SME IPO platforms
Vikram Limaye, MD & CEO at NSE, and Ajay Kumar Thakur, Head, SME at BSE, see bright outlook for SME IPO platforms on the two exchanges:
SME platforms on the Bombay Stock Exchange and National Stock Exchange are now major source of generating interest from investors with a record number of firms having raised significant funds through IPOs in 2017-18. The BSE SME platform represents companies from 15 states and 20 major sectors. Ajay Kumar Thakur, head, SME at BSE, says 39 IPOs have been floated on the BSE SME platform in 2017-18 so far. In all, 216 SME companies have been listed on this platform till 20 December 2017 since inception in 2012.
The NSE SME platform ensures the growth of potential companies in the SME segment. The platform, called EMERGE, is considered as a credible and efficient market place to bring about convergence of sophisticated investors and emerging corporates in the country. Vikram Limaye, MD & CEO at NSE, says 61 companies have been listed during the period April 17 till 20 December 2017 on EMERGE.
On BSE’s SME platform, `378 crore was raised in 2017 alone through IPOs, while EMERGE could raise `975 crore. It has an aggregate market capitalization of over `7600 crore.
BSE SME platform was launched on 13 March 2012 and BCB Finance was the first company to be listed on that day. Says Thakur: “The platform’s market cap crossed $1 billion mark on 4 April 2014. Trident Texofab has got listed on this platform as 200th company on 5 October 2017.”
The first-ever SME IPO Index was launched on BSE platform on 14 December 2012. Thakur says the maximum weight any company can command is capped at around 10-20%.” In 2012 itself, institutional participation in IPOs on BSE’s platform began by SIDBI Ventures and awareness started being created in tier 2 & 3 cities. The exchange has also tied up with state governments for extending incentives to SME listed companies.
EMERGE was launched on NSE on 12 March 2012. The first company was listed on 18 September 2012. Says Limaye: “Some 50 companies were listed on the platform in April 2017. The 100th company was listed in November 2017.” NSE, in association with independent agencies, has initiated business and financial due diligence, independent equity research etc. for certain SME companies. Limaye says this initiative is a part of NSE’s continuous efforts to adopt best practices globally in the equity research space, as it adds a valuable dimension to empowering individual investors to make better-informed investment decisions. It is sponsored by NSE’s Investor Protection Fund Trust.
TOP MERCHANT BANKERS
Guiness Corporate Advisors, Gretex Corporate Services, Navigant Corporate Advisors, Pantomath Capital Advisors and Aryaman Financial Services are some of the merchant bankers associated with the BSE SME platform for capital raising in 2017-18 so far. In the case of EMERGE, HEM Securities, Pantomath Capital Advisors, Sarthi Capital Advisors, Swastika Investmart and Systematix Corporate Services are the merchant bankers.
BSE is leveraging the existing trading where the SME companies are also being traded under ‘M’ and ‘MT’ groups. Says Thakur: “There is a concept of lot size where the lots of the companies have been decided on the basis of price band, with the value between `1 lakh to `1.2 lakh.”
For EMERGE, SME securities are distinctly identified on the exchange’s NEAT trading system. Alternate options are available for trading of the securities of listed companies. The SME securities can trade either in the normal (continuous) market or have daily liquidity window through a call auction session. The trading system has hybrid features which allow quotes by market makers in an order driven system. Limaye mentions that some of the unique features of EMERGE include credible admission process, higher quality investor information, access to capital and future financing opportunities to the corporates, liquidity for shareholders, facilitation of acquisitions, visibility across the regions and migration to main board.
Vikram says the SME IPO pipeline on EMERGE is robust and many companies have expressed their interest. The response from the merchant bankers and investors is also very encouraging. Thakur estimates some 25 companies would get listed in the Q4, 2017-18 on the BSE platform. Maharashtra chief minister Devendra Fadnavis had recently expressed willingness of the state government to create a joint working group with BSE to promote SMEs listing as SMEs in the country. The sector is expected to provide huge employment opportunities after agriculture.
Ajay Kumar Thakur