The Hindu Business Line : 'Several Indian cos exploring Nasdaq listing'

MS Charlotte Crosswell is in charge of the international business of Nasdaq. From her London office, she monitors the affairs relating to Nasdaq's overseas listed companies through its offices and representatives based in London, New York, Bangalore, Tokyo and Beijing. The global market capitalisation of Nasdaq-listed companies stands at over $400 billion.

Ms Crosswell also looks after business development for overseas companies that are considering a listing on Nasdaq. On her second trip to India in her present capacity, she spoke to Business Line and was hopeful that a host of Indian companies, including public sector companies, could soon be listing on the exchange in the beginning of 2006.

Excerpts:

Are you satisfied with the response of Indian companies in getting a US listing especially on Nasdaq?

It is my second trip for Nasdaq. It is important that we continue to come out here on a regular basis and make sure we are showing commitment to the market. We would love to see more listings from India. I am very hopeful that we will have some listings next year.

We have not seen many Indian listings on Nasdaq in recent times. Are there any specific reasons for that?

Well, obviously the main reason is that the market downturn has affected every single international market. That didn't pick up until last year anyway. What's happened in India is that companies have started to prepare through last year. There is a huge appetite for foreign IPOs and ADRs. They have done their local listing first because they have to do under the local rules and now they are preparing for the US listing. We are pretty satisfied and it is not only next year, there is a pipeline stretched into 2007-08. We believe it is very important to work with companies at a very early stage. We always start on very early, as soon as we know they are looking for listing in the domestic market.

What about those companies that are already listed?

We obviously talk to these companies. We also have to have a relationship with companies that have business interest in the US and therefore they are likely to seek listing in the US.

You have intense competition from exchanges across globe vying for listing by Indian companies. There is a feeling that the US disclosure and compliance norms are keeping Indian companies away?

Well, as I understand, your compliance systems are getting tighter and tighter. What we are clearly seeing is convergence globally on regulator norms. We don't believe that it (compliance and disclosure) is going to be a deterrent for very long. What you have seen on Sarbanes Oxley Act over the last few years is a lot of noise and a lost of press and a lot of negativity against it. What you don't see are companies who are saying that we think it is good to have these processes and controls in place and that we can comply with them. You have look at our success in China. In the last 18 months, we have had 16 companies listed. We are able to see that companies are able to comply. Competition is a good thing but equally what you don't want to do is take a rush decision and list maybe in Europe and later find that you have to be listed in the US in a two years time if your business is in the US because it adds to the cost. We have to break the myth that (compliance with Sarbanes Oxley) is a big thing that you cannot comply with. We need to move away from the mindset that it is time consuming and difficult.

Did all the 16 Chinese companies you mentioned list on Nasdaq? What was your score on India?

Yes, all 16 on Nasdaq. As for India, we had Kanbay Incorporated that listed in 2004. We would hopefully have good news soon.

Why this wide difference in numbers between India and China?

What you got in China is a lot of entrepreneurship, a lot of rush to get to market. Also companies don't list locally out of China and a Nasdaq listing is their first step into the capital market. They are registering in Cayman Islands and trough that listing on Nasdaq. In India, a lot of companies prefer to step into the capital market through a domestic listing. Because the markets function differently in India and companies have been able to get a lot in their early stage capital from the local market.

Do you encourage or prefer start-ups for listing?

Not really. Certainly out of China the pipeline has been a lot of these start-ups. From our point of view, we would look at every company that has a good management, good business in the US and is going to do well. Every company has decided to down the route of US listing, obviously we want to look at them. It is really the range (from small start-ups to large MNCs). It doesn't matter which sector they are in.

You said that you were hopeful of some Indian listings. Can you give us a broad indication on the sectors in which the companies belong?

It is a pretty wide range that the companies we are talking to. We don't distinguish by the sector. It is in all sectors including biotech, pharmaceuticals, banking and finance.

What about PSUs?

We have been looking at PSUs. PSU banks have gone in for US GAAP compliance on the basis of our initiative. That is the first stage (for US listing). I have talked to a lot of companies in the world who have not reached the stage of US GAAP compliance. But in India a lot of companies have got to the stage and are waiting for a right time. It is not practical to rush companies to market. If they are ready for the market we have to provide the right market place for them.

What are your views on the perception that Nasdaq is an exchange dominated by technology stocks?

Obviously tech is a very important sector for us. We don't want to move away from that. But we want the perception to reflect the reality. The reality is that around 30 per cent of the companies listed with us are IT companies. Around 500 banks are listed on Nasdaq. Not many people will say that. The reality is that we are not just about IT.

Did the 2000 meltdown in IT impact new listing in Nasdaq?

It did in 2001, 2002 and 2003. What we saw was 23 listings last year. This year, we had 17 listings to date and a pretty good pipeline for the rest of the year. I am very confident that we have moved away from that perception (that meltdown has impacted listing).

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