XED cited investors‘ inability to complete their applications due to KYC (Know Your Client)-related issues and subdued institutional participation as the reasons for the withdrawal.
“The withdrawal of the IPO from GIFT IFSC, after seeing limited investor interest, is more a reality check for how the platform can evolve,” said Suresh Swamy, partner, Price Waterhouse & Co LLP, GIFT City. “It brings into focus a simple issue: listing today is being asked to succeed without the natural support of resident investors and domestic mutual funds.”
Both foreign and Indian companies can raise money via IPOs at GIFT City. Such issues must rely on foreign portfolio investors, NRIs and offshore funds, as retail investors have limited access, said lawyers.
The catch here is that all these investors, including FPIs, NRIs and offshore entities, must complete full KYC with an IFSC-registered broker, including identity, address, and source of funds verification. Entities need additional disclosures on beneficial ownership.
“The friction of onboarding requirements like PAN-linked KYC for non-residents and lingering questions around tax treatment, and hesitation is understandable,” said Swamy.
Consultants and lawyers said tweaks in investor participation rules in the Gift City could help boost participation in IPOs there. “Despite regulatory changes in 2025 and early 2026, structural issues persist,” said Abhinav Kumar, partner-capital markets at TT&A. “One major hurdle is that Indian residents are not allowed to invest in IFSC IPOs. Because of this, intermediaries have to carry out extra checks to ensure no domestic money enters these issues, making the process longer and more complex than a regular IPO in India.”