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Fund-raising activity by small industries will see a sharp uptick in the next 10 days as more than a dozen SME players have lined up their IPOs on stock exchanges before September 30.
While the BSE’s SME platform will see about six SME IPOs, the NSE’s Emerge platform will witness about 12 IPOs before the end of September.
According to NSE sources, more than half of the upcoming SME IPOs in September are from Madhya Pradesh; together, they will raise about ₹155 crore on the Emerge platform.
However, in the overall SME IPO space, Gujarat-based companies continue to lead the pack.
Experts attribute the surge in IPO offerings by the end of September to a regulatory requirement. According to the norm, the audited financial numbers of a company proposing to offer an IPO should not be older than six months. Hence, companies with audited financial results for the fiscal ended March 31, 2017 have to come out with an IPO before September 30.
Regulatory norm“If they bring out an IPO after September 30, they will require an interim audit of their financials, which will impose an additional burden on a company. This is primarily the reason for the rush of SME IPOs in September,” an NSE source said.
According to Mahavir Lunavat from Pantomath Advisors, a leading merchant banker for SME IPOs, given the favourable market conditions for SME IPOs, even larger companies in the SME space are coming out with their IPOs in September. “Companies wanting to raise relatively large IPO funds such as ₹50 crore or so prefer to come out with their IPO post-September, when there will be fewer companies offering IPOs, so that they get the undivided attention of investors. But currently the markets are so good that even such companies are not looking to defer the IPO,” Lunavat told BusinessLine .
Pantomath recently closed the IPO for Indore-based Worth Peripherals; it closed on Tuesday with a subscription of more than 45 times.
Fund-raising by SMEs through the primary market under junior bourses has gained momentum in recent years. The number of companies coming out with IPOs has increased from 13 in 2012 with fund-raising of ₹120 crore to 72 in 2017 raising ₹873 crore. The total fund-raising so far through 267 SMEs stands at ₹2,458 crore.
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