It seems that the small and medium enterprises (SME) in Gujarat raise more funds through Initial Public Offers (IPO), as compared to their mid and big size companies. As per figures presented by Prime Database, India's first database dedicated to primary capital market, 16 SME firms from Gujarat cumulatively raised nearly £14.7 million in 2015-16. On the other hand, only three medium and large size companies from Gujarat came out with their IPOs this fiscal.
While only three IPOs were launched by bigger players in 2015-16, as many as 16 SME firms hit the primary capital market. While the amount raised by SMEs is lower than the biggies, the rush to list on the SME bourses show the ambition set by the SMEs.
“The SMEs typically run out of collateral and funding sources for meeting growth capital. Moreover, the requirement is of smaller amounts. Hence, SMEs find it difficult to meet the funding requirements only through bank loans or private money. SME exchanges, with relaxed compliance norms and cheaper cost structure, offer a growth capital platform to progressive firms to meet their funding requirement. As a result, increasing number of SMEs are taking IPO routes,” said Mahavir Lunawat, group MD, Pantomath Capital Advisors Private Limited, a merchant banker which has managed maximum SME IPOs over last two years.
