National pride apart, coming home has become attractive as investors understand India now, and listing in Mumbai is seen as a solid option
India's best-known fintech startups, and also others, engaging in what is popularly called a ‘reverse flip’ to move their holding parent entities back to India from countries such as the US, and Singapore?
Image: Shutterstock
Why are some of India's best-known fintech startups, and also others, engaging in what is popularly called a ‘reverse flip’ to move their holding parent entities back to India from countries such as the US, and Singapore? It can be a fairly complex, time-consuming process, but these companies—Groww, Pine Labs and Razorpay are in the news—feel it's worth the trouble. Flipkart too, India’s biggest e-commerce company, now part of Walmart, is rumoured to be preparing to flip back, ahead of an IPO.
Keyur Shah, partner and leader, Financial Services Tax, EY India, explains the timing and the process in a recent interview with Forbes India.
Q. The historical reasons for the US or Singapore holding entities.
KS: Earlier, tech or a fintech startups, more fintechs, were operating in areas that were fairly complex for an overall investor understanding. The founders were often returning Indians, or the startups required venture capital (VC) funds or investors who were not very large but understood the fintech ecosystem fairly well.
And their need at that time, essentially, was structures that they understood and most of them were predominantly based in the Silicon Valley or overseas. Investors were very comfortable when the entity they were investing in was based in a jurisdiction they understood. This is why some of the large fintechs, including the likes of Razorpay and Pine Labs, were set up outside India, and got funded by private equity (PE) funds or VC firms in those jurisdictions.