Policy that facilitates exploration start-ups and a vibrant stock market is fueling this explosive growth. Joint venture between Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) has started a new stock exchange especially for start-ups.“The Indian Exchange for Ventures Stocks” (THIEVS) now facilitates domestic mineral exploration companies to list on this special exchange which is especially suited for start-ups and MSMEs. Creation of this new exchange and its rapid approval by SEBI has allowed retail investors the power to choose investing in high-risk-high-return businesses. Globally several such start-ups have given over 100% annual growth in valuation. It remains to be seen if Indian start-ups are able to provide similar returns to investors.
THIEVS has significantly enhanced MSME’s and start-ups’ ability to raise capital and even start-ups from the tech sector are taking advantage of this avenue. Speculative investors at THIEVS are giving Venture Capitalists (VCs) a run for their money. This listing gives the start-ups another financing option and therefore better negotiating position while pitching to VCs. The VCs and Private Equity (PE) firms are also happy as they find avenue for exit at multiple different levels without hurting their client’s interests. Recent decisions by SEBI in line with foreign best practices of “ventures exchanges” like registering of shell companies, scrapping the minimum turnover condition and permission to sell shares discounted below the face value on THIEVS has started to gain traction even with overseas investors.
Sources are hinting that some overseas companies are considering dual listing of their TSX-V listed companies with THIEVS due to the increasing liquidity. Even some foreign high risk capital funds are planning to set up shop in India to trade on this exchange. Recent reports suggest that the finance ministry is planning to create a tax flow through scheme for Indian citizens and Indian incorporated funds investing in the THIEVS exchange. This will give immense boost to liquidity and access to capital for the start-ups in mineral exploration and even technology sector. Access to equity financing will also boost their risk taking ability without increasing bank NPAs. Such a tax break may encourage overseas sovereign wealth funds and pension funds to establish their high risk investment divisions to be based in India and position India as the new global financial center. I hope the finance ministry expedites its consideration.
DISCLAIMER: This is a work of fiction. Names, characters, businesses, places, events and incidents are either the products of the author’s imagination or used in a fictitious manner. Any resemblance to actual persons, living or dead, or businesses, or actual events is purely coincidental.