GIFT City’s Listing Hub Ambitions Dealt A Blow As XED Withdraws IPO

Gujarat International Finance Tec-City's (GIFT City) dream of becoming a premier destination for share listings has taken a hit following the withdrawal of XED Executive Development’s ₹110 crore initial public offering (IPO).

XED was supposed to be the first IPO from India’s international financial centre. The IPO consisted of a $9.6 million fresh issue and $2.4 million offer for sale (OFS). Global Horizons Capital Advisors (IFSC) Private Limited was the sole book-running lead manager.

Why Did XED Withdraw Its IPO?

XED said that the withdrawal was triggered by a confluence of factors outside its control. Although retail interest was robust, a large number of potential retail investors failed to complete their bids within the offering window due to procedural bottlenecks related to know your client (KYC) compliance.

The company said that this led to considerable disparity between stated investor interest and actual subscriptions. It added that from an institutional perspective, there was not much demand, indicating general risk-averse behaviour across the globe.

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How GIFT City IPOs Differ From Other IPOs?

Unlike conventional IPOs that occur on the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE), which are issued in INR currency, IPOs in GIFT City can be denominated in foreign currencies such as the US dollar.

This reduces currency exchange risk for global investors and makes it easier to compare company values, especially for businesses that earn revenue overseas.

The rules for public shareholding are also different. On India's main stock exchanges, companies usually need to keep at least 25% of their shares available to the public. In GIFT City, the requirement is lower at 10%. This gives founders more room to hold a bigger stake even after listing.

Tax incentives further set this platform apart. Units in the National Stock Exchange – International Financial Services Centre (NSE-IFSC) can get a 10-year income tax exemption within a 15-year period. There is also no securities transaction tax (STT) on trades done on IFSC exchanges.

Additionally, non-resident investors can benefit from certain capital gains exemptions. These measures are designed to make GIFT City competitive with other global financial centres.

Sources:

Outlook Business

The Economic Times

Moneycontrol