Small and Medium Enterprises (SMEs), including micro-enterprises, are industries that contribute significantly to the Indian economy by producing a diverse range of goods and services. From FY12 to FY15, SMEs, both registered and unregistered, contributed significantly to India’s GDP. They are regarded as the backbone of overall economic growth and a major contributor to job creation in the country. Initiatives such as ‘Make in India,’ ‘Startup India,’ MUDRA Yojana, and ‘Skill India’ see SMEs as the catalyst for India’s socioeconomic transformation.
Many finance issues arise as a result of SMEs’ low scale production and non-adoption of new technology. Financing is the most difficult challenge for these businesses. As we know, SMEs contribute significantly to job creation and play an important role in the country’s economic growth, so it is critical that their financial needs are met.
Stock exchanges have created a separate platform for SMEs to raise funds from stock market investors in order to provide finance to them. For SME stocks to be listed and traded on an exchange, the company must launch an Initial Public Offering (IPO) on the exchange’s SME platform.
The NIFTY SME EMERGE Index is designed to reflect the performance of a portfolio of NSE EMERGE-listed eligible small and medium enterprises.
SME IPOs are becoming increasingly popular among Indian investors. Some IPOs for small businesses have been oversubscribed by up to 85 times. This shows that investors are becoming more confident in small businesses.
In the same way as a normal IPO, SMEs can file for an initial public offering (IPO). Through the ASBA facility, one can apply in either of two ways:
If the stocks are not assigned to you, a refund check will be mailed to your home address.
If the stocks are not assigned to him/her, the money will be returned to his/her account via online fund transfer.
The year 2017 was a record-breaking year for SME initial public offerings (IP0s). In 2017, 123 companies raised approximately Rs1640 crore. In terms of funds raised, it was a threefold increase over 2016. Despite the fact that the number of issues was nearly double that of the previous year. According to industry data, the total amount raised by SMEs in 2017 alone was greater than the total amount raised in the previous five years. Despite the fact that in comparative terms—about Rs 65,000 crate raised through IP0s by large companies—market participants said the trend is definitely positive for SMEs seeking funds from the stock market.In the current fiscal year, two SME IPOS were subscribed to more than 100 times, with the highest being a 261-time subscription for Ice Make Refrigeration, which generated a book size of Rs. 6200 crore for an issue size of Rs 23.7 crore. In addition, AM Integrated Solutions’ initial public offering (IPO) was oversubscribed 200 times in early November. The SME boost resulted from strong growth prospects, attractive valuations, and increased institutional interest in small and medium-sized enterprise shares (SMEs). “At an early stage of their business cycle, SMEs offer attractive valuations.”
For the first time since the launch of dedicated stock trading platforms for SME shares in 2012, two anchor investors purchased stakes in a SME, One Point One Solutions, just a day before the IPO opened. The IPO closed with an 85-times oversubscription on Friday, with a total book size of about Rs 2700 crore for its Rs 32 crore non-anchor part. As a result, it was India’s third most subscribed SME IPO. According to data on the NSE website, the HNI portion was subscribed 336 times, for a total demand of 31.7 crore shares, while the retail portion was subscribed 15 times. This was the highest ever HNI subscription figure for any SME IPO, according to the merchant banker, at 336 times.
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