SMEs raise a record Rs 17.32 billion through IPOs in 2017

Spurred by investor interest, 132 small and medium enterprises (SMEs) raised a record Rs 17.32 billion through IPOs in 2017, which was more than three times the funds raised in the preceding year.

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

A total of 132 SMEs got listed with initial public offers (IPOs) worth Rs 17.85 billion last year as compared to 66 firms garnering Rs 540 crore in 2016 through the route, according to a data compiled by Pantomath Research.

Besides, 2017 witnessed more fund-raising than aggregate capital garnered in past five years cumulatively. Overall, the firms had mopped up Rs 13150 million in last five years.

Together, these 132 firms have a market capitalisation of more than Rs 300 billion.

"The year 2017 has been a pinnacle in SME capital market and we expect this trend to continue in 2018 as well," said Mahavir Lunawat Group Managing Director at Pantomath Advisory Services Group.

Besides, average initial share-sale offers have shot up to Rs 134.2 million last year from Rs 81.8 million in 2016.

The IPO chart in the year is led by Zota Healthcare that raised Rs 585 million, followed by Euro India Fresh Foods Ltd, which mopped up Rs 51.26 crore.

Geographically, Gujarat continued to dominate the IPO space by contributing 51 firms on SME bourses, followed by Maharashtra (39), Madhya Pradesh (11), Delhi (8), Rajasthan (6), Telangana (4), West Bengal (3) and two companies each got listed from Andhra Pradesh and Punjab.

The companies which got listed during the period under review represent diverse industry base such as media and entertainment, manufacturing, textiles, engineering, finance, chemicals, agriculture, food processing and construction.

"Some of the marque investors also participated in SME IPOs at pre-listing and post-listing stage. This clearly shows SME investing is gaining popularity day by day," he added.

The year 2017 also reaped bumper returns to investors. Out of 132 companies listed in 2017, 39 closed at 20 per cent upper circuit limit on the first day of listing.

Further, robust response from investors has been received in terms of subscriptions with five IPOs getting subscribed more than 100 times the issue size.

In terms of value, top five initial share-sale offers garnered Rs 186.29 billion subscriptions from the investors.

BSE and NSE launched SME platforms in March 2012, becoming the only two bourses to offer such a segment in the country. Since then, around 329 companies have got listed on these platforms.

Further, SME indices outperformed broader markets in 2017. The secondary market witnessed 89 per cent growth of BSE SME index and 67 per cent surge in Nifty SME. In comparison, the broader indices - Sensex and Nifty 50 - climbed 27 per cent and 28 per cent, respectively.