XED Executive Development’s decision to pursue a $10 million private placement after withdrawing its proposed GIFT City IPO has exposed the gap between creating a listing framework and building a market capable of supporting regular equity issuance. The company has not abandoned GIFT International Financial Services Centre (IFSC), but its move shows that regulatory permission alone may not be enough to persuade companies to list through the new route.
XED, a global executive education provider, withdrew its proposed IPO from GIFT City’s IFSC in March. Promoter and Managing Director John Kallelil told The Hindu BusinessLine that the company was now in the market for a $10 million private placement and had already received some investor commitments. The company, he said, no longer depended on an IPO to raise capital.
“Our objective in GIFT City was to raise funds. There are various ways of doing that, and we are currently in the market to raise $10 million. We have already received a few commitments and are in the middle of a transaction,” Kallelil said from New York.
The shift is significant because XED was expected to become the first company to use GIFT IFSC’s direct-listing framework. Its proposed listing was to take place on both the NSE International Exchange, or NSE IX, and India International Exchange, or India INX. The withdrawal therefore removes an early opportunity for the framework to demonstrate how an Indian company could use the IFSC to access foreign-currency capital and international investors.
The company has kept open the possibility of returning to the public market through GIFT City. Kallelil said XED remained committed to the GIFT City ecosystem and could revisit listing plans when market conditions were more favourable. He also said the company maintained the governance standards and approvals required for a public listing.
That distinction matters. XED’s decision is not presented as a rejection of GIFT City or its regulatory framework. It is a decision to use a different fundraising instrument at a time when private capital appears more immediately accessible to the company. The episode consequently raises a wider question about whether GIFT IFSC can turn its formal ability to host listings into a consistently liquid marketplace.
The regulatory foundations for the route are relatively recent. The government introduced the Direct Listing Scheme and the Listing of Equity Shares of Companies Incorporated in India on International Exchanges Rules, or LEAP Rules, in January 2024. The International Financial Services Centres Authority followed with listing regulations in August 2024. Together, these measures created an alternative path for Indian companies seeking foreign-currency capital outside the traditional domestic exchange structure.
GIFT IFSC’s proposition is different from that of the NSE and the BSE. Domestic exchanges provide access to rupee funding and Indian investors. The IFSC route is designed to offer access to global investors and foreign-currency capital. The IFSC also supports dollar-denominated trading and provides tax exemptions for overseas investors, according to the report.
IFSCA Chairman K Rajaraman has described the IFSC route as complementary to, rather than a replacement for, India’s domestic exchanges. That positioning is important because the success of the GIFT City market does not necessarily depend on displacing Mumbai’s established exchanges. Its intended role is to add another channel for companies and investors whose funding needs, currency preferences or international exposure are not fully served by domestic markets.
The immediate constraint is market depth. Haigreve Khaitan, Managing Partner at Khaitan & Co, said investors need confidence that listed stocks will have adequate trading volumes and liquidity. “Building that ecosystem takes time, although momentum can accelerate quickly once it starts,” he said.
Liquidity is not a secondary feature of a listing venue. It affects the price at which investors can enter or exit, the visibility of a company after its issue and the willingness of institutions to commit capital. A company may receive regulatory approval to list, but that approval does not by itself create a reliable secondary market. The marketplace must also attract enough issuers, investors, intermediaries and research attention to make trading meaningful.
This creates a sequencing problem for a new financial centre. Companies may hesitate to list until they are confident that investors will trade their shares. Investors may remain cautious until there are enough companies, sufficient information and regular transactions to establish a functioning market. Early listings are therefore expected to perform more than a fundraising function: they also help demonstrate that the venue can support price discovery and continued trading.
XED’s proposed listing would have carried that demonstration value. As the first company to use the direct-listing framework, it could have provided an early test of the process for issuers, exchanges, regulators and investors. Its withdrawal does not invalidate the framework, but it delays the point at which the market can learn from an actual listing and its subsequent trading performance.
The situation also reflects the strength of India’s domestic capital markets. Khaitan said the success of domestic markets had reduced the urgency for companies to list overseas, particularly after reforms allowed start-ups to go public without a profit track record. If companies can raise capital through familiar Indian exchanges with access to a deep domestic investor base, the case for choosing a newer overseas-listing route becomes more specific and transaction-dependent.
That does not make the IFSC proposition redundant. It changes the challenge from creating a legal route to establishing a clear market advantage. GIFT City must show why a company would choose an IFSC listing when domestic exchanges are already accessible and when private placements can provide capital without the obligations and exposure associated with a public issue.
The answer, as described by IFSCA, lies in the combination of global investors, foreign-currency capital and dollar-denominated trading. Those features may be particularly relevant for companies with international operations or funding needs. However, the supplied evidence does not establish how many companies currently have such a need, how much trading activity the exchanges can support or what level of liquidity investors would find adequate. Those remain central indicators for judging whether the framework is moving beyond regulatory design.
IFSCA is exploring additional measures, including a framework for listings without a public offer. Such a mechanism could broaden the ways companies access the IFSC and reduce dependence on a conventional IPO as the first route into the market. The regulator also expects foreign companies to add momentum, and at least one US-based company has already filed for an IFSC listing, according to the report.
Foreign-company participation could expand the market’s range of issuers, but it would not automatically solve the liquidity problem. A larger ecosystem requires sustained participation from investors and intermediaries, as well as sufficient trading activity after listing. The regulator’s role is therefore not limited to approving products and listings; it also includes helping create the conditions in which those instruments can function as a market.
For GIFT City, the institutional test is whether its exchanges can become useful infrastructure rather than merely an available regulatory option. That test will be measured through completed listings, investor participation, trading volumes, liquidity and the willingness of companies to return for future capital raises. XED’s private placement keeps the company connected to the IFSC, but it also shows that the market must still prove its practical value to issuers.
The evidence currently supports a measured conclusion. GIFT IFSC has established the rules for direct listings and offers a distinct foreign-currency and international-investor proposition. Yet XED’s change in strategy indicates that companies can still find private funding more immediately workable, while India’s domestic exchanges remain a powerful alternative. The next milestones will be the completion of XED’s private placement, any future decision by the company to revisit a public listing, the progress of the proposed no-public-offer framework and the arrival of additional domestic or foreign issuers on the IFSC exchanges.
