IPO 2017: This Broker Thinks Listing of SMEs Is More Than Just A Trend
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2017 has officially been the year of IPOs, not just for the main board but even for the SME platform. The increase in listings have skyrocketed, with only 12 SMEs getting listed in 2012, to 70 going for an IPO this year.
Recently, the National Stock Exchange (NSE) celebrated is 100th SME listing on the NSE Emerge platform, while the Bombay Stock Exchange (BSE) marked their 200th SME listing. Till date, through the platforms, SMEs have managed to raised about Rs 1400 crore, a feat that gives hope to more such companies that want to go public in the near future.
To understand if its just a fad or the trend is here to stay, Entrepreneur India sat down for a conversation with Prasanth Prabhakaran, Senior President, and CEO – Brokerage, Yes Securities, who feels this shift is likely to be a norm in future for businesses to grow.
Unorganized to Organized
Prabhakaran feels if any company is against entering the gamut of taxation structure, particulalry the GST in recent times, then it is going to be extremely difficult for them to run their business.
“Individuals, who were running their businesses because for tax arbitrage, are likely to lose their market share to the organized and listed firms, as they have always been tax compliant and have smoothly migrated to GST,” he shared.
Giving an example of the plywood industries, which has been traditionally an unorganized market, however, players like Century Plywood and Green Ply continue to dominate the transition, mainly driven by the willingness of customers to a pay premium to transact with such companies and enjoy tax benefits.
Listing – A Norm?
One of the easiest ways for these companies to get into the organized business is to get themselves listed in the SME platform of the stock markets and unlike the main bourse, they have to comply with simple regulations, which means making fewer disclosures. For example, companies on the main platform are required to disclose their corporate earnings every quarter, but SMEs need to do this only once in six months.
"I see it as a potential norm to form an organized channel as listing will help these companies raise money through a cheaper method, instead of diluting the company’s equity for PE investors, who would also be interested in owning the management," he said.
In addition to just listing, SMEs, that have completed about two years on the platform and have post-issue paid-up capital about Rs 10 crore, have a choice to upgrade through the main bourse, which is very difficult otherwise.