Spurred by investor interest, 145 small and medium enterprises (SMEs) raised a record ₹2,455 crore through initial public offerings (IPOs) in 2018, a surge of 37 per cent from the funds raised in the preceding year.
Going ahead, the IPO pipeline is “very handsome” as several companies are looking to tap the route for raising funds, said Mahavir Lunawat, group managing director, Pantomath Advisory Services Group.
Funds raised through IPOs in 2018 were used for business expansion plans, working capital requirements and other general corporate purposes.
A total of 145 SMEs got listed with IPOs worth ₹2,455 crore last year as compared with 133 firms garnering ₹1,785 crore in 2017 through the route, according to data compiled by Pantomath Research.
Overall, a total of 474 firms have garnered ₹5,825 crore since 2012, when leading stock exchanges — the BSE and the National Stock Exchange (NSE) — launched the SME platforms.
“The year 2018 has been roller-coaster for SME capital market with volatile stock prices and fluctuating IPO subscription trends. There exists good appetite for quality stocks and investor confidence despite turbulent market conditions,” Lunawat said.
Markets regulator Sebi’s move of bringing down the minimum anchor investor size in SME IPO to ₹2 crore from ₹10 crore has helped several anchor investors participate in initial share-sales of such firms.
“Going forward, we are having very handsome pipeline of growth businesses and aim to introduce them to capital markets in the near future,” he added.
In 2018, average initial share-sale offers have shot up to ₹17 crore from ₹13.42 crore in 2017.
The past year witnessed 28 SME IPOs which had a issue size of over ₹25 crore. Of these, the biggest initial share-sale was ₹92.74 crore. Besides, the year saw a milestone change in the investor pattern with anchor investors participating in number of SME IPOs.
Moreover, two firms — SoftTech Engineers and E2E Networks Ltd — provided exit to private equity or venture capital funds through the SME IPO route.
Geographically, the highest amount of fundraising was seen from Maharashtra, whereas Gujarat-dominated capital market with the highest number of listings.
Migration trend continued in the past year with increasing number of companies opting to migrate. Total of 18 companies migrated — 17 to the BSE and 1 to the NSE main board platform.
The BSE and the NSE had launched SME platforms in March 2012, becoming the only two bourses to offer such a segment in the country.