SME Listing on Stock Exchange

The BSE SME platform was launched in March of 2012. BSE was the first stock exchange in the country to launch an exclusive BSE SME platform last year offering a great opportunity to entrepreneurs to raise equity capital for expansion and acquisition. It helped the SMEs to create visibility, strong balance sheet, credibility and wealth creation.

There is a general lack of awareness among SMEs about equity capital, stock market and funding options other than banks. Banks are able to meet only about a fourth of SMEs’ funding requirements, so a lot of awareness needs to be mobilized among SMEs, market intermediaries and investors about the BSE SME Exchange. It would also help small and medium enterprises resolve the serious start-up issue of a lack of initial liquidity.

SEBI, in an attempt, to make it easier for the small and medium-sized companies to raise capital had laid down easier initial public offer (IPO) listing norms. At present, companies do not need regulatory approval for listing on the exchanges. The exchanges can provide an in-principle approval to the companies after having conducted the required due-diligence and background checks of the companies.

BSE SME platform has enabled wealth creation for 43 companies by helping them raise over Rs 307 cr

As of Januray, 2014 the total market capitalization of the listed companies SMEs stands at Rs 3642.62 crore.

SME IPO index launched in December 2012 with 100 as base and the value as on January 14, 2014 is 464.41points.

SME IPO index launch, aims to track primary market conditions in the Indian capital market and measure growth in investor investments in SME equities over a period of time.

The MSME sector contributes to around 40 percent of India’s exports and employs about 80 million people. The small companies coming under this sector face several difficulties in their quest for growth.

This segment forms a major part of India’s industrial base. If India is to attain its aspiration of double-digit growth rates and a reduced poverty ratio, greater focus on the well being of the Small and Medium Enterprises (SME) sector becomes a necessity.

The vision is wealth creation for SMEs through inclusive growth and provide international platform for SMEs and investors so that they can come together and raise equity capital.

Products and services for MSMEs often need significant collateral to back them up as a way to manage both the risk in this sector, as well as the transaction cost of serving this segment. However, the majority of entrepreneurs do not have access to sufficient levels of collateral.

Secondly, financial institutions also have limited access to relevant credit information on MSMEs. These factors are detrimental for SME enhancement, so a viable solution for SMEs is to get listed on BSE SME platform.

Goldchip helps you connect with the various agencies involved in the process of SME listing. We will be assisting you in co-coordinating with various Merchant Bankers and set up a Market maker as well as assist in conducting due-diligence regarding the Company, i.e checking the documentation including all the financial documents, material contracts, Government Approvals, Promoter details etc. and planning the IPO structure, share issuances, and financial requirements

Goldchip also sets up the Issuer Company for consulting the Merchant Banker/s in an advisory capacity.

Benefits of Listing:-

  • Easy access to Capital
    BSE SME provides an avenue to raise capital through equity infusion for growth oriented SME’s.
  • Enhanced Visibility and Prestige
    The SME’s benefit by greater credibility and enhanced financial status leading to demand in the company’s shares and higher valuation of the company.
  • Encourages Growth of SMEs
    Equity financing provides growth opportunities like expansion, mergers and acquisitions thus being a cost effective and tax efficient mode.
  • Ensures Tax Benefits
    In case of listed securities Short Term Gains Tax is 15% and there is absolutely no Long Term Capital Gains Tax.
  • Enables Liquidity for Shareholders
    Equity financing enables liquidity for shareholders, provides growth opportunities like expansion, mergers and acquisitions, thus being a cost effective and tax efficient mode.
  • Equity financing through Venture Capital
    provides an incentive for Venture Capital Funds by creating an Exit Route and thus reducing their lock in period.
  • Efficient Risk Distribution
    Capital Markets ensure that the capital flows to its best uses and those riskier activities with higher payoffs are funded.
  • Employee Incentives
    Employee Stock Options ensures stronger employee commitment, participation and recruitment incentive