into the fray is SIX Swiss Exchange, which has planned to build a steady pipeline of Indian companies willing to list in Switzerland.
A slowing in the financial market has taken a toll on the trading volumes of exchanges globally, resulting in cannibalisation of business and forcing them to seek newer markets for business.
In India, the Swiss bourse will be competing with the NYSE Euronext, London Stock Exchange and Singapore Stock Exchange, which have been marketing their platforms to Indian companies for long. For small and mid-sized companies, London’s AIM market has been a prominent listing venue, though it has not witnessed any initial public offering (IPO) from an Indian firm this year.
Year 2010 was the last best period for global listings, when global IPOs were worth $53 billion and 20 Indian companies raised a whopping $1.2 billion through initial share sale offers in the first three months of 2010.
The SIX Swiss Exchange has an alliance with the Deutsche Borse, which holds five per cent in the Bombay Stock Exchange.
Marco Estermann, head of issuer relations and member of the committee managing the Swiss Exchange, says it is prominent for bond issuance and they were aggressively marketing it to Indian companies, while not losing the focus on the equity segment. They have entered into a partnership with New Delhi-based T&A Consulting and would also be looking for an alliance with an Indian exchange.
The key selling point for the Swiss exchange is that order books for 25-30 per cent of bond issuances globally are traced back to investors in Switzerland and regulations in the country make it compulsory for institutions such as pension funds to invest a certain percentage of their funds in Swiss Franc-denominated assets.
According to Tarun Gupta of T&A, there are many Indian companies having business in Europe. “Increasingly, bankers are asking these companies to form a separate entity of European business and list it in the region. In such a scenario, a Swiss exchange is a perfect platform with the captive investor base it has.”
While the country got a bad name after the US clamp on tax evaders believed to be hiding their money in Switzerland, Estermann says there is another aspect to the country which got overshadowed in the controversy. “The Swiss have a robust banking system, a most stable economy and a currency in Europe that was not affected by the slowdown,” he said.
Switzerland is home to assets totalling $4,000 billion and is the world leader in cross-border private banking, with a market share of close to 30 per cent. Under Swiss law, SIX Swiss Exchange enjoys self-regulatory powers. This enables it to achieve a balance between robust investor protection and a market-driven regulatory environment. This light-touch approach also enables companies to list more efficiently on SIX Swiss Exchange than on other venues. SIX Swiss calculates a wide range of indices — including Switzerland’s foremost equity index, the SMI, further benchmarks such as the SLI and SPI, as well as industry, bond and customer indices. It has holdings in Scoach, STOXX, Swiss Fund Data and Indexium.
