Small and medium enterprises (SMEs) in India have reportedly raised Rs 825 crore through initial public offerings (IPOs) in the first quarter of 2018-19, more than two-fold jump from the preceding financial year, according to an industry report. It said that funds raised through IPOs were meant for business expansion plans, working capital requirements and other general corporate purposes.
The Pantomath Advisory Services Group report reveals about 47 companies got listed with initial share sale offers worth Rs 825 crore during April-June quarter of 2018-19 compared with 24 firms which tapped the IPO route to garner Rs 310 crore in the same period of the previous year, according to PTI as quoted in Business Line. This reflects a significant rise in the amount raised through SME platforms of both the BSE and NSE. Further, the average issue size also increased to over Rs 17 crore during the period under review from Rs 13 crore in the first quarter of 2017-18.
“It has been more than six years since SME market opened up and we have witnessed this market evolving gradually with varying trends: high over-subscriptions, widening shareholder base, venture capital exits through this platform, anchor investor participation and the like. This segment will continue to be of interest and will grow leaps and bounds in time to come,” said Mahavir Lunawat, Group Managing Director, at Pantomath Advisory Services Group told the agency.
Geographically, Gujarat topped the list as a maximum 17 firms from the state listed on SME bourses, followed by Maharashtra (11), Delhi (5) and Madhya Pradesh (3). Out of 47 IPOs, only 7 got subscribed more than 10 times, 14 initial share-sale offers witnessed a subscription between 2 and 10 times and 17 public issues subscribed less than 2 times. Further, participation from anchor investors have been increasing in the small and medium enterprises segment too, the report said.
According to Lunawat, the pricing of SME IPOs are generally attractive and due to high demand, post listing the prices rally up to a significant number. He added that markets have been corrected sharply in 2018 so far and SMEs are no exceptions, hence, decline in prices of some of the SME scripts was also seen in the quarter.