By AltG Investment Research Lab On Behalf Of Poornima Vardhan & Taponeel Mukherjee
India needs to make the flow of capital through the interlocking public and private markets easier and faster.
Making the delisting of companies from India's public markets easier would allow more productive use of capital for publicly listed businesses that need to change course and drive innovation.
Dell in the US is an excellent example of why making take-privates easier can help corporations unlock value, create jobs, drive up tax revenues, and reward shareholders. Dell went private in 2013, leveraged its business model's strengths and returned to the public markets to create tremendous value for all.
A business adds value, creates jobs and contributes to the tax exchequer by compounding capital at high rates of return. The higher and more sustainable the compounding of capital, the greater the value creation for the economy.
The worst position is for a solid economic franchise to be stuck as a public company when tectonic shifts are needed.
India has many public companies that can significantly benefit from going private and fixing up their business models through better operational efficiency, sharper capital allocation, and better capital structures.
Most importantly, such value-creative take-privates boost economic growth since the capital in these companies can compound at higher rates of return. Simply, GDP growth is the ability of the economic machine to grow at higher rates of return. An efficient capital market is a great contributor.
Another vital aspect is bringing private market financial instrument taxation to par with public markets. Indian private markets drive as much of India's growth story as the public market peers and must be fully supported.
Disclaimer: In the article "Why Blackstone’s Jonathan Gray Is Correct On India’s Delisting Norms And What India Inc. Needs To Do About It?" above - Any views, comments or communication (above or in the past) should not be construed to be investment advice by Alternative Growth (hereafter referred to as “AltG”) in any form whatsoever. AltG does not make an offer to sell or solicit to buy any securities.