In a recent Knowledge Session focusing on Raising Equity through SME IPO, CA Sumeet Mehta, CEO of Paradigm Advisors, encouraged small and medium enterprises (SMEs) to harness the prevailing surge in the primary IPO market to alleviate their capital needs amidst mounting interest rates on bank loans.
Sumeet Mehta highlighted the possibilities for SMEs to raise equity capital on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) dedicated platforms. Notably, he revealed that 464 SMEs have collectively secured Rs. 5,727 crore on the BSE platform, with an overall market capitalization of Rs. 97,488 crore. Similarly, around 234 SMEs have raised Rs. 3,100 crore on the NSE platform, with a market capitalization surpassing Rs. 8,000 crore due to burgeoning investor interest.
Underlining the significance of IPOs for profitable SMEs over the past two years, Mehta advised utilizing IPOs to reduce debt, dilute promoter shares, finance new projects, or amass reserves for potential mergers and acquisitions.
Mehta emphasized that listing shares on stock exchanges elevates credit ratings, strengthens financial discipline, and paves the way for future capital growth through follow-on public offers (FPOs). Additionally, it enables SMEs to offer stock options, foster shareholder wealth, and secure fresh loans by pledging listed shares.
Mehta outlined crucial pre- and post-listing measures for SMEs, including refining financial statements, ensuring numerical consistency, assembling adept management teams, forming proficient Boards of Directors, and deciding on segment inclusion within the listed entity.
Dr. Vijay Kalantri, Chairman of MVIRDC World Trade Center Mumbai, emphasized the pivotal role of SMEs in achieving economic growth. He highlighted a substantial funding gap of up to Rs. 25 lakh crore faced by SMEs, advocating for streamlined compliance norms to facilitate SME stock exchange listings.
Kalantri underscored the necessity for capacity building and affordable capital to enable SMEs to expand their manufacturing capacity and cater to India’s burgeoning domestic consumption. He announced the intent to organize further sessions to raise awareness about equity capital raising through IPOs.
The event, attended by entrepreneurs, banking professionals, investment analysts, and consultants, concluded with Ms. Rupa Naik, Executive Director of MVIRDC WTC Mumbai, emphasizing the significance of supporting women-owned enterprises. She highlighted the surge in women-owned enterprises, stating their growth from 15% to 30% in the MSME sector. Naik stressed the need to create awareness about various government schemes aimed at promoting entrepreneurship, particularly among women.
Overall, the event aimed to educate SMEs about the substantial benefits of utilizing dedicated stock exchange platforms for raising equity capital, thereby propelling their growth trajectory and fostering their contribution to the economy.