Strong performance of past IPOs spurred investors' interest, with 87 small and medium enterprises (SMEs) garnering Rs 1,460 crore through initial share-sales in the first nine months of the year. This was way higher than 56 companies that had raised Rs 783 crore through initial public offering (IPO) in the entire 2021, the industry data showed.
Further, the remaining part of the year 2022 can see more mature companies accessing the platform. Moreover, tech-based and larger broking players can play a major role in developing the SME platform, Uday Nair, Director at Fedex Securities, said, adding, "overall the year is good for SME companies looking to raise capital from the exchange". "SME segment is not impacted by the bearishness in the market and investors are looking forward to the healthy pipeline of IPOs going forward, many companies have filed or planning to file their documents for listing on the BSE SME and NSE Emerge platforms," Prateek Jain, Director at Hem Securities, said.
Going by the industry data, a total of 87 IPOs have debuted on the SME platforms and raised Rs 1,460 crore during January to September. These companies belong to a wide range of sectors like IT, automotive components, pharma, infrastructure and hospitality, and jewellery.
The month of September saw 29 SMEs hitting the primary market despite volatility in the secondary market compared to nine in the preceding month. Of the 29 issues, 25 have already concluded and the remaining four are ongoing. Many IPOs have seen robust participation from qualified institutional investors as well as retail investors and one such public issue was that of Insolation Energy.
The IPO of Insolation Energy, which successfully concluded last week, was subscribed by 183 times. This was the highest subscription in any BSE SME IPO. Gaurav Jain, Director at Hem Securities, attributed the robust fund raising in this year to strong performance of many IPOs in the segment that attracted more investors.
"Though small in size, these IPOs are getting a good response. The segment has performed at a time when the benchmark indices have taken a beating and IPOs on the main boards have seen fewer public issues, compared to last year," he added. Fedex Securities' Nair said that SME platform is a sector agnostic platform for raising growth capital. With more and more companies accessing the market, a natural filter gets created adding to that is good financial performance by some of these companies, which have helped in building investor confidence.
The company raised the funds through IPOs for business expansion plans, working capital requirements, debt payment and other general corporate purposes. On the other hand, a total of 20 companies, including state-owned LIC, opted for the main-board IPOs, and raised Rs 43,275 crore during January-September, while 63 firms mopped up more than Rs 1.2 lakh crore in the entire 2011.Stock exchanges — BSE and NSE — had launched SME platforms in 2012 becoming the only two bourses to offer such a segment in the country. These platforms provide opportunities to such firms to raise capital for growth and expansion.