SEBI Mulls Tighter Norms For Such Listings

SEBI Allows Greater Overseas Investments; Permits 100% Aggregate Contribution In FPIs For NRIs

SUMMARY

SEBI is considering raising the minimum size of SME public offers to INR 30 Cr-INR 50 Cr as it looks to curb the misuse of SME platforms

Currently, there is no minimum issue size requirement for SME IPOs, but the companies are required to have a post issue capital base of INR 25 Cr

The number of SME IPOs have been on the rise over the last couple of years, with four new-age tech companies, including DroneAcharya and Yudiz, also opting for such listings

At a time when the public listings on the SME platforms of the BSE and the NSE are on the rise, the Securities and Exchange Board of India (SEBI) is reportedly looking to tighten the norms for these listings following certain complaints of misuse of these platforms.

As per a Reuters report, the markets regulator is considering raising the minimum size of SME public offers to INR 30 Cr-INR 50 Cr.

Sources informed the news agency that the new rules are expected to be issued later this year after the regulator and exchanges consult stakeholders.

Currently, SME IPOs do not necessitate a minimum issue size. However, the companies are required to have a post issue capital base of INR 25 Cr. The report said that a minimum offer size would ensure that “serious companies” have access to the capital markets, which would also safeguard the investors’ interest.

It is pertinent to note that four new-age tech companies also opted for SME listings over the last two years. While drone startup DroneAcharya had an issue size of around INR 34 Cr, Yudiz Solutions, listed on the NSE SME platform last year, had an issue size of INR 44.8 Cr.

Most recently, SaaS cybersecurity startup TAC Infosec, listed on NSE Emerge, had an issue size of about INR 30 Cr. Fintech SaaS company Trust Fintech’s IPO issue size was INR 63.4 Cr.

Despite the overall market downturn, DroneAcharya’s public issue was oversubscribed 262X and its shares listed on the BSE SME platform at almost a 90% premium to its issue price. Meanwhile, TAC Infosec’s IPO also saw a high demand with a 392.5X subscription. The stock listed at a premium of 173.6% to the issue price.

Among the new-age companies which went for SME listings, Yudiz’s IPO received a lukewarm response compared to others. The public issue was oversubscribed 4.75X and the shares listed at a 12% premium.

As per the Reuters report, going forward, the companies opting for SME listings would also be asked to make more disclosures in addition to adhering to a minimum issue size.

Meanwhile, amid rising activity in the domestic IPO market, SME public listings jumped to 205 companies raising a cumulative INR 5,996.84 Cr in FY24 against 125 such companies that raised INR 2,234.92 Cr in the previous year, a database shows.

Just a month into FY25, 12 firms have already raised INR 314.31 Cr via their SME listings.

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