SME IPOs catch investors' eye, raise Rs 811 crore in FY17

Small and medium enterprises (SMEs) raised a staggering Rs 811 crore through initial public offerings in 2016-17, more than two-fold jump from the preceding fiscal.

The huge fund-raising can be attributed to reforms and initiatives taken by the government to encourage the SME sector.

Funds raised through the issue were used for business expansion plans, working capital requirements and other general corporate purposes.

A total of 80 companies got listed with initial public offers (IPOs) worth Rs 811 crore in the last fiscal as compared to 46 firms which tapped the IPO route to garner Rs 304 crore in 2015-16.

In 2014-15, 37 firms made debut on the SME platform and raised Rs 271 crore. These companies are listed on the small and medium enterprise platforms of BSE and NSE.

"SME capital market is witnessing participation from wider class of investors and the trend is expected to continue. Even institutional investors have started showing interest in SME investing and the market looks up to them with expectation. Most of the listed SMEs have added value to shareholders," Pantomath Group Managing Director Mahavir Lunawat said.

Geographically, Gujarat has proved its dominance in the SME listing by contributing 33 firms on SME bourses which is the maximum, followed by Maharashtra (15), Rajasthan (10), West Bengal (4) and Delhi (3).

Further, average issue size also increased during the past fiscal to Rs 10 crore as compared to Rs 7 crore each for the preceding two financial years.

Besides, institutional investors including banks and mutual funds have started showing interest in the SME's public offers.

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Bohra Industries, Momai Apparels, Agro Phos India, Maheswari Logistics and Nandini Creation are some of the companies that received participation from institutional investors.

"Governance structures, improved credit rating, reduced finance cost, easy finances and branding are some of key benefits for listing on the SME platform. Besides valuation has helped listed SMEs to achieve speedy growth in systematic manner at early stage of their respective business life cycle," Lunawat added.

The companies which got listed in the past fiscal are from sectors such as finance; media and entertainment; real estate and infrastructure; manufacturing; agriculture; aquaculture; food and processing; and IT and IT-enabled service.

BSE and NSE had launched SME platforms in March 2012, becoming the only two bourses to offer such a segment in the country. Since then, several companies have got listed on them and some have even shifted to the main-board.

The platform provides opportunity to SME entrepreneurs to raise equity capital for growth and expansion. It also provides immense opportunity for investors to identify and invest in good SMEs at an early stage.