Laura Anthony

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    • Member Type(s): Expert
    • Title:Founding Partner
    • Organization:Legal & Compliance, LLC
    • Area of Expertise:Securities Law
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India – an emerging market for U.S. investors
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Uploaded By: Attorney Laura Anthony
Date Added: November 29, 2016
Description: India – an emerging market for U.S. investors- India is widely considered the world’s fastest growing major economy. The small and micro-cap industry has been eyeing India as an emerging market for the U.S. public marketplace for several years now. In my practice alone, I have been approached by several groups that see the U.S. public markets as offering incredible potential to the exploding Indian start-up and emerging growth sector. Taking advantage of this opportunity, however, was stifled by strict Indian laws prohibiting or limiting foreign investment into Indian companies. In June 2016, the Indian government announced new rules allowing for foreign direct investments into Indian owned and domiciled companies opening up the country to foreign investment, including by U.S. shareholders. The new rules allow for up to 100% foreign investment in certain sectors. U.S. investors who already invest heavily in Indian-based defense, aviation, pharmaceutical and technology companies will see even greater opportunity in these sectors, which will now allow up to 100% foreign investment. Although certain sectors, including defense, will still require advance government approval for foreign investment, most sectors will receive automatic approval. U.S. public companies will now be free to invest in and acquire Indian-based subsidiaries. Likewise, more India-based companies will be able to trade on U.S. public markets, attracting U.S. shareholders and the benefits of market liquidity and public company valuations. Indian companies are slowly starting to take advantage of reverse merger transactions with U.S. public companies. In July 2016, online travel agency Yatra Online, Inc., entered into a reverse merger agreement with Terrapin 3 Acquisition Corp, a U.S. SPAC. The transaction is expected to close upon obtaining shareholder approval. Yatra is structured under a U.S. holding company with operations in India though an India domiciled subsidiary. Last year Vidocon d2h became the first India-based company to go public via reverse merger when it completed a reverse merger with a U.S. NASDAQ SPAC. In January, 2016 Bangalore-based Strand Life Sciences Pvt Ltd became the second India based reverse merger when it went public in the U.S. in a transaction with a NASDAQ company. In addition, U.S.-based public companies, venture capital and private equity firms, and hedge funds and family offices have been investing heavily in the Indian start-up and emerging growth boom. Yatra and Strand Life had both received several rounds of U.S. private funding before entering into their reverse merger agreements. NASDAQ-listed firm Ctrip.com International recently invested $180 million into another India-based online travel company, MakeMyTrip. India’s Mumbai/Bombay Stock Exchange is already a Qualified Foreign Exchange for purposes of meeting the standards to trade on the U.S. OTCQX International. At least 5 companies currently trade on the OTCQX, with their principal market being in India.
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