A notable trend is emerging in the Indian business world: companies that have established themselves on a global scale are increasingly choosing to return to the Indian stock market for listing. This "reverse flipping," as it's often called, involves shifting the domicile of the holding company from a foreign location back to India.

Driving Factors

Several factors are contributing to this homecoming.

• Attractive Valuations: The Indian stock market is currently offering high valuations, making it an appealing destination for companies seeking to list their shares. As Vikna Rajah, Co-head of Rajah & Tann Singapore (R&T)'s South Asia desk, notes, the Indian stock exchanges are among the best for value creation.
• Maturing Capital Market: India's capital market has matured significantly, presenting a viable alternative to global markets for IPOs.
• Simplified Compliance: Relocating to India streamlines regulatory compliance, particularly for fintech startups operating within the Indian financial system.
• Growing Domestic Funding Options: The rise of domestic funding options, including family offices and venture capital funds, reduces the reliance on foreign investors.
• Government Support: The Indian government is actively encouraging investment through initiatives like "Make in India" and "Digital India," offering tax benefits and simplified regulations.
• Desire to Include Indian Investors: Listing in the US would deny Indian investors the opportunity to participate in the company's growth.
• New Regulations: Regulations prevent foreign-registered companies from launching IPOs in India, securing NBFC, payment licenses from RBI and exporting certain types of data.

The "Reverse Flipping" Trend

This trend marks a shift from previous practices where Indian startups often incorporated overseas, particularly in the U.S. (Delaware) or Singapore, to gain easier access to capital and scale their business operations. These locations offered benefits such as a more favorable regulatory environment, easier access to global funding, and tax incentives. However, with India's economic growth and evolving regulatory landscape, the tide is turning.

Companies Making the Shift

Several prominent Indian companies have either already shifted their base back to India or are in the process of doing so.

• Zepto and Pine Labs have shifted their holding companies from Singapore to India.
• PhonePe transitioned its domicile to India from Singapore in 2022.
• Groww completed its transition back to India from the U.S..
• Razorpay, Meesho, and Udaan are actively considering or in the process of relocating to India.

Benefits of Listing on Indian Stock Exchanges

Listing on Indian stock exchanges offers several advantages for businesses.

• Access to Capital: Companies can raise funds for growth and expansion through IPOs.
• Liquidity and Marketability: Listing increases the liquidity and marketability of shares, attracting more investors.
• Enhanced Visibility and Reputation: Listing enhances a company's visibility and reputation, increasing its market capitalization.
• Growth Opportunities: Access to funds enables companies to pursue takeovers and expansions.

Challenges and Considerations

Despite the benefits, "reverse flipping" is not without its challenges. Companies need to navigate complex legal and regulatory approvals and may face significant tax implications. For example, PhonePe incurred a substantial tax implication of nearly $1 billion during its transition. Careful planning and execution are essential for a successful transition.

Looking Ahead

The trend of Indian businesses returning home for stock market listing reflects the growing strength and attractiveness of the Indian economy and capital market. As India continues to strengthen its position as a global startup hub, more companies may choose to grow and list in India, marking a new phase of innovation and economic growth.