139 SMEs Raise INR 3,540 Crore Via IPOs In 2023

In the current year, small and medium enterprises (SMEs) have witnessed significant interest in their initial public offerings (IPOs). According to Prime Database, 139 SMEs have successfully garnered INR 3,540 crore through IPOs in 2023 so far. Notably, the figure nearly doubled as compared to 2022, during which 109 companies managed to raise INR 1,875 crore through their IPOs. This seems to be the result of strong participation from family offices and high-net-worth individuals, along with a healthy stock market and optimistic investors.

In 2023, September marked a significant milestone with a total of 37 SMEs making their debut in the IPO market. This year's largest IPO issue was Spectrum Talent Management, securing INR 105 crore, followed by CFF Fluid Control, which raised INR 86 crore.

Speaking to media, Abhishek Jain, head of research at Arihant Capital Markets Ltd said, “Going by the industry data, a total of 139 IPOs have debuted on the SME platforms—BSE SME and NSE Emerge—and raised INR 3,540 crore this year (till October 20). In addition, the maiden public issues of two more SMEs—Paragon Fine and Speciality Chemical and On Door Concepts—are scheduled to open next week. These companies that came out with their maiden public issue belong to a wide range of sectors like IT, FMCG, automotive components, pharma, infrastructure, advertising, and hospitality. These firms have mobilized funds for expansion plans, support working capital requirements, and retire debt. The remarkable surge in SME fundraising through IPOs in 2023 can be attributed to the participation of family offices and HNIs that injected substantial capital into the SME market.”

SMEs hailing from a wide spectrum of sectors, including IT, FMCG, automotive components, pharmaceuticals, infrastructure, advertising, and hospitality, have made their foray into the IPO arena. These diverse businesses are turning to the capital markets to fuel their growth strategies, strengthen their working capital, and manage existing debts.

A study of anchor allotments in various SME IPOs reveals a limited pool of entities, comprising both domestic and foreign players, who consistently appear on the list of anchor investors.

According to Prime Database, a leading primary market tracker, entities such as Rajasthan Global Securities, Chhattisgarh Investments, LRSD Securities, Negen Undiscovered Value Fund, Moneywise Financial Services, Bengal Finance & Investment, and Authum Investment & Infrastructure have featured as anchor investors in several SME IPOs in the recent period.

The BSE and NSE stock exchanges in 2012 launched dedicated SME platforms. These platforms continue to serve as crucial avenues for SMEs, enabling them to raise capital required for their growth and expansion initiatives.

What is SME IPO?

An SME IPO, which stands for Small and Medium Enterprise IPO, serves as a gateway for SMEs to enter the stock market. It presents a valuable opportunity for promising companies to secure investments. An SME IPO is the inaugural offering of shares to the public by a privately owned small and medium enterprise (SME) firm, resulting in its listing on either the BSE SME or NSE Emerge platform. To qualify for an SME IPO in India, companies must have a post-issue capital ranging from a minimum of INR 1 crore to a maximum of INR 25 crores. Till October 23, 2023, the BSE SME platform had 459 listed SMEs, with a market cap of INR 89,239.95 crore.

With such development, it seems that SMEs are well-positioned for sustained prosperity, as their IPOs continue to garner robust support from investors. As we look ahead, the remaining months of the year offer promising prospects for these enterprises to prosper and secure funding for their businesses.