According to SEBI’s latest amendments, SMEs can list their shares without floating an Initial Public Offering (IPO). Moreover, the requirement to offer a minimum 25-per cent of shareholding to the public has also been waved off. The BSE SME platform is for small businesses with a face value capital of less than Rs.250 crore.
In what should be read in correlation to these developments, nearly half a dozen of small businesses have floated their IPOs in the last month and another three to four SMEs are in the process of entering into the big market, reveals a Business Standard report.
Kushal Tradelink, one of the leading wholesalers of paper & paper products, opened its IPO for subscription last week with the base price fixed at Rs.35 per share. This week also saw the entrance of VKJ Infradevelopers opening its 51 lakh equity shares of Rs.10. There are nearly 30 companies listed on the BSE SME platform now and SEBI has placed a minimum investment of Rs. 1 lakh for these stocks so that small investors will keep away from them.
Although SEBI has proposed the Institutional Trading Platform with which SMEs can be listed on the stock exchange without an IPO, the shares of SMEs cannot be traded by the public. Rather, the security watchdog says “informed investors” can access the shares; however, SEBI has not defined the exact nature of this 'informed investors' group which can apparently include angel investors, venture capital funds and private equity funds etc.
While the benefits of listing on the BSE SME platform are many, the most important one is the access to capital and future financing opportunities that every small business looks forward to. The resultant visibility and prestige can lift their business profile and credibility. It can further encourage their innovation and entrepreneurial spirits in addition to facilitating growth through mergers and acquisitions.