September sees record SME IPOs in a booming market

Rajalakshmi S | | Updated on: Sep 20, 2017
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Fund-raising activity by small industries will see a sharp momentum in the coming 10 days as more than a dozen SME players have lined up their IPOs on stock exchanges before September 30.

While BSE's SME platform will see about six SME IPOs, NSE's Emerge platform will have about 12 IPOs before the end of September.

According to NSE sources, more than half of the upcoming SME IPOs during September are from Madhya Pradesh, raising about Rs 155 crore on the Emerge platform. However in the overall SME IPO space, Gujarat-based companies continue to lead the pack.

For the sharp surge in IPO offerings by the end of September, experts attribute it to the regulatory requirement. As per the norm, the audited financial numbers of a company proposing to offer an IPO should not be older than six months. Hence, for those companies having audited financial results for the fiscal ended MArch 31, 2017, they have to bring an IPO before September 30.

"If they bring an IPO after September 30, they will require an interim audit of financials, which will cause an additional burden on a company. This is primarily the reason for a rush for SME IPOs in September," informed an NSE source.

According to Mahavir Lunavat from Pantomath Advisors, a leading merchant banker for SME IPO, it is also favourable market conditions for SME IPO that even larger companies in the SME space are bringing their IPOs in September.

"Companies wanting to raise relatively large IPO funds like Rs 50 crore or so, they prefer to bring their IPO post September, when there would be less companies offering IPOs, so that they get undivided attention of investors. But currently, the markets are so good that such companies too are not thinking of defering the IPO," Lunavat told BusinessLine.

Pantomath recently closed IPO for Indore-based Worth Peripherals Ltd, which closed on Tuesday with oversubscription of more than 45 times.

Fund-raising by SMEs through primary market under junior bourses has gained momentum in recent years. The number of companies bringing IPO has increased from 13 in 2012 with fund raising of Rs 120 crore to 72 in 2017 raising Rs 873 crore. Total fund-raising so far through total 267 SMEs stands at Rs 2,458 crore.

Published on January 10, 2018

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